SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
NuVision, Inc.
(Name of subject company)
American Vision Centers, Inc.
NI Acquiring Corp.
(Bidder)
Common Stock, par value $.50 per share
(Title of class of securities)
670923 10 1
(CUSIP number of class of securities)
Lee A. Barkan, Esquire
General Counsel and Secretary
American Vision Centers, Inc.
90 John Street
New York, New York 10038
(212) 385-1000
(Name, address and telephone number of person authorized
to receive notices and communications on behalf of bidder)
With a copy to:
Leonard S. Ferleger, Esquire
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
(412) 355-6500
Calculation of Filing Fee
Transaction valuation* Amount of filing fee**
$21,731,258 $4,347
* Based on the offer to purchase all of the outstanding shares
of common stock of the Subject Company at $7.60 cash per
share, the number of shares outstanding and the number of
options outstanding as reported in the Annual Report on Form
10-K of the Subject Company for the year ended December 31,
1994.
** 1/50 of 1% of the Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the
offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the form or
schedule and the date of its filing.
Amount previously paid: _________ Filing party: ________________
Form or registration no.: _______ Date filed: __________________
(Page 1 of 8 Pages)
(Exhibit Index on Page 8)
<PAGE>
This Tender Offer Statement on Schedule 14D-1 relates to the
offer by NI Acquiring Corp., a Michigan corporation (the
"Purchaser") and a wholly owned subsidiary of American Vision
Centers, Inc., a New York corporation ("Parent"), to purchase all
of the outstanding shares of Common Stock, par value $.50 per
share (the "Shares"), of NuVision, Inc., a Michigan corporation
(the "Company"), at a purchase price of $7.60 per Share, net to
the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase
dated May 4, 1995 (the "Offer to Purchase"), a copy of which is
attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal (which, together with the Offer to Purchase,
constitute the "Offer"), a copy of which is attached hereto as
Exhibit (a)(2).
Item 1. Security and Subject Company.
(a) The name of the subject company is NuVision, Inc. The
information set forth in Section 8 ("Certain Information
Concerning the Company") of the Offer to Purchase is incorporated
herein by reference.
(b) The exact title of the class of equity securities being
sought in the Offer is common stock, par value $.50 per share.
The information set forth in the Introduction (the
"Introduction") to the Offer to Purchase is incorporated herein
by reference.
(c) The information set forth in Section 6 ("Price Range of
the Shares; Dividends on the Shares") of the Offer to Purchase is
incorporated herein by reference.
Item 2. Identity and Background.
(a) - (d) and (g) This Statement is filed by the Purchaser
and Parent. The information set forth in Section 9 ("Certain
Information Concerning the Purchaser and Parent") of the Offer to
Purchase and in Schedule I thereto is incorporated herein by
reference.
(e) and (f) During the last five years, neither the
Purchaser nor Parent nor, to the best knowledge of the Purchaser
and Parent, any of the persons listed in Schedule I to the Offer
to Purchase (1) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii)
was a party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such
laws.
- 2 -
<PAGE>
Item 3. Past Contacts, Transactions or Negotiations With the
Subject Company.
(a) The information set forth in Section 9 ("Certain
Information Concerning the Purchaser and Parent") of the Offer to
Purchase is incorporated herein by reference. Except as set
forth in Section 9 of the Offer to Purchase, since January 1,
1991, there have been no transactions which would be required to
be disclosed under this Item 3(a) between either the Purchaser or
Parent or, to the best knowledge of the Purchaser and Parent, any
of the persons listed in Schedule I to the Offer to Purchase and
the Company or any of its executive officers, directors or
affiliates.
(b) The information set forth in Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11
("Contacts with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; The Merger Agreement; The
Shareholder Agreement; The Consulting Agreement; Other Matters")
of the Offer to Purchase is incorporated herein by reference.
Except as set forth in Section 9, Section 11 and Section 12 of
the Offer to Purchase, since January 1, 1991, there have been no
contacts, negotiations or transactions which would be required to
be disclosed under this Item 3(b) between either the Purchaser or
Parent or any of their respective subsidiaries or, to the best
knowledge of the Purchaser and Parent, any of the persons listed
in Schedule I to the Offer to Purchase, and the Company or its
affiliates concerning a merger, consolidation or acquisition, a
tender offer or other acquisition of securities, an election of
directors or a sale or other transfer of a material amount of
assets.
Item 4. Source and Amount of Funds or Other Consideration.
(a) and (b) The information set forth in Section 10
("Source and Amount of Funds") of the Offer to Purchase is
incorporated herein by reference.
(c) Not applicable.
Item 5. Purpose of the Tender Offer and Plans or Proposals of
the Bidder.
(a) - (g) The information set forth in the Introduction,
Section 11 ("Contacts with the Company; Background of the
Offer"), Section 12 ("Purpose of the Offer; The Merger Agreement;
The Shareholder Agreement; The Consulting Agreement; Other
Matters"); Section 13 ("Dividends and Distributions") and Section
7 ("Effect of the Offer on the Market for the Shares, Stock
Quotation and Exchange Act Registration") of the Offer to
Purchase is incorporated herein by reference.
- 3 -
<PAGE>
Item 6. Interest in Securities of the Subject Company.
(a) The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Purchaser and
Parent") of and Schedule I to the Offer to Purchase is
incorporated herein by reference. Except as set forth in the
Introduction and Section 9 of and Schedule I to the Offer to
Purchase, neither the Purchaser nor Parent nor, to the best
knowledge of the Purchaser and Parent, any of the persons listed
in Schedule I to the Offer to Purchase or any associate or
majority-owned subsidiary of the Purchaser or Parent or any of
the persons so listed beneficially owns or has any right to
acquire, directly or indirectly, any Shares.
(b) The information set forth in the Introduction and
Section 9 ("Certain Information Concerning the Purchaser and
Parent") of and Schedule I to the Offer to Purchase is
incorporated herein by reference. Except as set forth in the
Introduction and Section 9 of and Schedule I to the Offer to
Purchase, neither the Purchaser nor Parent nor, to the best
knowledge of the Purchaser and Parent, any of the persons or
entities referred to above or any executive officer, director or
subsidiary of the foregoing has effected any transactions in the
Shares during the past 60 days.
Item 7. Contracts, Arrangements, Understandings or
Relationships With Respect to the Subject Company's
Securities.
The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and Parent"),
Section 10 ("Source and Amount of Funds"), Section 11 ("Contacts
with the Company; Background of the Offer"), Section 12 ("Purpose
of the Offer; The Merger Agreement; The Shareholder Agreement;
The Consulting Agreement; Other Matters") and Section 16 ("Fees
and Expenses") of the Offer to Purchase in incorporated herein by
reference. Except as set forth in the Introduction and Sections
9, 10, 11, 12 and 16 of the Offer to Purchase, neither the
Purchaser nor Parent nor, to the best knowledge of the Purchaser
and Parent, any of the persons listed in Schedule I to the Offer
to Purchase has any contract, arrangement, understanding or
relationship with any other person with respect to any securities
of the Company (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures,
loans or option arrangements, puts or calls, guarantees of loans,
guarantee agreements or any giving or withholding of proxies).
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth in the Introduction, Section 10
("Source and Amount of Funds") and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by
reference.
- 4 -
<PAGE>
Item 9. Financial Statements of Certain Bidders.
Although the Purchaser and Parent do not believe that their
financial condition or the financial condition of their
affiliates is material to a decision by a security holder of the
Company whether to sell, tender or hold Shares, selected
consolidated financial information with respect to Parent is
included in Section 9 ("Certain Information Concerning the
Purchaser and Parent") of the Offer to Purchase and such
information is incorporated herein by reference.
Item 10. Additional Information.
(a) The information set forth in Section 12 ("Purpose of
the Offer; The Merger Agreement; The Shareholder Agreement; The
Consulting Agreement; Other Matters") of the Offer to Purchase is
incorporated herein by reference.
(b) and (c) The information set forth in Section 15
("Certain Legal Matters") of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
(e) None.
(f) The information set forth in the Offer to Purchase, the
Letter of Transmittal, the Agreement and Plan of Merger dated as
of April 27, 1995 by and among the Purchaser, Parent and the
Company, and the Shareholder Agreement dated as of April 27, 1995
among the Purchaser, Parent and the Shareholders, copies of which
are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and
(c)(2), respectively, is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase dated May 4, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies
and Other Nominees from the Information Agent.
(a)(5) Letter to clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published on May 4, 1995.
- 5 -
<PAGE>
(a)(8) Press Release issued by the Company on April 28,
1995.
(b)(1) Greyrock Capital Group Inc. Commitment Letter
dated March 29, 1995 (as amended and restated on
May 3, 1995).
(b)(2) Heller Equity Capital Corporation Letter of Intent
dated as of May 3, 1995.
(c)(1) Agreement and Plan of Merger dated as of April 27,
1995 by and among the Purchaser, Parent and the
Company.
(c)(2) Shareholder Agreement dated as of April 27, 1995
by and among the Purchaser, Parent and Eli and
Esther Shapiro.
(c)(3) Confidentiality Agreement dated March 11, 1993
between Parent and the Company.
(c)(4) Consulting Agreement dated as of April 27, 1995
between Parent and Eli Shapiro
(c)(5) Agreement Regarding Split Dollar Life Insurance
Agreement dated as of April 27, 1995 by and among
the Company, Brad Jeffrey Shapiro, Leslie Michelle
Raven and Jan Lori Albert, the Purchaser and
Parent.
(d) None.
(e) Not applicable.
(f) None.
- 6 -
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this
statement is true, complete and correct.
AMERICAN VISION CENTERS, INC.
/S/ Seth R. Poppel
----------------------------
Name: Seth R. Poppel
---------------------
Title: Chairman and President
----------------------
NI ACQUIRING CORP.
/S/ Seth R. Poppel
----------------------------
Name: Seth R. Poppel
---------------------
Title: President
---------------------
Date: May 4, 1995
- 7 -
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description Page No.
- ------- ----------- --------
(a)(1) Offer to Purchase dated May 4, 1995.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies
and Other Nominees from the Information Agent.
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Summary Advertisement as published on May 4, 1995.
(a)(8) Press Release issued by the Company on April 28, 1995.
(b)(1) Greyrock Capital Group Inc. Commitment Letter dated
March 29, 1995 (as amended and restated on May 3, 1995).
(b)(2) Heller Equity Capital Corporation Letter of Intent dated as of
May 3, 1995.
(c)(1) Agreement and Plan of Merger dated as of April 27, 1995 by and among
the Purchaser, Parent and the Company.
(c)(2) Shareholder Agreement dated as of April 27, 1995 by and among the
Purchaser, Parent and Eli and Esther Shapiro.
(c)(3) Confidentiality Agreement dated March 11, 1993 between Parent and
the Company.
(c)(4) Consulting Agreement dated as of April 27, 1995 between Parent and
Eli Shapiro
(c)(5) Agreement Regarding Split Dollar Life Insurance Agreement dated as of
April 27, 1995 by and among the Company, Brad Jeffrey Shapiro, Leslie
Michelle Raven and Jan Lori Albert, the Purchaser and Parent.
- 8 -
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NUVISION, INC.
AT
$7.60 NET PER SHARE
BY
NI ACQUIRING CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN VISION CENTERS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON JUNE 1, 1995, UNLESS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES WHICH WOULD CONSTITUTE, TOGETHER WITH ALL OTHER SHARES OWNED BY NI
ACQUIRING CORP., AMERICAN VISION CENTERS, INC. OR ANY AFFILIATE THEREOF, MORE
THAN 90% OF THE SHARES ON A FULLY DILUTED BASIS AND (II) PARENT AND PURCHASER
HAVING ENTERED INTO DEFINITIVE FINANCING AGREEMENTS TO PROVIDE DEBT AND EQUITY
FINANCING TO CONSUMMATE THE OFFER AND THE MERGER (AS DEFINED BELOW) AND ALL
CONDITIONS TO FUNDING UNDER THESE AGREEMENTS HAVING BEEN SATISFIED OR WAIVED.
-------------------
THE BOARD OF DIRECTORS OF NUVISION, INC. HAS, BY UNANIMOUS VOTE, APPROVED
THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT EACH OF THE
OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES.
-------------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares should either (1) complete and sign a Letter of Transmittal or a
facsimile copy thereof in accordance with the instructions in the Letter of
Transmittal, have such shareholder's signature thereon guaranteed if required by
Instruction 1 to the Letter of Transmittal, mail or deliver such Letter of
Transmittal or facsimile and any other required documents to the Depositary and
either deliver the certificates for such shares to the Depositary along with the
Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (2) request such
shareholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such shareholder. A shareholder having shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such shareholder desires
to tender such shares.
A shareholder who desires to tender shares and whose certificates for such
shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such shares by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its address and telephone number set
forth on the back cover of this Offer to Purchase.
-------------------
May 4, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
Introduction........................................................................... 1
1. Terms of the Offer............................................................... 2
2. Procedure for Tendering Shares................................................... 4
3. Withdrawal Rights................................................................ 7
4. Acceptance for Payment and Payment............................................... 8
5. Certain Federal Income Tax Consequences.......................................... 9
6. Price Range of the Shares; Dividends on the Shares............................... 10
7. Effect of the Offer on the Market for the Shares, Stock Quotation
and Exchange Act Registration.................................................. 10
8. Certain Information Concerning the Company....................................... 12
9. Certain Information Concerning the Purchaser and Parent.......................... 13
10. Source and Amount of Funds....................................................... 15
11. Contacts with the Company; Background of the Offer............................... 21
12. Purpose of the Offer; The Merger Agreement; The Shareholder Agreement; The
Consulting Agreement; Other Matters.............................................. 22
13. Dividends and Distributions...................................................... 38
14. Certain Conditions of the Offer.................................................. 39
15. Certain Legal Matters............................................................ 41
16. Fees and Expenses................................................................ 43
17. Miscellaneous.................................................................... 43
Schedule I--Directors and Executive Officers........................................... S-1
</TABLE>
<PAGE>
To the Holders of Common Stock
of NUVISION, INC.:
INTRODUCTION
NI Acquiring Corp., a Michigan corporation (the "Purchaser") and a wholly
owned subsidiary of American Vision Centers, Inc., a New York corporation
("Parent"), hereby offers to purchase all outstanding shares of common stock,
par value $.50 per share (the "Shares"), of NuVision, Inc., a Michigan
corporation (the "Company"), at $7.60 per Share (the "Offer Price"), net to the
seller in cash, upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements hereto or thereto, collectively constitute the
"Offer"). Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of State Street Bank & Trust Company,
which is acting as the Depositary (the "Depositary"), and MacKenzie Partners,
Inc., which is acting as Information Agent (the "Information Agent"), incurred
in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS, BY UNANIMOUS VOTE, APPROVED THE
OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT EACH OF THE OFFER
AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMENDS THAT THE SHAREHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
Legg Mason Wood Walker, Incorporated, the Company's financial advisor, has
delivered to the Board of Directors of the Company its written opinion to the
effect that the consideration to be received by the public shareholders of the
Company in the Offer and the Merger is fair to such shareholders from a
financial point of view as of the date of delivery of that opinion. That opinion
is set forth in full as an exhibit to the Company's Solicitation/Recommendation
Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to the
shareholders of the Company herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED TO THE PURCHASER AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER
THAT NUMBER OF SHARES (THE "MINIMUM NUMBER OF SHARES") WHICH WOULD CONSTITUTE,
TOGETHER WITH ALL OTHER SHARES OWNED BY THE PURCHASER, PARENT OR ANY AFFILIATE
THEREOF, MORE THAN 90% OF THE SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION") AND (II) PARENT AND THE PURCHASER HAVING ENTERED INTO DEFINITIVE
FINANCING AGREEMENTS TO PROVIDE DEBT AND EQUITY FINANCING SUFFICIENT TO
CONSUMMATE THE OFFER AND THE MERGER (AS DEFINED BELOW) AND ALL CONDITIONS TO
FUNDING UNDER THESE AGREEMENTS HAVING BEEN SATISFIED OR WAIVED (THE "FINANCING
CONDITION"). PARENT AND THE PURCHASER HAVE RESERVED THE RIGHT (SUBJECT TO THE
APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION")), TO WAIVE OR REDUCE THE MINIMUM CONDITION AND TO ELECT TO
PURCHASE, PURSUANT TO THE OFFER, LESS THAN THE MINIMUM NUMBER OF SHARES. SEE
SECTIONS 1, 10 AND 14.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of April 27, 1995 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following consummation of the Offer or the
expiration or termination of the Offer under certain circumstances and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"), with the Company surviving the Merger as a
wholly owned subsidiary of Parent. In the Merger, each outstanding Share (other
than Shares owned by Parent, the Purchaser or any other subsidiary of Parent and
Shares held by the Company or any of its subsidiaries), will be converted into
the right to receive $7.60 in cash or any higher price that may be paid per
Share in the Offer (the "Merger Price") without interest. See Section 12.
<PAGE>
The Merger is subject to a number of conditions, including approval and
adoption of the Merger Agreement and the Merger by the shareholders of the
Company, if such approval and adoption is required by applicable law. In the
event that the Minimum Condition is satisfied, i.e., if the Purchaser acquires
more than 90% of the outstanding Shares pursuant to the Offer or otherwise, the
Purchaser will, upon the terms and subject to the conditions of the Merger
Agreement, take all necessary and appropriate actions to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of the shareholders of the Company in accordance with the short-form
merger provisions of the Michigan Business Corporation Act (the "BCA"). If the
Purchaser acquires, through the Offer or otherwise, voting power with respect to
at least a majority of the outstanding Shares (which could be the case if the
Minimum Condition were not satisfied and the Purchaser were to waive the Minimum
Condition and accept for payment sufficient Shares tendered pursuant to the
Offer), it would have sufficient voting power to effect the Merger without the
vote of any other shareholder of the Company. See Section 12.
The Purchaser and Parent have also entered into a separate shareholder
agreement (the "Shareholder Agreement") with Eli Shapiro ("Shapiro") and Esther
Shapiro, the Company's largest shareholders (together, the "Shareholders"),
pursuant to which the Shareholders have agreed to tender all Shares held by them
pursuant to the Offer, and, if necessary, to vote for the Merger. The
Shareholders presently hold 1,137,785 Shares, or approximately 42.2% of the
outstanding Shares (approximately 39.8% of the Shares on a fully diluted basis).
Shapiro, who is a director and Chief Executive Officer of the Company, will be
retained by Parent following the Merger as a consultant pursuant to a Consulting
Agreement among Shapiro, Parent and the Purchaser dated as of April 27, 1995
(the "Consulting Agreement"). In addition, the children of the Shareholders,
Parent and the Purchaser have entered into a certain Agreement Regarding Split
Dollar Life Insurance Agreement dated April 27, 1995 (the "Split Dollar
Termination Agreement"), pursuant to which a split dollar life insurance
agreement among the children of the Shareholders and the Company will be
terminated. See Section 12.
The Company has informed the Purchaser that, as of April 1, 1995, there were
2,696,426 Shares issued and outstanding and 162,950 Shares reserved for issuance
upon the exercise of outstanding employee stock options. Based upon the
foregoing, the Purchaser believes that approximately 2,573,439 Shares
constitutes 90% of the Shares on a fully diluted basis. Accordingly, the Minimum
Condition will be satisfied if at least 2,573,440 Shares (including the
1,137,785 Shares subject to the Shareholder Agreement) are validly tendered and
not withdrawn prior to the Expiration Date (as defined in Section 1). If the
Minimum Condition is satisfied and the Purchaser accepts for payment Shares
tendered pursuant to the Offer, the Purchaser will be able to effect the Merger
without submitting the Merger to the other shareholders of the Company for
approval.
The Merger Agreement, the Shareholder Agreement, the Consulting Agreement
and the Split Dollar Termination Agreement are more fully described in Section
12. Certain federal income tax consequences of the sale of Shares pursuant to
the Offer and the exchange of Shares for the Merger Price pursuant to the Merger
are described in Section 5.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on June 1,
1995, unless and until the Purchaser, in its sole discretion, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire.
2
<PAGE>
Subject to the terms of the Merger Agreement and the applicable rules and
regulations of the Commission, the Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 14 hereof shall have
occurred or shall have been determined by the Purchaser to have occurred, to (a)
extend the period of time during which the Offer is open, and thereby delay
acceptance for payment of and the payment for any Shares, by giving oral or
written notice of such extension to the Depositary and (b) amend the Offer in
any other respect by giving oral or written notice of such amendment to the
Depositary. THE PURCHASER SHALL NOT HAVE ANY OBLIGATION TO PAY INTEREST ON THE
PURCHASE PRICE FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS
RIGHT TO EXTEND THE OFFER.
If by 12:00 Midnight, New York City time, on June 1, 1995 (or any other date
or time then set as the Expiration Date), any or all conditions to the Offer
have not been satisfied or waived, the Purchaser reserves the right (but shall
not be obligated), subject to the terms and conditions contained in the Merger
Agreement and the applicable rules and regulations of the Commission, to (1)
terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering shareholders, (2) waive all unsatisfied conditions
and, subject to complying with the terms of the Merger Agreement and the
applicable rules and regulations of the Commission, accept for payment and pay
for all Shares validly tendered prior to the Expiration Date and not theretofore
withdrawn, (3) extend the Offer and, subject to the right of shareholders to
withdraw Shares until the Expiration Date, retain the Shares that have been
tendered during the period or periods for which the Offer is extended or (4)
amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, amendment or termination will be followed as
promptly as practicable by public announcement. In the case of an extension,
Rule 14e-1(d) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the announcement be issued no later than 9:00
a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
shareholders in connection with the Offer be promptly disseminated to
shareholders in a manner reasonably designed to inform shareholders of that
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of any Shares) is delayed in its acceptance for
payment of or payment for other Shares or is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
shareholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 under the Exchange
Act, which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of that bidder's offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition), the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of that offer or information concerning that offer, other than a change in price
or a change in the percentage of
3
<PAGE>
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to shareholders and investor response. As used in this Offer to
Purchase, "business day" has the meaning set forth in Rule 14d-1 under the
Exchange Act.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the expiration or termination of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act") and the other conditions set
forth in Section 14, which include the Financing Condition, which will be
satisfied if Parent and Purchaser shall have entered into definitive agreements
with Greyrock Capital Group Inc. ("Greyrock Capital") and Heller Equity Capital
Corporation ("HECC") to provide debt and equity financing, respectively, to
consummate the Offer and the Merger, and all conditions to funding under these
agreements shall have been satisfied or waived. See Section 10. The Purchaser
has reserved the right (but shall not be obligated) to waive any or all such
conditions. However, if the Purchaser waives or amends the Minimum Condition
during the last five business days during which the Offer is scheduled to remain
open, the Purchaser will be required to extend the Expiration Date so that the
Offer will remain open for at least 10 business days after the announcement of
such waiver or amendment is first published, sent or given to holders of Shares.
The Company has provided the Purchaser with the Company's shareholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal and
other relevant materials will be mailed by the Purchaser to record holders of
Shares and will be furnished by the Purchaser to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
VALID TENDER. For a shareholder to validly tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer of
Shares, and any other documents required by the Letter of Transmittal, must be
received by the Depositary at one of its addresses set forth on the back cover
of this Offer to Purchase and either certificates for tendered Shares must be
received by the Depositary at one of those addresses or those Shares must be
delivered pursuant to the procedure for book-entry transfer set forth below (and
a "Book-Entry Confirmation" (as defined below) must be received by the
Depositary), in each case prior to the Expiration Date, or (2) the tendering
shareholder must comply with the guaranteed delivery procedure set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined below) in connection with a book-entry transfer of Shares, and any
other documents required by the Letter of Transmittal, must, in any case, be
transmitted to, and received by, the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the
4
<PAGE>
tendering shareholder must comply with the guaranteed delivery procedure set
forth below. The confirmation of a book-entry transfer of Shares into the
Depositary's account at the Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message, transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce the Letter of Transmittal against such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
the Book-Entry Transfer Facility's system whose name appears on a security
position listing as the owner of the Shares) tendered therewith and that
registered holder has not completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (2) those Shares are tendered for the account of a firm that
is a member of the Medallion Signature Guarantee Program or any other "eligible
guarantor institution", as such term is defined in Rule 17Ad-15 under the
Exchange Act (each, an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 in the Letter of Transmittal. If the
certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or certificates
for Shares not tendered or not accepted for payment are to be issued to a person
other than the registered holder of the certificates surrendered, the tendered
certificates must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name or names of the registered holders or
owners appear on the certificates, with the signatures on the certificates or
stock powers guaranteed as aforesaid. See Instruction 5 in the Letter of
Transmittal.
GUARANTEED DELIVERY. If a shareholder desires to tender Shares pursuant to
the Offer and that shareholder's certificates for those Shares are not
immediately available or the procedure for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, that shareholder's tender may
be effected if all the following conditions are met:
(1) that tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser is received by the
Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to those Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal, are received by the Depositary within
five trading days
5
<PAGE>
after the date of execution of that Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange, Inc. (the
"NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the Depositary
or transmitted by facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in that
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and (3) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING PAYMENT FOR SUCH SHARES.
The valid tender of Shares pursuant to one of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
APPOINTMENT. By executing a Letter of Transmittal as set forth above, the
tendering shareholder will irrevocably appoint designees of the Purchaser as
such shareholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such shareholder's rights with respect to the Shares tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of those Shares on or after April 27, 1995. All such proxies shall be considered
coupled with an interest in the tendered Shares. That appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such shareholder as provided herein. Upon that appointment,
all prior powers of attorney and proxies given by that shareholder with respect
to those Shares or other securities or rights will, without further action, be
revoked and no subsequent powers of attorney and proxies may be given (and, if
given, will not be deemed effective). The designees of the Purchaser will
thereby be empowered to exercise all voting and other rights with respect to
those Shares or other securities or rights in respect of any annual, special or
adjourned meeting of the Company's shareholders, or otherwise, as they in their
sole discretion deem proper. The Purchaser reserves the right to require that,
in order for Shares to be deemed validly tendered, immediately upon the
Purchaser's acceptance for payment of those Shares, the Purchaser must be able
to exercise full voting and other rights with respect to those Shares and other
securities or rights, including voting at any meeting of shareholders then
scheduled.
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
6
<PAGE>
The Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the instructions thereto) will be final
and binding.
BACKUP WITHHOLDING. In order to avoid "backup withholding" of federal income
tax on payments of cash pursuant to the Offer, a shareholder tendering Shares in
the Offer must provide the Depositary with that shareholder's correct taxpayer
identification number ("TIN") on a Substitute Form W-9 and certify under
penalties of perjury that the TIN is correct and that the shareholder is not
subject to backup withholding. Certain shareholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. If a shareholder does not provide its correct TIN or
fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on that shareholder and payment of cash to
that shareholder pursuant to the Offer may be subject to backup withholding of
31%. All shareholders surrendering Shares pursuant to the Offer should complete
and sign the main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification necessary
to avoid backup withholding (unless an applicable exemption exists and is proved
in a manner satisfactory to the Purchaser and the Depositary). Noncorporate
foreign shareholders should complete and sign the main signature form and a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 to the
Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after July 2, 1995.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of those
certificates, the serial numbers shown on those certificates must be submitted
to the Depositary and, unless those Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures set forth in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
7
<PAGE>
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. Any determination
concerning the satisfaction of those terms and conditions will be within the
sole discretion of the Purchaser, whose determination will be final and binding
on all tendering shareholders. See Sections 1 and 14. The Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of
or payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
the Purchaser's obligation to pay for or return tendered Shares promptly after
the termination or withdrawal of the Offer).
HECC has advised Parent and the Purchaser that HECC and its ultimate parent,
as the prospective ultimate parent entity of Parent, plan to file a Notification
and Report Form with respect to the Offer under the HSR Act during the week of
May 8, 1995. See Sections 9, 10 and 12. The waiting period under the HSR Act
with respect to the Offer will expire at 11:59 p.m., New York City time, on the
fifteenth calendar day following such filing, unless early termination of the
waiting period is granted. In addition, the Antitrust Division of the Department
of Justice (the "Antitrust Division") or the Federal Trade Commission (the
"FTC") may extend the waiting period by requesting additional information or
documentary material. If such a request is made, that waiting period will expire
at 11:59 p.m., New York City time, on the 10th day after substantial compliance
with that request. See Section 15 hereof for additional information concerning
the HSR Act and the applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
those Shares (or timely Book-Entry Confirmation of a transfer of those Shares as
set forth in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and (3) any
other documents required by the Letter of Transmittal. The per Share
consideration paid to any shareholder pursuant to the Offer will be the highest
per Share consideration paid to any other shareholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of those Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE FOR THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and those Shares may not be withdrawn except to the extent
tendering shareholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
8
<PAGE>
If any tendered Shares are not purchased pursuant to the Offer because of an
invalid tender or otherwise, certificates for any such Shares will be returned,
without expense to the tendering shareholder (or, in the case of Shares
delivered by book-entry transfer of those Shares into the Depositary's account
at the Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, those Shares will be credited to an account maintained at the
Book-Entry Transfer Facility), as promptly as practicable after the expiration
or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, and any such transfer or assignment will relieve the Purchaser of its
obligations under the Offer but will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by shareholders of the Company pursuant to the Merger) will be
taxable transactions for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For federal income
tax purposes, a tendering shareholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the shareholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the shareholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer. If tendered Shares are held by a tendering shareholder as capital
assets, gain or loss recognized by the tendering shareholder will be capital
gain or loss, which will be long-term capital gain or loss if the tendering
shareholder's holding period for those Shares exceeds one year.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless that shareholder provides its
TIN and certifies that that number is correct or properly certifies that it is
awaiting a TIN. A shareholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each shareholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to that shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the shareholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. HOLDERS OF SHARES ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
9
<PAGE>
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded in the over-the-counter market and prices are quoted
on The Nasdaq National Market under the symbol "NUVI". The following table sets
forth, for each of the periods indicated, the high and low reported closing
sales prices per Share as reported by the Nasdaq National Market Retrieval
Service.
<TABLE>
<CAPTION>
SALES PRICE
---------------
<S> <C> <C>
HIGH LOW
------------ ------------
Fiscal Year Ended December 31, 1992
First Quarter.............................................................. $ 3 1/8 $ 2 1/4
Second Quarter............................................................. 5 2 1/2
Third Quarter.............................................................. 4 1/2 3
Fourth Quarter............................................................. 4 2 3/4
Fiscal Year Ended December 31, 1993
First Quarter.............................................................. $ 3 1/2 $ 2 5/8
Second Quarter............................................................. 4 2 5/8
Third Quarter.............................................................. 3 3/8 2 3/8
Fourth Quarter............................................................. 4 1/4 2 3/4
Fiscal Year Ended December 31, 1994
First Quarter.............................................................. $ 4 3/8 $ 3 1/2
Second Quarter............................................................. 4 1/4 3 5/8
Third Quarter.............................................................. 4 3 5/8
Fourth Quarter............................................................. 4 3 5/8
Fiscal Year Ending December 31, 1995
First Quarter.............................................................. $ 5 7/8 $ 3 5/8
Second Quarter (through May 3, 1995)....................................... $ 7 3/8 $ 4 1/2
</TABLE>
On April 27, 1995, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported closing sale
price of the Shares on the Nasdaq National Market was $5 3/4 per Share. On May
3, 1995, the last full day of trading before the commencement of the Offer, the
reported closing sale price of the Shares on the Nasdaq National Market was $7
23/64 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR
THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 (the "1994 Form 10-K"), it has been the intention of the
Company's Board of Directors not to pay dividends but, rather, to use the
Company's cash resources for the expansion and development of operations, and,
although the Company had paid cash dividends at various times prior to becoming
a public company and declared a three-for-two stock split in 1985 in the form of
a dividend, future dividend policy would depend upon the earnings and financial
condition of the Company and the Company's need for funds and other factors.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK QUOTATION
AND EXCHANGE ACT REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market (the top tier market of the Nasdaq Stock Market), which require
that an issuer have at least 200,000 publicly held shares held by at least
10
<PAGE>
400 shareholders or 300 shareholders of round lots, with a market value of
$1,000,000, and have net tangible assets of at least either $2,000,000 or
$4,000,000, depending on profitability levels during the issuer's four most
recent fiscal years. If those standards are not met, the Shares might
nevertheless continue to be included in the Nasdaq Stock Market with quotations
published in the Nasdaq "additional list" or in one of the "local lists", but if
the number of holders of the Shares were to fall below 300, or if the number of
publicly held Shares were to fall below 100,000 or there were not at least two
registered and active market makers for the Shares, the NASD's rules provide
that the Shares would no longer be "qualified" for Nasdaq reporting and Nasdaq
would cease to provide any quotations. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for this purpose. According to the Company, as
of April 1, 1995, there were approximately 205 holders of record of Shares and
2,696,426 Shares were outstanding. If, as a result of the purchase of Shares
pursuant to the Offer, the Shares no longer meet the requirements of the NASD
for continued inclusion in the Nasdaq Stock Market or the Nasdaq National Market
and the Shares are no longer included in the Nasdaq Stock Market or the Nasdaq
National Market, as the case may be, the market for Shares could be adversely
affected.
In the event that the Shares no longer meet the requirements of the NASD for
quotation through Nasdaq and the Shares are no longer included in the Nasdaq
Stock Market, it is possible that the Shares would continue to trade in the
over-the-counter market and that price quotations would be reported by other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend upon the number of holders of Shares
remaining at such time, the interest in maintaining a market in Shares on the
part of securities firms, the possible termination of registration of the Shares
under the Exchange Act, as described below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its shareholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short-swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
shareholders' meetings and the related requirement of furnishing an annual
report to shareholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of these securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, as amended, may be impaired or eliminated. The
Purchaser intends to seek to cause the Company to apply for termination of
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for that termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on the Nasdaq Stock Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for Nasdaq reporting.
11
<PAGE>
8. CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL. The Company is a Michigan corporation with its principal executive
offices at 2284 South Ballenger Highway, Flint, Michigan. According to the 1994
Form 10-K, the Company is a major retailer of prescription and non-prescription
eye care products and related services. The Company operated 78 retail optical
offices and had franchised 47 retail optical offices as of December 31, 1994.
The Company operates a central ophthalmic laboratory and distribution center
which provides laboratory services and eye care products to Company-operated
stores and franchises.
HISTORICAL FINANCIAL INFORMATION. Set forth below is certain selected
consolidated financial information with respect to the Company and its
subsidiaries excerpted or derived from the information contained in the 1994
Form 10-K. More comprehensive financial information is included in the reports
and other documents filed by the Company with the Commission, and the following
summary is qualified in its entirety by reference to those reports and those
other documents and all the financial information (including any related notes)
contained therein. Those reports and other documents should be available for
inspection and copies thereof should be obtainable in the manner set forth below
under "Available Information."
NUVISION, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Systemwide sales.............................................. $59,107 $50,944 $52,338
Total revenues................................................ $47,401 $41,709 $42,536
Income (loss) before provision (credit) for income taxes and
cumulative effect of accounting change........................ $ 488 $(2,497) $ 403
Provision (credit) for income taxes........................... -- $ (274) $ 137
Cumulative effect of change in method of accounting for income
taxes......................................................... -- $ (93) --
Net income (loss)............................................. $ 488 $(2,316) $ 266
Earnings (loss) per share before cumulative effect of
accounting change............................................. $ .18 $ (0.82) $ .10
Loss per share from cumulative effect of accounting change.... -- $ (0.04) --
Earnings (loss) per share..................................... $ .18 $ (0.86) $ .10
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993
------- -------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................................... $ 4,552 $ 3,709
Current assets.......................................................... $10,085 $ 8,891
Total assets............................................................ $19,976 $19,883
Current liabilities..................................................... $ 5,533 $ 5,182
Long-term debt (non-current)............................................ $ 118 $ 876
Total Debt (including current portions)................................. $ 1,077 $ 2,551
Shareholders' equity.................................................... $14,077 $13,589
</TABLE>
CERTAIN COMPANY PROJECTIONS. During the course of Parent's due diligence
investigation of the Company that led to the execution of the Merger Agreement,
the Company provided Parent with certain non-public business and financial
information about the Company. This information included financial projections
prepared by the Company which included projected total revenues, operating
income, net income and earnings per Share for the Company for the year ending
December 31, 1995, of approximately $52 million, $1.2 million, $768,000 and
$0.28 per Share, respectively.
12
<PAGE>
The Company does not as a matter of course make public any projections as to
future performance or earnings, and the projections summarized above are
included in this Offer to Purchase only because the information was provided to
Parent. The projections summarized above were not prepared with a view to public
disclosure or compliance with the published guidelines of the Commission or the
guidelines established by the American Institute of Certified Public Accountants
regarding projections or forecasts. The Company's projections are, in general,
prepared solely for internal use and capital budgeting and other management
decisions and are subjective in many respects and thus susceptible to various
interpretations and periodic revision based on actual experience and business
developments. The projections summarized above were based on a number of
assumptions (not all of which were stated in the projections summarized above
and not all of which were provided to Parent) that are beyond the control of the
Company, the Purchaser or Parent. Many of the assumptions upon which the
projections summarized above were based are dependent upon economic forecasting
(both general and specific to the Company's business), which is inherently
uncertain and subjective, and certain of such assumptions have not been realized
in the period since the date that those projections were prepared. None of the
Company, the Purchaser or Parent assumes any responsibility for the accuracy of
any of the projections summarized above. The inclusion of those projections
should not be regarded as an indication that the Company, the Purchaser, Parent
or any other person who received that information considers it an accurate
prediction of future events.
AVAILABLE INFORMATION. The Company is subject to the informational reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information as of particular dates
concerning the Company's directors and officers, their remuneration, Shares sold
to them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's shareholders and
filed with the Commission. Those reports, proxy statements and other information
should be available for inspection at the public reference facilities of the
Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located in the Northwestern Atrium Center,
500 West Madison Street (Suite 1400), Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies should be obtainable,
by mail, upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser, a Michigan corporation and a wholly owned subsidiary of
Parent, was organized to acquire the Company and has not conducted any unrelated
activities since its organization. The principal offices of the Purchaser are
located at 90 John Street, New York, New York. All shares of capital stock of
the Purchaser are owned by Parent.
Parent's principal line of business is the franchising and operation of
retail optical centers. As of May 1, 1995, 52 centers were operated by
franchisees, 14 Parent-owned centers were being operated pursuant to management
agreements including 10 Parent-owned centers in New Jersey that were being
operated by EyesFirst, Inc. A majority of the shares of capital stock of Parent
are
13
<PAGE>
currently owned by AVC Equity, L.P. and AVC Debt, L.P., both Delaware limited
partnerships (the "Partnerships") of which AVC Acquisition Corp., a Delaware
corporation, is the general partner. Mr. Michael J. Rosenthal ("Rosenthal") is a
director and president of AVC Acquisition Corp. and a director of Parent and
owns a majority of the limited partner interests in the Partnerships. Mr.
Jonathan S. Hayes, ("Hayes"), a director and officer of AVC Acquisition Corp.
and a director of Parent, and certain other officers of Parent, including Mr.
Seth R. Poppel ("Poppel"), the Chief Executive Officer and a director of Parent,
also own limited partner interests in the Partnerships. M.J. Rosenthal &
Associates, Inc., a Delaware corporation controlled by Rosenthal, has a
preexisting management agreement with Parent pursuant to which M.J. Rosenthal &
Associates, Inc. receives an annual management fee. If the Purchaser accepts
shares for payment pursuant to the Offer and completes the Merger, HECC will
acquire a 50% equity interest in Parent at that time. See Section 10.
Set forth below is certain selected consolidated financial information with
respect to Parent and its subsidiaries excerpted or derived from the
informational contained in Parent's audited consolidated financial statements
for the year ended December 31, 1994. Parent is a privately-held company and is
not subject to the periodic informational reporting requirements of the Exchange
Act.
AMERICAN VISION CENTERS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Systemwide sales(a)........................................... $23,114 $23,573 $22,645
Total revenues................................................ $ 2,654 $ 2,881 $ 2,714
Net income (loss)............................................. $ (897) $ (405) $ 417
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1993
------- -------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................................... $ 22 $ 370
Current assets.......................................................... $ 1,897 $ 1,649
Total assets............................................................ $ 8,275 $ 5,164
Current liabilities..................................................... $ 1,875 $ 1,279
Long-term debt (non-current)............................................ $11,092 $ 8,000
Total Debt (including current portions)................................. $11,390 $ 8,065
Shareholders' deficit................................................... $(5,617) $(4,720)
</TABLE>
- ------------
(a) Systemwide sales does not include sales of the 18-store EyesFirst chain
acquired in late 1994, which itself had 1994 systemwide sales of
approximately $6.3 million.
As contemplated by the HECC Letter of Intent (as defined in Section 10),
prior to the consummation of the Offer, it is planned that Parent will be
recapitalized. In connection with that recapitalization, approximately $8.5
million of long-term debt of Parent will be converted into equity. If that
conversion had occurred at the beginning of 1994, the net loss of Parent for the
year ended December 31, 1994 would have been approximately $222,000 and the
shareholders' deficit at December 31, 1994 would have been shareholders' equity
of $2,942,000. Also, the HECC Letter of Intent provides for the purchase of $5
million of equity of Parent by HECC.
None of the Purchaser or Parent (collectively, the "Corporate Entities") or,
to the best knowledge of the Corporate Entities, any of the persons listed in
Schedule I, or any associate or majority-owned subsidiary of the Corporate
Entities or any of the persons so listed, beneficially
14
<PAGE>
owns any equity security of the Company, and neither of the Corporate Entities
or, to the best knowledge of the Corporate Entities, any of the other persons
referred to above, or any of the respective directors, executive officers or
subsidiaries of any of the foregoing, has effected any transaction in any equity
security of the Company during the past 60 days.
Except as described in this Offer to Purchase, there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the
Commission and none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I has any contract,
arrangement, understanding or relationship with any person with respect to any
securities of the Company.
Except as described in this Offer to Purchase, during the last five years,
none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I has been convicted in a
criminal proceeding (excluding traffic violations and similar misdemeanors) or
was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of those laws. The name, business address, present principal occupation or
employment, five-year employment history and citizenship of each of the
directors and executive officers of the Purchaser and Parent are set forth in
Schedule I.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $28.5 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution which will be made by Parent to the Purchaser. Parent
plans to obtain funds for such capital contribution pursuant to a revolving
credit facility and two term loans contemplated by a Commitment Letter (the
"Greyrock Commitment Letter") dated as of March 29, 1995 (as amended and
restated on May 3, 1995) from Greyrock Capital. In addition, Parent will obtain
funds to retire certain long-term debt of Parent and the Company and to pay
expenses of the Offer from the sale of equity securities to HECC, as provided in
an amended and restated Letter of Intent (the "HECC Letter of Intent") dated as
of May 3, 1995. Parent and Purchaser have conditioned the Offer on the Parent's
having entered into definitive agreements with Greyrock Capital and HECC (the
"Definitive Financing Agreements") evidencing the foregoing and the Financing
Condition having been satisfied.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE FINANCING CONDITION.
THE OBLIGATIONS OF GREYROCK CAPITAL AND HECC TO FUND UNDER THE GREYROCK
COMMITMENT LETTER AND HECC LETTER OF INTENT DESCRIBED BELOW ARE SUBJECT TO
CERTAIN CONDITIONS WHICH ARE DESCRIBED BELOW. IF ANY SUCH CONDITION IS NOT
SATISFIED OR WAIVED AND, AS A RESULT, THE FINANCING CONTEMPLATED BY THE GREYROCK
COMMITMENT LETTER AND THE HECC LETTER OF INTENT IS NOT FUNDED, THEN THE
FINANCING CONDITION WOULD NOT BE SATISFIED AND PURCHASER WOULD NOT BE OBLIGATED
TO ACCEPT FOR PAYMENT OR TO PAY FOR SHARES PURSUANT TO THE OFFER.
Pursuant to the Greyrock Commitment Letter, Greyrock Capital is to provide
three loans and make credit available to Parent, the Purchaser and the Company
(as a combined or affiliated entity, the "New Entity") in an amount totaling
$21.0 million in the form of a $3.0 million Revolving Credit Facility, a $13.0
million Term Loan A Facility and a $5.0 million Term Loan B Facility
(collectively, the "Greyrock Financing"). Pursuant to the HECC Letter of Intent,
HECC has agreed to purchase 50% of the outstanding shares of common stock of the
New Entity for a cash purchase price, payable on the Closing Date, of $5.0
million and has agreed to participate along with Rosenthal,
15
<PAGE>
Hayes and Poppel in providing additional funding of up to $3.0 million in the
form of senior subordinated debt (collectively, the "HECC Financing", and
together with the Greyrock Financing, the "Financing") on and subject to the
terms described below. See Section 9.
Set forth below is a summary description of the Financing to be incurred in
connection with the Offer and the Merger. Consummation of the Financing is
subject to, among other things, the negotiation and execution of the Definitive
Financing Agreements on terms satisfactory to the parties thereto. There can be
no assurance that the terms set forth below will be contained in such agreements
or that such agreements will not contain additional provisions.
GREYROCK FINANCING
REVOLVING CREDIT FACILITY. The Greyrock Commitment Letter provides that
borrowings may be made by the New Entity from time to time over five years on a
revolving credit basis in an amount up to $3.0 million. Borrowings will not be
subject to a borrowing base. Each such borrowing will be in a minimum amount of
$100,000 not more frequently than two times per week, except that the New Entity
will be permitted to borrow an amount not to exceed $1.7 million at the time of
the closing of the Greyrock Financing (the "Closing Date"), which is to occur
either (i) at the time of the Merger or (ii) not more than five business days
prior to the time of the Merger provided that Greyrock Capital is satisfied that
the Merger will occur within such up to five day period and receives such
guarantees and collateral from the New Entity as it may require. Each borrowing
under the Revolving Credit Facility will bear interest on the aggregate unpaid
principal amount thereof at a floating rate equal to a 30 day commercial paper
rate plus 450 basis points, payable monthly in arrears.
TERM LOAN A. The Greyrock Commitment Letter also provides that the New
Entity may borrow on a term loan basis ("Term Loan A") an amount of $13.0
million. Borrowings under Term Loan A will be scheduled to be repaid quarterly
in arrears in equal installments in accordance with the following annual
schedule: $1.5 million in the first year; $2.0 million in the second year; $2.5
million in the third year; $3.0 million in the fourth year; and $4.0 million in
the fifth year. An amount equal to 75% of the Excess Cash Flow of the New Entity
will be required to be paid annually as additional principal payments on Term
Loan A, applied in inverse order of maturity (the "Cash Sweep"). Excess Cash
Flow will mean the sum of net income, depreciation and amortization, plus
decreases/less increases in working capital, plus increases/less decreases in
deferred tax liabilities and plus principal payments received by the Company,
less the sum of capital expenditures, the increase in the aggregate amount of
franchisee notes and principal payments made by the Company.
Following the second anniversary of the Closing Date, the New Entity may, at
its option, prepay principal at a premium of 3% of the outstanding principal
amount, which premium will decline ratably until the fourth anniversary of the
Closing Date, after which no prepayment premium will apply, provided, however,
that the New Entity will be permitted to prepay principal at any time without
premium (i) in connection with the sale of the New Entity, (ii) from the
proceeds of a public offering, (iii) from the proceeds of the sale of franchisee
receivables or (iv) from the portion of Excess Cash Flow not swept. All
prepayments will be applied in inverse order of maturity, provided that
prepayments under clauses (ii) and (iii) will be applied pro rata and those
under clause (iv) will be applied in forward order of maturity. Any prepayment
in full (other than from operating cash flow) may only be made in connection
with a prepayment in full of the entire Greyrock Financing.
Term Loan A will bear interest on the outstanding principal amount thereof
at a floating rate equal to a 30 day commercial paper rate plus 450 basis
points, payable monthly in arrears.
TERM LOAN B. The Greyrock Commitment Letter provides that the New Entity may
borrow on a term loan basis ("Term Loan B") an amount of $5.0 million.
Borrowings under Term Loan B will be scheduled to be repaid in one installment
on the fifth anniversary of the Closing Date. Pursuant to a Cash Sweep, after
repayment in full of Term Loan A, 75% of Excess Cash Flow will be paid annually
16
<PAGE>
as additional principal payments on Term Loan B. Following the repayment in full
of Term Loan A, the principal of Term Loan B may, at the New Entity's option, be
prepaid, with the same prepayment premiums as Term Loan A together with the
Make-Whole Premium. The Make-Whole Premium amount will equal the sum of the
present value of the aggregate principal amount of Term Loan B being prepaid and
the amount of interest which would have been payable on such amount of Term Loan
B if not prepaid minus the aggregate principal amount of Term Loan B being
prepaid, and in no case shall be less than zero. The present value of the
aggregate principal amount of Term Loan B will be calculated at a discount rate
equal to the sum of the yield on U.S. Treasury instruments with similar
remaining maturities (at the date of prepayment) plus the spread on the Closing
Date between the interest rate of Term Loan B and the interest rate of U.S.
Treasury securities with maturities equal to the original average life of Term
Loan B.
Term Loan B will bear interest on the outstanding principal amount thereof
at a fixed rate equal to the rate then applicable to 5-year U.S. Treasury
securities plus 550 basis points, with a floor of 13%.
SECURITY. The Greyrock Commitment Letter provides that, from and after the
consummation of the Merger, each of the loans made under the Greyrock Commitment
Letter will be secured by a first perfected lien on all of the New Entity's
assets, including cash, cash equivalents, inventory, accounts and notes
receivable, property, plant and equipment, intangibles, contract rights and
other agreements (the "Collateral"), provided that franchisee notes held by the
New Entity and other collateral associated with Parent's 1994 acquisition of the
"EyesFirst" chain of optical stores and held by the sellers in that acquisition
(the "EyesFirst Sellers") will be excluded from the Collateral. If Greyrock
Capital can reach agreement with the EyesFirst Sellers it will have a second
lien on the collateral held by the EyesFirst Sellers. Greyrock Capital and the
EyesFirst Sellers, who hold certain promissory notes issued by Parent, may enter
into an intercreditor agreement containing terms and conditions acceptable to
the EyesFirst Sellers and Greyrock Capital. If the Company is maintained as a
subsidiary of the New Entity, it will guarantee the New Entity's obligations
under the Greyrock Financing and its assets will secure such guarantee. The
Greyrock Commitment Letter provides that if the Closing Date occurs prior to the
time of the Merger, Greyrock Capital's obligation to fund will be conditioned on
receiving such guarantees and collateral from the New Entity as it may require.
FEES. Pursuant to the Greyrock Commitment Letter, the New Entity will be
obligated to pay to Greyrock Capital a 2.0% one-time Commitment Fee, payable on
the Closing Date, for each of the Revolving Credit Facility, Term Loan A and
Term Loan B. The New Entity will also be obligated to pay to Greyrock Capital a
Facility Fee for the Revolving Credit Facility of 50 basis points (.5%) of the
average amount of the undrawn facility, payable quarterly in arrears. The New
Entity will also pay a monitoring fee of $25,000 annually, payable quarterly in
arrears to Greyrock Capital. All of Greyrock Capital's reasonable out-of-pocket
expenses incurred in consummating the Greyrock Financing, the Offer and the
Merger will be paid by the New Entity.
On February 16, 1995, a $50,000 good faith deposit (the "Deposit") was paid
by Parent to Greyrock Capital. The Deposit will be refunded, less any reasonable
out of pocket expenses incurred, only in the event that a transaction is not
consummated. If the Greyrock Financing is consummated, the balance of the
Deposit, after payment of expenses, will be credited against the Commitment Fees
due.
In addition, the Greyrock Commitment Letter provides that in the event that
Parent (or any of its affiliates) acquires the Company within twelve months from
the date of the Greyrock Commitment Letter and Parent (or any of its affiliates)
obtains alternative financing from other source(s), a fee equal to the sum of
the Commitment Fees (the "Break-Up Fee") will be due and payable to Greyrock
Capital by Parent. If Parent receives any broken deal or similar fees pursuant
to the Merger Agreement, Parent is required by the Greyrock Commitment Letter to
pay Greyrock Capital 1/3 of such fees (net of Parent's and HECC's out-of-pocket
expenses).
17
<PAGE>
WARRANTS. The Greyrock Commitment Letter provides that detachable warrants
(the "Warrants") for 10.5% of the common equity of the New Entity on a fully
diluted basis as of the Closing Date will be issued to Greyrock Capital on the
Closing Date. The Warrants will be exercisable for non-voting common stock of
the New Entity which will be convertible into voting stock, subject to
Regulation Y constraints, provided that the Warrants may be for voting common
stock if Regulation Y permits it. The Warrants will have an aggregate exercise
price of $1,173,000 and a 10 year term, will be freely transferable (subject to
applicable securities law and Regulation Y restrictions) and will contain
standard anti-dilution language protecting against stock splits, dividends and
the sale of stock or other equity securities at less than fair market value
(subject to an exception for a limited number of management stock options). The
Warrants will also entitle the holder thereof to exercise, at one time following
an initial public offering of common stock of the New Entity (an "IPO"), the
right to require the New Entity to register the stock receivable upon exercise
of the Warrants, and will also entitle the holder to request that the stock
receivable upon exercise of the Warrants be registered in the event of any
registered public offering of stock of the New Entity. The Warrants will also
entitle the holder thereof to participate in the event a major shareholder of
the New Entity sells its stock to a third party. The terms and structure of the
Warrants may be subject to adjustment in order to preserve certain favorable
corporate tax consequences for the New Entity provided that Greyrock Capital
obtains the economic equivalent of the terms set forth in the Greyrock
Commitment Letter.
The Greyrock Commitment Letter provides that Greyrock Capital will have the
right to cause the New Entity to purchase the Warrants at any time (prior to an
IPO) beginning on the earlier of a refinancing or other repayment of the
Financing or the fifth anniversary of the Closing Date, at the fair market value
of 10.5% of the New Entity's common equity less the Warrant exercise price (the
"Option Price"). The fair market value of the New Entity's common equity will be
determined by appraisal unless a public offering has occurred. Any appraisal
will not give effect to the fact that the Warrants represent a minority position
and do not have voting rights. The New Entity will use its best efforts to pay
the purchase price of the Warrants in cash and, except in the case of a
refinancing, if it is unable to do so, Greyrock Capital will finance the
purchase price of the Warrants with a three year note.
The Greyrock Commitment Letter further provides that the New Entity will
have the option (prior to an IPO) to purchase the Warrants at the Option Price
at any time beginning on the sixth anniversary of the Closing Date (the "Warrant
Call Option"). In the event that the New Entity exercises its Warrant Call
Option and then within nine months completes an IPO, or more than 25% of its
Common Stock or assets (excluding the sale of notes of franchisees) are sold to
any non-affiliated third party or third parties as part of a single sale or
series of sales (each of such events being referred to as an "Adjustment
Event"), then the New Entity will pay to Greyrock Capital as additional
compensation with respect to the exercise of the Warrant Call Option, the
difference between the price per share paid or to be paid as a result of the
Adjustment Event (less underwriting commissions and other appropriate costs and
expenses) or consideration for the assets (on a per share basis) and the amount
paid to Greyrock Capital upon exercise of the Warrant Call Option.
TERMS AND CONDITIONS. The Greyrock Commitment Letter also provides that the
New Entity will observe certain financial and other covenants including, but not
limited to: (i) debt service and debt coverage ratios, (ii) limitations on
leverage, (iii) capital expenditure limitations (including limitations on the
New Entity's financing of franchisee renovations), (iv) minimum cash flow
levels, (v) financial reporting (including review of operating and capital
expenditure budgets), (vi) restriction on additional indebtedness or liens,
(vii) prohibition of disposition of material assets (other than those
dispositions contemplated by the New Entity's business plan), (viii) limitations
on leasing, (ix) restrictions on dividends and redemption of common stock (with
an exception for redemption of certain stock issued to management), (x)
restriction on related party transactions and (xi) restrictions on mergers and
consolidations.
18
<PAGE>
EVENTS OF DEFAULT/REMEDIES. The Greyrock Commitment Letter provides that the
documents evidencing the Greyrock Financing will contain customary provisions
describing events of default and remedies customary for transactions of this
type. There will be a change in control event of default which shall be
triggered 120 days after Poppel (or any successor) is no longer chief executive
officer of the New Entity unless a successor has been appointed by the Board of
Directors of the New Entity and approved by Greyrock Capital (such approval not
to be unreasonably withheld); a change in Poppel's stock ownership as long as he
is chief executive officer (with appropriate provisions for transfers for estate
planning reasons or to his heirs); a change in control of the Board of Directors
of the New Entity; or a change in the ownership of the New Entity by Rosenthal
and entities affiliated with him and HECC (provided that a shift in control or
ownership between Mr. Rosenthal and HECC and a sale to a third party of up to
10% in the aggregate shall not be an event of default).
MISCELLANEOUS. The Greyrock Financing is expressly conditioned on
consummation of the HECC Financing (see "HECC Financing"). The Greyrock
Financing is further conditioned on the agreement of Heller Financial, Inc.
("HFI") an affiliate of HECC, and Rosenthal to provide a total of $2.0 million
of additional capital support. The Greyrock Commitment Letter provides that this
amount may be split between the two parties at closing in such proportion as
they may agree, and their obligations will be on a several basis. The capital
support would be in the form of an agreement of HFI and Rosenthal with Greyrock
Capital to deleverage the New Entity by purchasing up to $2.0 million of
Greyrock's Term Loan A if the New Entity fails to reach certain targets with
respect to its earnings before interest, taxes, depreciation and amortization
and other non-cash items ("EBITDA") (each such failure to meet an EBITDA target
being referred to as a "Triggering Event"). If the New Entity's EBITDA were less
than $3.0 million for the first transaction year, then $1.0 million would be
funded. If the New Entity's EBITDA were less than $5.0 million for the second
transaction year, then an additional $1.0 million would be funded. If the New
Entity's EBITDA were $3.0 million or greater for the first year, and less than
$5.0 million for the second year, then $2.0 million would be funded. Amounts
funded as a result of an EBITDA shortfall during the New Entity's first
transaction year could be repaid to HFI and Rosenthal by Parent out of available
cash provided the New Entity's preceding two transaction years' EBITDA were at
least $6.0 million per annum and no default existed. On the Closing Date, HFI
and Rosenthal will enter into an intercreditor agreement with Greyrock Capital
acceptable to it in its sole discretion (including provisions for payment of
interest to HFI and Rosenthal solely in kind).
As a condition to the Greyrock Financing, Parent is required to arrange for
an environmental consulting firm to conduct an environmental and occupational
safety and health review (the "Environmental Review") of the Parent's and the
Company's properties and business practices. The scope of the Environmental
Review, the report prepared by the consulting firm (the "Environmental Report")
and the consulting firm must be satisfactory to Greyrock Capital. Greyrock
Capital reserves the right to have the Environmental Report reviewed by its
environmental consultants. Environmental representations, warranties, covenants,
notices of default and indemnities related to compliance with environmental laws
and regulations, and the maintenance of the New Entity's properties free of
hazardous material and/or waste, as are deemed appropriate by Greyrock Capital
and its counsel in their sole discretion, will be required.
The Greyrock Commitment letter provides that no closing fees will be payable
to Rosenthal, HECC, their affiliates and other equity investors and that annual
management fees charged to the New Entity may not exceed $100,000 and will be
subordinated to the Greyrock Financing. Greyrock Capital has reserved the right
to require key-man life insurance on certain members of senior management of the
New Entity in amounts acceptable to Greyrock Capital.
Greyrock Capital may require that the Company obtain an interest rate cap
agreement with respect to its floating rate obligations under the Financing.
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The Greyrock Commitment Letter provides that Parent will agree to indemnify
and hold Greyrock Capital harmless from any claim for any commission, fee or
compensation from any broker resulting from the Greyrock Financing. Greyrock
Capital represents in the Greyrock Commitment Letter that it has not retained
any broker or third party in connection with the proposed transaction and that
no broker or any other third party has any authority to act for or bind Greyrock
Capital.
The Greyrock Commitment Letter provides that it is subject to the
satisfaction, in Greyrock Capital's discretion, of the following conditions:
(i) satisfactory review of documents concerning equity financing and
capital structure (including charter, shareholder and other documents) with
terms and conditions acceptable to Greyrock Capital;
(ii) satisfactory review of the scope of the Environmental Review and
results of the Environmental Report;
(iii) closing on or prior to September 23, 1995; and
(iv) absence of material adverse change in the financial condition,
operations or business prospects of Parent and the Company.
HECC FINANCING
Pursuant to the HECC Letter of Intent, HECC has proposed to purchase shares
of common stock of the New Entity for a cash purchase price of $5.0 million. The
number of shares received by HECC would equal 50% of the outstanding shares of
common stock of the New Entity; the remaining 50% of the outstanding shares of
common stock would be owned by the current beneficial holders of shares. In
addition, HECC in conjunction with Rosenthal, Hayes and Poppel would provide
additional funding of up to $1 million in the form of senior subordinated debt,
and HFI and Rosenthal would provide additional capital support of up to $2
million as contemplated by the Greyrock Commitment Letter. Of the additional
$1 million investment, HECC would provide two-thirds and Rosenthal, Hayes and
Poppel would provide the remainder. Pursuant to the HECC Letter of Intent,
HECC's provision of the foregoing financing will be subject to, among other
things, the consummation of the Offer or the Merger.
The HECC Letter of Intent provides that, effective upon the Closing Date,
HECC, Rosenthal, Hayes, Poppel and Robert Sheft (a former officer of M.J.
Rosenthal & Associates, Inc. and an owner of limited partner interests in the
Partnerships) and other senior managers of the New Entity would enter into a
customary shareholders agreement providing, among other things, for the election
of the directors of the New Entity, registration rights (demand and piggyback),
and the transfer of shares.
The HECC Letter of Intent provides that on the Closing Date, the New Entity
would reimburse HECC for reasonable out-of-pocket expenses associated with the
Offer, the Merger and the HECC Financing. In the event that the Offer and the
Merger are not consummated, all parties would be responsible for their
respective out-of-pocket expenses except that expenses relating to certain
advisors and termination fees would be the responsibility one-half of Parent and
one-half of HECC. Similarly, expenses relating to advisors of any potential
lenders or fees to be charged by such lenders would be the responsibility of
one-half of Parent and one-half of HECC.
THE FOREGOING DESCRIPTION OF THE TERMS AND PROVISIONS OF THE GREYROCK
COMMITMENT LETTER AND HECC LETTER OF INTENT ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE TO THE FULL TEXTS THEREOF, WHICH ARE FILED AS EXHIBITS TO THE SCHEDULE
14D-1 FILED BY PARENT AND THE PURCHASER WITH THE COMMISSION IN CONNECTION WITH
THE OFFER, AND ARE AVAILABLE FOR INSPECTION AND COPYING AT THE PRINCIPAL OFFICE
OF THE COMMISSION IN THE MANNER DESCRIBED IN SECTION 8.
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11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
In early 1993, Poppel, Chairman of Parent, and Shapiro, Chairman of the
Company, held preliminary discussions about the possibility of a business
combination between Parent and the Company. In March 1993, a confidentiality
agreement was signed by Parent and the Company (the "Confidentiality
Agreement"), pursuant to which, among other things, Parent was to have an
opportunity to conduct a due diligence investigation into the Company's business
and affairs and Parent agreed not to acquire Shares for a three-year period
without the Company's prior consent. (The full text of the Confidentiality
Agreement is filed as an exhibit to the Schedule 14D-1 filed by Parent and the
Purchaser with the Commission in connection with the Offer and is available for
inspection and copying at the principal office of the Commission in the manner
described in Section 8). Through the fall of 1993, Parent conducted a due
diligence investigation of the Company and studied different approaches to
acquiring and operating the Company. Conversations were also held between the
parties about the possible pricing of an acquisition of the Company by Parent.
Parent and the Company agreed to halt those discussions in late fall 1993 when
it became clear that the parties were unable to agree on the principal terms of
a possible transaction.
During the spring of 1994, representatives of Parent and the Company
restarted discussions about ways in which a business combination of the two
entities could be achieved. Based on those discussions, Parent began to contact
possible sources of debt and equity funds to ascertain their interest in
financing a business combination between Parent and the Company.
In the summer of 1994, HECC told Parent that it would be interested in
providing equity financing for such a transaction. Subsequently, representatives
of the Company and HECC met with representatives of Parent to discuss various
alternative means to accomplish a business combination between Parent and the
Company. Although no decisions were reached, the representatives of Parent
indicated that it planned to conduct further study and investigation of the
Company and that Parent had an increased interest in a business combination with
the Company, but stated that Parent was not prepared to make a proposal at that
time.
During the winter of 1994-95, Parent continued to contact possible sources
for the debt portion of the financing for a transaction. In early February,
Greyrock Capital told Parent that it had a strong interest in providing that
debt financing. Parent terminated discussions with other possible financing
sources and reached agreement with Greyrock Capital on the terms of such
financing.
On March 30, 1995, Rosenthal met with Shapiro to obtain Shapiro's views on
several issues that were critical to the formulation of a business combination
proposal that Parent wanted to make to the Company. Based on that meeting,
counsel for Parent circulated drafts of the Merger Agreement and Shareholder
Agreement to the parties and their counsel.
Subsequently, Rosenthal called Jonathan E. Raven, the Company's President
and Chief Operating Officer, to request a meeting of the parties and their legal
counsel to begin negotiating the terms of a business combination between Parent
and the Company. On April 7, 1995, representatives of the Company and Parent and
their respective counsel met. At the conclusion of that meeting, several
essential issues, including price, were unresolved and Parent indicated that it
needed to complete its due diligence review before completely negotiating the
unresolved issues.
During the rest of April 1995, Parent conducted an extensive due diligence
investigation into the business and affairs of the Company. Negotiations on the
unresolved points also continued.
On April 26, 1995, Rosenthal informed Shapiro that Parent was prepared to
make an all cash offer of $7.60 per Share for the Company, if acceptable to the
Company's Board of Directors and subject to the completion of negotiations
concerning the Merger Agreement, the Shareholder Agreement and the Consulting
Agreement. On April 27, 1995, the Company's Board of Directors approved the
transaction and all three of those agreements were executed.
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12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE SHAREHOLDER AGREEMENT;
THE CONSULTING AGREEMENT; OTHER MATTERS
PURPOSE OF THE OFFER
The purpose of the Offer is to acquire control of the Company. Upon
consummation of the Offer, the Purchaser and Parent intend to acquire any
remaining equity interest in the Company not acquired in the Offer by
consummating the Merger.
THE MERGER AGREEMENT
THE OFFER. The Merger Agreement provides that the Offer will be subject only
to the conditions set forth in Section 14 of this Offer to Purchase, any of
which conditions may be waived in the sole discretion of Parent and the
Purchaser, and that, upon the terms and subject to the satisfaction or waiver of
such conditions to the Offer, the Purchaser will accept for payment all Shares
properly tendered pursuant thereto as soon as legally permissible following the
consummation thereof and following such consummation will pay for all such
Shares as promptly as practicable.
THE MERGER. The Merger Agreement provides that, upon the terms and subject
to the conditions set forth therein, at the time at which a certificate of
merger has been duly filed with the Michigan Department of Commerce, Corporation
and Securities Bureau, Corporation Division as provided in the BCA (the
"Effective Time"), the Company and the Purchaser will consummate the Merger, the
separate corporate existence of the Purchaser will thereupon cease, the Company
will be the successor or surviving corporation in the Merger and will continue
to be governed by the laws of the State of Michigan, and the separate corporate
existence of the Company with all its rights, privileges, immunities, powers and
franchises will continue unaffected by the Merger. The corporation surviving the
Merger is sometimes hereinafter referred to as the "Surviving Corporation." The
Merger will have the effects set forth in the BCA and the Merger Agreement.
DIRECTORS AND OFFICERS. The Merger Agreement provides that the directors and
officers of the Purchaser immediately prior to the Effective Time will, from and
after the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors have been duly elected or appointed
and qualified or until their earlier death, resignation or removal in accordance
with the Articles of Incorporation and By-laws of the Surviving Corporation.
EFFECT ON CAPITAL STOCK. The Merger Agreement provides that, at the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares owned by Parent, the Purchaser or any other
subsidiary of Parent and Shares held by the Company or any of its
subsidiaries immediately prior to the Effective Time) will be converted into
the right to receive the Merger Price, in cash, will cease to be
outstanding, will automatically be canceled and retired and will cease to
exist; and each holder of a stock certificate (a "Certificate") formerly
representing any such Shares will cease to have any rights with respect
thereto, except the right to receive, without interest, the aggregate Merger
Price therefor upon the surrender of such Certificate.
(b) Each Share issued and outstanding immediately prior to the Effective
Time and owned by Parent or its affiliates and each Share issued and held by
the Company or any of its subsidiaries immediately prior to the Effective
Time will cease to be outstanding, will automatically be canceled and
retired without payment of any consideration therefor and will cease to
exist.
(c) The shares of common stock of the Purchaser issued and outstanding
immediately prior to the Effective Time will remain outstanding and will be
converted into and thereafter constitute all of the issued and outstanding
shares of the capital stock of the Surviving Corporation.
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INTERIM OPERATIONS OF THE COMPANY. The Merger Agreement provides that from
and after the date of the signing of the Merger Agreement until the Effective
Time, except as and to the extent disclosed to Parent by the Company or as
otherwise expressly required or permitted by the Merger Agreement, or except to
the extent that the Chief Executive Officer of Parent otherwise consents or
approves in writing:
(i) The respective businesses of the Company and its subsidiaries will
be conducted only in the ordinary and usual course of business in
substantially the same manner as conducted prior to April 27, 1995, and the
Company and its subsidiaries will use their reasonable best efforts to
preserve their business organizations intact and to maintain their existing
relations with customers, lessors, suppliers, employees and others having
business dealings with them.
(ii) The Company will not sell, pledge or otherwise dispose of or agree
to sell, pledge or otherwise dispose of any capital stock or debt owned by
it in any of its subsidiaries; amend the Company's Articles of Incorporation
or By-laws; split, combine or reclassify any outstanding capital stock;
declare, set aside or pay any dividend payable in cash, stock or property
with respect to any of its capital stock; or repurchase, redeem or otherwise
acquire, or permit any subsidiary to purchase or otherwise acquire, directly
or indirectly, any shares of its capital stock or any securities convertible
or exchangeable into or exercisable for any shares of its capital stock.
(iii) Neither the Company nor any of its subsidiaries will issue, sell,
pledge, dispose of or encumber, or authorize or propose the issuance, sale,
pledge, disposition or encumbrance of, any shares of, or securities
convertible or exchangeable into or options, warrants, calls, commitments or
rights of any kind to acquire any shares of, its capital stock of any class
or any debt instrument which has, or is convertible into any security that
has, any voting rights, other than Shares issuable pursuant to options
outstanding on April 27, 1995 under the Company's 1984 Stock Option Plan and
1994 Stock Option Plan (the "Company Stock Plans"); transfer, lease,
license, sell, mortgage, pledge or otherwise dispose of or encumber any
property or assets or any interest therein, except in the ordinary and usual
course of business; incur or modify any indebtedness or other liability,
except in the ordinary and usual course of business; transfer, sell,
mortgage, pledge or dispose of any substantial portion of the property or
assets of any subsidiary, except in the ordinary and usual course of
business; acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or a substantial portion of the assets of, or
by any other manner, any corporation, partnership or other business
organization or division thereof, or otherwise acquire any assets outside
the ordinary and usual course of business; or authorize or make capital
expenditures or make any acquisition of, or investment in, assets or stock
of any other person or entity.
(iv) Neither the Company nor any of its subsidiaries will grant any
severance or termination pay to, or enter into any employment or severance
agreement or arrangement with, any director, officer or employee of the
Company or any of its subsidiaries, except as may be required to satisfy
existing contractual obligations and written policies and practices of the
Company and its subsidiaries and the requirements of applicable law.
(v) Except as may be required to satisfy existing contractual
obligations and written policies and practices of the Company and its
subsidiaries and the requirements of applicable law, neither the Company nor
any of its subsidiaries will establish, adopt, enter into, make, amend, or
accelerate the vesting of any grants, options, benefits or awards under, any
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, employee stock ownership, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any of their directors, officers or
employees ("Benefit Plans").
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(vi) Neither the Company nor any of its subsidiaries will settle or
compromise any material claim or litigation or, except in the ordinary and
usual course of business, modify, amend or terminate any of its material
contracts or waive, release or assign any material rights or claims.
(vii) Neither the Company nor any of its subsidiaries will make any tax
election or permit any insurance policy naming it as a beneficiary or a loss
payable payee to be canceled or terminated without notice to Parent, except
in the ordinary and usual course of business.
(viii) Neither the Company nor any of its subsidiaries will enter into
any real property lease not in effect as of the date of the Merger
Agreement, or amend, modify, extend the term of, waive any violation of or
default under, or otherwise change any real property lease in effect as of
such date.
(ix) The Company will not change its methods of accounting as in effect
at December 31, 1994, except as required by changes in generally accepted
accounting principles as concurred to in writing by the Company's
independent auditors and in any such case will promptly provide notice of
any such change to Parent. The Company will not change its fiscal year.
(x) Neither the Company nor any of its subsidiaries will take any action
that is reasonably likely to cause any of the representations and warranties
of the Company set forth in the Merger Agreement to be untrue as of any date
after the date of the signing of the Merger Agreement and prior to the
Effective Time.
(xi) Neither the Company nor any of its subsidiaries will authorize or
enter into an agreement to do any of the actions referred to in paragraphs
(i) through (x) above or any similar actions.
ACQUISITION PROPOSALS. The Merger Agreement provides that neither the
Company nor any of its subsidiaries nor any of its officers or directors or the
directors or officers of its subsidiaries nor any of its other affiliates (each,
an "Affiliate") will, and the Company will cause its and its subsidiaries'
employees, agents and representatives (including, without limitation, any
investment banking, proxy solicitation, legal or accounting firm retained by the
Company or any of its subsidiaries and any individual member or employee of the
foregoing) (each, an "Agent") not to, directly or indirectly, initiate, solicit
or encourage any inquiries or the making or implementation of any proposal or
offer (including, without limitation, any proposal or offer to its shareholders
or any of them or any public statement of an intention to make, or the
consideration of, such a proposal or offer) with respect to a merger,
acquisition, consolidation, recapitalization, liquidation, dissolution or
similar transaction involving, or any purchase of all or a substantial portion
of the assets or equity securities of, it or any of its subsidiaries (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal");
except to the extent necessary so that the Company's Board of Directors can
comply with its fiduciary duties under applicable law as advised in writing by
independent counsel, engage in any discussions or negotiations with, or provide
any confidential information or data to, any person relating to an Acquisition
Proposal; or otherwise cooperate in any effort or attempt to make, implement or
accept an Acquisition Proposal. However, the Merger Agreement also provides that
this restriction will not prohibit the Company or its Board of Directors from
taking and disclosing to the Company's shareholders a position with respect to
an offer by any person pursuant to Rules 14d-9 and 14e-2(a) promulgated under
the Exchange Act or from making such disclosure to the Company's shareholders
which, in the judgment of the Company's Board of Directors based on the written
advice of independent counsel, may be required under applicable law. Prior to
providing any confidential information or data to a person relating to an
Acquisition Proposal, the Company is required to enter into a confidentiality
agreement with such person having substantially the same terms as the
Confidentiality Agreement between the Company and Parent. The Merger Agreement
requires the Company to immediately cease and cause to
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be terminated any activities, including discussions or negotiations, with any
persons conducted prior to April 27, 1995 with respect to any of the foregoing,
and to take the necessary steps to inform the individuals and entities referred
to in the first sentence of this paragraph of the obligations described herein.
The Company is required to notify Parent immediately if any inquiries, proposals
or offers related to an Acquisition Proposal are received by, any confidential
information or data is requested from, or any negotiations or discussions
related to an Acquisition Proposal are sought to be initiated or continued with,
it or any individual or entity referred to in the first sentence of this
paragraph, and of the terms and other details of any such Acquisition Proposal
or request and will keep Parent fully apprised of all developments with respect
thereto.
FILINGS; OTHER ACTIONS. The Company and Parent have agreed to cooperate to
prepare and file a Proxy Statement with regard to the Merger with the Commission
promptly after the expiration of the Offer if the Minimum Condition has not been
satisfied or if the condition set forth in paragraph (a) of Section 14 or the
Financing Condition has not been satisfied because necessary consents under
leases of real property to which the Company is a party have not been obtained
(the "Lease Condition"). The Merger Agreement also provides that each party will
cooperate with each other party and use all reasonable efforts to prepare and
file promptly all other necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents, and to obtain as
promptly as practicable all necessary permits, consents, orders, approvals and
authorizations of, or any exemptions from, all third parties and governmental
or regulatory authorities, agencies, courts, commissions or other similar
entities, domestic or foreign ("Governmental Entities") necessary or advisable
to consummate the transactions contemplated by the Merger Agreement or the
Shareholder Agreement; provided, however, that Parent will not be required
to take any action to comply with any legal requirement or agree to the
imposition of any order, statute, law, ordinance, rule, regulation, judgment,
decree or injunction by a Governmental Entity of competent jurisdiction that
would (i) prohibit or restrict the ownership or operation by Parent of any
portion of the business or assets of Parent or the Company (or any of their
respective subsidiaries); (ii) compel Parent or the Company (or any of their
respective subsidiaries) to dispose of or hold separate any portion of the
Company's business or assets; or (iii) impose any limitation on the ability of
Parent or the Surviving Corporation or any of their respective affiliates or
subsidiaries to own or operate the business and operations of the Company and
its subsidiaries. Each party will have the right to review in advance, and to
the extent practicable each will consult the others on, in each case subject to
applicable laws relating to the exchange of information as advised by
independent counsel, all the information relating to the other parties and any
of their respective subsidiaries which are to appear in any filing to be made
with, or written materials to be submitted to, any third party or any
Governmental Entity in connection with the transactions contemplated by the
Merger Agreement or the Shareholder Agreement. In exercising the foregoing
right, each of the parties is to act reasonably and as promptly as practicable.
Each party is to consult with the other parties with respect to the obtaining
of all permits, consents, orders, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by the Merger Agreement or the Shareholder Agreement
and each party is to keep the other parties apprised of the status of matters
relating to the transactions contemplated thereby.
The Merger Agreement provides that, subject to applicable laws relating to
the exchange of information as advised by independent counsel, each party will,
upon request, furnish the other party with all information concerning itself,
its subsidiaries, directors, officers and shareholders and such other matters as
may be necessary or advisable in connection with the filings to be made with the
Commission or any other petition, filing, notice, application or other document
made by or on behalf of each such party or any of its subsidiaries to any
Governmental
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Entity in connection with the Merger and the other transactions contemplated by
the Merger Agreement or the Shareholder Agreement.
The Merger Agreement provides that each party will promptly furnish each
other party with copies of written communications received by such party or any
of its subsidiaries, affiliates or associates (as such term is defined in Rule
12b-2 under the Exchange Act) from, or delivered by any of the foregoing to, any
Governmental Entity in respect of the transactions contemplated thereby, in each
case subject to applicable laws relating to the exchange of information as
advised by independent counsel, and that the Company and Parent will use their
reasonable best efforts to promptly enter into agreements with respect to
certain retail store operations in New Jersey.
ACCESS. The Merger Agreement provides that, upon reasonable notice, the
Company will (and will cause each of its subsidiaries to) afford Parent's
officers, employees, counsel, accountants, financing sources and other
authorized representatives ("Representatives") access during normal business
hours, throughout the period prior to the Effective Time, to the Company's
properties, books, contracts and records and, during such period, will (and will
cause each of its subsidiaries to) furnish promptly to Parent and its
Representatives all information concerning its business, properties and
personnel as may reasonably be requested, in each case subject to applicable
laws relating to the exchange of information as advised by independent counsel;
provided, that no such investigation will affect or be deemed to modify any
representation or warranty made by the Company. The Merger Agreement provides
that, prior to the Effective Time, Parent is required to keep all such
information and documents confidential in accordance with the provisions of the
Confidentiality Agreement.
The Merger Agreement also provides that, prior to consummation of the
Merger, Parent and the Purchaser will not discuss or negotiate, and Parent will
cause its Representatives to refrain from discussing or negotiating, with any
person regarding the potential sale or other disposition of any assets or
business owned or operated by the Company or any of its subsidiaries; provided,
however, that this will not prohibit Parent from setting forth its business plan
with respect to the Company and its subsidiaries as required under applicable
law or from discussing such business plan generally; and, provided, further,
that any such general discussion will be in writing and will be approved by the
Company prior to its use, which approval will not be unreasonably withheld.
STOCK OPTIONS. The Merger Agreement provides that, prior to the Effective
Time, the Company will take such actions as may be necessary such that at the
Effective Time each stock option (an "Option"), issued pursuant to the
Company Stock Plans, whether or not then exercisable, will be converted into and
become only the right to receive the product of (a) the number of Shares subject
to such Option and (b) the difference, if positive, between the Offer Price and
the per share exercise price for such Option.
INDEMNIFICATION AND BENEFITS. The Merger Agreement provides that, for six
years after the Effective Time, Parent will cause the Surviving Corporation to
indemnify, defend and hold harmless the present and former officers and
directors of the Company against all losses, claims, damages, liabilities, fees
and expenses (including reasonable fees and disbursements of counsel, judgments,
fines and amounts paid in settlement to the extent that any such settlement is
effected with the prior written consent of the Surviving Corporation) arising
out of actions or omissions occurring at or prior to the Effective Time to the
fullest extent permitted under Michigan law or the Company's Articles of
Incorporation and By-laws in effect as April 27, 1995, including the provisions
relating to the advancement of expenses incurred in the defense of any action or
suit; provided, that, in the event any claim or claims for indemnification are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims will continue until the disposition of all
such claims.
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The Merger Agreement also provides that the Surviving Corporation will, for
three years from the Effective Time, maintain in effect the current directors'
and officers' liability insurance policies maintained by the Company for the
persons presently covered by such policies with respect to matters occurring
prior to or at the Effective Time; provided, that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous to such persons
so long as substitution does not result in gaps or lapses in coverage; provided,
however, that in no event will the Surviving Corporation be required to expend
more in each such year than an amount, based on the current annual premium paid
by the Company for such insurance, equal to 110% of such premium in the first
such year, 121% of such premium in the second such year and 133.1% of such
premium in the third such year, and, in the event that the cost of such coverage
will exceed the applicable amount for any such year, the Surviving Corporation
will purchase for such year as much coverage as possible for such amount.
The Merger Agreement also provides that for a period of one year from and
after the Effective Time, the Surviving Corporation will provide Benefit Plans
to the employees of the Surviving Corporation and its subsidiaries that provide
benefits comparable in the aggregate to those provided by the Company to the
employees of the Company and its subsidiaries as of April 27, 1995; provided,
however, that, as of the Effective Time, the Surviving Corporation will have the
right to cancel the Company Stock Plans and the Company's Incentive Compensation
Plan and, except as provided below, to discontinue the Company's practice of
providing severance benefits to any employees terminated by the Company or any
of its subsidiaries without any requirement to provide similar Benefit Plans or
substitute benefits; and, provided, further, that the Company's "Home Office
Bonus Plan" will continue in effect and any benefits payable thereunder will be
accrued through the Effective Time on a pro rata basis (at which time all
accruals thereunder will cease) and any participant therein who is terminated by
the Surviving Corporation without cause on or prior to December 31, 1995 or is
employed by the Surviving Corporation as of December 31, 1995 will be entitled
to the pro rata bonus payable thereunder to such person that had accrued as of
the Effective Time. The Surviving Corporation may terminate the "Home Office
Bonus Plan" at any time after December 31, 1995.
The Merger Agreement provides that in the case of persons employed by the
Company as of the Effective Time at its corporate headquarters or its central
laboratory facility, other than any such persons who are covered by a collective
bargaining agreement and those executive officers whose employment agreements
will continue to be honored by the Surviving Corporation, the Surviving
Corporation will pay a lump sum severance benefit to each such person whose
employment is terminated by the Surviving Corporation for any reason other
than cause, death or disability prior to the first anniversary of the Effective
Time. Such severance benefit will be based on the terminated employee's number
of whole years (rounded up or down to the nearest whole year) of continuous
service with the Company and the Surviving Corporation, will be reduced by
withholding and employment taxes, if required by applicable law, and will
equal one week's gross pay for each whole year of service, with a maximum
severance benefit of ten weeks' gross pay. The term "gross pay" means the
employee's average weekly gross wages or salary, before deductions or
withholdings of any kind whatsoever, received from the Company or the Surviving
Corporation during the last full calendar month immediately prior to the date of
termination. The severance benefit described above will only be provided upon
the giving by the severed employee of a full release of claims in form and
substance satisfactory to the Surviving Corporation.
The Merger Agreement provides that Parent will cause the Surviving
Corporation, from and after the Effective Time, to honor the terms and
provisions of the employment agreements described below. All other employment
agreements and all rights thereunder may be terminated by the Surviving
Corporation at any time after the Effective Time. Pursuant to Employment
Agreements with two executive officers of the Company, Jonathan E. Raven, the
Company's
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President and Chief Operating Officer, will have the right to receive a $250,000
change in control payment from the Company if the Purchaser acquires Shares
pursuant to the Offer, and Stephen L. Hirsch, the Company's Chief Financial
Officer, will have the right to receive a $175,000 change in control payment
from the Company if the Purchaser acquires Shares pursuant to the Offer and Mr.
Hirsch remains in the employ of the Surviving Corporation for six months
following the acquisition. Mr. Raven will also be entitled to receive an
additional $50,000 termination payment if his employment agreement is canceled
by the Surviving Corporation. Each officer's employment agreement also provides
for severance payments equal to their current annual salaries upon cancellation
thereof, and continuation of benefits for a period of one year.
The Merger Agreement further provides that nothing contained in the Merger
Agreement will, or be construed to, confer upon any person the right to remain
an employee of the Surviving Corporation or any of its subsidiaries, restrain
the Surviving Corporation or any of its subsidiaries from changing the terms or
conditions of its employment of any person, or require the Surviving Corporation
to maintain any particular Benefit Plan or specific form of benefit under any
Benefit Plan.
CONDITIONAL OPTION. Pursuant to the Merger Agreement, the Company has
granted to the Purchaser an irrevocable, non-assignable (except to Parent or
another direct or indirect wholly owned subsidiary of Parent) option (the
"Conditional Option") to purchase, for its own account, up to all the authorized
and unissued Shares, other than those Shares reserved as of April 27, 1995 for
issuance in connection with the Company Stock Plans, at the Offer Price. The
Conditional Option may be exercised by the Purchaser at any time prior to the
termination of the Merger Agreement in whole or in part if after such exercise
the Purchaser would beneficially own more than 90% of the Shares then
outstanding; provided, however, that the Conditional Option may only be
exercised in the event that Parent, the Purchaser and their affiliates prior to
the exercise thereof have become the beneficial owners of 85% or more of the
outstanding Shares upon consummation of the Offer and the purchase of Shares
pursuant to the Shareholder Agreement. In the event that the Purchaser wishes to
exercise the Conditional Option, the Purchaser must deliver a written notice to
the Company specifying a place and a date not later than two business days from
the date such notice is delivered for the closing of such exercise and the
number of Shares to be purchased; provided, that such closing may be deferred by
the Purchaser until the expiration of any applicable regulatory waiting periods
or the receipt of any required regulatory approvals or consents. At any such
closing the Purchaser will make prompt payment to the Company of the aggregate
purchase price for the Shares so purchased in immediately available funds or in
the form of a promissory note (to the extent permitted under applicable law)
bearing interest at a rate no less favorable than the rate at which the Company
borrows funds under its existing senior unsecured credit arrangements and having
a maturity of not more than six months from the date of issuance or any
combination thereof at the Purchaser's election and the Company will deliver to
the Purchaser a duly executed certificate or certificates representing the
number of Shares so purchased.
TERMINATION BY MUTUAL CONSENT. The Merger Agreement may be terminated and
the transactions contemplated thereby may be abandoned at any time prior to the
Effective Time, whether before or after the approval and adoption thereof and of
the Merger by the shareholders of the Company, by the mutual consent of the
Company and Parent by action of their respective Boards of Directors.
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TERMINATION BY EITHER PARENT OR THE COMPANY. The Merger Agreement may be
terminated and the transactions contemplated thereby may be abandoned, whether
before or after the approval and adoption thereof and of the Merger by the
shareholders of the Company, by action of the Board of Directors of either
Parent or the Company if (a) the Offer has expired or been terminated, with no
Shares being purchased pursuant thereto because of the failure to satisfy or
waive any condition of the Offer other than the Minimum Condition or the Lease
Condition, after July 15, 1995, (b) the Offer has expired or been terminated,
with no Shares being purchased pursuant thereto because of the failure to
satisfy or waive the Minimum Condition or the Lease Condition, and the Merger
has not been consummated, after October 31, 1995, (c) the Offer has expired or
been terminated, with no Shares being purchased pursuant thereto because of the
failure to satisfy or waive the Minimum Condition or the Lease Condition, and
the approval and adoption of the Merger Agreement and the Merger by the
Company's shareholders in accordance with applicable law and the Company's
Articles of Incorporation and By-laws is not obtained at a special meeting of
the Company's shareholders or at any adjournment thereof, at any time
thereafter, (d) a Governmental Entity of competent jurisdiction has issued an
order or taken any other action permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger and such order or other action has
become final and nonappealable, at any time thereafter, or (e) the United
States Federal Trade Commission or the United States Department of Justice has
commenced, or officially recommended commencement of, an action (judicial or
administrative) seeking an order restraining, enjoining or otherwise
prohibiting the consummation of the Merger; provided, that the party seeking
to terminate the Merger Agreement in the circumstances described in clause
(a), (b) or (c) of this paragraph must not have breached or failed to perform
in any material respect its obligations under the Merger Agreement.
TERMINATION BY THE COMPANY. The Merger Agreement may be terminated and the
transactions contemplated thereby may be abandoned at any time prior to the
Effective Time, whether before or after the approval and adoption thereof and of
the Merger by the shareholders of the Company, by action of the Board of
Directors of the Company if there has been a material breach of, or any material
failure to comply with, any covenant or agreement contained in the Merger
Agreement by Parent or the Purchaser which is not curable or, if curable, is not
cured within five days after written notice of such breach or failure is given
by the Company to Parent or any material representation or warranty of Parent
and the Purchaser in the Merger Agreement was untrue or incorrect at the time
made or will have ceased to be true and correct; provided, however, that, prior
to any such termination on account of any such representation or warranty
ceasing to be true and correct, the Company has given to Parent written
notice of such event and Parent has not taken all necessary action, within five
days of delivery of such notice, so that such representation or warranty will
have again become true and correct.
TERMINATION BY PARENT. The Merger Agreement may be terminated and the
transactions contemplated thereby may be abandoned at any time prior to the
Effective Time, whether before or after the approval and adoption thereof and of
the Merger by the shareholders of the Company, by action of the Board of
Directors of Parent, if the Company or any of its Affiliates or Agents has
engaged in any discussions (other than to provide information or data) or
negotiations with any person (other than Parent) relating to an Acquisition
Proposal, the Board of Directors of the Company has withdrawn or modified in a
manner adverse to Parent or the Purchaser its approval or recommendation of the
Merger Agreement, the Offer or the Merger or has approved or recommended any
Acquisition Proposal other than one from Parent or the Purchaser or has resolved
to do either of the foregoing, or the Offer has expired or been terminated with
no Shares being purchased pursuant thereto and there has been a material breach
of, or any material failure to comply with, any covenant or agreement contained
in the Merger Agreement by the Company which is not curable or, if curable, is
not cured within five days after written notice of such breach or failure is
given by Parent to the Company, or any material representation or warranty of
the Company in the Merger Agreement was untrue or incorrect at the time made or
has ceased to be true and correct;
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provided, however, that, prior to any such termination on account of any such
representation or warranty ceasing to be true and correct, Parent has given to
the Company written notice of such event and the Company has not taken all
necessary action, within five days of delivery of such notice, so that such
representation or warranty again becomes true and correct.
TERMINATION DUE TO LACK OF FINANCING. The Merger Agreement may be terminated
and the transactions contemplated thereby may be abandoned at any time prior to
the Effective Time, before or after the approval and adoption thereof and of the
Merger by the shareholders of the Company, by action of the Board of Directors
of Parent if Parent and the Purchaser have not entered into the Definitive
Financing Agreements or all conditions to funding pursuant thereto have not been
satisfied or waived or Greyrock Capital proposes to enter into agreements in
connection with the Greyrock Financing that contain terms and conditions that
are inconsistent with the terms and conditions set forth in the Greyrock
Commitment Letter or HECC proposes to enter into agreements in connection with
the Heller Financing that contain terms and conditions that are inconsistent
with the terms and conditions set forth in the HECC Letter of Intent.
EFFECT OF TERMINATION AND ABANDONMENT. The Merger Agreement provides that in
the event of termination of the Merger Agreement and abandonment of the
transactions contemplated thereby in accordance with the Merger Agreement, no
party (or any of its directors or officers) will have any liability or further
obligation to any other party to the Merger Agreement in connection with such
termination and abandonment except as described below.
In the event that (i) (A) any person makes an Acquisition Proposal or
acquires beneficial ownership of Shares representing 9.9% or more of the
outstanding Shares and thereafter the Merger Agreement is terminated by either
Parent or the Company pursuant to the provisions described under "Termination
by Either Parent of the Company", or (B) Parent terminates the Merger Agreement
as set forth above pursuant to the provisions described under "Termination by
Parent" and (ii) on or after April 27, 1995 and not later than one year from
the date of such termination, (x) the Board of Directors of the Company approves
or recommends any Acquisition Proposal other than from Parent, or (y) the
Company enters into an agreement with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase of all or a substantial portion of the assets or
equity securities of, the Company, or (z) any person has acquired beneficial
ownership of Shares representing 50% or more of the outstanding Shares, then
the Company, when requested by Parent, at any time after the earliest to occur
of the events described in clauses (x), (y) and (z), will promptly, but in no
event later than two days after the date of such request, pay Parent
$900,000, which will be paid by wire transfer of same day funds.
In the event that Parent terminates the Merger Agreement pursuant to the
provisions described under "Termination by Either Parent or the Company"
or the Merger Agreement is terminated pursuant to the provisions described under
"Termination by Parent" and, at such time, there has been a material breach of,
or any material failure to comply with, any covenant or agreement contained in
the Merger Agreement by the Company which has not been cured or any material
representation or warranty of the Company in the Merger Agreement was untrue
or incorrect at the time made or has ceased to be true and correct, then the
Company, when requested by Parent, will promptly, but in no event later than two
days after the date of such request, pay Parent an amount equal to all actual
out-of-pocket fees and expenses (including the fees and expenses of counsel,
accountants, financial advisors, other consultants, financial printers and
financial sources (the "Advisors")) ("Expenses") incurred by Parent, the
Purchaser and its Advisors (both prior to and after April 27, 1995) in
connection with the negotiation of, and proposed consummation of the
transactions contemplated by, the Merger Agreement or in connection with
previous discussions and due diligence efforts, which will be paid
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by wire transfer of same day funds; provided, however, that the maximum amount
so payable will not exceed $500,000.
In the event that the Company terminates the Merger Agreement pursuant to
the provisions described under "Termination by the Company", then Parent, when
requested by the Company, will promptly, but in no event later than two days
after the date of such request, pay the Company an amount equal to all Expenses
incurred by the Company and its Advisors in connection with the negotiation of,
and proposed consummation of the transactions contemplated by, the Merger
Agreement, which will be paid by wire transfer of same day funds; provided,
however, that the maximum amount so payable will not exceed $500,000.
In the event that Parent terminates the Merger Agreement because of a
failure to satisfy the Financing Condition or the Company terminates the Merger
Agreement under certain circumstances and, at such time, (i) the Offer has
expired or been terminated, with no Shares being purchased pursuant thereto,
and all of the conditions to the Purchaser's obligation to purchase Shares
pursuant to the Offer have been satisfied or waived, other than the Financing
Condition, or (ii) the Offer has expired or been terminated, with no Shares
being purchased pursuant thereto because of the failure to satisfy or waive
the Minimum Condition or the Lease Condition, and all of the conditions to
Parent's and the Purchaser's obligations to consummate the Merger have been
satisfied or waived, other than the Financing Condition, and at such time none
of the conditions set forth in the second and third paragraphs under this
subheading exist, then Parent, when requested by the Company, will promptly, but
in no event later than two days after the date of such request, pay the Company
an amount equal to all Expenses incurred by the Company and its Advisors in
connection with the negotiation and proposed consummation of the transactions
contemplated by the Merger Agreement, which will be paid by wire transfer of
same day funds; provided, however, that the maximum amount so payable will not
exceed $150,000; and, provided, further, that Parent will have no obligation to
make any payment to the Company as described in this paragraph if, at such time,
the Company has breached or failed to comply with in any material respect any of
its covenants or agreements contained in the Merger Agreement, any
representation or warranty of the Company in the Merger Agreement was untrue or
incorrect in any material respect at the time made or has ceased to be true and
correct, any filing required to be made prior to the Effective Time by the
Company or any of its subsidiaries with, or any consent, approval or
authorization required to be obtained prior to the Effective Time by the
Company or any of its subsidiaries from any Governmental Entity in connection
with the execution and delivery of the Merger Agreement or the consummation of
the transactions contemplated by the Merger Agreement by the Company have not
been made or obtained (as the case may be), any other consent that was to be
obtained by the Company and is required to consummate the transactions
contemplated by the Merger Agreement has not been obtained or any other
consents that were to be obtained by the Company in connection with the
transactions contemplated by the Merger Agreement, the failure to obtain
which would have or would be reasonably likely to have a material adverse
effect on the Surviving Corporation, have not been obtained, or the
representations and warranties of the Company set forth in the Merger Agreement
would not have been deemed to be true and correct in all material respects as
of April 27, 1995 and as of the other applicable date.
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THE SHAREHOLDER AGREEMENT
On April 27, 1995, the Purchaser and Parent entered into the Shareholder
Agreement with the Shareholders, pursuant to which the Shareholders have, among
other things, agreed to tender all Shares held by them pursuant to the Offer
pursuant to the terms and conditions described below.
TENDER OF SHARES. Pursuant to the Shareholder Agreement, the Shareholders
have agreed to tender and sell (and not withdraw) pursuant to and in accordance
with the terms of the Offer all of the Shares beneficially owned by them
individually, jointly or as trustees. Upon the purchase of all such Shares
pursuant to the Offer the Shareholder Agreement will terminate. In the event any
of the Shareholders' Shares are for any reason withdrawn from the Offer or are
not purchased pursuant to the Offer, such Shares will remain subject to the
terms of the Shareholder Agreement.
TRANSFER OF SHARES. During the term of the Shareholder Agreement, except as
otherwise provided therein, the Shareholders have agreed that they will not
offer to sell, sell, pledge or otherwise dispose of or transfer any interest in
or encumber any of the Shares held by them; acquire any Shares or other
securities of the Company (otherwise than in connection with a stock dividend,
stock split, recapitalization, combination, exchange of Shares or the like or
any other action that would have the effect of changing the Shareholders'
ownership of the Company's capital stock or other securities and any such
additional Shares or securities will be deemed Shares and included in the Shares
subject to the Shareholder Agreement); deposit such Shares into a voting trust,
enter into a voting agreement or arrangement with respect to such Shares or
grant any proxy or power of attorney with respect to such Shares; or enter into
any contract, option or other arrangement or undertaking with respect to the
direct or indirect acquisition or sale, assignment or other disposition of or
transfer of any interest in or the voting of any such Shares or any other
securities of the Company; provided, however, that the Shareholders may dispose
of Shares as gifts or donations so long as prior to any such disposition, any
intended recipient thereof executes an agreement, in form and substance
reasonably satisfactory to Parent, that provides that any such Shares will be
subject to and any such person will become a party to all the obligations of the
Shareholder Agreement as if such person had been a party thereto from April 27,
1995.
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VOTING OF SHARES. Pursuant to the Shareholder Agreement, each Shareholder
constitutes and appoints Parent, or any nominee thereof, with full power of
substitution, during and for the term of the Shareholder Agreement, as his or
her true and lawful attorney and proxy, for and in his or her name, place and
stead, to vote each of the Shares held by the Shareholder at any annual, special
or adjourned meeting of the shareholders of the Company (and the appointment
will include the right to sign such Shareholder's name (as shareholder) to any
consent, certificate or other document relating to the Company which the laws of
the State of Michigan may require or permit) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
and adoption of the terms thereof and each of the other actions contemplated by
the Merger Agreement and the Shareholder Agreement and any actions required in
furtherance thereof; against any action or agreement that would result in a
breach in any respect of any covenant, agreement, representation or warranty of
the Company under the Merger Agreement; and against the following actions (other
than the Merger and the other transactions contemplated by the Merger
Agreement): (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or one of its
subsidiaries; (ii) a sale, lease or transfer of a material amount of assets of
the Company or one of its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (iii)(A) any
change in a majority of the persons who constitute the Board of Directors of the
Company as of April 27, 1995; (B) any change in the present capitalization of
the Company or any amendment of the Company's Restated Articles of Incorporation
or By-laws, as amended prior to April 27, 1995; (C) any other material change in
the Company's corporate structure or business; or (D) any other action which, in
the case of each of the matters referred to in clauses (iii)(A), (B), (C) and
(D), is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, or adversely affect the Merger and the other transactions
contemplated by the Shareholder Agreement and the Merger Agreement; the
Shareholder Agreement further provides, however, that none of the foregoing will
prohibit or restrain any such Shareholder from complying with his or her
fiduciary obligations as a director or officer of the Company, as advised in
writing by independent counsel. The proxy and power of attorney is deemed by the
parties to the Shareholder Agreement to be a proxy and power coupled with an
interest. Each Shareholder, pursuant to the Shareholder Agreement, has revoked
all and any other proxies with respect to such Shareholder's Shares which he,
she or it may have made or granted prior to April 27, 1995.
NO SOLICITATION. During the term of the Shareholder Agreement, each
Shareholder (subject to any legal requirements applicable to him or her solely
in his or her capacity as an officer or a director of the Company) will not,
directly or indirectly, initiate, solicit or encourage any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any Acquisition Proposal), engage in any discussions or negotiations
with, or provide any confidential information or data to, any person relating to
an Acquisition Proposal, or otherwise cooperate in any effort or attempt to
make, implement or accept an Acquisition Proposal. Each Shareholder will notify
Parent immediately if any inquiries, proposals or offers related to an
Acquisition Proposal are received by, any confidential information or data is
requested from, or any negotiations or discussions related to an Acquisition
Proposal are sought to be initiated or continued with, him, her or it and of the
terms and other details of any such Acquisition Proposal or request and will
keep Parent fully apprised of all developments with respect thereto.
TERMINATION. Except for the provisions of the Shareholder Agreement
regarding the Fee referred to below, which will only terminate as and when
provided therein, the Shareholder Agreement will terminate on the earlier of the
date the Merger Agreement is terminated in accordance with its terms and October
31, 1995; provided, that, if on such date (i) any applicable waiting period
under the HSR Act has not expired or been terminated or (ii) there is in effect
an injunction, order, judgment, decree or ruling which has not become final and
nonappealable issued by any federal or state court or other governmental
authority of competent jurisdiction in the United States, or there has been
commenced and is pending a proceeding or lawsuit before any such court
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or authority which would have the effect of preventing consummation of the Offer
or the Merger or any other business combination of the Company with Parent or
any affiliate of Parent, or imposing material limitations on the ability of
Parent and the Purchaser to acquire, hold or operate the business of the Company
and its subsidiaries or to exercise full rights of ownership of the Shares,
including, but not limited to, the right to vote the Shares on all matters
properly presented to the shareholders of the Company, then the Shareholder
Agreement will terminate only at the earlier of 15 business days after the
expiration or termination of such waiting period or the resolution, in a manner
reasonably satisfactory to Parent, of any injunction, order, judgment, decree,
ruling, proceeding or lawsuit that has occurred and is of a type set forth in
the foregoing proviso and December 31, 1995. Except for the provisions of the
Shareholder Agreement regarding the Fee referred to below, which will only
terminate as and when provided in the Shareholder Agreement, the Shareholder
Agreement will terminate if it becomes the subject of a final and nonappealable
injunction, order, judgment, decree or ruling issued by any federal or state
court of competent jurisdiction in the United States prohibiting the
enforceability thereof.
FEE. The Shareholder Agreement provides that if (a) (i) any person has made
an Acquisition Proposal or has acquired beneficial ownership of Shares
representing 9.9% or more of the outstanding Shares and thereafter the Merger
Agreement is terminated by either Parent or the Company pursuant to a right to
terminate of either Parent or the Company, or (ii) Parent terminates the Merger
Agreement pursuant to a right to terminate of Parent, and (ii) on or after the
date of the signing of the Shareholder Agreement and not later than one year
from the date of such termination of the Merger Agreement, (x) the Board of
Directors of the Company approves or recommends any Acquisition Proposal other
than from Parent, or (y) the Company enters into an agreement with respect to a
merger, acquisition, consolidation, recapitalization, liquidation, dissolution
or similar transaction involving, or any purchase of all or a substantial
portion of the assets or equity securities of, the Company, or (z) any person
has acquired beneficial ownership of Shares representing 50% or more of the
outstanding Shares, and in connection therewith or thereafter, (A) any
Shareholder sells, transfers or otherwise disposes of any or all of his or her
Shares to any person not an affiliate or an associate of Parent or to the
Company or any affiliate thereof (or realize cash proceeds in respect of such
Shares as a result of a distribution to shareholders of the Company following
the sale of substantially all of the Company's assets) in connection with a
transaction proposed, described or set forth in such Acquisition Proposal or
agreement or pursuant to such acquisition or (B) the Company undergoes a
recapitalization, dissolution, liquidation or similar transaction proposed,
described or set forth in such Acquisition Proposal or agreement or the Company
pays an extraordinary dividend or other distribution in accordance with such
Acquisition Proposal or agreement (each, a "Subsequent Transaction") at a per
share price or with equivalent per share proceeds, as the case may be, with a
value in excess of $7.60 (the "Subsequent Price"), then such Shareholder will
promptly pay to Parent an amount equal to 50% of the excess of the Subsequent
Price over $7.60 multiplied by the number of Shares disposed of or otherwise
participating in the Subsequent Transaction.
THE CONSULTING AGREEMENT
Parent, Purchaser and Shapiro have entered into a Consulting Agreement dated
as of April 27, 1995, which provides for the performance of certain services by
Shapiro for Parent and the Surviving Corporation and for certain payments to
Shapiro by Parent, as set forth below.
TERM AND SERVICES TO BE PROVIDED. The Consulting Agreement provides that,
commencing at the Effective Time and continuing until the fifth anniversary
thereof (the "Term"), Shapiro will provide consulting services to Parent from
time to time at the reasonable request of Parent. Such consulting services will
consist of advising Parent and the Surviving Corporation with respect to general
business matters, issues and strategies relating to Parent's business, including
issues
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concerning community, governmental and industry relations and cooperating to the
extent reasonably requested by Parent with appropriate notice and with due
regard being given to Shapiro's schedule and subject to Shapiro's reasonable
agreement in connection with the defense or prosecution of any litigation, claim
or proceeding that involves or relates to any acts occurring with respect to the
Company prior to the Effective Time. Such services will be rendered from the
locales where Shapiro may generally reside from time to time and may be provided
telephonically or via other electronic transmission media. Shapiro may be
requested to travel to render such services on an occasional basis, subject to
Shapiro's agreement and with due regard being given to Shapiro's schedule.
COMPENSATION. The Consulting Agreement provides that as compensation for the
services to be provided and the noncompetition covenants made by Shapiro in the
Consulting Agreement, Parent will pay Shapiro the aggregate amount of
$1,250,000, payable in 24 equal installments of $26,042 each commencing at the
Effective Time and on the same date in the 23 months thereafter, and one
installment of $625,000 due on the day after the second anniversary of the
Effective Time; provided, however, that Parent will have the option to instead
pay this amount in two annual installments of $312,500 each due on the day after
the second and third anniversaries of the Effective Time. Interest at the rate
of 12% per annum will accrue and be payable on installments not paid on the due
date until the date of payment.
The Consulting Agreement provides that in addition to the cash compensation
set forth above, during the Term, Parent will provide or make available to
Shapiro and his spouse at Parent's expense the same medical, health, dental,
prescription drug and optical insurance plans or coverage as Shapiro currently
enjoys, or plans or programs providing Shapiro and his spouse with at least
substantially equivalent benefits; and to Shapiro, the use of an automobile at
least comparable to the automobiles previously provided to Shapiro by the
Company, with expenses (including maintenance and insurance) paid by Parent to
the same extent as currently provided by the Company.
For purposes of the Consulting Agreement, if a "Change in Control" (as
defined below) of either Parent or the Surviving Corporation occurs during the
Term, then on the date of the Change in Control, Parent will pay to Shapiro in
one lump sum payment all amounts which then remain to be paid to Shapiro during
the remainder of the Term, without discount, and make provision acceptable to
Shapiro for the continuation of the benefits set forth above for the remainder
of the Term.
For purposes of the Consulting Agreement, "Change in Control" means any of
the following events occurring after the Effective Time: (i) the acquisition (or
disclosure of the previous acquisition) by any person who is not a shareholder
at the Effective Time of the beneficial ownership of shares of Parent's or the
Surviving Corporation's outstanding stock of any class which results in such
person possessing or having the right to possess, in the aggregate, more than
50% of the total voting power exercisable by all Parent's or the Surviving
Corporation's shareholders in the election of directors; or (ii) the merger by
Parent or the Surviving Corporation into or the consolidation of Parent or the
Surviving Corporation with any person which will result in the shareholders of
Parent or the Surviving Corporation immediately prior to such merger or
consolidation possessing less than 50% of the total voting power exercisable by
all of the shareholders of the surviving or resulting corporation or other
entity in the election of directors; or (iii) the transfer by Parent or the
Surviving Corporation of all or substantially all of its assets to any person.
Notwithstanding the foregoing, a "Change in Control" will not be deemed to have
occurred (A) for purposes of clause (i) or (ii) of the preceding sentence, (x)
if the Surviving Corporation merges into or consolidates with Parent or any
other subsidiary of Parent or (y) unless, after any such acquisition, merger or
consolidation, the Company no longer beneficially owns, directly or indirectly,
shares possessing or having the right to possess more than 50% of the total
voting power exercisable by all of the Surviving Corporation's shareholders in
the election of directors; (B) solely as a result of any sale of all or
substantially all of the assets of the Surviving Corporation to any other
subsidiary of Parent;
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(C) solely as a result of any transfer or other disposition of up to 35 stores
owned by the Surviving Corporation as contemplated by Parent following the
Merger; or (D) solely as a result of any conversion of stores owned by Parent
into franchisee-owned stores; so long, in the cases of clauses (A) and (B), as
the surviving or resulting corporation or the acquiror of any such assets
expressly assumes the obligation of the Surviving Corporation to guarantee
Parent's performance and payment under the Consulting Agreement pursuant to a
written instrument reasonably satisfactory to Shapiro, and, after any such
transaction, Parent beneficially owns, directly or indirectly, shares possessing
or having the right to possess more than 50% of the total voting power
exercisable by all of such entity's shareholders in the election of directors.
TERMINATION. Shapiro's consulting relationship with Parent under the
Consulting Agreement will terminate upon his death; provided that, if Shapiro
dies during the Term, Parent will pay to Shapiro's spouse, if living, or if she
dies, to the Eli Shapiro Revocable Living Trust or in any case to such other
beneficiary as may be designated by Shapiro by written notice to Parent, the
cash compensation set forth above that would have been paid to Shapiro
thereunder for the remainder of the Term. Such compensation will be paid in the
same amounts and at the same times as set forth above. In addition, Parent will
continue to provide to Shapiro's spouse the benefits set forth above for the
remainder of the Term.
If, as a result of Shapiro's incapacity due to physical or mental illness,
Shapiro will be unable to perform the consulting services described in the
Consulting Agreement for a continuous period of six months, Parent may terminate
Shapiro's consulting relationship with Parent. In such event, Shapiro will
continue to receive the compensation and Shapiro and his spouse will receive the
benefits set forth above for the remainder of the Term.
NONCOMPETITION. The Consulting Agreement provides that during the Term
Shapiro will not: (i) directly or indirectly, as owner, partner, officer,
employee, agent or consultant or in any other capacity, engage in or be employed
in any way by any business that is engaged in the business of optical retailing
that is competitive with the business of Parent and/or the Surviving Corporation
then being conducted in the States of Michigan, Indiana and New Jersey (provided
that Shapiro may be an owner or partner in one optical boutique in the Somerset
Mall, Troy, Michigan); or (ii) whether for his own account or for the account of
any other person, willfully and intentionally interfere with the relationship of
Parent and/or the Surviving Corporation with any person who at any time during
the Term was an employee, customer or supplier of, or in the habit of dealing
with, Parent, the Surviving Corporation and/or any of their subsidiaries or
affiliates; provided, however, that Shapiro may own up to ten percent of any
class of stock of a publicly-traded company.
CONFIDENTIALITY. The Consulting Agreement provides that Shapiro, either
during or after the Term, will not, except as may otherwise be required by law,
directly or indirectly, willfully or knowingly disclose or make available to any
person, firm, corporation, association or other entity for any reason or purpose
whatsoever, or willfully or knowingly use or cause to be used in any manner
adverse to the interests of the Surviving Corporation or Parent any Confidential
Information (as defined in the Consulting Agreement). Shapiro will, upon
termination of services as a consultant of Parent, return all Confidential
Information in his possession that is in written or other tangible form
(together with all copies or duplicates thereof) to Parent, and thereafter no
Confidential Information will be retained by Shapiro or furnished to any third
party, either by sample, facsimile, film, audio or video cassettes, electronic
data, verbal communication or any other means of communication; provided,
however, that Shapiro will not be obligated to treat as confidential, or return
to Parent copies of, any Confidential Information that was publicly known at the
time of disclosure to Shapiro, becomes publicly known or available thereafter
other than by any means in violation of the Consulting Agreement or is lawfully
disclosed to Shapiro by a third party.
GUARANTY. The Consulting Agreement provides that in recognition of the fact
that Shapiro's services thereunder will inure to the benefit of the Surviving
Corporation, the Surviving Corporation
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will guarantee the timely performance of and payment (and not merely collection)
by Parent of all of its obligations under the Consulting Agreement. However, in
the event of any litigation or other action by Shapiro to enforce a right under
the Consulting Agreement, the Surviving Corporation will be entitled to assert
any defense that Parent would have been entitled to assert in connection with
such litigation or other action.
TERMINATION OF EMPLOYMENT AGREEMENT. Pursuant to an Employment Agreement
dated as of March 1, 1990, as amended, between the Company and Shapiro (the
"Shapiro Employment Agreement"), Shapiro will be entitled to a payment in an
amount equal to 2.99 times Shapiro's average annual compensation for the
previous five years if Shapiro's employment with the Company is terminated
following the consummation of the Offer. Parent and Shapiro have agreed that
Shapiro's employment will be terminated if the Offer is consummated and Shapiro
will therefore become entitled to a payment of approximately $1.2 million.
Pursuant to the Consulting Agreement,
at and from the Effective Time and immediately following payment of that $1.2
million, any and all other rights of Shapiro under the Shapiro Employment
Agreement will terminate and cease to exist.
THE FOREGOING DESCRIPTION OF THE TERMS AND PROVISIONS OF THE MERGER
AGREEMENT, THE SHAREHOLDER AGREEMENT AND THE CONSULTING AGREEMENT ARE QUALIFIED
IN THEIR ENTIRETY BY REFERENCE TO THE FULL TEXTS THEREOF, WHICH ARE FILED AS
EXHIBITS TO THE SCHEDULE 14D-1 FILED BY PARENT AND THE PURCHASER WITH THE
COMMISSION IN CONNECTION WITH THE OFFER, AND ARE AVAILABLE FOR INSPECTION AND
COPYING AT THE PRINCIPAL OFFICE OF THE COMMISSION IN THE MANNER DESCRIBED IN
SECTION 8.
OTHER MATTERS
SPLIT DOLLAR TERMINATION AGREEMENT. Pursuant to the Split Dollar Termination
Agreement, the Company will release the children of the Shareholders (the
"Owners") from any obligation for repayment of amounts owed to the Company
pursuant to a split dollar life insurance agreement dated April 5, 1987, as
amended, among the Owners and the Company (the "Split Dollar Agreement") and the
Company will assign all of its rights and delegate all of its duties under the
Split Dollar Agreement (including the obligation to pay premiums on an insurance
policy on the joint lives of the Shareholders) to the Owners.
PLANS OR PROPOSALS OF PARENT. As part of its due diligence investigation of
the Company, Parent has conducted a detailed review of the Company and its
assets, corporate structure, operations, properties, policies, management and
personnel and, subject to the terms of the Merger Agreement, intends to continue
such review after commencement of the Offer. Although Parent has not reached any
definitive conclusion concerning the conduct of the business of the Company
after the Merger, Parent is considering possible courses of action, including
the divestiture of some stores that could be considered underperforming, the
franchising of other stores currently owned and operated by the Company and
related reductions in the staffing of the Company's headquarters and the
laboratory. Upon completing its review of the Company, Parent may decide to
adopt one or more of the approaches and will consider what, if any, additional
changes in the business of the Company would be desirable in light of the
circumstances then existing, and reserves the right to take such actions or
effect such changes as it deems desirable. Such changes could include changes in
the Company's assets, corporate structure, capitalization, operations,
properties, policies, management and personnel.
Except as otherwise described in this Offer to Purchase, the Purchaser and
Parent have no current plans or proposals that would relate to, or result in,
any extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, any change in the Company's present board of directors or
management, any material change in the
37
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Company's capitalization or dividend policy or any other material change in the
Company's business or corporate structure.
VOTE REQUIRED TO APPROVE THE MERGER. The BCA requires, among other things,
that the adoption of any plan of merger or consolidation must be approved by the
Board of Directors of the Company and generally by the holders of the Company's
outstanding voting securities. The Board of Directors of the Company has
approved the Offer and the Merger; consequently, the only additional action by
the Company that may be necessary to effect the Merger is approval by its
shareholders if the short-form merger procedure described below is not
available. Under the BCA and the Company's Restated Articles of Incorporation,
the affirmative vote of holders of a majority of the outstanding Shares is
generally required to approve the Merger. However, the BCA provides that, if a
parent company owns at least 90% of each class of stock of a subsidiary, the
parent company can effect a "short-form" merger with that subsidiary without any
action by the other shareholders of that subsidiary. Accordingly, if, as a
result of the Offer or otherwise, the Purchaser acquires at least 90% of the
outstanding Shares, the Purchaser could, and intends to, effect the Merger
without prior notice to, or any action by, any other shareholder of the Company.
If the Purchaser acquires, through the Offer or otherwise, voting power with
respect to at least a majority of the outstanding Shares (which could be the
case if the Minimum Condition were not satisfied and the Purchaser were to waive
the Minimum Condition and accept for payment sufficient Shares tendered pursuant
to the Offer), it would have sufficient voting power to effect the Merger
without the vote of any other shareholder of the Company.
APPRAISAL RIGHTS. Holders of Shares will not have dissenters' rights as a
result of the Offer or the Merger.
GOING PRIVATE TRANSACTIONS. The Merger would have to comply with any
applicable federal law operative at the time of its consummation. Rule 13e-3
under the Exchange Act is applicable to certain "going private" transactions.
The Purchaser does not believe that Rule 13e-3 will be applicable to the Merger
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger and the consideration offered to minority
shareholders be filed with the Commission and disclosed to minority shareholders
prior to consummation of the Merger.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of the Merger Agreement, the Company should (a)
split, combine or otherwise change the Shares or its capitalization, (b) acquire
currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares or (c) issue or sell additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible or
exchangeable into, or rights, warrant or options, conditional or otherwise, to
acquire, any of the foregoing, other than Shares issued pursuant to the exercise
of outstanding employee stock options, then, subject to the provisions of
Section 14 below, the Purchaser, in its sole discretion, may make such
adjustments as it deems appropriate in the Offer Price and other terms of the
Offer, including, without limitation, the number or type of securities offered
to be purchased.
If, on or after the date of the Merger Agreement, the Company should declare
or pay any cash dividend on the Shares or other distribution on the Shares, or
issue with respect to the Shares any additional Shares, shares of any other
class of capital stock, other voting securities or any securities convertible or
exchangeable into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to shareholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 14 below, (a) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of
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<PAGE>
any such cash dividend or cash distribution and (b) the whole of any such
noncash dividend, distribution or issuance to be received by the tendering
shareholders will (i) be received and held by the tendering shareholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering shareholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (ii) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
Price or deduct from the Offer Price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two preceding paragraphs, and
nothing herein constitutes a waiver by the Purchaser or Parent of any of their
rights under the Merger Agreement or a limitation of remedies available to the
Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Merger Agreement, Parent
or the Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to the Purchaser's obligation to pay for or
return tendered Shares after the termination or withdrawal of the Offer), to pay
for any Shares tendered pursuant to the Offer unless (1) the Minimum Condition
shall have been satisfied, (2) the Financing Condition shall have been satisfied
and (3) any waiting period under the HSR Act applicable to the purchase of
Shares pursuant to the Offer shall have expired or been terminated. Furthermore,
notwithstanding any other term of the Offer or the Merger Agreement, Parent or
the Purchaser shall not be required to accept for payment or to pay for any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer and may postpone the acceptance for payment of Shares pursuant
thereto if, at any time on or after April 27, 1995 and before the acceptance of
such Shares for payment or the payment therefor, any of the following conditions
exists:
(a) The Company shall have breached or failed to comply with in any
material respect any of its covenants or agreements contained in the Merger
Agreement, any representation or warranty of the Company in the Merger
Agreement shall have been untrue or incorrect in any material respect at the
time made or shall have ceased to be true and correct, any filing required
to be made prior to the Effective Time by the Company or any of its
subsidiaries with, or any consent, approval or authorization required to be
obtained prior to the Effective Time by the Company or any of its
subsidiaries from, any Governmental Entity, in connection with the execution
and delivery of the Merger Agreement or the consummation of the transactions
contemplated thereby by the Company shall not have been made or obtained (as
the case may be), any other consent that was to be obtained by the Company
and is required to consummate the transactions contemplated by the Merger
Agreement shall not have been obtained or any other consents that were to be
obtained by the Company in connection with the transactions contemplated by
the Merger Agreement, the failure to obtain which would have or would be
reasonably likely to have a material adverse effect on the Surviving
Corporation, shall not have been obtained; or
(b) there shall have occurred (i) any general suspension (which
continues for a period in excess of 24 hours) of trading in, or general
limitation on prices for, securities on the New York Stock Exchange, (ii) a
declaration of a banking moratorium or any suspension of payments in respect
of banks in the United States, (iii) a commencement of a war or armed
hostilities
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<PAGE>
affecting the United States, which is reasonably likely to materially and
adversely affect the extension of credit by banks or other lending
institutions located in the United States, (iv) any limitation by any
Governmental Entity on, or any other event which is reasonably likely to
adversely affect, the extension of credit by banks or other lending
institutions located in the United States, or (v) in the case of any of the
foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(c) any action or proceeding shall have been instituted or authorized or
shall be pending before any Governmental Entity or by any Governmental
Entity or there shall have been any determination by any Governmental
Entity: (i) challenging the making of the Offer or the acquisition by the
Purchaser of the Shares or seeking to restrain or prohibit the consummation
of the Offer or the other transactions contemplated by the Merger Agreement
and the Shareholder Agreement; (ii) seeking to prohibit Parent's or the
Purchaser's (or any of their affiliates') ownership or operation of all or
any portion of Parent's or the Company's business or assets, or to compel
Parent or the Purchaser (or any of their affiliates) to dispose of or hold
separate all or any portion of Parent's or the Company's business or assets,
as a result of the Offer or the other transactions contemplated by the
Merger Agreement; (iii) making the acceptance for payment of, or payment
for, some or all of the Shares illegal or resulting in a delay in the
ability of the Purchaser to accept for payment or pay for some or all of the
Shares; or (iv) imposing material limitations on the ability of Parent or
the Purchaser effectively to acquire or hold or to exercise full rights of
ownership of Shares, including, without limitation, the right to vote Shares
purchased by it on all matters properly presented to the shareholders of the
Company; or
(d) any statute, law, rule, regulation, injunction, decree, ruling or
order shall be enacted, promulgated, entered, enforced or deemed applicable
to the Offer or the Merger or any other action shall have been taken by any
Governmental Entity that is reasonably likely to, directly or indirectly,
result in any of the consequences referred to in clauses (i) through (iv) of
paragraph (c) above; or
(e) it shall have been publicly disclosed or the Purchaser shall have
otherwise learned that (i) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) shall have acquired 9.9% or more of the
outstanding Shares or shall have been granted any option or right,
conditional or otherwise, to acquire 9.9% or more of the outstanding Shares,
or (ii) any new "group" is formed which beneficially owns 9.9% or more of
the outstanding Shares;
(f) the Company and Parent shall have agreed in writing that the Offer
will be terminated; or
(g) the Merger Agreement, prior to the expiration of the Offer, is
terminated in accordance with its terms; or
(h) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to the Purchaser or Parent its recommendation
of the Offer set forth herein or shall have approved or recommended any
Acquisition Proposal other than the Offer or the Board of Directors of the
Company shall have resolved to do either of the foregoing; or
(i) The Standard & Poor's 500 Stock Index at the close of business on
the date that the Offer is scheduled to expire is less than 80% of the
Standard & Poor's 500 Stock Index at the close of business on April 27,
1995;
which, in the sole judgment of the Purchaser and Parent in any such case, and
regardless of the circumstances (including any action or inaction by Parent, the
Purchaser or any other affiliate of Parent) giving rise to any such condition,
makes it inadvisable to proceed with such acceptance for payment, purchase or
payment.
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The Merger Agreement provides that the foregoing conditions are for the sole
benefit of Parent and the Purchaser and may be asserted by Parent and the
Purchaser regardless of the circumstances giving rise to any such conditions or
may be waived by Parent or the Purchaser in whole or in part, at any time and
from time to time in their sole discretion. The failure by Parent or the
Purchaser at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right and each right shall be deemed an ongoing
right which may be asserted at any time and from time to time. Any determination
by Parent or the Purchaser concerning any events described in the above
conditions shall be final and binding on all parties.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, neither the Purchaser nor Parent is
aware of any license or regulatory permit that appears to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares as contemplated
herein or of any approval or other action by any Governmental Entity that would
be required for the acquisition or ownership of Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser and Parent currently contemplate that such approval or other action
will be sought, except as described below under "State Takeover Laws." While,
except as otherwise expressly described in this Section 15, the Purchaser does
not presently intend to delay the acceptance for payment of or payment for
Shares tendered pursuant to the Offer pending the outcome of any such matter,
there can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer.
GOVERNMENTAL APPROVALS. Vision Maintenance Organization, Inc. a Michigan
corporation and wholly owned subsidiary of the Company ("VMO"), operates prepaid
and fee for services vision care plans sponsored by employers in Michigan and
New Jersey. VMO is licensed by the Michigan Department of Public Health ("MDPH")
to operate an alternative health care financing and delivery system, which
license is currently being reviewed. Among the prepaid vision care plans
operated by VMO are two plans sponsored by gambling casinos located in Atlantic
City, New Jersey. The Company is therefore required to be licensed by the New
Jersey Casino Control Commission ("NJCCC") to provide services to casino
operators. It is anticipated that the acquisition of the Company by Parent and
Purchaser will require notice to MDPH and NJCCC and the submission of certain
information regarding Parent to those agencies, and Parent may be requied to
obtain a license from NJCCC. The Company is not aware of any other licensing
requirements for VMO's activities.
STATE TAKEOVER LAWS. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining shareholders, provided that such laws were applicable
only under certain conditions.
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Although certain provisions of the BCA limit the ability of a Michigan
corporation to engage in business combinations with "interested shareholders"
(defined as any beneficial owner of 10% or more of the voting power of the
outstanding voting shares of the corporation) under certain circumstances or
require a potential acquiror to obtain shareholder approval prior to acquiring
the right to vote its shares, none of the provisions are applicable to the
Company. However, Article VI of the Company's Restated Articles of Incorporation
limits the ability of the Company to engage in business combinations with
"interested shareholders" (defined to include any person who is or who has
announced or publicly disclosed a plan or intention to become the beneficial
owner of voting stock of the Company representing 10% or more of the votes
entitled to be cast by the holders of all the outstanding shares of such stock),
unless, among other things, the business combination has been approved, either
specifically or categorically, by a majority of the Company's directors who are
not affiliated or associated with the interested shareholder. The Company's
Board of Directors, none of whom are affiliated or associated with the Purchaser
or Parent, has approved the Merger Agreement, the transactions contemplated by
the Shareholder Agreement and the Purchaser's acquisition of Shares pursuant to
the Offer and the Shareholder Agreement and, therefore, the restrictions
contained in Article VI of the Company's Restated Articles of Incorporation are
inapplicable to the Offer and the Merger.
Based on information supplied by the Company, the Purchaser does not believe
that any state takeover statutes purport to apply to the Offer or the Merger.
Neither the Purchaser nor Parent has currently complied with any state takeover
statute or regulation. The Purchaser reserves the right to challenge the
applicability or validity of any state law purportedly applicable to the Offer
or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and an appropriate court does not determine that it is inapplicable
or invalid as applied to the Offer or the Merger, the Purchaser might be
required to file certain information with, or to receive approvals from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer or the Merger. In such case, the Purchaser may not be
obliged to accept payment or pay for any Shares tendered pursuant to the Offer.
ANTITRUST. The purchase of Shares under the Offer may be consummated
following the expiration of a 15-calendar day waiting period following the
filing by HECC and its ultimate parent (as the prospective ultimate parent
entity of Parent) of a Notification and Report Form with respect to the Offer,
unless HECC receives a request for additional information or documentary
material from the Antitrust Division or the FTC or unless early termination of
the waiting period is granted. HECC has informed Parent and the Purchaser that
it and its ultimate parent intend to make such filing during the week of May 8,
1995. If, within the initial 15-day waiting period, either the Antitrust
Division or the FTC requests additional information or material concerning the
Offer, the waiting period will be extended and would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance with such request. Only one extension of the waiting period pursuant
to a request for additional information is authorized by the HSR Act.
Thereafter, such waiting period may be extended only by court order or with the
consent of HECC. In practice, complying with a request for additional
information or material can take a significant amount of time. In addition, if
the Antitrust Division or the FTC raises substantive issues in connection with a
proposed transaction, the parties frequently engage in negotiations with the
relevant governmental agency concerning possible means of addressing those
issues and may agree to delay consummation of the transaction while such
negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
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The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the result thereof.
16. FEES AND EXPENSES
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and State Street Bank and Trust Company to serve as the
Depositary in connection with the Offer. The Information Agent and the
Depositary each will receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities and expenses in connection therewith,
including certain liabilities under the federal securities laws.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by the Purchaser
upon request for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. None of the Purchaser or Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In any jurisdiction the securities, "blue sky" or other laws of
which require the Offer to be made by a licensed broker or dealer, the Offer
will be made on behalf of the Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act,
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that they will not be available at the regional offices of the
Commission).
NI ACQUIRING CORP.
May 4, 1995
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, business address and present principal occupation or employment,
and material occupations, positions, offices or employments for the past five
years, of each director and executive officer of Parent. Each such person is a
citizen of the United States of America and, unless otherwise indicated below,
the business address of each such person is c/o American Vision Centers, Inc.,
90 John Street, New York, New York 10038.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- --------------------------------------------- ---------------------------------------------
<S> <C>
Seth R. Poppel
Age 51..................................... Chairman of the Board of Directors, President
and Chief Executive Officer of Parent since
1990
Vice President and Director of Corporate
Planning, Chase Manhattan Bank, New York, New
York from 1983 to 1990
Michael J. Rosenthal
Age 51..................................... Director of Parent since 1993
President, M.J. Rosenthal & Associates, Inc.
(245 Park Avenue, 35th Floor, New York, New
York 10167) for the last five years
Jonathan S. Hayes
Age 55..................................... Director of Parent since 1993
Principal, M.J. Rosenthal & Associates, Inc.
for the last five years
Lee A. Barkan
Age 40..................................... General Counsel and Secretary of Parent since
1988
Senior Vice President of Parent since 1991
Director of Parent since 1993
John S. Fanuko
Age 36..................................... Senior Vice President, Chief Financial
Officer and Treasurer of Parent since June
1994.
Senior Manager, Ernst & Young (787 Seventh
Avenue, New York, New York 10017) from 1988 to
1994
Donald T. Baasch
Age 40..................................... Senior Vice President of Parent since 1994
Vice President of Parent from 1991 to 1994
Director of Advertising of Parent from 1989
to 1991
Leon Bailey
Age 44..................................... Senior Vice President of Parent since 1994
Vice President of Parent from 1991 to 1994
Director of Training of Parent from 1990 to
1991
Director of Training, Tru-Run Corp. (leasing of
retail jewelry departments; 521 Fifth Avenue,
New York, New York) from 1988 to 1990
</TABLE>
S-1
<PAGE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name and position with the Purchaser of each director and
executive officer of the Purchaser. For further information regarding such
persons, see paragraph 1 above.
<TABLE>
<CAPTION>
NAME POSITION WITH THE PURCHASER
- ------------------------------------------------------------------- ----------------------------
<S> <C>
Seth R. Poppel..................................................... President and Director
John S. Fanuko..................................................... Treasurer and Director
Lee A. Barkan...................................................... Secretary and Director
</TABLE>
S-2
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
By Overnight Courier:
State Street Bank and Trust Company
c/o Boston Financial Data Services, Inc.
Two Heritage Drive MB2
North Quincy, MA 02171
By First Class Mail:
State Street Bank and Trust Company
Corporate Reorganization
P.O. Box 9061
Boston, MA 02205-8686
By Hand:
State Street Bank and Trust Company
225 Franklin Street--Concourse Level
Boston, MA 02110
or
State Street Bank and Trust Company
61 Broadway--Concourse Level
New York, NY 10006
For Information on your Account:
(800) 426-5523
(Toll-Free)
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent at its telephone number and location listed
below. You may also contact your broker, dealer, bank, trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
(LOGO)
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
NUVISION, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 4, 1995
BY
NI ACQUIRING CORP.
A WHOLLY OWNED SUBSIDIARY
OF
AMERICAN VISION CENTERS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JUNE 1, 1995, UNLESS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
By Overnight Courier: By First Class Mail:
State Street Bank and Trust Company State Street Bank and Trust Company
c/o Boston Financial Data Services Inc. Corporate Reorganization
Two Heritage Drive MB2 P.O. Box 9061
North Quincy, MA 02171 Boston, MA 02205-8686
By Hand:
State Street Bank and Trust Company
225 Franklin Street--Concourse Level
Boston, MA 02110
or
State Street Bank and Trust Company
61 Broadway--Concourse Level
New York, NY 10006
For Information on your Account:
(800) 426-5523
(Toll-Free)
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY
THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares (as defined below) is to be made by book-entry
transfer to an account maintained by the Depositary at the Book-Entry Transfer
Facility (as defined below) pursuant to the procedure set forth in Section 2 of
the Offer to Purchase. Shareholders who deliver Shares by book-entry transfer
are referred to herein as "Book-Entry Shareholders" and other shareholders are
referred to herein as "Certificate Shareholders." Shareholders whose
certificates for Shares are not immediately available or who cannot deliver
either the certificates for, or a Book-Entry Confirmation (as defined in Section
2 of the Offer to Purchase) with respect to, their Shares and all other
documents required hereby to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) must tender their Shares in
accordance with the guaranteed delivery procedure set forth in Section 2 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE DEPOSITORY TRUST
COMPANY (THE "BOOK-ENTRY TRANSFER FACILITY") AND COMPLETE THE FOLLOWING
(ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES
BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution __________________________________________________
<PAGE>
Account Number _________________________________________________________________
Transaction Code Number ________________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owner(s) _________________________________________________
Window Ticket No. (if any) _____________________________________________________
Date of Execution of Notice of Guaranteed Delivery _____________________________
Name of Institution that Guaranteed Delivery ___________________________________
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL-IN, SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY)
TOTAL NUMBER
OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
TOTAL SHARES:
</TABLE>
(1) Need not be completed by Book-Entry Shareholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to NI Acquiring Corp., a Michigan corporation
(the "Purchaser") and a wholly owned subsidiary of American Vision Centers,
Inc., a New York corporation ("Parent"), the above-described shares of common
stock, par value $.50 per share (the "Shares"), of NuVision, Inc., a Michigan
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
outstanding Shares at a price of $7.60 per Share, net to the seller in cash, in
accordance with the terms and conditions of the Purchaser's Offer to Purchase
dated May 4, 1995 (the "Offer to Purchase") and this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith, in accordance with the terms of the Offer
(including, if the Offer is extended or amended, the terms or conditions of any
such extension or amendment), the undersigned hereby sells, assigns and
transfers to, or upon the order of, the Purchaser all right, title and interest
in and to all the Shares that are being tendered hereby (and any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after April 27, 1995) and irrevocably constitutes and appoints the
Depositary the true and lawful agent and attorney-in-fact of the undersigned
with respect to such Shares (and any such other Shares or securities or rights),
with full power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares (and any such other Shares or securities or rights) or transfer
ownership of such Shares (and any such other Shares or securities or rights) on
the account books maintained by the Book-Entry Transfer Facility, together, in
any such case, with all accompanying evidences of transfer and authenticity, to
or upon the order of the Purchaser, (b) present such Shares (and any such other
Shares or securities or rights) for transfer on the Company's books and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Shares (and any such other Shares or securities or rights), all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints John S. Fanuko and Lee A.
Barkan, and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's shareholders or otherwise in such manner as each such attorney and
proxy or his substitute shall in his sole discretion deem proper with respect
to, to execute any written consent concerning any matter as each such attorney
and proxy or his substitute shall in his sole discretion deem proper with
respect to, and to otherwise act as each such attorney and proxy or his
substitute shall in his sole discretion deem proper with respect to, all the
Shares tendered hereby that have been accepted for payment by the Purchaser
prior to the time any such action is taken and with respect to which the
undersigned is entitled to vote (and with respect to any and all other Shares or
other securities or rights issued or issuable in respect of such Shares on or
after April 27, 1995). This appointment is effective when, and only to the
extent that, the Purchaser accepts for payment such Shares as provided in the
Offer to Purchase. This power of attorney and proxy are irrevocable and are
granted in consideration of the acceptance for payment of such Shares in
accordance with the terms of the Offer. Such acceptance for payment shall,
without further action, revoke all prior powers of attorney and proxies
appointed by the undersigned at any time with respect to such Shares (and any
such other Shares or securities or rights) and no subsequent powers of attorney
or proxies will be appointed by the undersigned, or be effective, with respect
thereto. The Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon the Purchaser's acceptance for
payment of those Shares, the Purchaser must be able to exercise full voting and
other rights with respect to those Shares (and any such other Shares or
securities or rights), including voting at any meeting of shareholders then
scheduled.
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after April 27, 1995), and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good and
marketable title thereto, free and clear of all liens, restrictions, claims and
encumbrances. The undersigned will, upon request, execute any additional
documents deemed by the Depositary or the Purchaser to be necessary or desirable
to complete the sale, assignment and transfer of the tendered Shares (and any
such other Shares or other securities or rights).
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures set forth in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
<PAGE>
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to the person or persons so indicated.
Unless otherwise indicated herein under "Special Payment Instructions," in the
case of a book-entry delivery of Shares, please credit the account maintained at
the Book-Entry Transfer Facility with any Shares not accepted for payment. The
undersigned recognizes that the Purchaser has no obligation pursuant to the
Special Payment Instructions to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificates for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment are to be issued in the name of someone other than the undersigned,
or if Shares delivered by book-entry transfer that are not accepted for payment
are to be returned by credit to an account maintained at the Book-Entry
Transfer Facility other than the account indicated above.
Issue check and/or certificate(s) to:
Name:___________________________________________
(Please Print)
Address:________________________________________
________________________________________________
(Include Zip Code)
________________________________________________
(Taxpayer Identification or
Social Security Number)
[ ] Credit unpurchased Shares delivered by book-entry
transfer to the Book-Entry Transfer Facility account
set forth below.
(Account Number)________________________________
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificates for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that indicated above.
Mail check and/or certificate(s) to:
Name:___________________________________________
(Please Print)
Address:________________________________________
________________________________________________
(Include Zip Code)
<PAGE>
IMPORTANT
SHAREHOLDERS: SIGN HERE
(Also Complete Substitute Form W-9 on the reverse)
SIGN
- ---> --------------------------------------------------------------------------
HERE
--------------------------------------------------------------------------
(Signature(s) of Shareholder(s))
Dated: ____________ __, 1995
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If any signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or another acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s) ________________________________________________________________________
(Please Print)
Capacity (Full Title) __________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ____________________________________________________
Taxpayer Identification or Social Security No. _________________________________
(See Substitute Form W-9 on reverse side)
GUARANTEE OF SIGNATURE(S)
(If Required--See Instructions 1 and 5)
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
(Please Print)
Name of Firm ___________________________________________________________________
Address ________________________________________________________________________
________________________________________________________________________________
(Include Zip Code)
Area Code and Telephone No. ____________________________________________________
Dated: ___________________________________________________________________, 1995
Financial Institutions: Place
Medallion Guarantee in Space Below
<PAGE>
INSTRUCTIONS FORMING PART OF THE
TERMS AND CONDITIONS OF THE OFFER
1. SIGNATURE GUARANTEES. No signature guarantee is required on this Letter
of Transmittal (a) if this Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this document, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the owner of Shares) of Shares tendered herewith, unless
such holder(s) has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the reverse
hereof, or (b) if such Shares are tendered for the account of a firm that is a
member of the Medallion Signature Guarantee Program, or by any other "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each, an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
shareholders either if certificates for Shares are to be forwarded herewith or,
unless an Agent's Message is utilized, if delivery of Shares is to be made
pursuant to the procedure for book-entry transfer set forth in Section 2 of the
Offer to Purchase. For a shareholder to validly tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or an
Agent's Message in the case of a book-entry transfer, and any other required
documents, must be received by the Depositary at one of its addresses set forth
herein prior to the Expiration Date and either (i) certificates for tendered
Shares must be received by the Depositary at one of such addresses prior to the
Expiration Date or (ii) Shares must be delivered pursuant to the procedure for
book-entry transfer set forth in Section 2 of the Offer to Purchase and a
Book-Entry Confirmation must be received by the Depositary prior to the
Expiration Date or (b) the tendering shareholder must comply with the guaranteed
delivery procedure set forth below and in Section 2 of the Offer to Purchase.
Shareholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedure for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedure, (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser must be received by the
Depositary prior to the Expiration Date and (c) the certificates for all
physically delivered Shares or a Book-Entry Confirmation with respect to all
tendered Shares, as well as a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) with any required signature guarantees (or,
in the case of a book-entry transfer, an Agent's Message), and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within five New York Stock Exchange, Inc. trading days after the date
of execution of the Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering shareholders, by execution of
this Letter of Transmittal (or facsimile hereof), waive any right to receive any
notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
<PAGE>
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE SHAREHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate(s) delivered to the Depositary
are to be tendered, fill in the number of Shares that are to be tendered in the
box entitled "Number of Shares Tendered." In any such case, new certificate(s)
for the remainder of the Shares that were evidenced by the old certificate(s)
will be sent to the registered holder, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
expiration or termination of the Offer. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTERS OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signatures must correspond with the names as written on the
face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are signed
by trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or another acting in a fiduciary or representative capacity, such
person should so indicate when signing, and proper evidence satisfactory to the
Purchaser of the authority of such person so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed herein and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered holder(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of certificates listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL
NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES
LISTED IN THIS LETTER OF TRANSMITTAL. The Purchaser will pay any stock transfer
taxes with respect to the transfer and sale of Shares to it or upon its order
pursuant to the Offer. If, however, payment of the purchase price is to be made
to, or if certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any persons other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s) or such person) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes or exemption therefrom
is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be returned to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown on the reverse of this Letter of Transmittal,
the appropriate boxes on the reverse of this Letter of Transmittal should be
completed. Any shareholder(s) delivering Shares by book-entry transfer may
request that Shares not accepted for payment be credited to such account
maintained at the Book-Entry Transfer Facility as such shareholder(s) may
designate.
8. WAIVER OF CONDITIONS. Subject to the terms of the Offer, the Purchaser
reserves the absolute right in its sole discretion to waive any of the specified
conditions of the Offer, in whole or in part, in the case of any Shares
tendered.
<PAGE>
9. 31% BACKUP WITHHOLDING. Under U.S. federal income tax law, a shareholder
whose tendered Shares are accepted for payment is required to provide the
Depositary with such shareholder's correct taxpayer identification number
("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the
correct TIN, the Internal Revenue Service may subject the shareholder or other
payee to a $50 penalty. In addition, payments that are made to such shareholder
or other payee with respect to Shares purchased pursuant to the Offer may be
subject to 31% backup withholding. If backup withholding applies, the Depositary
is required to withhold 31% of any such payments made to the shareholder or
other payee. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld, provided that the required information is given to the Internal
Revenue Service. If backup withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
The box in Part 3 of the Substitute Form W-9 may be checked if the tendering
shareholder has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is checked, the
shareholder or other payee must also complete the Certification portion of the
Substitute Form W-9 in order to avoid backup withholding. Notwithstanding that
the box in Part 3 is checked and the Certification portion of the Substitute
Form W-9 is completed, the Depositary may withhold 31% on all payments made
prior to the time a properly certified TIN is provided to the Depositary.
However, such amounts will be refunded to such shareholder (if withheld) if a
TIN is provided to the Depositary within 60 days.
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal, the Notice of
Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 should be directed to the
Information Agent at its address set forth below. Questions or requests for
assistance may also be directed to the Information Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE COPY HEREOF (TOGETHER
WITH CERTIFICATES FOR, OR A BOOK-ENTRY CONFIRMATION WITH RESPECT TO, TENDERED
SHARES WITH ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS)
MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION DATE.
<PAGE>
PAYER'S NAME: STATE STREET BANK & TRUST COMPANY
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1: PLEASE PROVIDE YOUR TIN IN
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY ------------------------------
Payer's Request for SIGNING AND DATING BELOW Social Security Number
Taxpayer OR
Identification Number (TIN) ----------------------------
Employer Identification Number
PART 2: For Payees exempt from backup withholding, see the enclosed
Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 and complete as instructed therein.
PART 3: Awaiting TIN / /
CERTIFICATION--Under the penalties of perjury, I certify that (1) the
number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me) and either (a) I
have mailed or delivered an application to receive a taxpayer
identification number to the appropriate IRS center or Social Security
Administration office or (b) I intend to mail or deliver an
application in the near future) and (2) I am not subject to backup
withholding because: (a) I am exempt from backup withholding; or (b) I
have not been notified by the IRS that I am subject to backup
withholding as a result of a failure to report all interest or
dividends; or (c) the IRS has notified me that I am no longer subject
to backup withholding. Certification Instructions-- You must cross out
item (2) above if you have been notified by the IRS that you are
currently subject to backup withholding because of underreporting
interest or dividends on your tax return.
SIGN
- ---> SIGNATURE___________________________________________________________
HERE
DATE________________________________________________________________
NAME________________________________________________________________
(Please Print)
ADDRESS_____________________________________________________________
--------------------------------------------------------------------
(Include Zip Code)
</TABLE>
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31%
OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
Questions and requests for assistance or additional copies of the Offer to
Purchase, any supplements thereto, this Letter of Transmittal and other tender
offer materials may be directed to the Information Agent as set forth below.
The Information Agent for the Offer is:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
MAY 4, 1995
Exhibit (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
NUVISION, INC.
(Not to be used for Signature Guarantees)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of common stock, par value
$.50 per share (the "Shares"), of NuVision, Inc., a Michigan corporation (the
"Company"), are not immediately available or if the procedure for book-entry
transfer cannot be completed on a timely basis or time will not permit all
required documents to reach the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase). Such form may be delivered by
hand or transmitted by facsimile transmission or mailed to the Depositary and
must include a guarantee by an Eligible Institution (as defined in Section 2 of
the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
STATE STREET BANK AND TRUST COMPANY
By Overnight Courier: By First Class Mail:
State Street Bank and Trust Company State Street Bank and Trust Company
c/o Boston Financial Data Services Inc. Corporate Reorganization
Two Heritage Drive MB2 P.O. Box 9061
North Quincy, MA 02171 Boston, MA 02205-8686
By Hand:
State Street Bank and Trust Company
225 Franklin Street--Concourse Level
Boston, MA 02110
or
State Street Bank and Trust Company
61 Broadway--Concourse Level
New York, NY 10006
Facsimile Transmission Confirm by Telephone:
(for Eligible Institutions Only)
(617) 774-4519 (617) 774-4514
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to NI Acquiring Corp., a Michigan corporation
(the "Purchaser") and a wholly owned subsidiary of American Vision Centers,
Inc., a New York corporation, upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated May 4, 1995 (the "Offer to
Purchase") and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"), receipt
of which is hereby acknowledged, Shares pursuant to the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: ______________________ Name(s) of Record Holder(s):
Certificate Nos. (if available): _______ ______________________________________
________________________________________ ______________________________________
(PLEASE PRINT)
/ / (Check box if Shares will be tendered by Address(es):__________________________
book-entry transfer)
______________________________________
ZIP CODE
Area Code and Tel. No.:_______________
Account Number: ___________________________ Signature(s): ________________________
Dated: ____________________________________ ______________________________________
</TABLE>
GUARANTEE
(Not to be Used for Signature Guarantee)
The undersigned, a member of a registered national securities exchange or of
the National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in Section 2
of the Offer to Purchase) of a transfer of such Shares, in any such case
together with a properly completed and duly executed Letter of Transmittal, or a
manually signed facsimile thereof, with any required signature guarantees,or an
Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry transfer, and any other documents required by the Letter of
Transmittal within five New York Stock Exchange, Inc. trading days after the
date hereof.
<TABLE>
<S> <C>
___________________________________________ _______________________________________
NAME OF FIRM AUTHORIZED SIGNATURE
___________________________________________
ADDRESS
___________________________________________ _______________________________________
ZIP CODE TITLE
Name: ________________________________
PLEASE TYPE OR PRINT
___________________________________________ Dated: ________________________ , 1995
AREA CODE AND TEL. NO.
</TABLE>
DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
Exhibit (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NUVISION, INC.
AT
$7.60 NET PER SHARE
BY
NI ACQUIRING CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN VISION CENTERS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JUNE 1 1995, UNLESS EXTENDED.
May 4, 1995
To Brokers, Dealers, Banks, Trust Companies and Other Nominees:
We have been appointed by NI Acquiring Corp., a Michigan corporation (the
"Purchaser") and a wholly owned subsidiary of American Vision Centers, Inc., a
New York corporation ("Parent"), to act as the Information Agent in connection
with the Purchaser's offer to purchase all outstanding shares of common stock,
par value $.50 per share (the "Shares"), of NuVision, Inc., a Michigan
corporation (the "Company"), at $7.60 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Purchaser's Offer to
Purchase dated May 4, 1995 (the "Offer to Purchase") and the related Letter of
Transmittal (which, together with any supplements or amendments thereto,
collectively constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated May 4, 1995;
2. Letter of Transmittal to be used by shareholders of the Company
accepting the Offer;
3. The Letter to Shareholders of the Company from the Chairman of the
Board and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/
Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold shares in your name or in the name of a nominee, with space
provided for obtaining such client's instructions with regard to the Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, JUNE 1, 1995, UNLESS EXTENDED.
<PAGE>
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would constitute, together with all other Shares owned by the
Purchaser, Parent or any affiliate thereof, more than 90% of the Shares on a
fully diluted basis and (ii) Parent and the Purchaser having entered into
definitive financing agreements to provide debt and equity financing sufficient
to consummate the Offer and the Merger and all conditions to funding under these
agreements having been satisfied or waived.
The Board of Directors of the Company has, by unanimous vote, approved the
Offer and the Merger (as defined below) and determined that each of the Offer
and the Merger is fair to, and in the best interests of, the Company and its
shareholders and recommends that shareholders of the Company accept the Offer
and tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of April 27, 1995 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer or the
expiration or termination of the Offer under certain circumstances and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company (the "Merger"), with the Company surviving the Merger as a
wholly owned subsidiary of Parent. In the Merger, each outstanding Share (other
than Shares owned by Parent, the Purchaser or any other subsidiary of Parent and
shares held by the Company or any of its subsidiaries) will be converted into
the right to receive in cash $7.60 per Share, without interest, as set forth in
the Merger Agreement and described in the Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
set forth in Section 2 of the Offer to Purchase), a properly completed and duly
executed Letter of Transmittal (or facsimile thereof), or an Agent's Message (as
defined in the Offer to Purchase) in the case of a book entry transfer, and any
other documents required by the Letter of Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
set forth in Section 2 of the Offer to Purchase.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Depositary and the Information
Agent as described in the Offer to Purchase) in connection with the solicitation
of tenders of Shares pursuant to the Offer. You will be reimbursed upon request
for customary mailing and handling expenses incurred by you in forwarding the
enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may be
directed to the Information Agent at its address and telephone number set forth
on the back cover of the enclosed Offer to Purchase.
Very truly yours,
MACKENZIE PARTNERS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM OR AUTHORIZE YOU OR ANY OTHER
PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY STATEMENTS ON
BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NUVISION, INC.
AT
$7.60 NET PER SHARE
BY
NI ACQUIRING CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN VISION CENTERS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JUNE 1, 1995, UNLESS EXTENDED.
May 4, 1995
To Our Clients:
Enclosed for your consideration are an Offer to Purchase dated May 4, 1995
(the "Offer to Purchase") and a related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the "Offer")
relating to an offer by NI Acquiring Corp., a Michigan corporation (the
"Purchaser") and a wholly owned subsidiary of American Vision Centers, Inc., a
New York corporation ("Parent"), to purchase shares of common stock, par value
$.50 per share (the "Shares"), of NuVision, Inc., a Michigan corporation (the
"Company"), at $7.60 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer. Also enclosed is the Letter to
Shareholders of the Company from the Chairman of the Board and Chief Executive
Officer of the Company accompanied by the Company's Solicitation/Recommendation
Statement on Schedule 14D-9.
We are the holder of record of Shares held by us for your account. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any or all of the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The tender price is $7.60 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has, by unanimous vote,
approved the Offer and the Merger (as defined below) and determined that
each of the Offer and the Merger is fair to and in the best interests of the
Company and its shareholders and recommends that the shareholders of the
Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
<PAGE>
4. The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of April 27, 1995 (the "Merger Agreement"), among Parent, the
Purchaser and the Company pursuant to which, following consummation of the
Offer or the expiration or termination of the Offer under certain
circumstances and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the Company (the "Merger"), with the
Company surviving the Merger as a wholly owned subsidiary of Parent. In the
Merger, each outstanding Share (other than Shares owned by Parent, the
Purchaser or any other subsidiary of Parent and Shares held by the Company
or any of its subsidiaries) will be converted into the right to receive in
cash $7.60 per Share, without interest, as set forth in the Merger Agreement
and described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer that
number of Shares which would constitute, together with all other Shares
owned by the Purchaser, Parent or any affiliate thereof, more than 90% of
the Shares on a fully diluted basis, and (ii) Parent and the Purchaser
having entered into definitive financing agreements to provide debt and
equity financing sufficient to consummate the Offer and the Merger and all
conditions to funding under these agreements having been satisfied or
waived.
6. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, June 1, 1995, unless the Offer is extended by
the Purchaser. In all cases, payment for Shares accepted for payment
pursuant to the Offer will be made only after timely receipt by the
Depositary of certificates for such Shares (or timely Book-Entry
Confirmation of a transfer of such Shares as set forth in Section 2 of the
Offer to Purchase), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other documents required by the
Letter of Transmittal.
7. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer, except
as otherwise provided in Instruction 6 of the Letter of Transmittal.
8. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter
of Transmittal, stock transfer taxes with respect to the purchase of Shares
by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction form
set forth below. An envelope to return your instructions to us is enclosed. If
you authorize tender of your Shares, all such Shares will be tendered unless
otherwise specified below. Your instructions to us should be forwarded promptly
to permit us to submit a tender on your behalf prior to the expiration of the
Offer.
The Offer is made solely by the Offer to Purchase dated May 4, 1995 and the
related Letter of Transmittal and is being made to all holders of Shares. The
Purchaser is not aware of any state where the making of the Offer is prohibited
by administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with that state statute. If, after that good faith
effort, the Purchaser cannot comply with that state statute, the Offer will not
be made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in that state. In any jurisdiction the securities, blue sky or other laws
of which require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed made on behalf of the Purchaser by one or more registered
brokers or dealers licensed under the laws of that jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK OF
NUVISION, INC.
BY NI ACQUIRING CORP.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase dated May 4, 1995, of NI Acquiring Corp., a Michigan corporation and a
wholly owned subsidiary of American Vision Centers, Inc., a New York
corporation, and the related Letter of Transmittal, relating to shares of common
stock, par value $.50 per share, of NuVision, Inc., a Michigan corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all of the Shares) held by you for the account
of the undersigned upon the terms and subject to the conditions set forth in
such Offer to Purchase and the related Letter of Transmittal.
Dated: _________ __, 1995
Number of Shares to be Tendered* ___________________________________________
__________ Shares
___________________________________________
(Signature(s))
___________________________________________
___________________________________________
Please print name(s)
Address ___________________________________
___________________________________________
(Include Zip Code)
Area Code and Telephone No. _______________
Taxpayer Identification or Social
Security No. ______________________________
- ------------
* Unless otherwise indicated, it will be assumed that all of the Shares held by
us for your account
are to be tendered.
3
Exhibit (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens; i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- ------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF--
- ------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee incompetent person(3)
for a designated ward,
minor or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust
account (grantor is
also trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
- ------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------
9. A valid trust, estate, The legal entity (Do
or pension trust not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious charitable, The organization
or educational
organization account
12. Partnership account The partnership
held in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of
Agriculture in the name
of a public entity
(such as a State or
local government,
school district, or
prison) that receives
agricultural program
payments
- ------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEE EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan.
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof.
. A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
. An entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee
Payments of interest to generally subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to non-resident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file a tax return. Beginning January 1, 1984, payers must generally
withhold 20% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase
dated May 4, 1995 and the related Letter of Transmittal and is being made
to all holders of Shares. The Purchaser is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action
pursuant to any valid state statute. If the Purchaser becomes aware of any
valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, the Purchaser will make a good faith effort to
comply with that state statute. If, after that good faith effort, the
Purchaser cannot comply with that state statute, the Offer will not be made
to (nor will tenders be accepted from or on behalf of) the holders of
Shares in that state. In any jurisdiction the securities, blue sky or other
laws of which require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed made on behalf of the Purchaser by one or more
registered brokers or dealers licensed under the laws of that jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
NuVision, Inc.
at
$7.60 Net Per Share
by
NI Acquiring Corp.
A Wholly Owned Subsidiary of
American Vision Centers, Inc.
NI Acquiring Corp., a Michigan corporation (the "Purchaser") and a
wholly owned subsidiary of American Vision Centers, Inc., a New York
corporation ("Parent"), is offering to purchase all outstanding shares of
common stock, par value $.50 per share (the "Shares"), of NuVision, Inc., a
Michigan corporation (the "Company"), at $7.60 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated May 4, 1995 and in the related Letter of
Transmittal (which together constitute the "Offer").
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JUNE 1, 1995,
UNLESS EXTENDED.
- --------------------------------------------------------------------------------
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which would constitute, together with all other
Shares owned by the Purchaser, Parent or any affiliate thereof, more than
90% of the Shares on a fully diluted basis, and (ii) Parent and the
Purchaser having entered into definitive financing agreements to provide
debt and equity financing sufficient to consummate the Offer and the Merger
(as defined below) and all conditions to funding under those agreements
having been satisfied or waived.
The Offer is being made pursuant to an Agreement and Plan of
Merger, dated as of April 27, 1995 (the "Merger Agreement"), among Parent,
the Purchaser and the Company pursuant to which, among other things,
following consummation of the Offer or the expiration or termination of the
Offer under certain circumstances and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company (the
"Merger"). On the effective date of the Merger, each outstanding Share
(other than Shares owned by Parent, the Purchaser or any other subsidiary
of Parent and Shares held by the Company or any of its subsidiaries) will
be converted into the right to receive in cash the amount per Share paid
pursuant to the Offer, without interest. Parent has also entered into a
<PAGE>
separate agreement with Eli Shapiro and Esther Shapiro, the Company's
largest shareholders (the "Shareholders"), in which the Shareholders have
agreed to tender 1,137,785 Shares (or approximately 42% of the outstanding
Shares) pursuant to the Offer and, if necessary, to vote for the Merger.
The Board of Directors of the Company has, by unanimous vote,
approved the Offer and the Merger and determined that each of the Offer and
the Merger is fair to and in the best interests of the Company and its
shareholders, and recommends that the shareholders of the Company accept
the Offer and tender their Shares.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment, and thereby purchased, Shares properly tendered to
the Purchaser and not withdrawn as, if and when the Purchaser gives oral or
written notice to the Depositary of the Purchaser's acceptance for payment
of those Shares. Upon the terms and subject to the conditions of the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit
of the purchase price therefor with the Depositary, which will act as agent
for tendering shareholders for the purpose of receiving payment from the
Purchaser and transmitting payment to tendering shareholders. In all cases,
payment for Shares purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of (a) certificates for those Shares or
timely confirmation of book-entry transfer of those Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in
Section 2 of the Offer to Purchase) pursuant to the procedure set forth in
Section 2 of the Offer to Purchase, (b) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees, or an Agent's Message (as defined in Section 2 of the
Offer to Purchase) in connection with a book-entry transfer, and (c) any
other documents required by the Letter of Transmittal. Under no
circumstances will interest be paid by the Purchaser on the purchase price
of Shares, regardless of any delay in making that payment.
The Purchaser expressly reserves the right, in its sole discretion
(subject to the terms of the Merger Agreement), at any time or from time to
time, and regardless of whether or not any of the events set forth in
Section 14 of the Offer to Purchase shall have occurred or shall have been
determined by the Purchaser to have occurred, to extend the period of time
during which the Offer is open and thereby delay acceptance for payment of,
and payment for, any Shares, by giving oral or written notice of that
extension to the Depositary. The Purchaser shall not have any obligation to
pay interest on the purchase price for tendered Shares in the event the
Purchaser exercises its right to extend the period of time during which the
Offer is open. There can be no assurance that the Purchaser will exercise
its right to extend the Offer. Any such extension will be followed by a
public announcement thereof no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
During any such extension, all Shares previously tendered and not withdrawn
will remain subject to the Offer, subject to the right of a tendering
shareholder to withdraw that shareholder's Shares.
Except as otherwise provided below, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any
time prior to 12:00 midnight, New York City time, on Thursday, June 1, 1995
(or, if the Purchaser shall have extended the period of time during which
the Offer is open, the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire) and, unless theretofore accepted
for payment, may also be withdrawn at any time after Sunday, July 2, 1995.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name
of the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the
physical release of those certificates, the serial numbers shown on those
certificates must be submitted to the Depositary and, unless those Shares
have been tendered by an Eligible Institution (as defined in Section 2 of
the Offer to Purchase), the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedure for book-entry transfer set forth in Section 2 of
<PAGE>
the Offer to Purchase, any notice of withdrawal must also specify the name
and number of the account at the Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise comply with the Book-Entry
Transfer Facility's procedures. Withdrawals of tenders of Shares may not be
rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may
be retendered by again following one of the procedures described in Section
2 of the Offer to Purchase at any time prior to the Expiration Date.
The Company has provided the Purchaser with the Company's
shareholder list and security position listings for the purpose of
disseminating the Offer to holders of Shares. The Offer to Purchase and the
related Letter of Transmittal and other relevant materials will be mailed
to record holders of Shares and furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder lists of the Company or, if applicable, who are
listed as participants in a clearing agency's security position listing,
for subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii)
under the Securities Exchange Act of 1934, as amended, is contained in the
Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and Letter of Transmittal contain important
information which should be read before any decision is made with respect
to the Offer.
Requests for copies of the Offer to Purchase and the Letter of
Transmittal may be directed to the Information Agent as set forth below,
and copies will be furnished promptly at the Purchaser's expense.
The Information Agent for the Offer is:
MacKenzie
Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
May 4, 1995
Exhibit (a)(8)
[NuVision Letterhead]
PRESS RELEASE
For Further Information Contact:
For American Vision Centers, Inc.
Seth Poppel, Chairman
212 385 1000
For NuVision, Inc.
Jonathan Raven, President
810 767 0900
FOR IMMEDIATE RELEASE
FLINT, MI [April 28, 1995] - American Vision Centers, Inc., ["AVC"] and
NuVision, Inc. [NUVI-Nasdaq/NCS] today announced that they have entered
into an agreement pursuant to which AVC would purchase all of the
outstanding shares of NuVision, Inc. for $7.60 per share in cash, or
approximately $21 million. A definitive merger agreement was entered into
by the parties following unanimous approval by NuVision's board of
directors. NuVision, which is a major retailer of prescription and non-
prescription eyecare products and related services with annual systemwide
sales of approximately $60 million and 126 retail outlets, has
approximately 2.7 million shares outstanding.
The merger agreement calls for a subsidiary of AVC to make a cash tender
offer promptly for all outstanding shares of common stock of NuVision at a
price of $7.60 per share. The tender offer would be followed as soon as
possible by a cash merger in which each share of NuVision not acquired in
the tender offer or otherwise would be converted into the right to receive
$7.60 in cash. The tender offer is scheduled to commence the week of
May 1, 1995.
AVC also stated that it has entered into a shareholder agreement with Dr.
Eli Shapiro, Chairman, Chief Executive Officer and Founder of NuVision, and
his wife, pursuant to which they have agreed to tender all of their
NuVision shares, representing approximately 40% of NuVision's outstanding
shares on a fully diluted basis, into the AVC offer, and to vote for the
merger if necessary.
AVC is the largest all-franchise optical chain in the United States, and is
headquartered in New York.
Seth Poppel, Chairman of AVC, stated "We are excited by the prospect of
having a major market position in three key geographic areas with over 190
stores and system sales of $90 million. The company will be well
positioned to compete effectively in the enormously attractive but rapidly
changing optical industry. We look forward to working with the fine
NuVision management, and all of the NuVision professional staff and
associates in providing the absolute highest quality eyecare and eyewear to
the over one million patients we will jointly serve going forward."
Exhibit (b)(1)
May 3, 1995
Mr. Seth R. Poppel
American Vision Centers, Inc.
90 John Street
New York, N. Y. 10038
Dear Mr. Poppel:
Greyrock Capital Group Inc. ("Greyrock Capital") is pleased to present
its commitment to provide financing for the proposed tender offer/merger
pursuant to the merger agreement dated as of April 27, 1995 among
Nuvision, Inc. ("Nuvision"), American Vision Centers, Inc.("AVC"), and
NI Acquiring Corp. (collectively, Nuvision, AVC and NI Acquiring Corp.
are referred to as the "Company").This letter amends and restates the
commitment letter dated March 29, 1995. Greyrock Capital agrees to
provide three loans and make credit available in an amount totaling
$21.0 million directly to the Company in the form of a $3.0 million
Revolving Credit Facility, a $13.0 million Term Loan A and a $5.0
million Term Loan B (collectively, the "Financing") on and subject to
the terms set forth herein. It is our understanding that Heller Equity
Capital Corporation ("HECC") will be investing $5.0 million of equity in
the Company. It is anticipated that Nuvision shall be merged into AVC
(or a wholly owned subsidiary of AVC) and that the sources and uses will
be as follows:
Sources: ($000's) Uses: ($000's)
------- -------- ---- --------
Cash on bal. sheet* $1,765 Purchase of Nuvision Stock $ 21,700
Revolver 3,000 Change of control payment 1,500
Term Loan A 13,000 Retire AVC working capital 3,550
Term Loan B 5,000 Seller Notes & misc. debt 2,800
Seller Notes** misc. debt 3,085 Transaction Costs 1,500
HECC and other equity 6,500 Unfunded Revolver 1,300
----- -----
$32,350 $32,350
====== ======
*After giving effect to stock option proceeds
**Seller Notes are the EyesFirst notes
The general terms of the Financing are set forth below.
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 2
REVOLVING CREDIT FACILITY
-------------------------
Amount: Up to $3,000,000.
Interest Rate: Floating at the 30 day commercial paper
rate plus 450 basis points, payable
monthly in arrears.
Term: Coterminous with Term Loan A.
Collateral: A first perfected lien from and after
consummation of the merger on all of the
Company's assets, including cash, cash
equivalents, inventory, accounts and notes
receivable, property, plant and equipment,
intangibles, contract rights and other
agreements (the "Collateral"), provided
that the franchisee notes held by the
Company and other collateral associated
with the EyesFirst stores and held by the
sellers shall be excluded from the
Collateral. If Greyrock Capital can reach
agreement with the sellers it shall have a
second lien on the collateral held by the
sellers. If Nuvision is maintained as a
subsidiary of AVC, it shall guarantee
AVC's obligations under the Financing and
its assets shall secure such guarantee.
It is understood that assets will be
released from the Collateral upon the
Company's sale of such assets in the
normal course of implementing the
Company's plan to convert owned locations
to franchised locations and the sale of
certain assets.
Purpose: For working capital purposes only (except
for amount drawn at Closing).
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 3
Draws: Minimum draw of $100,000 not more
frequently than two times per week.
Availability: The Company shall be permitted to borrow
an amount up to $3,000,000. Borrowings
shall not be subject to a borrowing base.
Amount Drawn at Closing: Not to exceed $1.7 million
Ranking: Ranks pari passu with Term Loans A and B.
Commitment Fee: A 2.0 % one-time commitment fee, payable
on the Closing Date.
Facility Fee: 50 basis points of the average amount of
the undrawn facility, payable quarterly in
arrears.
Refinancing: Any refinancing shall only be in
connection with the prepayment in full of
the Financing.
TERM LOAN A
-----------
Amount: $13.0 million.
Interest Rate: Floating at the 30 day commercial paper
rate plus 450 basis points, payable
monthly in arrears.
Term: 5 years
Mandatory Repayment:
- Scheduled: To be paid quarterly in arrears in equal
installments per the annual schedule
below:
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 4
Year
----
1 $1,500,000
2 2,000,000
3 2,500,000
4 3,000,000
5 4,000,000
- Cash Sweep: 75% of Excess Cash Flow (as defined below)
shall be paid annually as additional
principal payments on Term Loan A, applied
in inverse order of maturity.
Excess Cash Flow shall mean the sum of (x)
net income, depreciation and amortization,
plus decreases/less increases in working
capital, plus increases/less decreases in
deferred taxes and principal payments
received by the Company, less (y) the sum
----
of capital expenditures, the increase in
the aggregate amount of franchisee notes
and principal payments made by the
Company.
Optional Prepayment: None prior to the second anniversary then
at a 3% premium declining ratably until
the fourth anniversary, no premium
thereafter provided however, the Company
shall be permitted to prepay at any time
without premium (w) in connection with the
sale of the Company, (x) from the proceeds
of a public offering, (y) from the
proceeds of the sale of franchisee
receivables or (z) from the portion of
excess cash flow not swept.
All prepayments shall be applied in
inverse order of maturity, provided that
prepayments under clauses (x) and (y)
shall be applied pro rata and those under
clause (z) shall be applied in forward
order of maturity.
Any prepayment in full (other than from
operating cash flow) shall only be in
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 5
connection with a prepayment in full of
the Financing.
Collateral: Same as the Revolving Credit Facility and
Term Loan B.
Ranking: Ranks pari passu with the Revolving Credit
Facility and Term Loan B.
Commitment Fee: A 2.0% one-time commitment fee, payable on
the Closing Date.
TERM LOAN B
-----------
Amount: $5,000,000.
Interest Rate: Fixed at 5-year Treasuries plus 550 basis
points, with a floor of 13%.
Term: 5 years
Mandatory Repayment:
- Scheduled: To be paid in one installment on the fifth
anniversary of the Closing Date.
- Cash Sweep: After repayment of Term Loan A, 75 % of
Excess Cash Flow shall be paid annually as
additional principal payments on Term Loan
B.
Optional Prepayment: Term Loan B may be prepaid, after
repayment in full of Term Loan A, with the
same prepayment premiums as Term Loan A
together with the Make-Whole Premium.
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 6
The Make-Whole Premium amount shall equal:
(A) the sum of the present value of (x)
the aggregate principal amount of Term
Loan B being prepaid and (y) the
amount of interest which would have
been payable on such amount of the
Term Loan B if not prepaid minus
-----
(B) the aggregate principal amount of Term
Loan B being prepaid
and in no case shall be less than zero.
Present value shall be calculated at a
discount rate equal to the sum of the
Treasury yield on instruments with similar
remaining maturities (at the date of
prepayment) plus the spread on the Closing
Date between the rate on Term Loan B and
Treasuries equal to the original average
life of Term Loan B.
Collateral: Same as the Revolving Credit Facility and
Term Loan A.
Ranking: Ranks pari passu with the Revolving Credit
Facility and Term Loan A.
Commitment Fee: A 2.0% one-time commitment fee, payable on
the Closing Date.
WARRANTS
- --------
General: Detachable warrants for 10.5% of the
Company on a fully diluted basis as of the
Closing Date shall be issued to Greyrock
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 7
Capital for nominal consideration (the
"Warrants"). The Warrants shall have a
total exercise price of $1,173,000, a 10
year term, be freely transferable (subject
to applicable securities law and Reg Y
restrictions) and shall contain standard
anti-dilution language protecting against
stock splits, dividends and the sale of
stock or other equity securities at less
than fair market value with a basket for
management stock options, one demand
registration right (after an IPO),
piggy-back rights and tag-along
provisions. The Warrants shall be
exercisable for non-voting common stock
which shall be convertible into voting
stock, subject to Reg Y constraints
provided that the Warrants may be for
voting common stock if Reg Y permits it.
The terms and structure of the Warrants
may be subject to adjustment in order to
preserve the Company's NOL provided that
Greyrock obtains the economic equivalent
of the terms set forth herein.
Put: Greyrock Capital shall have the right to
cause the Company to purchase the Warrants
at any time (prior to a qualified IPO)
beginning on the earlier of a refinancing
or other repayment of the Financing or the
fifth anniversary of the Closing Date at
the fair market value of the Company's
common equity on an appraised basis unless
a qualified public offering has occurred,
minus the exercise price of the Warrants
(the "Option Price"). Any appraisal shall
not give effect to the fact that the
Warrants are a minority position and do
not have voting rights. The Company shall
use its best efforts to pay the put in
cash and, except in the case of a
refinancing, if it is
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 8
unable to do so, Greyrock Capital shall
finance the put with a 3-year note.
Call: The Company shall have the option
(prior to a qualified IPO) to purchase the
Warrants at the Option Price at any time
beginning on the sixth anniversary of the
Closing Date. In the event that the
Company exercises its call option and then
within nine months (i) completes an IPO or
(ii) more than 25% of its common stock or
assets (excluding the sale of notes of
franchisees) are sold to any
non-affiliated third party or third
parties as part of a single sale or series
of sales (each of such events being
referred to as an "Adjustment Event"),
then the Company shall pay to Greyrock
Capital as additional compensation with
respect to the exercise of the call
option, the difference between the price
per share paid or to be paid as a result
of the Adjustment Event (less underwriting
commissions and other appropriate costs
and expenses) or consideration for the
assets (on a per share basis) less the
amount paid to Greyrock Capital with
respect to the call.
GENERAL TERMS AND CONDITIONS
----------------------------
The general terms and conditions set forth below shall apply to the
Financing.
Financial Covenants
-------------------
Financial covenants (reasonably acceptable to Greyrock Capital and the
Company and consistent with the Company's business plan) shall include
but not be limited to:
(i) debt service and debt coverage ratios,
(ii) limitations on leverage,
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 9
(iii) capital expenditure limitations (including limitations on the
Company's financing of franchisee renovations) and
(iv) minimum cash flow levels.
Other Covenants
- ---------------
Other covenants (reasonably acceptable to Greyrock Capital and the
Company and consistent with the Company's business plan) shall include
but not be limited to:
(i) financial reporting (including review of operating and
capital expenditure budgets),
(ii) restriction on additional indebtedness or liens,
(iii) prohibition of disposition of material assets (other than
those dispositions contemplated by the Company's business
plan),
(iv) limitations on leasing,
(v) restriction on dividends and redemption of common stock
(provided there shall be a basket permitting redemption of
certain management stock),
(vi) restriction on related party transactions and
(vii) merger and consolidation provisions.
Events of Default/Remedies
--------------------------
The transaction documents shall contain events of default and remedies
customary for transactions of this type. There shall be a change in
control event of default which shall be triggered 120 days after Mr.
Poppel (or any successor) is no longer chief executive officer unless a
successor has been appointed by the Board of Directors and approved by
Greyrock Capital (such approval not to be unreasonably withheld), change
in Mr. Poppel's stock ownership as long as he is chief executive officer
(with appropriate provisions for transfers for estate planning reasons
or to his heirs), change in control of the Board of Directors and change
in ownership by M.J. Rosenthal & Associates ("MJR") and HECC (provided
that a shift in control or ownership between MJR and HECC and a sale to
a third party of up to 10% in the aggregate shall not be an event of
default).
MISCELLANEOUS
- -------------
Closing Date: To be mutually agreed. The closing of the
Financing shall be simultaneous with the
merger of Nuvision into AVC or one of its
subsidiaries; provided that the closing of
--------
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 10
the Financing may precede closing of the
merger by not more than five business
days, so long as Greyrock Capital is
satisfied that the merger will occur
within that time and receives at closing
of the Financing such guarantees and
collateral from the Company as it may
require.
Other Elements of
the Capital Structure:
Existing Seller Notes: An intercreditor agreement , if any, shall
contain terms and conditions acceptable to
the holders of the Seller Notes and
Greyrock Capital.
Common Equity: HECC shall purchase $5.0 million of common
equity on the Closing Date.
Additional Capital Support:
General: Heller Financial, Inc. ("HFI") and Mr.
Michael Rosenthal shall agree to provide a
total of $2.0MM of additional capital
support. This amount may be split between
the two parties at closing in such
proportion as they may agree, and their
obligations shall be on a several basis.
The capital support shall be in the form
of an agreement with Greyrock Capital to
deleverage the Company by up to $2.0MM if
the Company fails to reach certain EBITDA
targets (the "Triggering Events").
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 11
Triggering Events: If the Company's EBITDA does not equal or
exceed the amounts shown below, then the
following shall occur:
(a) if it is less than $3.0MM for
the first transaction year, then
$1.0MM shall be funded and
(b) if it is less than $5.0MM for
the second transaction year, then an
additional $1.0MM shall be funded.
If EBITDA is $3.0MM or greater for the
first year, and less than $5.0MM for the
second year, then $2.0MM shall be funded
under clause (b).
EBITDA for these purposes shall be
calculated in the same manner as
calculated in the model.
Conditions for repayment: Amounts funded under clause (a) may be
repaid by the Company out of available
cash provided the Company's preceding two
transaction year's EBITDA is at least
$6.0MM per annum and no default exists.
Mechanics: The mechanics shall provide that HFI and
Mr. Rosenthal purchase up to $2.0MM of
Greyrock's Term A debt if a Triggering
Event occurs. At the original Closing
Date, HFI and Mr. Rosenthal shall have
entered into an intercreditor agreement
with Greyrock Capital acceptable to it in
its sole discretion (including provisions
for payment of interest solely in kind).
Environmental: AVC shall arrange for an environmental
consulting firm to conduct an
environmental and occupational safety and
health review
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 12
(the "Environmental Review") of the
Company's properties and business
practices. The scope of the Environmental
Review, the report prepared by the
consulting firm (the "Environmental
Report") and the consulting firm must be
satisfactory to Greyrock Capital.
Greyrock Capital reserves the right to
have the Environmental Report reviewed by
its environmental consultants.
Environmental representations, warranties,
covenants, notices of default and
indemnities related to compliance with
environmental laws and regulations, and
the maintenance of the Company's
properties free of hazardous material
and/or waste, as are deemed appropriate by
Greyrock Capital and its counsel in their
sole discretion, will be required.
Closing/Management Fees: No closing fees shall be payable to MJR,
HECC, their affiliates and other equity
investors. Annual management fees shall
not exceed $100,000 and shall be
subordinated to the Financing.
Monitoring Fee: A $25,000 annual fee will be payable,
quarterly in arrears, to Greyrock Capital.
Key-Man Life Insurance: Greyrock Capital may require key-man life
insurance on certain members of senior
management in amounts acceptable to
Greyrock Capital.
Transaction Expenses: All of Greyrock Capital's reasonable
out-of-pocket expenses (including counsel
and consultant fees and expenses) will be
for the account of AVC regardless of
whether the transactions contemplated
hereby are consummated. Greyrock Capital
agrees that
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 13
it shall receive permission from AVC in
writing prior to incurring out-of-pocket
expenses (excluding counsel) that exceed
$25,000.
Good Faith Deposit: A $50,000 good faith deposit (the
"Deposit") was previously paid.The
Deposit will be refunded, less any
reasonable out of pocket expenses
incurred, only in the event that a
transaction is not consummated. If the
Financing is consummated, the balance of
the Deposit, after payment of expenses,
will be credited against the Commitment
Fees due.
Break-Up Fee: In addition to the above, and without
limiting the provisions stated herein in
any respect, in the event that AVC (or any
of its affiliates) acquires Nuvision
within twelve months from the date of this
letter and AVC (or any of their
affiliates) obtains alternative financing
from other source(s), a fee equal to the
sum of the Commitment Fees (the "Break-Up
Fee") will be due and payable to Greyrock
Capital by the Company.
In addition, if AVC shall receive any
broken deal or similar fees as a result of
this transaction, it shall pay Greyrock
Capital 1/3 of such fees (net of AVC's and
HECC's out-of-pocket expenses).
Interest Rate Cap: Greyrock Capital may require that the
Company obtain an interest rate cap
agreement with respect to its floating
rate obligations under the Financing.
Broker: AVC agrees to indemnify and hold Greyrock
Capital harmless from any claim for any
commission, fee or compensation
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 14
from any broker resulting from this
transaction. Greyrock Capital represents
that it has not retained any broker or
third party in connection with the
proposed transaction. No broker or any
other third party has any authority to act
for or bind Greyrock Capital.
Documentation: Negotiation of transaction agreements,
perfection of liens, and satisfaction of
other customary closing conditions
(including opinions) must be satisfactory
in form and substance to Greyrock Capital
and its counsel. Greyrock Capital's
counsel shall prepare drafts of
transaction documents for the Financing.
Conditions to closing: This commitment letter is subject to the
satisfaction, in Greyrock Capital's
discretion, of the following conditions:
(i) satisfactory review of the equity
documents (including charter,
shareholder and other documents) with
terms and conditions acceptable to
Greyrock Capital,
(ii) satisfactory review of the scope of
the Environmental Review and results
of the Environmental Report,
(iii) closing on or prior to September
23, 1995 and
(iv) absence of material adverse change in
the financial condition, operations or
business prospects of AVC and
Nuvision.
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 15
The general terms and conditions of the Financing outlined in this
Commitment Letter are not intended to be all-inclusive, rather they are
set forth as an indication of Greyrock Capital's economic and
documentation requirements for the contemplated transaction.
This Commitment Letter:
(i) sets forth the entire understanding to date between the
parties hereto with respect to the Financing and supercedes
all prior agreements and understandings, both written and oral
with respect thereto,
(ii) may not be amended, modified or supplemented in any respect
except as expressly set forth in writing signed by an
authorized Greyrock Capital representative,
(iii) may not (and its terms may not) be disclosed (except as
required by law) to anyone except to AVC, Nuvision and HECC,
your and their agents, advisors and attorneys who have a need
to know as a result of their being involved in the proposed
transaction and
(iv) shall be governed by and construed in accordance with the
internal laws of the State of New York.
If the terms of this Commitment Letter are acceptable to you, please
sign below on the enclosed copy of this letter and return such
originally signed copy to the undersigned. By signing below, you agree
that the terms of this Commitment Letter are acceptable to you and to
enter the Financing on and subject to the terms set forth herein. This
Commitment Letter expires if not accepted by 5pm New York time on May
10, 1995.
Very truly yours,
GREYROCK CAPITAL GROUP INC.
by /s/ A. Pier Meager
---------------------------
A. Pier Meager, Authorized
Signatory
Agreed and accepted:
AMERICAN VISION CENTERS, INC.
<PAGE>
Mr. Seth R. Poppel
May 3, 1995
Page 16
by ___________________________
Date:
May 3, 1995
CONFIDENTIAL
- ------------
Mr. Michael J. Rosenthal
Mr. Jonathan S. Hayes
M.J. Rosenthal & Associates, Inc.
245 Park Avenue
New York, NY 10167
Mr. Seth R. Poppel
American Vision Centers, Inc.
90 John Street
New York, NY 10038
Gentlemen:
This letter of intent is intended to encompass all agreements to date and
express the collective interest of Heller Equity Capital Corporation ("HECC")
and/or its affiliates (collectively, "Heller") in investing up to $7 million in
the common stock and senior subordinated debt (of which $5 million would be in
common stock) of American Vision Centers, Inc. ("AVC" or the "Company") in
connection with the acquisition by AVC of all of the capital stock of NuVision,
Inc. ("Target") pursuant to the terms of the Merger Agreement, dated April 27,
1995, among AVC, NI Acquiring Corp. and Target (the "Merger Agreement"). The
investment by Heller would be conditioned upon, among other things, the
consummation of the tender offer or merger (without waiver of any conditions),
of Target pursuant to the terms of the Merger Agreement as in effect as of the
date hereof.
It is anticipated that the shareholders in the Company would consist of Heller
and the current beneficial shareholders of AVC (the "Existing Shareholders"),
who include Michael J. Rosenthal ("Rosenthal"), Jonathan S. Hayes ("Hayes"),
Seth R. Poppel ("Poppel"), Robert Sheft ("Sheft") and other senior managers of
AVC (who, together with Rosenthal, Hayes, Poppel and Sheft are collectively, the
"Principal Existing Shareholders") and certain other outside shareholders of
AVC.
<PAGE>
Mr. Michael J. Rosenthal
Mr. Jonathan S. Hayes
Mr. Seth R. Poppel
Page 2
May 3, 1995
This letter outlines the terms of the proposed transaction; however, the final
terms and conditions would be evidenced only by a definitive agreement
acceptable to all parties (the "Agreement").
1. Sources and Uses. The total amount of funds required by the
Company to purchase Target, refinance debt and to pay fees and expenses related
to the transaction is estimated to be $28.5 million. The necessary funds at
closing are provided by the following: the restated commitment letter dated as
of May 3, 1995 from Greyrock Capital Group ("Greyrock") for $21.0 million, of
which $19.7 million would be availalble at closing; HECC agrees to invest $5.0
million in the common stock of the Company; the Rosenthal entities agree to
convert $1.5 million of working capital debt and/or contribute $1.5 million for
common stock of the Company; cash, option proceeds and other considerations of
approximately $2.3 million; and the Rosenthal entities and HECC agree to invest
an additional $1.0 million in senior subordinated debt of the Company if
necessary as described in section 2 (ii).
2. Heller Investment. The basic terms of Heller's proposed
investment in the Company would be a purchase of common stock for a cash
purchase price, payable at Closing, of $5 million. The number of shares
received by Heller would equal 50% of the outstanding shares of common stock of
the Company; the remaining 50% of the outstanding shares of common stock would
be owned by the Existing Shareholders (subject to the recapitalization described
below). In addition, HECC in conjunction with Rosenthal, Hayes and Poppel would
provide additional funding of up to $3 million. The parties agree such
additional funding or commitments will be provided as follows: (i) $2.0 million
will be reserved for payment if and to the extent required under the terms of
the Greyrock commitment letter in the following order: $666,666 will be payable
by the Rosenthal, Hayes and Poppel group and $333,333 will be payable by HECC on
the first $1 million required by Greyrock and $1 million will be payable by HECC
on the second $1 million required by Greyrock; and, (ii) the remaining $1
million which may be used for funding requirements necessary to acquire Target,
will be provided dollar for dollar by each of the parties on a ratio of 2/3 to
HECC and 1/3 to the Rosenthal, Hayes and Poppel group.
3. Management. Poppel would become President and CEO of the
Company under the terms outlined in the Employment Agreement dated May 28, 1993,
which you have shared with us. All other contemplated material employment
decisions concerning senior management would be handled at the discretion of
Company's Board of Directors (the "Board").
<PAGE>
Mr. Michael J. Rosenthal
Mr. Jonathan S. Hayes
Mr. Seth R. Poppel
Page 3
May 3, 1995
4. Shareholders Agreement. Effective upon Closing, Heller and
the Principal Existing Shareholders would enter into a customary shareholders
agreement (the "Shareholders Agreement"), providing, among other things, for the
election of directors of the Company, registration rights (demand and
piggyback), and the transfer of shares on terms previously discussed by the
parties.
5. Board of Directors. Subject to the terms of the
Stockholders Agreement, (i) Heller and the Principal Existing Shareholders would
agree to vote their shares to elect a Board consisting of at least five members
and (ii) each of Heller, on the one hand, and the Principal Existing
Shareholders, as a group on the other hand, would select two directors; the
fifth director would be the Company's Chief Executive Officer.
6. Transaction Costs. At Closing, the Company would reimburse
all parties for reasonable out-of-pocket expenses associated with the
transaction. In the event that all parties endeavor to close the transaction
and are unsuccessful at doing so, expenses would be paid as follows:
- All parties would be responsible for their respective out-of
-pocket expenses except as provided below.
- Expenses relating to advisors hired by any one party for the
sole use of that party will be reimbursed by that party.
- Expenses relating to advisors approved in advance to be
hired on behalf of the Company shall be the responsibility
one-half of AVC and one-half of Heller (including without
limitation the fees and expenses of Skadden, Arps, Slate,
Meagher and Flom, Kirkpatrick & Lockhart and Ernst & Young).
Similarly, expenses relating to advisors of any potential
lenders or fees to be charged by such lenders shall be the
responsibility of one-half to AVC and one-half to Heller.
- Amounts paid to Target by the Company, if any, pursuant of
Section 9.6 of the Merger Agreement shall be the
responsibility of one-half to AVC and one-half to Heller.
For the purposes of the above, advisors shall mean consultants, lawyers,
accountants and any other third parties used in connection with the proposed
transaction.
<PAGE>
Mr. Michael J. Rosenthal
Mr. Jonathan S. Hayes
Mr. Seth R. Poppel
Page 4
May 3, 1995
7. Documentation. The parties agree that the Agreement to be
entered into by Heller, AVC and the Principal Existing Shareholders will contain
customary representations and warranties and indemnification provisions.
8. Non-Binding. This letter of intent does not constitute a
binding contract and the parties do not intend to be legally bound, except as
provided by the terms and conditions of the Agreement, when and if executed and
delivered, and nothing stated herein expressly or by implication shall impose
any obligations on the parties including any obligation to enter into the
Agreement; however the parties of this letter of intent agree to be legally
bound by the terms of Paragraphs 6, 8, 9, 10 and 11. The transaction outlined
herein is subject to, among other things, HECC and the Principal Existing
Shareholders continuing business and legal due diligence review of Target as
well as the successful completion of the recapitalization contemplated by AVC on
terms and with a structure mutually acceptable to the Principal Existing
Shareholders and Heller.
9. Cooperation. M.J. Rosenthal and AVC will take all
appropriate action prior to the execution of the Agreement or the earlier
termination of this letter of intent, to cooperate with Heller in a manner
intended to permit Heller to complete its due diligence review on a timely
basis, including furnishing or causing to be furnished to Heller and its
representatives information and documents concerning AVC and, to the extent
available, Target, arranging meetings with management, company visits, and
permitting financial statement and accounting work paper review.
10. Exclusivity. In consideration of the time and expense
required on the part of HECC to enter into the due diligence process, for a
period of 180 days from the date of your signature, HECC shall have the
exclusive right to close this transaction or any other financing or acquisition
which M.J. Rosenthal and AVC may enter into with Target that requires an
infusion of approximately $7 million of common stock and senior subordinated
debt (of which $5 million would be in common stock) and M.J. Rosenthal and AVC
will agree to close any such transaction only with HECC provided in all cases
that the final terms thereof, including those set forth in the Agreement and the
Shareholders Agreement, are acceptable to all parties. If HECC determines that
it no longer intends to close the transaction outlined in this letter, M.J.
Rosenthal and AVC will be promptly notified and released from the terms of this
paragraph. For a period of one year from the date of your signature, HECC will
not, directly or indirectly, seek to engage in any transaction involving the
Target without the written consent of AVC and M.J. Rosenthal.
<PAGE>
Mr. Michael J. Rosenthal
Mr. Jonathan S. Hayes
Mr. Seth R. Poppel
Page 5
May 3, 1995
11. Governing Law. This letter is governed by and shall be
construed in accordance with the laws of the State of New York (excluding any
conflict of laws provisions). If and when the Agreement is executed and
delivered by Heller and M.J. Rosenthal and AVC, any obligations of the parties
hereto shall terminate except to the extent expressly provided in the Agreement.
If this letter confirms your understanding, please execute both copies in the
space provided below, retain one copy for your files, and return the other copy
to the undersigned at the address set forth above.
Sincerely,
Heller Equity Capital Corporation
_________________________ _________________________
John M. Goense C. Andrew Brickman
Managing Director Vice President
<PAGE>
Mr. Michael J. Rosenthal
Mr. Jonathan S. Hayes
Mr. Seth R. Poppel
Page 6
May 3, 1995
ACCEPTED:
M.J. Rosenthal & Associates, Inc.
_________________________ _________________________
Michael J. Rosenthal Jonathan S. Hayes
President Principal
_________________________ _________________________
Date Date
American Vision Centers, Inc.
_________________________
Seth R. Poppel
President
_________________________
Date
Exhibit (c)(1)
==================================================================
AGREEMENT AND PLAN OF MERGER
dated as of April 27, 1995
by and among
NUVISION, INC.,
AMERICAN VISION CENTERS, INC.
and
NI ACQUIRING CORP.
==================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
The Offer
1.1. The Offer . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Company Action . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Effective Time . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
Articles of Incorporation and By-laws
of the Surviving Corporation
3.1. Articles of Incorporation . . . . . . . . . . . . . . . . 4
3.2. By-laws . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV
Directors and Officers of
the Surviving Corporation
4.1. Directors and Officers . . . . . . . . . . . . . . . . . 4
ARTICLE V
Effect of the Merger on Capital Stock;
Surrender of Certificates
5.1. Effect on Capital Stock . . . . . . . . . . . . . . . . . 5
5.2 Surrender of Certificates . . . . . . . . . . . . . . . 5
(a) Paying Agent . . . . . . . . . . . . . . . . . . . 5
(b) Surrender Procedure . . . . . . . . . . . . . . . . 5
(c) Transfers . . . . . . . . . . . . . . . . . . . . . 6
(d) Termination of Payment Fund . . . . . . . . . . . . 6
(e) No Liability . . . . . . . . . . . . . . . . . . . 6
-i-
<PAGE>
Page
----
ARTICLE VI
Representations and Warranties
6.1. Representations and Warranties of the Company . . . . . . 7
(a) Corporate Organization and Qualification. . . . . . 7
(b) Authorized Capital . . . . . . . . . . . . . . . . 8
(c) Corporate Authority . . . . . . . . . . . . . . . . 9
(d) Governmental Filings; No Violations . . . . . . . . 10
(e) Reports; Financial Statements . . . . . . . . . . . 11
(f) Indebtedness; Absence of Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . 11
(g) Absence of Certain Changes . . . . . . . . . . . . 12
(h) Litigation . . . . . . . . . . . . . . . . . . . . 12
(i) Taxes . . . . . . . . . . . . . . . . . . . . . . 13
(j) Contracts; Franchises . . . . . . . . . . . . . . . 13
(k) Real Property . . . . . . . . . . . . . . . . . . . 14
(l) Personal Property . . . . . . . . . . . . . . . . . 15
(m) Insurance . . . . . . . . . . . . . . . . . . . . . 16
(n) Employment Agreements . . . . . . . . . . . . . . . 16
(o) Employee Benefits . . . . . . . . . . . . . . . . . 16
(p) Labor Matters . . . . . . . . . . . . . . . . . . . 19
(q) Compliance with Laws and Regulations . . . . . . . 19
(r) Environmental Matters . . . . . . . . . . . . . . . 20
(s) Certain Transactions . . . . . . . . . . . . . . . 22
(t) Intellectual Property . . . . . . . . . . . . . . . 22
(u) Disclosure Documents . . . . . . . . . . . . . . . 23
(v) Brokers and Finders . . . . . . . . . . . . . . . . 23
(w) Opinion of Financial Advisor . . . . . . . . . . . 23
(x) Disclosure . . . . . . . . . . . . . . . . . . . . 23
6.2. Representations and Warranties of Parent
and the Purchaser . . . . . . . . . . . . . . . . . . . 24
(a) Corporate Organization and Qualification . . . . . 24
(b) Corporate Authority . . . . . . . . . . . . . . . . 24
(c) Governmental Filings; No Violations . . . . . . . . 25
(d) Brokers and Finders . . . . . . . . . . . . . . . . 26
(e) Commitments for the Financing . . . . . . . . . . . 26
(f) Disclosure Documents . . . . . . . . . . . . . . . 26
(g) Financial Statements . . . . . . . . . . . . . . . 26
ARTICLE VII
Covenants
7.1. Interim Operations of the Company . . . . . . . . . . . . 27
7.2. Acquisition Proposals . . . . . . . . . . . . . . . . . . 29
7.3. Shareholders' Approval . . . . . . . . . . . . . . . . . 30
7.4. Filings; Other Actions . . . . . . . . . . . . . . . . . 31
-ii-
<PAGE>
Page
----
7.5. Access . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6. Notification of Certain Matters . . . . . . . . . . . . . 33
7.7. Legal Conditions to Merger . . . . . . . . . . . . . . . 33
7.8. Publicity . . . . . . . . . . . . . . . . . . . . . . . . 34
7.9. Stock Options . . . . . . . . . . . . . . . . . . . . . . 34
7.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 34
7.11. Indemnification and Benefits . . . . . . . . . . . . . . 34
7.12. Conditional Option . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
Conditions
8.1. Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . . . . 37
(a) Company Shareholder Approval . . . . . . . . . . . 37
(b) Governmental and Regulatory Consents . . . . . . . 37
(c) Litigation . . . . . . . . . . . . . . . . . . . . 37
(d) The Offer . . . . . . . . . . . . . . . . . . . . . 38
8.2. Conditions to Obligation of the Company . . . . . . . . . 38
(a) Representations and Warranties . . . . . . . . . . 38
(b) Performance of Obligations of Parent . . . . . . . 38
8.3. Conditions to Obligations of Parent and
the Purchaser . . . . . . . . . . . . . . . . . . . . . 38
(a) Representations and Warranties . . . . . . . . . . 38
(b) Performance of Obligations of the Company . . . . . 38
(c) Consents . . . . . . . . . . . . . . . . . . . . . 39
(d) No Material Adverse Change . . . . . . . . . . . . 39
(e) Financing . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
Termination
9.1. Termination by Mutual Consent . . . . . . . . . . . . . . 39
9.2. Termination by either Parent or the Company . . . . . . . 39
9.3. Termination by the Company . . . . . . . . . . . . . . . 40
9.4. Termination by Parent . . . . . . . . . . . . . . . . . . 40
9.5. Termination Due to Lack of Financing . . . . . . . . . . 41
9.6. Effect of Termination and Abandonment . . . . . . . . . . 41
-iii-
<PAGE>
Page
----
ARTICLE X
Miscellaneous and General
10.1. Survival . . . . . . . . . . . . . . . . . . . . . . . . 44
10.2. Additional Actions . . . . . . . . . . . . . . . . . . . 44
10.3. Modification or Amendment . . . . . . . . . . . . . . . . 44
10.4. Waiver of Conditions . . . . . . . . . . . . . . . . . . 44
10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . 44
10.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . 45
10.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.8. Entire Agreement, etc. . . . . . . . . . . . . . . . . . 46
10.9. No Third Party Beneficiaries . . . . . . . . . . . . . . 46
10.10. Definition of "Subsidiary" . . . . . . . . . . . . . . . 46
10.11. Obligation of Parent . . . . . . . . . . . . . . . . . . 46
10.12. Captions . . . . . . . . . . . . . . . . . . . . . . . . 46
-iv-
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
April 27, 1995, by and among NUVISION, INC., a Michigan corporation (the
"Company"), AMERICAN VISION CENTERS, INC., a New York corporation
("Parent"), and NI ACQUIRING CORP., a Michigan corporation and a wholly
owned subsidiary of Parent (the "Purchaser").
WITNESSETH:
WHEREAS, the Boards of Directors of the Company and Parent each
have determined that a business combination between Parent and the Company
is in the best interests of their respective companies and shareholders
and, accordingly, have agreed to effect the offer and the merger provided
for herein, upon the terms and subject to the conditions set forth herein;
and
WHEREAS, in furtherance of such business combination, the
Purchaser will commence a tender offer (the "Offer") to purchase all
outstanding shares of common stock, par value $0.50 per share (the
"Shares"), of the Company at a price of $7.60 per Share, net to the seller
in cash (the "Offer Price"), upon the terms and subject to the conditions
set forth herein; and
WHEREAS, to induce Parent and the Purchaser to enter into this
Agreement and as a condition to Parent and the Purchaser entering into this
Agreement, concurrently with the execution and delivery of this Agreement,
certain shareholders of the Company have entered into a shareholder
agreement (the "Shareholder Agreement") with Parent pursuant to which,
among other things, such shareholders have agreed, subject to certain
conditions, to tender 1,137,785 Shares into the Offer.
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements contained herein
and in the Shareholder Agreement, the parties hereto agree as follows:
ARTICLE I
The Offer
1.1. The Offer. So long as none of the events set forth in
---------
Annex I hereto shall have occurred or be continuing, the Purchaser shall
commence (within the meaning of Rule 14d-2(a) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
promptly as reasonably practicable after the date hereof (but in no event
later than five business days after the public announcement of the
execution hereof), the Offer in accordance with Section 14(d) of the
Exchange Act. The
<PAGE>
Offer shall be subject only to the conditions set forth in Annex I hereto,
any of which conditions may be waived in the sole discretion of Parent and
the Purchaser. Upon the terms and subject to the satisfaction or waiver of
such conditions to the Offer, the Purchaser shall accept for payment and
thereby purchase all Shares properly tendered pursuant thereto as soon as
legally permissible following the consummation thereof and following such
consummation shall pay for all such Shares as promptly as practicable
thereafter. On the date of commencement of the Offer, Parent and the
Purchaser shall file with the Securities and Exchange Commission (the
"Commission") and disseminate to holders of Shares to the extent required
by law a Tender Offer Statement on Schedule 14D-1 (together with all
amendments thereof and supplements thereto, the "Schedule 14D-1") with
respect to the Offer. The Schedule 14D-1 shall contain or shall
incorporate by reference, among other documents, an offer to purchase
relating to the Offer (the "Offer to Purchase") and forms of the related
letter of transmittal and summary advertisement (the Schedule 14D-1, the
Offer to Purchase and all such other documents, together with all
amendments thereof and supplements thereto, being referred to herein
collectively as the "Offer Documents"). Parent and the Purchaser, on the
one hand, and the Company, on the other hand, shall promptly correct any
information provided by such person for use in the Schedule 14D-1 or the
other Offer Documents that shall have become false or misleading in any
material respect, and Parent and the Purchaser shall take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the
Commission and such Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws.
1.2. Company Action. The Company hereby approves of and
--------------
consents to the Offer and represents and warrants that its Board of
Directors has, at a meeting duly called and held, by the unanimous action
of all of its directors, (a) determined that each of the Offer and the
Merger is fair to and in the best interests of the Company and its
shareholders, (b) approved this Agreement, the Offer, the Merger and the
other transactions contemplated hereby and the transactions contemplated by
the Shareholder Agreement for all purposes under the Business Corporation
Act of the State of Michigan (the "BCA") and Article VI of the Restated
Articles of Incorporation of the Company, as amended to date (the
"Company's Restated Articles"), and (c) resolved to recommend that the
holders of the Shares accept the Offer and tender their Shares pursuant
thereto and approve and adopt this Agreement and the Merger. On the date
of commencement of the Offer, the Company shall file with the Commission a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments thereof and supplements thereto, the "Schedule 14D-9")
containing, subject to the fiduciary duties of the Company's Board of
Directors under applicable law as advised in writing by independent
counsel, the recommendation and determination of the Company's Board of
- 2 -
<PAGE>
Directors described above and shall disseminate to holders of Shares the
Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the
Exchange Act and any other applicable federal securities laws. The
Company, on the one hand, and Parent and the Purchaser, on the other hand,
shall promptly correct any information provided by such person for use in
the Schedule 14D-9 that shall have become false or misleading in any
material respect, and the Company shall take all steps necessary to cause
the Schedule 14D-9 as so corrected to be filed with the Commission and
disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Company hereby
consents to the inclusion in the Offer Documents of the recommendation and
determination described in the first sentence of this Section 1.2. In
connection with the Offer, the Company shall promptly furnish, or cause to
be furnished, to the Purchaser a list of the holders of Shares, mailing
labels containing the names and addresses of all record holders of Shares,
lists of security positions of Shares held in stock depositories and any
related computer files, each as of the most recent practicable date, and
shall promptly furnish the Purchaser with such additional information,
including, without limitation, updated lists of the shareholders of the
Company, mailing labels, lists of security positions and such computer
files, and such assistance as the Purchaser or its agents may reasonably
request in communicating the Offer to the Company's shareholders.
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger. Upon the terms and subject to the conditions
----------
of this Agreement, at the Effective Time (as defined in Section 2.3), the
Company and the Purchaser shall consummate a merger (the "Merger") pursuant
to which (a) the Purchaser shall be merged with and into the Company and
the separate corporate existence of the Purchaser shall thereupon cease,
(b) the Company shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the laws of the State of
Michigan, and (c) the separate corporate existence of the Company with all
its rights, privileges, immunities, powers and franchises shall continue
unaffected by the Merger. The corporation surviving the Merger is
sometimes hereinafter referred to as the "Surviving Corporation." The
Merger shall have the effects set forth in the BCA and this Agreement.
2.2. Closing. The closing for the Merger (the "Closing") shall
-------
take place (a) at the offices of Kirkpatrick & Lockhart, 1251 Avenue of the
Americas, 45th Floor, New York, New York at 9:00 a.m., local time, on the
second business day after the day on which the last to be fulfilled or
waived of the conditions set forth in Article VIII shall be fulfilled or
waived in accordance with this Agreement or (b) at such other place and
- 3 -
<PAGE>
time and/or on such other date as the Company and Parent may agree. The
date upon which the Closing occurs is herein called the "Closing Date."
2.3. Effective Time. Parent, the Purchaser and the Company
--------------
shall cause an appropriate certificate of merger (the "Certificate of
Merger") to be executed and filed on the Closing Date (or on such other
date as Parent and the Company may agree) with the Michigan Department of
Commerce, Corporation and Securities Bureau, Corporation Division (the
"Michigan Bureau") as provided in the BCA. The Merger shall become
effective at the time at which the Certificate of Merger has been duly
filed with the Michigan Bureau or such other time as is agreed upon by the
Company and Parent and specified in the Certificate of Merger, and such
time is hereinafter referred to as the "Effective Time."
ARTICLE III
Articles of Incorporation and By-laws
of the Surviving Corporation
3.1. Articles of Incorporation. The Company's Restated
-------------------------
Articles, as in effect immediately prior to the Effective Time, shall,
effective as of the Effective Time, become the Articles of Incorporation of
the Surviving Corporation, until duly amended in accordance with the terms
thereof and the BCA.
3.2. By-laws. The By-laws of the Company, as in effect
-------
immediately prior to the Effective Time, shall, effective as of the
Effective Time, become the By-laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof, the Articles of Incorporation
of the Surviving Corporation and the BCA.
ARTICLE IV
Directors and Officers of the
Surviving Corporation
4.1. Directors and Officers. The directors and officers of the
----------------------
Purchaser immediately prior to the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been duly elected
or appointed and qualified or until their earlier death, resignation or
removal in accordance with the Articles of Incorporation and By-laws of the
Surviving Corporation.
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<PAGE>
ARTICLE V
Effect of the Merger on Capital Stock;
Surrender of Certificates
5.1. Effect on Capital Stock. At the Effective Time, by virtue
-----------------------
of the Merger and without any action on the part of the holder thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Parent, the Purchaser or any
other subsidiary of Parent (collectively, the "Parent Companies") and
Shares held by the Company or any of its subsidiaries immediately prior to
the Effective Time) shall be converted into the right to receive in cash an
amount per Share equal to the highest price paid per Share pursuant to the
Offer (the "Merger Price"), shall cease to be outstanding, shall
automatically be canceled and retired and shall cease to exist; and each
holder of a stock certificate (a "Certificate") formerly representing any
such Shares shall cease to have any rights with respect thereto, except the
right to receive, without interest, the aggregate Merger Price therefor
upon the surrender of such Certificate in accordance with this Article V.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by any of the Parent Companies and each Share
issued and held by the Company or any of its subsidiaries immediately prior
to the Effective Time shall cease to be outstanding, shall automatically be
canceled and retired without payment of any consideration therefor and
shall cease to exist.
(c) The shares of common stock ("Purchaser Common Stock") of the
Purchaser issued and outstanding immediately prior to the Effective Time
shall remain outstanding and shall be converted into and thereafter
constitute all of the issued and outstanding shares of the capital stock of
the Surviving Corporation.
5.2. Surrender of Certificates.
-------------------------
(a) Paying Agent. From and after the Effective Time, Parent
------------
shall make available, or shall cause to be made available, from time to
time to the bank or trust company selected by Parent (the "Paying Agent"),
for the benefit of the former holders of Shares, for exchange in accordance
with this Article V, sufficient funds to make all payments of the aggregate
Merger Price (such funds, together with any interest or income with respect
thereto being hereinafter referred to as the "Payment Fund"). The Payment
Fund shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation.
(b) Surrender Procedure. Promptly after the Effective Time,
-------------------
Parent shall cause the Paying Agent to mail to each person
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<PAGE>
(other than any of the Parent Companies) who was, at the Effective Time, a
holder of record of a Certificate (i) a letter of transmittal which shall
specify that delivery shall be effected, and risk of loss of and title to
such Certificate shall pass, upon (and only upon) delivery of such
Certificate to the Paying Agent, and which shall be in such form and have
such other provisions as Parent may reasonably specify, and
(ii) instructions for use in effecting the surrender of such Certificate.
Upon surrender to the Paying Agent of a Certificate, together with such a
letter of transmittal duly executed and completed in accordance with the
instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor an amount in cash equal to the number of
Shares formerly represented by such Certificate times the Merger Price,
after giving effect to any required tax withholdings, and such Certificate
shall forthwith be canceled. No interest will accrue or be payable on any
amount payable upon surrender of a Certificate. If payment with respect to
any surrendered Certificate is to be made to a person other than the person
in whose name such Certificate is registered, it shall be a condition of
such payment that such Certificate shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer or other taxes required by reason of
payment of the aggregate Merger Price therefor to a person other than the
registered holder of such Certificate or shall have established to the
satisfaction of the Surviving Corporation that such taxes either have been
paid or are not applicable. Until surrendered as contemplated by this
Section 5.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the appropriate
amount in cash as contemplated by this Article V.
(c) Transfers. At the Effective Time, the stock transfer books
---------
of the Company shall be closed and thereafter there shall be no further
registration of transfers of Shares on the books of the Company or the
Surviving Corporation. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be
canceled and exchanged for cash in accordance with the procedures set forth
in this Article V.
(d) Termination of Payment Fund. Any portion of the Payment
---------------------------
Fund that has not been claimed by the former shareholders of the Company
during the six-month period commencing on the date of the Effective Time
shall be delivered to the Surviving Corporation at the end of such period.
Any former shareholder of the Company who has not complied with this
Article V during such period shall thereafter look only to the Surviving
Corporation for delivery of the aggregate Merger Price payable thereto and
then only as a general creditor of the Surviving Corporation.
(e) No Liability. (i) Notwithstanding any other provision of
------------
this Agreement, none of Parent, the Surviving
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<PAGE>
Corporation, the Purchaser or the Paying Agent shall be liable to any
person for any amount properly delivered to a public official upon his
request pursuant to applicable abandoned property, escheat or similar laws.
(ii) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and the posting
by such person of a bond in such amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against it or the
Paying Agent with respect to such Certificate, the Paying Agent will
deliver in exchange for such lost, stolen or destroyed Certificate the
aggregate Merger Price payable with respect thereto.
ARTICLE VI
Representations and Warranties
6.1. Representations and Warranties of the Company. Except as
---------------------------------------------
specifically set forth (by reference to the paragraph of this Section 6.1
to which it relates) in the disclosure letter delivered prior to the
execution hereof to Parent by the Company (the "Company Disclosure
Letter"), the Company hereby represents and warrants to Parent and the
Purchaser as follows:
(a) Corporate Organization and Qualification. The Company and
----------------------------------------
each of its subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
incorporation and is qualified or licensed as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification or license, except for
such failure to so qualify or be licensed, which, when taken together with
all other such failures, has not had and is not reasonably likely to have a
material adverse effect on the Company. As used in this Agreement, the
term "material adverse effect on the Company" means a material adverse
effect on or change in, directly or indirectly, (i) the financial
condition, properties, business or results of operations of the Company and
its subsidiaries taken as a whole, except to the extent such effects or
changes merely reflect trends generally affecting the industry in which the
Company operates, or (ii) the ability of the Company to perform its
obligations hereunder or to consummate the transactions contemplated
hereby; provided, however, that no material adverse effect on the Company
shall be deemed to have occurred solely as a result of (x) any change in
the consolidated net income of the Company and its subsidiaries, as
calculated for purposes of the Company Reports (as defined in Section
6.1(e)), for any period beginning on or after January 1, 1995 when compared
to the consolidated net income of the Company and its subsidiaries for the
corresponding period during calendar year 1994; (y) any change in the
consolidated total revenues of the
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<PAGE>
Company and its subsidiaries, as calculated for purposes of the Company
Reports, for any period beginning on or after January 1, 1995 so that such
consolidated total revenues equals more than 90% of the consolidated total
revenues of the Company and its subsidiaries for the corresponding period
during calendar year 1994; or (z) any change in the consolidated gross
profit of the Company and its subsidiaries, as calculated for purposes of
the Company Reports, for any period beginning on or after January 1, 1995
so that such consolidated gross profit equals more than 80% of the
consolidated gross profit of the Company and its subsidiaries for the
corresponding period during calendar year 1994. Any reference in this
Agreement to the knowledge of the Company or any subsidiary of the Company
shall refer to the knowledge of each of the officers and directors of the
Company whose names and titles are set forth in the Company Disclosure
Letter. The Company Disclosure Letter contains a complete and accurate
list of the jurisdictions in which the Company is qualified or licensed to
do business as a foreign corporation, and a complete and accurate list of
each of the direct and indirect subsidiaries of the Company, including the
jurisdiction of incorporation and equity capitalization of each such
subsidiary and the jurisdictions where each such subsidiary is qualified or
licensed to do business as a foreign corporation. Neither the Company nor
any subsidiary of the Company owns any equity interest in any person not a
subsidiary of the Company. The Company and each of its subsidiaries have
the requisite corporate power and authority to carry on their respective
businesses as they are now being conducted. The Company has made available
to Parent complete and correct copies of the Company's Restated Articles
and its By-laws and the comparable governing documents of each of its
subsidiaries, each as amended to date. The Company's Restated Articles and
such By-laws and comparable governing documents are in full force and
effect.
(b) Authorized Capital. The authorized capital stock of the
------------------
Company consists of 10,000,000 Shares, of which 2,696,426 Shares were
outstanding on April 1, 1995, and 5,000,000 shares of preferred stock, par
value $1.00 per share ("Preferred Shares"), of which no shares were
outstanding on such date. Since such date, no additional shares of capital
stock of the Company have been issued except for Shares which have been
issued pursuant to the exercise of outstanding options under the Company
Stock Plans (as defined below). All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and nonassessable. The
Company has no Shares or Preferred Shares reserved for issuance, except
that, as of the date of this Agreement, 450,000 Shares were reserved for
issuance under the Company's 1984 Stock Option and Stock Appreciation
Rights Plan or 1994 Stock Option and Stock Appreciation Rights Plan (the
"Company Stock Plans"). As of April 1, 1995, options to purchase an
aggregate of 162,950 Shares granted under the Company Stock Plans were
outstanding, as set forth for each option (by grantee, the number of Shares
subject thereto and the exercise price therefor) in the Company Disclosure
Letter. The Company has no outstanding bonds,
- 8 -
<PAGE>
debentures, notes or other obligations the holders of which have the right
to vote (or are convertible or exchangeable into securities having the
right to vote) with the shareholders of the Company on any matter ("Voting
Debt"). Each of the outstanding shares of capital stock of each of the
Company's subsidiaries has been duly authorized and is validly issued,
fully paid and nonassessable and owned, either directly or indirectly, by
the Company free and clear of all liens, pledges, security interests,
claims or other encumbrances. Except as set forth above, there are no
shares of capital stock of the Company authorized, issued or outstanding
and no preemptive rights nor any outstanding subscriptions, options,
warrants, rights, convertible or exchangeable securities or other
agreements or commitments of the Company or any of its subsidiaries of any
character relating to issued or unissued capital stock or other securities
of the Company or any of its subsidiaries. Except for the Shareholder
Agreement, there are no existing restrictions on transfer, voting trusts or
shareholder agreements known to the Company relating to any outstanding
shares of capital stock of the Company or any of its subsidiaries. After
the Effective Time, the Surviving Corporation will have no obligation to
issue, transfer or sell any Shares or shares of capital stock of the
Surviving Corporation pursuant to any Benefit Plan (as defined in Section
7.1(e)). There are no outstanding contractual obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any of its subsidiaries. All
transactions in securities of the Company effected by the Company have been
effected in compliance with all applicable laws and regulations and after
disclosure to the other parties to such transactions of all material facts
regarding the Company.
(c) Corporate Authority. The Board of Directors of the Company
-------------------
has approved this Agreement and the transactions contemplated hereby and by
the Shareholder Agreement. Subject, if necessary, only to approval and
adoption of this Agreement and the Merger by the holders of at least a
majority of the Shares outstanding on the record date for the Special
Meeting (as defined in Section 7.3), the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and
by the Shareholder Agreement have been duly and validly authorized by all
necessary corporate action on the part of the Company. The Board of
Directors of the Company has directed that this Agreement and the Merger be
submitted to the shareholders of the Company for approval and adoption, if
necessary, in accordance with the BCA, the Company's Restated Articles and
the By-laws of the Company. The Company has the requisite corporate power
and authority to enter into this Agreement and, subject, if necessary, to
approval and adoption of this Agreement and the Merger by the Company's
shareholders in accordance with the BCA, to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered
by the Company and, subject, if necessary, to approval and adoption of this
Agreement and the Merger by the Company's
- 9 -
<PAGE>
shareholders (and assuming the due and valid authorization, execution and
delivery hereof by the other parties hereto), is a valid and binding
obligation of the Company, enforceable against it in accordance with its
terms, except that (i) the enforceability hereof may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereafter
in effect, affecting creditors' rights generally, and (ii) the availability
of the remedy of specific performance or injunctive or other forms of
equitable relief may be subject to equitable defenses and would be subject
to the discretion of the court before which any proceeding therefor may be
brought.
(d) Governmental Filings; No Violations. (i) Other than the
------------------------------------
filing provided for in Section 2.3 and filings required under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the Exchange Act, no notices, reports or other filings are
required to be made by the Company with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained
by the Company from, any governmental or regulatory authority, agency,
court, commission or other similar entity, domestic or foreign
("Governmental Entity"), in connection with the execution and delivery of
this Agreement by it and the consummation by it of the transactions
contemplated hereby.
(ii) The execution and delivery of this Agreement by the Company
do not, and the consummation by it of the transactions contemplated hereby
will not, constitute or result in (A) a breach or violation of the
Company's Restated Articles or its By-laws or the comparable governing
instruments of any of its subsidiaries, (B) a breach or violation of, a
default (or an event which with notice or lapse of time or both would
become a default) under, the triggering of any material payment or other
material obligation pursuant to or a right to terminate, amend, cancel or
accelerate vesting under, any of its existing Benefit Plans or any grant or
award made under any such Benefit Plan or any Employment Agreement (as
defined in Section 6.1(A)), (C) a breach or violation of, a default (or an
event which with notice or lapse of time or both would become a default)
under, the triggering of any material payment or other material obligation
pursuant to or a right to terminate, amend, cancel or accelerate under, or
the creation of a lien, pledge, security interest or other encumbrance on
assets (with or without the giving of notice or the lapse of time) pursuant
to, any provision of any material agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation ("Company Agreements")
of the Company or any of its subsidiaries or any law, statute, rule,
ordinance or regulation or judgment, decree, order, award, injunction or
governmental or non-governmental permit or license to which the Company or
any of its subsidiaries is subject or by which the Company or any of its
subsidiaries or any of their property is bound or affected or (D) any
change in the rights or obligations of any party under any of the Company
Agreements, except, in the case of clause (C) or (D) above, for such
- 10 -
<PAGE>
breaches, violations, defaults, payments, obligations, terminations,
amendments, cancellations, accelerations, encumbrances or changes that,
individually or in the aggregate, have not had and are not reasonably
likely to have a material adverse effect on the Company.
(e) Reports; Financial Statements. The Company has filed with
-----------------------------
the Commission and delivered to Parent each Current Report on Form 8-K,
Quarterly Report on Form 10-Q, Annual Report on Form 10-K, proxy statement,
information statement, registration statement and other form, report,
schedule, statement or document required to be filed by it under the
federal securities laws and prepared by or for it since December 31, 1991,
each in the form (including exhibits thereto and any amendments thereof)
filed with the Commission (collectively, the "Company Reports"). As of
their respective dates, the Company Reports, including, without limitation,
any financial statements or schedules included therein, (a) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act of 1933, as
amended, as the case may be, and the applicable rules and regulations of
the Commission thereunder. None of the Company's subsidiaries is required
to file any forms, reports or other documents with the Commission pursuant
to Section 12 or 15 of the Exchange Act. Each of the consolidated balance
sheets included in the Company Reports (including the related notes and
schedules) fairly presents the consolidated financial position of the
Company and its subsidiaries as of its date, and each of the consolidated
statements of operations, shareholders' equity and cash flows included in
the Company Reports (including any related notes and schedules) fairly
presents the results of operations, changes in shareholders' equity and
cash flows of the Company and its subsidiaries for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end
audit adjustments which would not be material in amount or effect), in each
case in accordance with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto, and
have been prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as may
be noted therein. The foregoing financial statements (including any
related notes and schedules) have been prepared from and are in accordance
with the books and records of the Company and its subsidiaries.
(f) Indebtedness; Absence of Undisclosed Liabilities. The
------------------------------------------------
Company has made available to Parent a correct and complete copy of each
instrument which evidences or sets forth the terms of indebtedness of the
Company or any of its subsidiaries (including any "off-balance" sheet
obligations such as leases, and any indebtedness of any other person or
entity that is
- 11 -
<PAGE>
guaranteed, directly or indirectly, by the Company or any of its
subsidiaries) and all constituent documents related to such indebtedness.
Each such instrument or document is in full force and effect and neither
the Company nor any of its subsidiaries (as the case may be) is in default
thereunder, nor, to the knowledge of the Company, is any other party to any
such instrument or document in default thereunder, nor, to the knowledge of
the Company, does any condition exist that, with the giving of notice or
lapse of time or both, would constitute a default thereunder, which default
could reasonably be expected to give rise to a right on the part of a party
thereto to terminate such instrument or document, accelerate the
obligations thereunder or claim damages in a material amount thereunder,
except any such default (i) as to which requisite waivers or consents have
been obtained or (ii) which is curable and has been cured within any
applicable period for cure permitted under such instrument or document.
Except as and to the extent set forth in the Company's Annual Report on
Form 10-K for the period ended December 31, 1994, as of December 31, 1994,
neither the Company nor any of its subsidiaries had any liabilities or
obligations of any nature, whether accrued, contingent or otherwise, that
would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of the Company and its
subsidiaries (including the notes thereto) as of such date. Since December
31, 1994, neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations of any nature, whether accrued, contingent or
otherwise, that are reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Company.
(g) Absence of Certain Changes. Except as disclosed prior to
--------------------------
the date hereof in the Company Reports, since December 31, 1994, the
Company and its subsidiaries have conducted their respective businesses
only in, and have not engaged in any material transaction or series of
transactions other than according to, the ordinary and usual course of
business and there has not been (i) any change or event, or any development
or combination of developments of which the Company has knowledge, which,
individually or in the aggregate, has resulted or is reasonably likely to
result in a material adverse effect on the Company; (ii) any declaration,
setting aside or payment of any dividend or other distribution with respect
to capital stock, or (iii) any change by the Company in accounting
principles, practices or methods.
(h) Litigation. There are no civil, criminal or administrative
----------
actions, suits, claims, hearings, investigations or proceedings pending or,
to the knowledge of the Company, threatened against the Company or any of
its subsidiaries or facts or circumstances of which the Company has
knowledge that have resulted or are reasonably likely to result in any
claims against, or obligations or liabilities of, the Company or any of its
subsidiaries, that, individually or in the aggregate, have had or are
reasonably likely to have a material adverse effect on
- 12 -
<PAGE>
the Company. The Company Disclosure Letter contains a list of each civil,
criminal or administrative action, suit, claim, hearing, investigation or
proceeding pending or, to the knowledge of the Company, threatened to which
the Company or any of its subsidiaries is or could be a party or subject.
(i) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of the Company or any of its
subsidiaries have been timely filed or requests for extensions have been
timely filed and any such extension has been granted and has not expired,
and all such filed returns are complete and accurate in all material
respects. All taxes required to be shown on all such returns or to be paid
with respect to returns for which extensions have been filed have been paid
in full or adequate provision has been made for any such taxes on the
Company's consolidated balance sheet as of December 31, 1994 (in accordance
with generally accepted accounting principles). As of the date of this
Agreement, there is no outstanding audit examination, deficiency or refund
litigation with respect to any taxes of the Company or any of its
subsidiaries that might reasonably be expected to result in a determination
that the Company or any of its subsidiaries owes $25,000 or more in
additional taxes, interest or penalties. The consolidated federal income
tax returns of the Company either have been examined by the Internal
Revenue Service for the period during which any assessments may be made by
the Internal Revenue Service or such periods have expired without waiver or
extension for all taxable years up to and including the year ended
December 31, 1990. All taxes, interest, additions and penalties due with
respect to completed and settled examinations or concluded litigation
relating to the Company or any of its subsidiaries have been paid in full
or adequate provision has been made for any such taxes on the Company's
consolidated balance sheet as of December 31, 1994. Neither the Company
nor any of its subsidiaries has executed an extension or waiver of any
statute of limitations for the assessment or collection of any tax due that
is currently in effect.
(j) Contracts; Franchises. The Company Disclosure Letter
---------------------
contains an accurate and complete list of (i) every contract, agreement,
commitment, undertaking or obligation to which the Company or any of its
subsidiaries is a party or by which any of them or their assets or
properties are bound or subject (other than instruments referred to in
Section 6.1(f) or 6.1(k), labor agreements, Employment Agreements and
Benefit Plans) (A) which requires the payment by or to the Company or any
subsidiary of the Company of more than $100,000 in any one year, (B) which
requires the payment by or to the Company or any subsidiary of the Company
of more than $50,000 and has a remaining term of more than 120 days and is
not cancelable without penalties payable by the Company or any of its
subsidiaries, as the case may be, on 30 days' or less notice, or (C) which
if terminated or lost is reasonably likely to have a material adverse
effect on the Company and (ii) all agreements
- 13 -
<PAGE>
pursuant to which the Company is a franchisor (collectively, the
"Contracts"). There have been made available to Parent correct and
complete copies of all such Contracts that are in writing (including all
amendments thereto, if any). All of the Contracts are in full force and
effect and neither the Company nor any subsidiary of the Company (as the
case may be) is in default thereunder, nor, to the knowledge of the
Company, is any other party to any Contract in default thereunder, nor, to
the knowledge of the Company, does any condition exist that, with the
giving of notice or lapse of time or both, would constitute a default
thereunder, which default could reasonably be expected to give rise to a
right on the part of a party thereto to terminate such Contract, accelerate
the obligations thereunder or claim damages in a material amount
thereunder, except such default (i) as to which requisite waivers or
consents have been obtained or (ii) which has been cured within any
applicable period for cure permitted under such Contract. The Company has
complied with all material applicable statutes, laws, ordinances, rules and
regulations in connection with its offer and sale of franchises, has
registered all offering circulars where required thereto, has satisfied any
applicable waiting period before signing any franchise-related agreement or
accepting any sum from a potential franchisee, has not made any material
misrepresentations nor omitted any material information in connection with
the offer and sale of a franchise, and has made no representation to any
franchisee with regard to potential or expected profits, losses and/or
sales. All material arrangements, agreements, commitments or undertakings
between the Company and any of its franchisees are embodied in writing in
the parties' franchise agreements. There are no material oral
arrangements, agreements, contracts, commitments, undertakings or
obligations between the Company and any of its franchisees. The Company is
in material compliance with all its material obligations under its
franchise agreements (and related agreements). To the knowledge of the
Company, all franchisees of the Company have had throughout the terms of
their franchises, and presently have, insurance coverage as required by
their franchise agreements. Set forth in the Company Disclosure Letter is
a list of the name of each franchisee of the Company, the names of any
guarantors of such franchisee's obligations to the Company, the expiration
date of the related franchise and the location of the applicable store.
(k) Real Property. The Company Disclosure Letter contains an
-------------
accurate and complete list of the location of each item of real property
("Real Property") owned or leased by the Company or any of its
subsidiaries. The Company or a subsidiary of the Company (as the case may
be) has good and marketable fee title to each item of Real Property owned
by it as of the date of this Agreement, in each case free and clear of all
mortgages, deeds of trust, security interests, conditional sale agreements,
easements, restrictions, encroachments and other charges or encumbrances
("Liens") except for those Liens (i) described in the Company Disclosure
Letter, (ii) that are reflected in the Company Reports, or (iii) that do
not materially affect the value
- 14 -
<PAGE>
of such Real Property or limit the ability of the Company or such
subsidiary of the Company to use such Real Property substantially as it is
currently being used and which are not otherwise material, in the
aggregate, to the Company and its subsidiaries taken as a whole. The
Company has made available to Parent a correct and complete copy of each
deed and title report, if any, representing or relating to the Real
Property owned in fee by the Company or any of its subsidiaries. The
Company Disclosure Letter contains an accurate and complete list (by
lessee) and summary description of all leases of Real Property to which the
Company or any of its subsidiaries is a party as lessor or lessee ("Real
Property Leases"), which summary includes the commencement date,
termination date and renewal options. The Company and each subsidiary of
the Company (as the case may be) has a valid leasehold interest in each
Real Property Lease held by it as lessee or sublessee as of the date of
this Agreement, in each case free and clear of all Liens, except for those
Liens (i) described in the Company Disclosure Letter, (ii) that are
reflected in the Company Reports, or (iii) that do not materially affect
the value of such leasehold interest or limit the ability of the Company or
such subsidiary of the Company to use such leasehold interest substantially
as it is currently being used and which are not otherwise material, in the
aggregate, to the Company and its subsidiaries taken as a whole. The
Company has made available to Parent a correct and complete copy of each
such Real Property Lease and a list of the current rent and the amount of
any percentage rent paid in 1994 for each such Real Property Lease. The
Real Property Leases are in full force and effect and neither the Company
nor any subsidiary of the Company (as the case may be) is, to the knowledge
of the Company, in default thereunder in any respect or has received any
notice of default thereunder which has not been remedied or waived or is
aware of any default thereunder by any other party thereto or any event or
circumstance which with the giving of notice or lapse of time or both would
constitute a default thereunder. Neither the Company nor any subsidiary of
the Company has received any notice or has any knowledge of any pending,
threatened or contemplated condemnation proceeding affecting any Real
Property leased by it or any part thereof or of any sale or other
disposition thereof in lieu of condemnation.
(l) Personal Property. The Company and each subsidiary of the
-----------------
Company (as the case may be) owns all personal property (including property
that may be deemed to be a mix of personal property and Real Property,
"Personal Property") purported to be owned by it as of the date of this
Agreement. Substantially all of the Personal Property owned or leased by,
and currently used or necessary for or in the operations of, the Company or
any subsidiary of the Company (i) is in such operating condition and repair
as may be necessary to carry on the business of the Company or any
subsidiary of the Company (as the case may be) as it is now conducted,
subject only to ordinary wear and tear, and (ii) is sufficient for all
purposes of the business of the Company and its subsidiaries.
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<PAGE>
(m) Insurance. The Company and each subsidiary of the Company
---------
has in effect valid and effective policies of insurance, issued by
companies believed by the Company to be sound and reputable, insuring the
Company or such subsidiary (as the case may be) for losses arising from or
out of (i) damage to its properties, and (ii) claims for personal injury or
property damage caused by the use, manufacture or sale of any products
currently or previously manufactured or sold by the Company or such
subsidiary or any of its predecessors or caused by any services performed
by or on behalf of the Company or any of its directors, officers,
employees, agents, representatives, independent contractors or subsidiaries
or by any action at any of the Company's stores that would constitute
malpractice under applicable professional standards, subject to the
limitations set forth in such policies. The Company Disclosure Letter
contains an accurate and complete list of all insurance policies held by
the Company or any of its subsidiaries, indicating the type of coverage,
the amount of coverage and the insuring entity with respect to each such
policy. Neither the Company nor any of its subsidiaries is insured under
any policy which provides that the premiums payable are determined from the
amount of actual claims paid by the insurer during the policy year.
(n) Employment Agreements. The Company Disclosure Letter
---------------------
contains an accurate and complete list of all written contracts,
agreements, commitments, understandings and obligations (except collective
bargaining agreements and Benefit Plans) with any director, officer,
executive employee or agent of or independent contractor (who or which is
an affiliate of such a director, officer or executive employee) for the
Company or any subsidiary of the Company to which the Company or any of its
subsidiaries is a party and which is in effect as of the date hereof,
providing for the terms of his or her employment, agency or contracting
relationship with the Company or any of its subsidiaries or the terms of
his or her severance or other payments upon termination of or change in
such employment, agency or contracting relationship ("Employment
Agreements"). The Company has previously furnished to Parent correct and
complete copies of all Employment Agreements that are in writing, together
with all amendments thereto (if any). Since December 31, 1994, neither the
Company nor any of its subsidiaries has (i) effected any increase in
salary, wages or other compensation of any kind, whether current or
deferred, for any director, officer, employee, agent, broker or consultant
thereof, other than routine increases in the ordinary and usual course of
business, (ii) made any contribution to any trust or plan for the benefit
of employees except as required by the terms thereof as now in effect, or
(iii) amended any Benefit Plan.
(o) Employee Benefits. (i) The Company Disclosure Letter
-----------------
contains an accurate and complete list of all employee benefit plans,
programs, policies, agreements, commitments and arrangements, all deferred
compensation plans, programs or arrangements, all stock option, restricted
stock or other
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<PAGE>
compensation plans, and all payroll practices, employment policies or other
arrangements which require or may require the payment of compensation by
the Company (including, without limitation, employee benefit plans as
defined in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and multi-employer plans as defined in Sections
3(37)A and 4001(a)(3) of ERISA and any labor agreements relating to any of
the foregoing) maintained, sponsored, contributed to or required to be
contributed to during the five-year period ending on the date of this
Agreement by the Company or any of its subsidiaries on behalf of any
current or former employee or director of the Company or any of its
subsidiaries or any former subsidiary of or other person formerly
controlled by the Company (the "Plans"). Neither the Company nor any of
its subsidiaries has any liability or obligation with respect to any
employee benefit plan, program, policy, agreement, commitment or
arrangement, deferred compensation plan, program or arrangement,
compensation plan or payroll arrangement which is not a Plan.
(ii) With respect to each Plan, the Company has delivered to
Parent prior to the date of this Agreement, accurate and complete copies of
each of the following, to the extent applicable: (A) all current plan
texts and agreements (and all amendments, supplements and modifications
thereto), including all trust agreements and other agreements related to
custody or investment of Plan assets, (B) the most recent summary plan
description, summary annual report and summary of material modifications
delivered to employees, (C) the most recent annual report (IRS Form 5500
series), including all schedules and attachments thereto, (D) the most
recent annual and periodic accounting of plan assets, and (E) the most
recent determination letter received from the Internal Revenue Service.
(iii) With respect to each Plan: (A) it is legally valid and
binding, benefits under it are as set forth in the documents provided
pursuant to paragraph (ii) above, the Company has no announced plan or
legally binding commitment to modify or amend it, except for required
amendments described in clause (B) below, or to increase benefits payable
thereunder and, except for Plans listed in the Company Disclosure Letter as
having been terminated, it shall be maintained in full force and effect
through the Effective Time; (B) if intended to qualify under Section 401(a)
or 403(a) of the Internal Revenue Code of 1986, as amended (the "Code"), to
the knowledge of the Company, such Plan so qualifies and its trust is
exempt from taxation under Section 501(a) of the Code (except insofar as
such qualification or exemption is dependent upon the adoption of
amendments required as a result of recent legislation, the remedial
amendment period for which has not yet expired); (C) to the knowledge of
the Company, it has been administered and enforced in material conformity
with the applicable provisions of the Code and ERISA and the terms of such
Plan, except to the extent the terms of such Plan are inconsistent with the
provisions of the Code referred to in clause (B) above, in which case such
Plan has been
- 17 -
<PAGE>
administered and enforced in material compliance with such provisions; (D)
there are no actions, suits or claims pending against such Plan, other than
claims for benefits made in the ordinary course; (E) to the knowledge of
the Company, no reportable event (within the meaning of Section 4043(b) of
ERISA and the regulations thereunder) has occurred during the five-year
period ending on the date of this Agreement which could reasonably be
expected to result in any material liability to the Company or any of its
subsidiaries; (F) all required contributions have been made on a timely
basis; and (G) all contributions made or required to be made under such
Plan meet the requirements for deductibility under the Code. To the
knowledge of the Company, no event has occurred in connection with which
the Company or any of its subsidiaries could be subject to any liability
under Section 406, 409, 502(i) or 502(l) of ERISA, or Section 4975 of the
Code, or under any agreement or other instrument pursuant to which the
Company or any of its subsidiaries has agreed or is required to indemnify
any person against any such liability, which has had or is reasonably
likely to have a material adverse effect on the Company. There are no
Plans subject to either Section 412 of the Code or Section 302 of ERISA or
Title IV of ERISA.
(iv) Neither the Company nor any of its subsidiaries has ever
contributed to or had any obligation to contribute to or had any obligation
to contribute to a Plan which is a multi-employer plan (within the meaning
of Section 4001(a)(3) of ERISA). Neither the Company nor any of its
subsidiaries has ever sponsored, maintained, contributed to, or had any
obligation to contribute to, a single-employer plan which has two or more
contributing sponsors at least two of whom are not under common control.
(v) With respect to each Plan which is a "welfare plan" (as
defined in Section 3(l) of ERISA): (A) no such Plan provides medical or
death benefits with respect to current or former employees of the Company
or any of its subsidiaries or any former subsidiary of or other person
formerly controlled by the Company beyond their termination of employment
(other than coverage mandated by law), (B) there are no reserves, assets,
surplus or prepaid premiums under any such Plan reflected on the Company's
consolidated balance sheet as of December 31, 1994, except for accrued
vacation pay, and (C) to the knowledge of the Company, each such Plan has,
to the extent applicable, been administered in material compliance with
Sections 601-609 of ERISA and Section 4980B(f) of the Code.
(vi) The consummation of the transactions contemplated by this
Agreement will not (A) entitle any individual to any compensation or
payment, (B) increase the amount, or accelerate the time of payment or
vesting, of compensation due or of benefits payable under any Plan with
respect to any individual or (C) result in any liability of the Company or
any of its
- 18 -
<PAGE>
subsidiaries under Title IV of ERISA or any multi-employer pension or
welfare benefit plan.
(p) Labor Matters. Neither the Company nor any of its
-------------
subsidiaries is a party to or bound by any labor or collective bargaining
agreement. The Company Disclosure Letter contains a list of all employees
of the Company and its subsidiaries, including their current annual salary
or corresponding payment measure. There are no strikes or other work
stoppages involving any employees of the Company or any of its subsidiaries
and there are no other material labor disputes by any labor organization in
progress or pending or, to the knowledge of the Company, threatened against
the Company or any of its subsidiaries. To the knowledge of the Company,
the Company and its subsidiaries are in compliance with all applicable
statutes, laws, ordinances, rules and regulations in respect of employment
and employment practices, terms and conditions of employment, wages and
hours, occupational safety, health or welfare conditions relating to
premises occupied, and civil rights, which non-compliance is reasonably
likely to have a material adverse effect on the Company. There are no
charges of unfair labor practices pending before any Governmental Entity
involving or affecting the Company or any of its subsidiaries.
(q) Compliance with Laws and Regulations. (i) Except as
------------------------------------
disclosed in the Company Reports, the businesses of the Company and its
subsidiaries are not being conducted in violation of any domestic or
foreign, federal, state or local statute, law, ordinance, rule, regulation,
order, judgment, decree or other requirement of any Governmental Entity
(collectively, "Laws"), except for possible violations of Laws which,
individually or in the aggregate, do not and are not reasonably likely to
have a material adverse effect on the Company. No investigation or review
by any Governmental Entity concerning any such possible violations by the
Company or any of its subsidiaries is, to the Company's knowledge, pending
or threatened, nor to the Company's knowledge has any Governmental Entity
indicated an intention to conduct the same, in each case other than those
the outcome of which are not reasonably likely to have a material adverse
effect on the Company.
(ii) Each of the Company and its subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of, and
has made all filings, applications and registrations with, Governmental
Entities that are required in order to permit it to carry on its business
as presently conducted, except for such permits, licenses, certificates,
orders, approvals, filings, applications and registrations, the absence of
which, individually or in the aggregate, have not had and are not
reasonably likely to have a material adverse effect on the Company. All
such permits, licenses, certificates of authority, orders and approvals are
in full force and effect, and, to the Company's knowledge, no suspension,
cancellation or modification of any of them is threatened.
- 19 -
<PAGE>
(r) Environmental Matters. (i) The Company Entities, and, to
---------------------
the knowledge of the Company, all predecessors of any of the Company
Entities now hold and in the past have held all Environmental Permits. The
Company Disclosure Letter specifies (A) the nature of each Environmental
Permit now held, (B) the Governmental Entity which has jurisdiction with
respect to such Environmental Permit, (C) the Person who is required to
hold such Environmental Permit, (D) whether and by whom such Environmental
Permit is held, and (E) the duration of such Environmental Permit.
(ii) The Company Entities, and, to the knowledge of the
Company, all predecessors of any of the Company Entities now are and in the
past have been in compliance with all terms and conditions of all
Environmental Permits and all Environmental Laws as then applicable, except
to the extent that the failure to have done or to do so are not reasonably
likely to have, individually or in the aggregate, a material adverse effect
on the Company.
(iii) The consummation of the transactions contemplated
hereby will not (A) require the Company or the Surviving Corporation to
provide notice, obtain governmental approval or take any other actions in
order to enable the Surviving Corporation to continue to hold all
Environmental Permits and to remain in compliance with the terms and
conditions of all Environmental Permits and all Environmental Laws or (B)
require the Surviving Corporation to obtain any new Environmental Permit.
(iv) There is not pending against any of the Company
Entities, or, to the knowledge of the Company, any predecessor of any of
the Company Entities any civil, criminal or administrative action, suit,
summons, citation, complaint, claim, notice of violation, demand, judgment,
order, lien, proceeding or hearing or, to the knowledge of the Company,
study or investigation (collectively, "Environmental Actions"), based on or
related to an Environmental Permit or an Environmental Law or the presence,
manufacture, generation, processing, distribution, use, sale, treatment,
recycling, receipt, storage, disposal, transport, arranging for
transportation, treatment or disposal, or handling, or the emission,
discharge, release or threatened release into the environment, of any
Hazardous Substance, nor, to the knowledge of the Company, has any such
Environmental Action been threatened within the last ten years.
(v) No Company Entity and, to the knowledge of the Company,
no predecessor of any of the Company Entities has ever received from any
Governmental Entity or any other person or entity any notice of, or has any
knowledge of, any event, condition, circumstance, activity, practice,
incident, action, agreement or plan that could reasonably be expected to
prevent, interfere with or increase the costs of compliance with an
Environmental Permit or any renewal thereof or an Environmental
- 20 -
<PAGE>
Law, in each case as then applicable, or that could reasonably be expected
to give rise to any liability, loss or expense, or form the basis of any
civil, criminal or administrative action, suit, summons, citation,
complaint, claim, notice, demand, request, judgment, order, lien,
proceeding, hearing, study or investigation with respect to any of the
Company Entities or the Premises based on or related to an Environmental
Permit or an Environmental Law.
(vi) No Hazardous Substance is, or at any time has been,
present on, in, under or above the Premises or, to the knowledge of the
Company, the area surrounding the Premises, except to the extent that the
presence of such Hazardous Substance is not reasonably likely to have,
individually or in the aggregate, a material adverse effect on the Company.
(vii) No Company Entity, and, to the knowledge of the
Company, no predecessor of any of the Company Entities has at any time
manufactured, generated, processed, distributed, used, sold, treated,
recycled, received, stored, disposed of, transported, arranged for
transportation, treatment or disposal of, handled, or conducted any other
activity involving, any Hazardous Substance, except to the extent that such
activity is not reasonably likely to have, individually or in the
aggregate, a material adverse effect on the Company.
(viii) The Company has made available to Parent true,
accurate and complete material information in its possession or control
pertaining to all of the matters set forth in paragraphs (i) through (vii)
hereof, including all documents pertaining to all environmental audits or
assessments prepared by or for the Company, any subsidiary of the Company,
any other Company Entity, any Governmental Entity or any third party
(including any financial institution) and including all reports of
environmental audits or assessments.
(ix) As used in this Section 6.1(r), "Company Entities"
means, collectively, the Company, all of the subsidiaries of the Company
and any former subsidiary of or other person or entity formerly controlled
by the Company or any subsidiary of the Company, directly or indirectly;
"Environmental Laws" means any past or present federal, state, local or
foreign statutory or common law, and any regulation, code, plan, order,
decree, judgment, permit, grant, franchise, concession, restriction,
agreement, requirement or injunction issued, entered, promulgated or
approved thereunder, relating to the environment, human health or safety or
relating to occupational or environmental matters, including, without
limitation, any law relating to emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment
(including, without limitation, air, surface water, groundwater and land),
or relating to the presence, manufacture, generation, processing,
distribution, use, sale, treatment, recycling, receipt, storage, disposal,
transport, arranging for transportation, treatment or
- 21 -
<PAGE>
disposal, or handling of Hazardous Substances; "Environmental Permits"
means, collectively, permits, consents, licenses, approvals, registrations,
certifications and authorizations required under Environmental Laws;
"Hazardous Substances" means, collectively, contaminants, pollutants, toxic
or hazardous chemicals, substances, materials, wastes and constituents,
petroleum products, polychlorinated biphenyls, asbestos, ozone depleting
substances and urea formaldehyde; "Premises" means real property in which
any of the Company Entities at any time has or ever had any interest,
including, without limitation, ownership, lease, rental, mortgage or
security interest, or on which any of the Company Entities at any time has
or ever had conducted any operations.
(s) Certain Transactions. The Company Disclosure Letter
--------------------
contains a list of all transactions between any director, officer or
executive employee of the Company or of any of its subsidiaries or any
affiliate thereof (other than for services as an employee, officer or
director) and the Company or any of its subsidiaries, including, without
limitation, any contract, agreement or other arrangement (i) providing for
the furnishing of services to or by, (ii) providing for rental of real or
personal property to or from, or (iii) otherwise requiring payments to or
from, such director, officer, executive employee or affiliate, any member
of the family of any such director, officer or executive employee or any
corporation, partnership, trust or other entity in which any such director,
officer or executive employee has a substantial interest or which is an
affiliate of such director, officer or executive employee, other than
transactions involving the sale of goods or the provision of services to or
by the Company or any of its subsidiaries in the ordinary course of
business at prices or rates that are comparable to those charged by or to
the Company by unaffiliated third parties.
(t) Intellectual Property. The Company and its subsidiaries own
---------------------
or have valid, binding, enforceable and adequate rights to use all material
patents, trademarks, trade names, service marks, service names, copyrights,
other proprietary intellectual property rights, applications therefor and
licenses or other rights in respect thereof ("Intellectual Property") used
or held for use or necessary in connection with the business of it or its
subsidiaries, without any conflict with the rights of others, except for
such conflicts that have not had and are not reasonably likely to have a
material adverse effect on the Company. The Company Disclosure Letter
contains a list of all Intellectual Property owned by the Company or any of
its subsidiaries. Neither the Company nor any of its subsidiaries has
received any notice from any other person pertaining to or challenging the
right of the Company or any of its subsidiaries to use any Intellectual
Property or any trade secrets, proprietary information, inventions, know-
how, processes and procedures owned or used by or licensed to it or any of
its subsidiaries, except with respect to rights the loss of which,
- 22 -
<PAGE>
individually or in the aggregate, have not had and are not reasonably
likely to have a material adverse effect on the Company. To the Company's
knowledge, none of its or its subsidiaries' key employees is in violation
of any term of any employment agreement, patent disclosure agreement or any
other contract or agreement relating to the relationship of any such
employee with it or its subsidiaries or any other party the result of which
has had or is reasonably likely to have a material adverse effect on the
Company.
(u) Disclosure Documents. None of the information supplied or
--------------------
to be supplied by the Company for inclusion or included in the Offer
Documents, the Schedule 14D-9 or the letter to shareholders, notice of
meeting, proxy statement and form of proxy to be distributed to
shareholders of the Company in connection with the Merger (collectively,
the "Proxy Statement"), if a Proxy Statement is required for consummation
of the Merger under applicable law, or any other documents (or in any
amendment of or supplement to any of the foregoing) required to be filed
with the Commission in connection with the Offer or the Merger, will, at
the respective times such documents or any amendments thereof or
supplements thereto are filed with the Commission or when mailed, or, in
the case of the Proxy Statement, on the date of the Special Meeting and the
date of any adjournment thereof, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Schedule
14D-9 and the Proxy Statement will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and
regulations thereunder.
(v) Brokers and Finders. Neither the Company nor any of its
-------------------
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby or by the
Shareholder Agreement other than Legg Mason Wood Walker, Inc. ("Legg
Mason"). Prior to the date hereof, the Company has furnished to Parent a
copy of the agreement between the Company and Legg Mason, as amended to
date.
(w) Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of Legg Mason, dated the date hereof, to the effect that each of
the Offer Price and the Merger Price is fair to the Company's shareholders
from a financial point of view, a copy of which opinion has been delivered
to Parent.
(x) Disclosure. None of this Agreement, the Company Reports,
----------
the Company Disclosure Letter, any certificate delivered in accordance with
the terms hereof or any document or statement in writing which has been
supplied to Parent or its Representatives (as defined in Section 7.5(a)) by
or on behalf of the Company or any of its subsidiaries in connection with
the transactions contemplated by this Agreement, contains any untrue
- 23 -
<PAGE>
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and/or therein, in light of
the circumstances under which they were made, not misleading.
6.2. Representations and Warranties of Parent and the Purchaser.
----------------------------------------------------------
Except as specifically set forth (by reference to the paragraph of this
Section 6.2 to which it relates) in the disclosure letter delivered prior
to the execution hereof to the Company by Parent (the "Parent Disclosure
Letter"), Parent, on behalf of itself and the Purchaser, hereby represents
and warrants to the Company as follows:
(a) Corporate Organization and Qualification. Parent and each
----------------------------------------
of its subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of
incorporation and is qualified or licensed as a foreign corporation in each
jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification or license, except for
such failure to so qualify or be licensed, which, when taken together with
all other such failures, has not had and is not reasonably likely to have a
material adverse effect on Parent. As used in this Agreement, the term
"material adverse effect" means, with respect to Parent or the Purchaser, a
material adverse effect on or change in, directly or indirectly, the
ability of Parent and the Purchaser to perform their respective obligations
hereunder or to consummate the transactions contemplated hereby. Parent
and each of its subsidiaries have the requisite corporate power and
authority to carry on their respective businesses as they are now being
conducted. Parent has made available to the Company a complete and correct
copy of its Articles of Incorporation and By-laws, each as amended to date.
Such Articles of Incorporation and By-laws are in full force and effect.
(b) Corporate Authority. Subject in the case of the Purchaser
-------------------
only to approval and adoption of this Agreement and the Merger by Parent as
the holder of the outstanding shares of Purchaser Common Stock, Parent and
the Purchaser each has the requisite corporate power and authority and has
taken all corporate action necessary in order to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, other
than any amendment of the Articles of Incorporation of Parent to provide a
capital structure for Parent (the "Recapitalization") that is appropriate
in connection with the debt and equity financing required for the
transactions contemplated by this Agreement (the "Financing") and the
authorization of the execution, delivery and performance of the definitive
agreements providing the Financing, including, without limitation, the
credit agreement and related agreements to be entered into with Greyrock
Capital Group Inc. in connection with the Offer and the Merger and the
purchase agreement to be entered into by Parent and Heller Equity Capital
Corporation pursuant to which such corporation would agree, subject to the
satisfaction
- 24 -
<PAGE>
of certain conditions, to provide some of the equity portion of the
Financing, which agreements will have the terms and conditions set forth in
the Commitment Letter and the Letter of Interest (as defined in Section
6.2(e)) (collectively, the "Definitive Financing Agreements"). This
Agreement has been duly executed and delivered by Parent and the Purchaser
and (assuming the due and valid authorization, execution and delivery
hereof by the Company) is a valid and binding obligation of Parent and the
Purchaser, enforceable against each of them in accordance with its terms,
except that (i) the enforceability hereof may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the availability of the
remedy of specific performance or injunctive or other forms of equitable
relief may be subject to equitable defenses and would be subject to the
discretion of the court before which any proceeding therefor may be
brought.
(c) Governmental Filings; No Violations. (i) Other than the
------------------------------------
filing provided for in Section 2.3, filings required under the HSR Act and
the Exchange Act and filings required to effect the Recapitalization, no
notices, reports or other filings are required to be made by Parent and the
Purchaser with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by them from, any Governmental
Entity in connection with the execution and delivery of this Agreement by
them and the consummation by them of the transactions contemplated hereby,
the failure to make or obtain any or all of which has had or is reasonably
likely to have a material adverse effect on Parent and the Purchaser.
(ii) The execution and delivery of this Agreement by Parent and
the Purchaser do not, and the consummation by them of the transactions
contemplated hereby will not, constitute or result in (A) a breach or
violation of the Articles of Incorporation or By-laws of either Parent or
the Purchaser or the comparable governing instruments of any of Parent's
other subsidiaries, (B) a breach or violation of, a default (or an event
which with notice or lapse of time or both would become a default) under,
the triggering of any material payment or other material obligation
pursuant to or a right to terminate, amend, cancel or accelerate vesting
under, any existing Benefit Plans of Parent or any grant or award made
under any such Benefit Plan, (C) a breach or violation of, a default (or an
event which with notice or lapse of time or both would become a default)
under, the triggering of any material payment or other material obligation
pursuant to or a right to terminate, amend, cancel or accelerate under, or
the creation of a lien, pledge, security interest or other encumbrance on
assets (with or without the giving of notice or the lapse of time) pursuant
to, any provision of any material agreement, lease, contract, note,
mortgage, indenture, arrangement or other obligation ("Parent Contracts")
of Parent or any of its subsidiaries or any law, statute, rule, ordinance
or regulation or judgment, decree, order, award,
- 25 -
<PAGE>
injunction or governmental or non-governmental permit or license to which
Parent or any of its subsidiaries is subject or by which Parent or any of
its subsidiaries or any of their property is bound or affected, or (D) any
change in the rights or obligations of any party under any of the Parent
Contracts, except, in the case of clause (C) or (D) above, for such
breaches, violations, defaults, payments, obligations, terminations,
amendments, cancellations, accelerations, encumbrances or changes that,
individually or in the aggregate, have not had and are not reasonably
likely to have a material adverse effect on Parent.
(d) Brokers and Finders. Neither Parent nor any of its
-------------------
officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees
in connection with the transactions contemplated hereby or by the
Shareholder Agreement.
(e) Commitments for the Financing. Parent and the Purchaser
-----------------------------
have heretofore received a written commitment from Greyrock Capital Group
Inc. (the "Commitment Letter") and a letter of interest from Heller Equity
Capital Corporation (the "Letter of Interest"), copies of which have
previously been delivered to the Company, to provide the debt portion and
part of the equity portion of the Financing (which are subject to the
negotiation, preparation and execution of the Definitive Financing
Agreements, certain of which will require the participation of the Company,
and the fulfillment of various conditions precedent contained therein).
(f) Disclosure Documents. None of the information supplied or
--------------------
to be supplied by Parent or the Purchaser for inclusion or included in the
Offer Documents, the Schedule 14D-9, the Proxy Statement or any other
documents (or in any amendment of or supplement to any of the foregoing)
required to be filed with the Commission in connection with the Offer or
the Merger, will, at the respective times such documents or any amendments
thereof or supplements thereto are filed with the Commission or when
mailed, or, in the case of the Proxy Statement, on the date of the Special
Meeting and the date of any adjournment thereof, contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
Schedule 14D-1 will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder.
(g) Financial Statements. Parent has previously delivered to
--------------------
the Company its consolidated financial statements for the year ended
December 31, 1993 (the "1993 Statements") and will deliver to the Company
its consolidated financial statements for the year ended December 31, 1994
(the "1994 Statements") as promptly as practicable after they become
available to Parent. The consolidated balance sheet included in the 1993
Statements
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<PAGE>
(including the related notes) do, and the consolidated balance sheet to be
included in the 1994 Statements (including the related notes) will, fairly
present the consolidated financial position of Parent and its subsidiaries
as of its date, and the consolidated statements of operations, cash flow
and stockholders' deficit included in the 1993 Statements (including the
related notes) do, and the consolidated statements of operations, cash flow
and stockholders' deficit to be included in the 1994 Statements (including
the related notes) will, fairly present the results of operation, cash flow
and changes in stockholders' deficit of Parent and its subsidiaries for the
periods set forth therein, and have been prepared or will be prepared in
accordance with generally accepted accounting principles consistently
applied during the period involved, except as may be noted therein, and
have been or will be prepared from and are or will be in accordance with
the books and records of Parent and its subsidiaries.
ARTICLE VII
Covenants
7.1. Interim Operations of the Company. From and after the date
---------------------------------
hereof until the Effective Time, except as and to the extent set forth in
the Company Disclosure Letter or as otherwise expressly required or
permitted by this Agreement, or except to the extent that the Chief
Executive Officer of Parent shall otherwise consent or approve in writing:
(a) The respective businesses of the Company and its
subsidiaries shall be conducted only in the ordinary and usual course of
business in substantially the same manner as heretofore conducted, and the
Company and its subsidiaries shall use their reasonable best efforts to
preserve their business organizations intact and to maintain their existing
relations with customers, lessors, suppliers, employees and others having
business dealings with them.
(b) The Company shall not (i) sell, pledge or otherwise dispose
of or agree to sell, pledge or otherwise dispose of any capital stock or
debt owned by it in any of its subsidiaries; (ii) amend the Company's
Restated Articles or its By-laws; (iii) split, combine or reclassify any
outstanding capital stock; (iv) declare, set aside or pay any dividend
payable in cash, stock or property with respect to any of its capital
stock; or (v) repurchase, redeem or otherwise acquire, or permit any
subsidiary to purchase or otherwise acquire, directly or indirectly, any
shares of its capital stock or any securities convertible or exchangeable
into or exercisable for any shares of its capital stock.
(c) Neither the Company nor any of its subsidiaries shall (i)
issue, sell, pledge, dispose of or encumber, or
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<PAGE>
authorize or propose the issuance, sale, pledge, disposition or encumbrance
of, any shares of, or securities convertible or exchangeable into or
options, warrants, calls, commitments or rights of any kind to acquire any
shares of, its capital stock of any class or Voting Debt, other than Shares
issuable pursuant to options outstanding on the date hereof under the
Company Stock Plans; (ii) transfer, lease, license, sell, mortgage, pledge
or otherwise dispose of or encumber any property or assets or any interest
therein, except in the ordinary and usual course of business; (iii) incur
or modify any indebtedness or other liability, except in the ordinary and
usual course of business; (iv) transfer, sell, mortgage, pledge or dispose
of any substantial portion of the property or assets of any subsidiary,
except in the ordinary and usual course of business; (v) acquire by merging
or consolidating with, or by purchasing a substantial equity interest in or
a substantial portion of the assets of, or by any other manner, any
corporation, partnership or other business organization or division
thereof, or otherwise acquire any assets outside the ordinary and usual
course of business; or (vi) authorize or make capital expenditures or make
any acquisition of, or investment in, assets or stock of any other person
or entity.
(d) Neither the Company nor any of its subsidiaries shall grant
any severance or termination pay to, or enter into any employment or
severance agreement or arrangement with, any director, officer or employee
of the Company or any of its subsidiaries, except as may be required to
satisfy existing contractual obligations and written policies and practices
of the Company and its subsidiaries and the requirements of applicable law.
(e) Except as may be required to satisfy existing contractual
obligations and written policies and practices of the Company and its
subsidiaries and the requirements of applicable law, neither the Company
nor any of its subsidiaries shall establish, adopt, enter into, make,
amend, or accelerate the vesting of any grants, options, benefits or awards
under, any bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, employee stock ownership, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any of their
directors, officers or employees ("Benefit Plans").
(f) Neither the Company nor any of its subsidiaries shall settle
or compromise any material claim or litigation or, except in the ordinary
and usual course of business, modify, amend or terminate any of its
material Contracts or waive, release or assign any material rights or
claims.
(g) Neither the Company nor any of its subsidiaries shall make
any tax election or permit any insurance policy naming it as a beneficiary
or a loss payable payee to be canceled or
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<PAGE>
terminated without notice to Parent, except in the ordinary and usual
course of business.
(h) Neither the Company nor any of its subsidiaries shall (i)
enter into any Real Property Lease not in effect as of the date hereof, or
(ii) amend, modify, extend the term of, waive any violation of or default
under, or otherwise change any Real Property Lease in effect as of the date
hereof.
(i) The Company shall not change its methods of accounting as in
effect at December 31, 1994, except as required by changes in generally
accepted accounting principles as concurred to in writing by the Company's
independent auditors and in any such case shall promptly provide notice of
any such change to Parent. The Company shall not change its fiscal year.
(j) Neither the Company nor any of its subsidiaries shall take
any action that is reasonably likely to cause any of the representations
and warranties of the Company set forth herein to be untrue as of any date
after the date hereof and prior to the Effective Time.
(k) Neither the Company nor any of its subsidiaries shall
authorize or enter into an agreement to do any of the actions referred to
in paragraphs (a) through (j) above or any similar actions.
7.2. Acquisition Proposals. Neither the Company nor any of its
---------------------
subsidiaries nor any of its officers or directors or the directors or
officers of its subsidiaries nor any of its other affiliates (as defined in
Rule 12b-2 under the Exchange Act) (each, an "Affiliate") shall, and the
Company shall cause its and its subsidiaries' employees, agents and
representatives (including, without limitation, any investment banking,
proxy solicitation, legal or accounting firm retained by the Company or any
of its subsidiaries and any individual member or employee of the foregoing)
(each, an "Agent") not to, directly or indirectly, (a) initiate, solicit
or encourage any inquiries or the making or implementation of any proposal
or offer (including, without limitation, any proposal or offer to its
shareholders or any of them or any public statement of an intention to
make, or the consideration of, such a proposal or offer) with respect to a
merger, acquisition, consolidation, recapitalization, liquidation,
dissolution or similar transaction involving, or any purchase of all or a
substantial portion of the assets or equity securities of, it or any of its
subsidiaries (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal"); (b) except to the extent necessary so that the
Company's Board of Directors can comply with its fiduciary duties under
applicable law as advised in writing by independent counsel, engage in any
discussions or negotiations with, or provide any confidential information
or data to, any person relating to an Acquisition Proposal; or
(c) otherwise cooperate in any effort or attempt to make, implement or
accept an
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<PAGE>
Acquisition Proposal. Nothing contained in this Section 7.2 shall prohibit
the Company or its Board of Directors from taking and disclosing to the
Company's shareholders a position with respect to a tender offer by any
person pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act or from making such disclosure to the Company's shareholders which, in
the judgment of the Company's Board of Directors based on the written
advice of independent counsel, may be required under applicable law. Prior
to providing any confidential information or data to a person relating to
an Acquisition Proposal, the Company shall enter into a confidentiality
agreement with such person having substantially the same terms as the
confidentiality agreement between the Company and Parent dated March 11,
1993 (the "Confidentiality Agreement"). The Company shall immediately
cease and cause to be terminated any existing activities, including
discussions or negotiations, with any persons conducted heretofore with
respect to any of the foregoing, and shall take the necessary steps to
inform the individuals and entities referred to in the first sentence
hereof of the obligations undertaken in this Section 7.2. If the Company
or any of its Affiliates or Agents has provided any person (other than
Parent) with any confidential information or data relating to an
Acquisition Proposal, the Company shall request the immediate return
thereof. The Company shall notify Parent immediately if any inquiries,
proposals or offers related to an Acquisition Proposal are received by, any
confidential information or data is requested from, or any negotiations or
discussions related to an Acquisition Proposal are sought to be initiated
or continued with, it or any individual or entity referred to in the first
sentence of this Section 7.2, and of the terms and other details of any
such Acquisition Proposal or request and shall keep Parent fully apprised
of all developments with respect thereto.
7.3. Shareholders' Approval. (a) If necessary in order to
----------------------
consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law: (i) duly call, give notice of,
convene and hold a special meeting of its shareholders (the "Special
Meeting") as soon as practicable following the expiration or termination of
the Offer without the purchase of any Shares thereunder for the purpose of
considering and taking action upon this Agreement and the Merger, (ii)
prepare and file with the Commission a preliminary form of the Proxy
Statement and use its reasonable best efforts (x) to obtain and furnish the
information required to be included by the Commission in the Proxy
Statement and, after consultation with Parent, to respond promptly to any
comments made by the Commission with respect to the preliminary form of the
Proxy Statement and to cause a definitive Proxy Statement to be mailed to
its shareholders and (y) to obtain the necessary approval and adoption of
the Merger and this Agreement by its shareholders, and (iii) subject to the
fiduciary duties of the Board of Directors of the Company under applicable
law as advised in writing by independent counsel, include in the Proxy
Statement the recommendation of its Board of Directors that the
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<PAGE>
shareholders of the Company vote in favor of the approval and adoption of
the Merger and this Agreement. If necessary, the Company shall take all
lawful action to solicit such approval and adoption and all lawful action
necessary or helpful to secure the affirmative vote of Company shareholders
required to effect the Merger. Parent shall vote all of the outstanding
shares of Purchaser Common Stock to approve and adopt this Agreement and
the Merger. Parent shall vote, or cause to be voted, all of the Shares
over which it, the Purchaser or any of its other subsidiaries or affiliates
has voting control in favor of the approval and adoption of the Merger and
this Agreement.
(b) Notwithstanding Section 7.3(a), in the event that Parent,
the Purchaser or any other subsidiary of Parent shall acquire at least 90%
of the outstanding shares of each class of capital stock of the Company
pursuant to the Offer or otherwise, the parties hereto shall, upon the
terms and subject to the conditions hereof, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without a meeting of the shareholders
of the Company, in accordance with Section 711 of the BCA.
7.4. Filings; Other Actions. (a) The Company and Parent shall
----------------------
cooperate to prepare and file the Proxy Statement with the Commission
promptly after the expiration of the Offer (i) if the Minimum Condition (as
defined in Annex I) has not been satisfied or (ii) if the condition set
forth in paragraph (a) or paragraph (j) of Annex I has not been satisfied
because of the necessary consents under Real Property Leases which have not
been obtained (the "Lease Condition"). Each party shall cooperate with
each other party and use all reasonable efforts to prepare and file
promptly all other necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents, and to
obtain as promptly as practicable all necessary permits, consents, orders,
approvals and authorizations of, or any exemptions from, all third parties
and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement or the Shareholder Agreement;
provided, however, that Parent shall not be required to take any action to
comply with any legal requirement or agree to the imposition of any Order
(as defined in Section 8.1(c)) that would (i) prohibit or restrict the
ownership or operation by Parent of any portion of the business or assets
of Parent or the Company (or any of their respective subsidiaries); (ii)
compel Parent or the Company (or any of their respective subsidiaries) to
dispose of or hold separate any portion of the Company's business or
assets; or (iii) impose any limitation on the ability of Parent or the
Surviving Corporation or any of their respective affiliates or subsidiaries
to own or operate the business and operations of the Company and its
subsidiaries. Each party shall have the right to review in advance, and to
the extent practicable each shall consult the others on, in each case
subject to applicable laws relating to the exchange of information as
advised by independent counsel, all the
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<PAGE>
information relating to the other parties and any of their respective
subsidiaries which are to appear in any filing to be made with, or written
materials to be submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement or the
Shareholder Agreement. In exercising the foregoing right, each of the
parties shall act reasonably and as promptly as practicable. Each party
shall consult with the other parties with respect to the obtaining of all
permits, consents, orders, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement or the Shareholder Agreement
and each party shall keep the other parties apprised of the status of
matters relating to the transactions contemplated hereby and thereby.
(b) Subject to applicable laws relating to the exchange of
information as advised by independent counsel, each party shall, upon
request, furnish the other party with all information concerning itself,
its subsidiaries, directors, officers and shareholders and such other
matters as may be necessary or advisable in connection with the Offer
Documents, the Schedule 14D-9 or the Proxy Statement or any other petition,
filing, notice, application or other document made by or on behalf of each
such party or any of its subsidiaries to any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement or the Shareholder Agreement.
(c) Each party shall promptly furnish each other party with
copies of written communications received by such party or any of its
subsidiaries, affiliates or associates (as such term is defined in Rule
12b-2 under the Exchange Act) from, or delivered by any of the foregoing
to, any Governmental Entity in respect of the transactions contemplated
hereby, in each case subject to applicable laws relating to the exchange of
information as advised by independent counsel.
(d) The Company and Parent shall use their reasonable best
efforts to promptly enter into agreements with respect to certain retail
store operations as set forth in Section 7.4 of the Company Disclosure
Letter.
7.5. Access. (a) Upon reasonable notice, the Company shall (and
------
shall cause each of its subsidiaries to) afford Parent's officers,
employees, counsel, accountants, financing sources and other authorized
representatives ("Representatives") access during normal business hours,
throughout the period prior to the Effective Time, to the Company's
properties, books, contracts and records and, during such period, shall
(and shall cause each of its subsidiaries to) furnish promptly to Parent
and its Representatives all information concerning its business, properties
and personnel as may reasonably be requested, in each case subject to
applicable laws relating to the exchange of
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<PAGE>
information as advised by independent counsel; provided, that no
investigation pursuant to this Section 7.5 shall affect or be deemed to
modify any representation or warranty made by the Company. Prior to the
Effective Time, Parent shall keep all such information and documents
confidential in accordance with the provisions of the Confidentiality
Agreement.
(b) Notwithstanding the foregoing, prior to consummation of
the Merger, Parent and the Purchaser shall not discuss or negotiate, and
Parent shall cause its Representatives to refrain from discussing or
negotiating, with any person regarding the potential sale or other
disposition of any assets or business owned or operated by the Company or
any of its subsidiaries; provided, however, that nothing in this Section
7.5(b) shall prohibit Parent from setting forth its business plan with
respect to the Company and its subsidiaries as required under applicable
law or from discussing such business plan generally; and, provided,
further, that any such general discussion shall be in writing and shall be
approved by the Company prior to its use, which approval shall not be
unreasonably withheld.
7.6. Notification of Certain Matters. Each party shall give
-------------------------------
prompt notice to the other parties of: (a) any event or circumstance with
regard to such party that has resulted or is reasonably likely to result in
any representation or warranty of such party made herein being untrue in
any material respect or in the failure to satisfy any condition specified
in Article VIII or Annex I, or (b) any event which, so far as reasonably
can be foreseen at the time of its occurrence, is reasonably likely to
result in any material adverse effect on such party; provided, however,
that delivery of any notice pursuant to this Section 7.6 shall not limit or
otherwise affect the remedies available hereunder to the party receiving
such notice. Each party shall give prompt notice to the other parties of
any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement.
7.7. Legal Conditions to Merger. Each party shall, and shall
--------------------------
cause each of its subsidiaries to, use all reasonable efforts to take, or
cause to be taken, all actions necessary to comply promptly with all legal
requirements which may be imposed on such party or its subsidiaries with
respect to the Merger and, subject to the conditions set forth in Article
VIII, to consummate the transactions contemplated by this Agreement or the
Shareholder Agreement; provided, however, that Parent shall not be required
to take any action to comply with any legal requirement or agree to the
imposition of any Order that would (a) prohibit or restrict the ownership
or operation by Parent of any portion of the business or assets of Parent
or the Company (or any of their respective subsidiaries); (b) compel Parent
or the Company (or any of their respective subsidiaries) to dispose of or
hold separate any portion of the Company's business or
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<PAGE>
assets; or (c) impose any limitation on the ability of Parent or the
Surviving Corporation or any of their respective affiliates or subsidiaries
to own or operate the business and operations of the Company and its
subsidiaries. Each party shall promptly cooperate with and furnish
information to each other party in connection with any requirement imposed
upon it or any of its subsidiaries in connection with the foregoing,
subject to applicable laws relating to the exchange of information as
advised by independent counsel.
7.8. Publicity. The initial press release with respect to the
---------
execution of this Agreement shall be a joint press release acceptable to
Parent and the Company. Thereafter, so long as this Agreement is in
effect, neither the Company nor Parent shall issue or cause the publication
of any press release or other announcement with respect to this Agreement,
the Merger or the other transactions contemplated hereby without the prior
written consent of the other party, except as may be required under
applicable law as advised in writing by independent counsel.
7.9. Stock Options. Prior to the Effective Time, the Company
-------------
shall take such actions as may be necessary such that at the Effective Time
each stock option outstanding pursuant to the Company Stock Plans (an
"Option"), whether or not then exercisable, shall be converted into and
become only the right to receive the greater of zero and the product of (a)
the number of Shares subject to such Option and (b) the difference, if
positive, between (i) the Offer Price and (ii) the per share exercise price
for such Option.
7.10. Expenses. Whether or not the Offer and the Merger are
--------
consummated, all costs and expenses incurred in connection with this
Agreement, the Shareholder Agreement and the transactions contemplated
hereby and thereby shall be paid by the party incurring such expense,
except as otherwise provided in Section 9.6.
7.11. Indemnification and Benefits. (a) For six years after the
----------------------------
Effective Time, Parent shall cause the Surviving Corporation to indemnify,
defend and hold harmless the present and former officers and directors of
the Company against all losses, claims, damages, liabilities, fees and
expenses (including reasonable fees and disbursements of counsel,
judgments, fines and amounts paid in settlement to the extent that any such
settlement is effected with the prior written consent of the Surviving
Corporation) arising out of actions or omissions occurring at or prior to
the Effective Time to the fullest extent permitted under Michigan law or
the Company's Restated Articles and its By-laws in effect at the date
hereof, including the provisions relating to the advancement of expenses
incurred in the defense of any action or suit; provided, that, in the event
any claim or claims for indemnification are asserted or made within such
six-year period, all rights to indemnification
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<PAGE>
in respect of any such claim or claims shall continue until the disposition
of all such claims.
(b) The Surviving Corporation shall, for three years from
the Effective Time, maintain in effect the current directors' and officers'
liability insurance policies maintained by the Company for the persons
presently covered by such policies with respect to matters occurring prior
to or at the Effective Time; provided, that the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous to such
persons so long as substitution does not result in gaps or lapses in
coverage; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 7.11(b) more
than in each such year an amount, based on the current annual premium paid
by the Company for such insurance (which premium the Company represents and
warrants to be approximately $45,000 in the aggregate for the current
premium year) equal to 110% of such premium in the first such year, 121% of
such premium in the second such year and 133.1% of such premium in the
third such year, and, in the event that the cost of such coverage shall
exceed the applicable amount for any such year, the Surviving Corporation
shall purchase for such year as much coverage as possible for such amount.
(c) For a period of one year from and after the Effective
Time, the Surviving Corporation shall provide Benefit Plans to the
employees of the Surviving Corporation and its subsidiaries that provide
benefits comparable in the aggregate to those provided by the Company to
the employees of the Company and its subsidiaries as of the date hereof;
provided, however, that, as of the Effective Time, the Surviving
Corporation shall have the right to cancel the Company Stock Plans and the
Company's Incentive Compensation Plan and, except as provided below, to
discontinue the Company's practice of providing severance benefits to any
employees terminated by the Company or any of its subsidiaries without any
requirement to provide similar Benefit Plans or substitute benefits; and,
provided, further, that the Company's "Home Office Bonus Plan" shall
continue in effect and any benefits payable thereunder shall be accrued
through the Effective Time on a pro rata basis (at which time all accruals
thereunder shall cease) and any participant therein who is terminated by
the Company without cause on or prior to December 31, 1995 or is employed
by the Company as of December 31, 1995 shall be entitled to the pro rata
bonus payable thereunder to such person that had accrued as of the
Effective Time. The Surviving Corporation may terminate the "Home Office
Bonus Plan" at any time after December 31, 1995.
(d) In the case of persons employed by the Company as of
the Effective Time at its corporate headquarters or its central laboratory
facility, other than any such persons who are covered by a collective
bargaining agreement and those executive officers referred to in Section
7.11(e), the Surviving
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<PAGE>
Corporation shall pay a lump sum severance benefit to each such person
whose employment is terminated by the Surviving Corporation for any reason
other than cause, death or disability prior to the first anniversary of the
Effective Time. Such severance benefit shall be based on the terminated
employee's number of whole years (rounded up or down to the nearest whole
year) of continuous service with the Company and the Surviving Corporation,
shall be reduced by withholding and employment taxes, if required by
applicable law, and shall equal one week's gross pay for each whole year of
service, with a maximum severance benefit of ten weeks' gross pay. The
term "gross pay" means the employee's average weekly gross wages or salary,
before deductions or withholdings of any kind whatsoever, received from the
Company or the Surviving Corporation during the last full calendar month
immediately prior to the date of termination. The severance benefit
described above shall only be provided upon the giving by the severed
employee of a full release of claims in form and substance satisfactory to
the Surviving Corporation.
(e) Parent shall cause the Surviving Corporation, from and
after the Effective Time, to honor the terms and provisions of all
Employment Agreements identified in Section 7.11 of the Company Disclosure
Letter. Nothing contained in this Section 7.11 (e) shall, or shall be
construed to, confer upon any person any rights under any other Employment
Agreement that are not provided therein.
(f) Nothing contained in this Section 7.11 shall, or shall
be construed to, confer upon any person any right to employment with the
Surviving Corporation or any of its subsidiaries, restrain the Surviving
Corporation or any of its subsidiaries from changing the terms or
conditions of its employment of any person, or require the Surviving
Corporation to maintain any particular Benefit Plan or specific form of
benefit under any Benefit Plan.
7.12. Conditional Option. The Company hereby grants to the
------------------
Purchaser an irrevocable, non-assignable (except to Parent or another
direct or indirect wholly owned subsidiary of Parent) option (the
"Conditional Option") to purchase, for its own account, up to all the
authorized and unissued Shares, other than those Shares reserved as of the
date hereof for issuance in connection with the Company Stock Plans, at the
Offer Price. The Conditional Option may be exercised by the Purchaser at
any time prior to the termination of this Agreement in whole or in part if
after such exercise the Purchaser would beneficially own more than 90% of
the Shares then outstanding; provided, however, that the Conditional Option
may only be exercised in the event that Parent, the Purchaser and their
affiliates prior to the exercise thereof have become the beneficial owners
of 85% or more of the outstanding Shares upon consummation of the Offer and
the purchase of Shares pursuant to the Shareholder Agreement. In the event
that the Purchaser wishes to exercise the Conditional Option, the Purchaser
shall deliver a written notice to the
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<PAGE>
Company specifying a place and a date not later than two business days from
the date such notice is delivered for the closing of such exercise and the
number of Shares to be purchased; provided, that such closing may be
deferred by the Purchaser until the expiration of any applicable regulatory
waiting periods or the receipt of any required regulatory approvals or
consents. At any such closing (i) the Purchaser shall make prompt payment
to the Company of the aggregate purchase price for the Shares so purchased
in immediately available funds or in the form of a promissory note (to the
extent permitted under applicable law) bearing interest at a rate no less
favorable than the rate at which the Company borrows funds under its
existing senior unsecured credit arrangements and having a maturity of not
more than six months from the date of issuance or any combination thereof
at the Purchaser's election and (ii) the Company shall deliver to the
Purchaser a duly executed certificate or certificates representing the
number of Shares so purchased.
ARTICLE VIII
Conditions
8.1. Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of the Company, Parent and the Purchaser to
consummate the Merger are subject to the fulfillment of each of the
following conditions:
(a) Company Shareholder Approval. If necessary, this Agreement
----------------------------
and the Merger shall have been duly approved and adopted by holders of the
Shares in accordance with applicable law and the Company's Restated
Articles and its By-laws.
(b) Governmental and Regulatory Consents. The applicable
------------------------------------
waiting period under the HSR Act shall have expired or been terminated and,
other than the filing provided for in Section 2.3, all filings required to
be made prior to the Effective Time by the Company, Parent or any of their
respective subsidiaries with, and all consents, approvals and
authorizations required to be obtained prior to the Effective Time by the
Company, Parent or any of their respective subsidiaries from, any
Governmental Entity in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by
the Company, Parent and the Purchaser shall have been made or obtained (as
the case may be).
(c) Litigation. No federal or state court or other Governmental
----------
Entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, law, ordinance, rule, regulation,
judgment, decree, injunction or other order (each, an "Order"), whether
temporary, preliminary or permanent, which is in effect and prohibits
consummation of the transactions contemplated by this Agreement, or imposes
any material restriction on Parent, the Purchaser or the Company in
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<PAGE>
connection with the consummation of the Merger or with respect to their
respective business operations either prior to or subsequent to the Merger.
(d) The Offer. The Offer shall have expired and Shares shall
---------
have been purchased pursuant thereto or the Offer shall have expired or
been terminated and no Shares shall have been purchased pursuant thereto
solely because of a failure to satisfy the Minimum Condition or the Lease
Condition.
8.2. Conditions to Obligation of the Company. The obligation of
---------------------------------------
the Company to consummate the Merger is also subject to the fulfillment
prior to the Effective Time of each of the following conditions if no
Shares have been purchased pursuant to the Offer:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Parent and the Purchaser set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement
and as of the Closing Date as though made on and as of the Closing Date,
except as otherwise permitted or required by this Agreement, and the
Company shall have received a certificate signed by the Chief Executive
Officer and Chief Financial Officer of Parent to such effect.
(b) Performance of Obligations of Parent. Parent shall have
------------------------------------
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed by the Chief Executive Officer and
Chief Financial Officer of Parent to such effect.
8.3. Conditions to Obligations of Parent and the Purchaser. The
-----------------------------------------------------
obligations of Parent and the Purchaser to consummate the Merger are also
subject to the fulfillment prior to the Effective Time of each of the
following conditions if no Shares have been purchased pursuant to the
Offer:
(a) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise permitted or required by this Agreement, and Parent shall have
received a certificate signed by the Chief Executive Officer and Chief
Financial Officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company
-----------------------------------------
shall have performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the Closing Date,
and Parent shall have received a certificate signed by the Chief Executive
Officer and Chief Financial Officer of the Company to such effect.
- 38 -
<PAGE>
(c) Consents. The Company shall have obtained all consents
--------
required to consummate the transactions contemplated by this Agreement,
including the Merger, and all other consents in connection with the Merger
and the other transactions contemplated hereby, the failure to obtain which
would have or would be reasonably likely to have a material adverse effect
on the Surviving Corporation.
(d) No Material Adverse Change. No change, event, development
--------------------------
or combination of developments shall have occurred which, individually or
in the aggregate, has resulted or is reasonably likely to result in a
material adverse effect on the Company, except for changes, events,
developments or a combination thereof which generally affect the industry
in which the Company operates, and Parent shall have received a certificate
signed by the Chief Executive Officer and Chief Financial Officer of the
Company to such effect.
(e) Financing. Parent and the Purchaser shall have entered into
---------
the Definitive Financing Agreements, all conditions to the drawdown of
funds pursuant thereto shall have been satisfied or waived and the
Financing shall be available.
ARTICLE IX
Termination
9.1. Termination by Mutual Consent. This Agreement may be
-----------------------------
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Effective Time, before or after the approval and adoption
hereof and of the Merger by the shareholders of the Company, by the mutual
consent of the Company and Parent, by action of their respective Boards of
Directors.
9.2. Termination by either Parent or the Company. This
-------------------------------------------
Agreement may be terminated and the transactions contemplated hereby may be
abandoned, before or after the approval and adoption hereof and of the
Merger by the shareholders of the Company, by action of the Board of
Directors of either Parent or the Company if (a) the Offer shall have
expired or been terminated, with no Shares being purchased pursuant thereto
because of the failure to satisfy or waive any condition of the Offer other
than the Minimum Condition or the Lease Condition, after July 15, 1995, (b)
the Offer shall have expired or been terminated, with no Shares being
purchased pursuant thereto because of the failure to satisfy or waive the
Minimum Condition or the Lease Condition, and the Merger shall not have
been consummated, after October 31, 1995, (c) the Offer shall have expired
or been terminated, with no Shares being purchased pursuant thereto because
of the failure to satisfy or waive the Minimum Condition or the Lease
Condition, and the approval and adoption of the Company's shareholders
referred to in Section 8.1(a) shall not have been obtained at the Special
- 39 -
<PAGE>
Meeting or at any adjournment thereof, at any time thereafter, (d) a
Governmental Entity of competent jurisdiction shall have issued an Order or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger and such Order or other action
shall have become final and nonappealable, at any time thereafter, or (e)
the United States Federal Trade Commission or the United States Department
of Justice shall have commenced, or officially recommended commencement of,
an action (judicial or administrative) seeking an Order restraining,
enjoining or otherwise prohibiting the consummation of the Merger;
provided, that the party seeking to terminate this Agreement pursuant to
clause (a), (b) or (c) of this Section 9.2 shall not have breached or
failed to perform in any material respect its obligations under this
Agreement.
9.3. Termination by the Company. This Agreement may be
--------------------------
terminated and the transactions contemplated hereby may be abandoned at any
time prior to the Effective Time, before or after the approval and adoption
hereof and of the Merger by the shareholders of the Company, by action of
the Board of Directors of the Company if there has been a material breach
of, or any material failure to comply with, any covenant or agreement
contained in this Agreement by Parent or the Purchaser which is not curable
or, if curable, is not cured within five days after written notice of such
breach or failure is given by the Company to Parent or any material
representation or warranty of Parent and the Purchaser in this Agreement
shall have been untrue or incorrect at the time made or shall have ceased
to be true and correct; provided, however, that, prior to any such
termination on account of any such representation or warranty ceasing to be
true and correct, the Company shall have given to Parent written notice of
such event and Parent shall not have taken all necessary action, within
five days of delivery of such notice, so that such representation or
warranty shall have again become true and correct.
9.4. Termination by Parent. This Agreement may be terminated
---------------------
and the transactions contemplated hereby may be abandoned at any time prior
to the Effective Time, before or after the approval and adoption hereof and
of the Merger by the shareholders of the Company, by action of the Board of
Directors of Parent, if (a) the Company or any of its Affiliates or Agents
shall have engaged in any discussions (other than to provide information or
data) or negotiations with any person (other than Parent) relating to an
Acquisition Proposal, (b) the Board of Directors of the Company shall have
withdrawn or modified in a manner adverse to Parent or the Purchaser its
approval or recommendation of this Agreement, the Offer or the Merger or
shall have approved or recommended any Acquisition Proposal other than one
from Parent or the Purchaser or shall have resolved to do either of the
foregoing, or (c) the Offer shall have expired or been terminated with no
Shares being purchased pursuant thereto and there has been a material
breach of, or any material
- 40 -
<PAGE>
failure to comply with, any covenant or agreement contained in this
Agreement by the Company which is not curable or, if curable, is not cured
within five days after written notice of such breach or failure is given by
Parent to the Company or any material representation or warranty of the
Company in this Agreement shall have been untrue or incorrect at the time
made or shall have ceased to be true and correct; provided, however, that,
prior to any such termination on account of any such representation or
warranty ceasing to be true and correct, Parent shall have given to the
Company written notice of such event and the Company shall not have taken
all necessary action, within five days of delivery of such notice, so that
such representation or warranty shall have again become true and correct.
9.5. Termination Due to Lack of Financing. This Agreement may
------------------------------------
be terminated and the transactions contemplated hereby may be abandoned at
any time prior to the Effective Time, before or after the approval and
adoption hereof and of the Merger by the shareholders of the Company, by
action of the Board of Directors of Parent if Parent and the Purchaser
shall not have entered into the Definitive Financing Agreements or all
conditions to the drawdown of funds pursuant thereto shall not have been
satisfied or waived or Greyrock Capital Group Inc. shall propose to enter
into agreements in connection with the debt portion of the Financing that
contain terms and conditions that are inconsistent with the terms and
conditions set forth in the Commitment Letter or Heller Equity Capital
Corporation shall propose to enter into agreements in connection with the
equity portion of the Financing that contain terms and conditions that are
inconsistent with the terms and conditions set forth in the Letter of
Interest.
9.6. Effect of Termination and Abandonment. (a) In the event of
-------------------------------------
termination of this Agreement and abandonment of the transactions
contemplated hereby pursuant to this Article IX, no party (or any of its
directors or officers) shall have any liability or further obligation to
any other party to this Agreement in connection with such termination and
abandonment except as provided in Section 9.6(b), 9.6(c), 9.6(d) and
9.6(e).
(b) In the event that (i) (A) any person shall have made an
Acquisition Proposal or shall have acquired beneficial ownership of Shares
representing 9.9% or more of the outstanding Shares and thereafter this
Agreement is terminated by either Parent or the Company pursuant to Section
9.2(a), 9.2(b) or 9.2(c), or (B) Parent terminates this Agreement pursuant
to Section 9.4(a), 9.4(b) or 9.4(c) and (ii) on or after the date hereof
and not later than one year from the date of such termination, (x) the
Board of Directors of the Company shall have approved or recommended any
Acquisition Proposal other than from Parent, or (y) the Company shall have
entered into an agreement with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar
transaction involving, or any purchase of all or a substantial portion of
the
- 41 -
<PAGE>
assets or equity securities of, the Company, or (z) any person shall have
acquired beneficial ownership of Shares representing 50% or more of the
outstanding Shares, then the Company, when requested by Parent, at any time
after the earliest to occur of the events set forth in clauses (x), (y) and
(z), shall promptly, but in no event later than two days after the date of
such request, pay Parent $900,000, which shall be paid by wire transfer of
same day funds. Any payment made by the Company to Parent pursuant to this
Section 9.6(b) shall be in addition to, and not in lieu of, any payment to
be made by the Company to Parent pursuant to Section 9.6(c).
(c) In the event that (i) Parent terminates this Agreement
pursuant to any clause of Section 9.4, or (ii) this Agreement is terminated
pursuant to any clause of Section 9.2 and, at such time, there has been a
material breach of, or any material failure to comply with, any covenant or
agreement contained in this Agreement by the Company which has not been
cured or any material representation or warranty of the Company in this
Agreement shall have been untrue or incorrect at the time made or shall
have ceased to be true and correct, then the Company, when requested by
Parent, shall promptly, but in no event later than two days after the date
of such request, pay Parent an amount equal to all actual out-of-pocket
fees and expenses (including the fees and expenses of counsel, accountants,
financial advisors, other consultants, financial printers and financial
sources (the "Advisors")) ("Expenses") incurred by Parent, the Purchaser
and its Advisors (both prior to and after the date hereof) in connection
with the negotiation of, and proposed consummation of the transactions
contemplated by, this Agreement or in connection with previous discussions
and due diligence efforts, which shall be paid by wire transfer of same day
funds; provided, however, that the maximum amount payable pursuant to this
Section 9.6(c) shall not exceed $500,000. Any payment made by the Company
to Parent pursuant to this Section 9.6(c) shall be in addition to, and not
in lieu of, any payment to be made by the Company to Parent pursuant to
Section 9.6(b).
(d) In the event that the Company terminates this Agreement
pursuant to Section 9.3, then Parent, when requested by the Company, shall
promptly, but in no event later than two days after the date of such
request, pay the Company an amount equal to all Expenses incurred by the
Company and its Advisors in connection with the negotiation of, and
proposed consummation of the transactions contemplated by, this Agreement,
which shall be paid by wire transfer of same day funds; provided, however,
that the maximum amount payable pursuant to this Section 9.6(d) shall not
exceed $500,000.
(e) In the event that (i) Parent terminates this Agreement
pursuant to Section 9.5 or (ii) the Company terminates this Agreement
pursuant to Section 9.2(a) or (b), and, at such time, (x) the Offer shall
have expired or been terminated, with no Shares being purchased pursuant
thereto, and all of the
- 42 -
<PAGE>
conditions to the Purchaser's obligation to purchase Shares pursuant to the
Offer shall have been satisfied or waived, other than the condition set
forth in clause (j) of Annex I, or (y) the Offer shall have expired or been
terminated, with no Shares being purchased pursuant thereto because of the
failure to satisfy or waive the Minimum Condition or the Lease Condition,
and all of the conditions to Parent's and the Purchaser's obligations to
consummate the Merger shall have been satisfied or waived, other than the
condition set forth in Section 8.3(e), and at such time none of the
conditions set forth in clauses (b) and (c) shall exist then Parent, when
requested by the Company, shall promptly, but in no event later than two
days after the date of such request, pay the Company an amount equal to all
Expenses incurred by the Company and its Advisors in connection with the
negotiation and proposed consummation of the transactions contemplated by
this Agreement, which shall be paid by wire transfer of same day funds;
provided, however, that the maximum amount payable pursuant to this Section
9.6(e) shall not exceed $150,000; and, provided, further, that Parent shall
have no obligation to make any payment to the Company pursuant to this
Section 9.6(e) if, at such time, the condition set forth in clause (a) of
Annex I or Section 8.3(a), as the case may be, would not have been deemed
to be satisfied if any applicable representation and warranty of the
Company had not been qualified as to the knowledge of the Company.
Notwithstanding anything to the contrary contained herein, if the Company
has the right to payment of any amount pursuant to this Section 9.6(e), it
shall have no right to any payment pursuant to Section 9.6(d).
(f) The parties acknowledge that (i) if a party hereto has the
right to terminate this Agreement pursuant to more than one provision of
this Article IX and determines to terminate this Agreement pursuant to any
such provision, then the other party hereto shall have no right to claim
that such party should have, or should be deemed to have, terminated this
Agreement pursuant to any other such provision and (ii) the agreements
contained in this Section 9.6 are an integral part of the transactions
contemplated by this Agreement, that, without these agreements, the parties
would not enter into this Agreement and that, in connection with any
termination of this Agreement and abandonment of the transactions
contemplated hereby, any damages would be difficult, if not impossible, to
quantify and any payment made pursuant to Section 9.6(b), 9.6(c), 9.6(d) or
9.6(e) shall be in the nature of liquidated damages and, if this Agreement
is terminated and the transactions contemplated hereby are abandoned in any
case in which Section 9.6(b), 9.6(c), 9.6(d) or 9.6(e) does not apply, all
parties acknowledge that there are no damages.
- 43 -
<PAGE>
ARTICLE X
Miscellaneous and General
10.1. Survival. Only those agreements and covenants of the
--------
parties which by their express terms apply in whole or in part after the
Effective Time shall survive the Effective Time. All other
representations, warranties, agreements and covenants shall be deemed to be
conditions of the Merger and shall not survive the Effective Time. If the
transactions contemplated hereby shall be abandoned and this Agreement
terminated, only the agreements of the parties in this Section 10.1 and
Sections 9.6, 10.6, 10.7 and 10.8 and the last sentence of Section 7.5
shall survive such abandonment and termination.
10.2. Additional Actions. If, at any time after the Effective
------------------
Time, the Surviving Corporation shall consider or be advised that any
further assignments or assurances in law or any other acts are necessary or
desirable to (a) vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its rights, title or interest in, to or under any of
the rights, properties or assets of the Purchaser or the Company acquired
or to be acquired by the Surviving Corporation as a result of or in
connection with the Merger or (b) otherwise carry out the purposes of this
Agreement, the Purchaser and its officers and directors and the former
directors and officers of the Company shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such proper deeds, assignments and assurances in law and to do
all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement; and
the proper officers and directors of the Surviving Corporation are fully
authorized in the name of the Purchaser or the Company or otherwise to take
any and all such actions.
10.3. Modification or Amendment. Subject to the applicable
-------------------------
provisions of the BCA, at any time prior to the Effective Time, the parties
may modify or amend this Agreement, by written agreement executed and
delivered by duly authorized officers of the respective parties.
10.4. Waiver of Conditions. The conditions to each party's
--------------------
obligation to consummate the Merger are for the sole benefit of such party
and may be waived by such party in whole or in part to the extent permitted
by applicable law, but only in writing.
10.5. Counterparts. For the convenience of the parties hereto,
------------
this Agreement may be executed in any number of separate counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts shall together constitute the same agreement.
- 44 -
<PAGE>
10.6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Michigan applicable
to agreements made and to be performed entirely within such State.
10.7. Notices. Any notice, request, instruction or other
-------
document to be given hereunder by any party to any other party shall be in
writing and shall be deemed to have been duly given (i) on the date of
delivery, if delivered personally or by telecopy or telefacsimile upon
confirmation of receipt, or (ii) on the first business day following the
date of dispatch, if delivered by Federal Express or other next-day courier
service, or (iii) on the third business day following the date of mailing,
if delivered by registered or certified mail, return receipt requested,
postage prepaid. All notices hereunder shall be addressed as set forth
below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice.
(a) If to the Company:
NuVision, Inc.
P.O. Box 2600
2284 S. Ballenger Hwy.
Flint, MI 48501
Attention: Chairman of the Board
Telecopier:
with a copy to
Dykema Gossett PLLC
400 Renaissance Center
Detroit, MI 48243-1668
Attention: Paul R. Rentenbach
Telecopier: (313) 568-6915
(b) If to Parent or the Purchaser:
American Vision Centers, Inc.
90 John Street
New York, NY 10038
Attention: Chief Executive Officer
Telecopier: (212) 385-1149
with a copy to:
Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, PA 15222
Attention: Leonard S. Ferleger
Telecopier: (412) 355-6501
- 45 -
<PAGE>
10.8. Entire Agreement, etc. This Agreement (including the
----------------------
Company and Parent Disclosure Letters) and the Confidentiality Agreement
constitute the entire agreement, and supersede all other agreements,
understandings, representations and warranties, both written and oral,
among the parties with respect to the subject matter hereof.
Notwithstanding anything herein to the contrary, the provisions of the
Confidentiality Agreement shall not apply to the Shareholder Agreement in
any respect. This Agreement shall not be assignable by operation of law or
otherwise; provided, however, that Parent may designate, by written notice
to the Company, another of its wholly owned direct or indirect subsidiaries
to be a party to the Merger in lieu of the Purchaser, in which event all
references herein to the Purchaser shall be deemed references to such other
subsidiary except that all representations and warranties made herein with
respect to the Purchaser as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other subsidiary
as of the date of such designation; and, provided, further, that Parent and
the Purchaser may assign or encumber any of their rights hereunder in
connection with the Financing.
10.9. No Third Party Beneficiaries. Except as provided in
----------------------------
Sections 7.9 and 7.11, this Agreement is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
10.10. Definition of "Subsidiary". When a reference is made in
--------------------------
this Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization, whether incorporated or unincorporated,
of which at least a majority of the securities or interests having by the
terms thereof ordinary voting power to elect at least a majority of the
board of directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its subsidiaries, or by
such party and one or more of its subsidiaries.
10.11. Obligation of Parent. Whenever this Agreement requires
--------------------
the Purchaser to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause the Purchaser to take
such action.
10.12. Captions. The Article, Section and paragraph captions
--------
herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof.
- 46 -
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first above set forth.
NUVISION, INC.
By /s/ Eli Shapiro
-------------------------
Name: Eli Shapiro
Title: Chairman
AMERICAN VISION CENTERS, INC.
By /s/ Seth R. Poppel
-------------------------
Name: Seth Poppel
Title: Chairman
NI ACQUIRING CORP.
By /s/ Seth R. Poppel
-------------------------
Name: Seth Poppel
Title: Chairman
- 47 -
<PAGE>
ANNEX I
Conditions of the Offer
Notwithstanding any other provisions of the Offer, the Purchaser
shall not be required to accept for payment, purchase or pay for any Shares
tendered and may terminate or amend the Offer and may postpone the
acceptance for payment, purchase of, or payment for Shares tendered, (i) if
there shall not have been validly tendered to the Purchaser and not
withdrawn prior to the expiration of the Offer such number of Shares as
would constitute, together with all other Shares owned by the Purchaser,
Parent or any affiliate thereof, more than 90% of the Shares on a fully
diluted basis (the "Minimum Condition"), (ii) if any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to
the expiration of the Offer and the Offer shall have remained outstanding
for at least 30 days after the commencement of the Offer, or (iii) if, at
any time on or after April 27, 1995, and at or prior to the time of
acceptance for payment, purchase of, or payment for, any Shares (whether or
not any Shares have theretofore been accepted for payment, purchased or
paid for pursuant to the Offer) any of the following events shall occur:
(a) The Company shall have breached or failed to comply with in
any material respect any of its covenants or agreements contained in the
Agreement, any representation or warranty of the Company in the Agreement
shall have been untrue or incorrect in any material respect at the time
made or shall have ceased to be true and correct, any filing required to be
made prior to the Effective Time by the Company or any of its subsidiaries
with, or any consent, approval or authorization required to be obtained
prior to the Effective Time by the Company or any of its subsidiaries from,
any Governmental Entity in connection with the execution and delivery of
the Agreement or the consummation of the transactions contemplated hereby
by the Company shall not have been made or obtained (as the case may be),
any other consent that was to be obtained by the Company and is required to
consummate the transactions contemplated by the Agreement shall not have
been obtained or any other consents that were to be obtained by the Company
in connection with the transactions contemplated by the Agreement, the
failure to obtain which would have or would be reasonably likely to have a
material adverse effect on the Surviving Corporation, shall not have been
obtained; or
(b) there shall have occurred (i) any general suspension (which
continues for a period in excess of 24 hours) of trading in, or general
limitation on prices for, securities on the New York Stock Exchange, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war or
armed hostilities affecting the United States, which is reasonably likely
to materially and adversely affect the extension of credit by banks or
other lending institutions located in the United
<PAGE>
States, (iv) any limitation by any Governmental Entity on, or any other
event which is reasonably likely to adversely affect, the extension of
credit by banks or other lending institutions located in the United States,
or (v) in the case of any of the foregoing existing at the time of the
commencement of the Offer, a material acceleration or worsening thereof; or
(c) any action or proceeding shall have been instituted or
authorized or shall be pending before any Governmental Entity by any
Governmental Entity or there shall have been any determination by any
Governmental Entity: (i) challenging the making of the Offer or the
acquisition by the Purchaser of the Shares or seeking to restrain or
prohibit the consummation of the Offer or the other transactions
contemplated by the Agreement and the Shareholder Agreement; (ii) seeking
to prohibit Parent's or the Purchaser's (or any of their affiliates')
ownership or operation of all or any portion of Parent's or the Company's
business or assets, or to compel Parent or the Purchaser (or any of their
affiliates) to dispose of or hold separate all or any portion of Parent's
or the Company's business or assets, as a result of the Offer or the other
transactions contemplated by the Agreement; (iii) making the acceptance for
payment of, or payment for, some or all of the Shares illegal or resulting
in a delay in the ability of the Purchaser to accept for payment or pay for
some or all of the Shares; or (iv) imposing material limitations on the
ability of Parent or the Purchaser effectively to acquire or hold or to
exercise full rights of ownership of Shares, including, without limitation,
the right to vote Shares purchased by it on all matters properly presented
to the shareholders of the Company; or
(d) any statute, law, rule, regulation, injunction, decree,
ruling or order shall be enacted, promulgated, entered, enforced or deemed
applicable to the Offer or the Merger or any other action shall have been
taken by any Governmental Entity that is reasonably likely to, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (iv) of paragraph (c) above; or
(e) it shall have been publicly disclosed or the Purchaser shall
have otherwise learned that (i) any person or "group" (as defined in
Section 13(d)(3) of the Exchange Act) shall have acquired 9.9% or more of
the outstanding Shares or shall have been granted any option or right,
conditional or otherwise, to acquire 9.9% or more of the outstanding
Shares, or (ii) any new "group" is formed which beneficially owns 9.9% or
more of the outstanding Shares;
(f) the Company and Parent shall have agreed in writing that the
Offer be terminated; or
(g) the Agreement, prior to the expiration of the Offer, shall
be terminated in accordance with its terms; or
- 2 -
<PAGE>
(h) the Board of Directors of the Company shall have withdrawn
or modified in a manner adverse to the Purchaser or Parent its
recommendation of the Offer set forth herein or shall have approved or
recommended any Acquisition Proposal other than the Offer or the Board of
Directors of the Company shall have resolved to do either of the foregoing;
or
(i) The Standard & Poor's 500 Stock Index at the close of
business on the date that the Offer is scheduled to expire shall be less
than 80% of the Standard & Poor's 500 Stock Index at the close of business
on April 27, 1995; or
(j) Parent and the Purchaser shall not have entered into the
Definitive Financing Agreements, all conditions to the drawdown of funds
pursuant thereto shall not have been satisfied or waived, or the Financing
shall not be available,
which, in the sole judgment of the Purchaser and Parent in any such case,
and regardless of the circumstances (including any action or inaction by
Parent, the Purchaser or any other affiliate of Parent) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for
payment, purchase or payment.
The foregoing conditions are for the sole benefit of Parent and
the Purchaser and may be asserted by Parent and the Purchaser regardless of
the circumstances giving rise to any such conditions or may be waived by
Parent and the Purchaser in whole or in part at any time and from time to
time in their sole discretion. The failure by Parent and the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
- 3 -
Exhibit (c)(2)
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of the 27th day of April, 1995
(this "Agreement"), by and among American Vision Centers, Inc., a New York
corporation ("Parent"), Eli Shapiro, an individual resident of the State of
Michigan, Esther E. Shapiro, an individual resident of the State of
Michigan, Eli Shapiro, in his capacity as trustee of the Eli Shapiro
Revocable Living Trust u/a/d 5/27/93, and Esther E. Shapiro, in her
capacity as trustee of the Esther E. Shapiro Revocable Living Trust u/a/d
5/27/93 (collectively, the "Shareholders").
WHEREAS, the Shareholders are the owners of 1,137,785 shares (the
"Shares") of common stock, par value $0.50 per share (the "Common Stock"),
of NuVision, Inc., a Michigan corporation (the "Company"); and
WHEREAS, Parent, the Company and NI Acquiring Corp., a Michigan
corporation and a wholly owned subsidiary of Parent (the "Purchaser"),
propose to enter into an Agreement and Plan of Merger, dated as of the date
hereof (as amended from time to time, the "Merger Agreement"), which will
provide, among other things, that the Purchaser will make a cash tender
offer (the "Offer") for all of the outstanding shares of Common Stock and
will merge with the Company upon the terms and subject to the conditions
therein (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and the
Purchaser to enter into the Merger Agreement, Parent has requested that the
Shareholders agree, and in order to induce Parent and the Purchaser to
enter into the Merger Agreement, the Shareholders have agreed, to enter
into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and
the representations, warranties, covenants and agreements set forth herein,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Representations and Warranties of the Shareholders. Each
--------------------------------------------------
Shareholder represents and warrants to Parent as follows:
(a) If such Shareholder is an individual, such Shareholder
has the legal capacity, power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. If such
Shareholder is a trust, the trust instrument under which such Shareholder
was
<PAGE>
established is in full force and effect under the laws of the State of
Michigan, it has the requisite power and authority to execute and deliver
this Agreement and to consummate the transaction contemplated hereby, and
it has taken all necessary action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly and validly
executed and delivered by such Shareholder and constitutes a legal, valid
and binding obligation of such Shareholder, enforceable against him, her or
it in accordance with its terms, except that (i) the enforceability hereof
may be subject to applicable bankruptcy, insolvency or other similar laws,
now or hereinafter in effect affecting creditors' rights generally, and
(ii) the availability of the remedy of specific performance or injunctive
or other forms of equitable relief may be subject to equitable defenses and
would be subject to the discretion of the court before which any proceeding
therefor may be brought.
(b) Such Shareholder is the sole lawful, record and
beneficial owner of, and has good, valid and marketable title to, all the
Shares listed in Appendix A hereto opposite such Shareholder's name, and
there exist no liens, claims, security interests, options, proxies, voting
agreements, charges or encumbrances of whatever nature ("Liens") affecting
such Shareholder's Shares except as set forth on such Appendix A.
(c) Upon transfer to Parent by such Shareholder of such
Shareholder's Shares upon consummation of the Offer or the Merger
(whichever is earlier) and assuming Parent has no knowledge of any Liens,
Parent will have good, valid and marketable title to such Shareholder's
Shares, free and clear of all Liens.
(d) Such Shareholder's Shares constitute all of the
securities (as defined in Section 3(10) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), which definition shall apply for all
purposes of this Agreement) of the Company beneficially owned (as defined
in Rule 13d-3 under the Exchange Act, which meaning shall apply for all
purposes of this Agreement), directly or indirectly, by such Shareholder
(excluding any securities beneficially owned by any of his, her or its
affiliates or associates (as such terms are defined in Rule 12b-2 under the
Exchange Act, which definition shall apply for all purposes of this
Agreement)) as to which he, she or it does not have voting or investment
power.
(e) Such Shareholder does not, directly or indirectly,
beneficially own or have any option, warrant or other right to acquire any
securities of the Company which are or may by their terms become entitled
to vote or any securities which are convertible or exchangeable into or
exercisable for any securities of the Company which are or may by their
terms become entitled to vote, nor is such Shareholder subject to any
- 2 -
<PAGE>
contract, commitment, arrangement, understanding or relationship (whether
or not legally enforceable) which allows or obligates him, her or it to
vote or acquire any securities of the Company.
(f) The execution and delivery of this Agreement by such
Shareholder does not, and the performance by such Shareholder of his, her
or its obligations hereunder will not, constitute a violation of, conflict
with, result in a default (or an event which, with notice or lapse of time
or both, would result in a default) under, or result in the creation of any
Lien on any Shares under, (i) if such Shareholder is a trust, the trust
agreement under which it was established, (ii) any contract, commitment,
agreement, understanding, arrangement or restriction of any kind to which
such Shareholder is a party or by which such Shareholder is bound or (iii)
any judgment, writ, decree, order or ruling applicable to such Shareholder.
(g) Neither the execution and delivery of this Agreement
nor the performance by such Shareholder of his, her or its obligations
hereunder will violate any order, writ, injunction, judgment, law, decree,
statute, rule or regulation applicable to such Shareholder or require any
consent, authorization or approval of, filing with, or notice to, any
court, administrative agency or other governmental body or authority, other
than any required notices or filings pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act") or the federal
securities laws.
2. Representations and Warranties of Parent. Parent represents
----------------------------------------
and warrants to the Shareholders as follows:
(a) Parent is duly organized and validly existing and in
good standing under the laws of the State of New York, has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly and validly
executed and delivered by Parent and constitutes a legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its
terms, except that (i) the enforceability hereof may be subject to
applicable bankruptcy, insolvency or other similar laws, now or hereinafter
in effect affecting creditors' rights generally, and (ii) the availability
of the remedy of specific performance or injunctive or other forms of
equitable relief may be subject to equitable defenses and would be subject
to the discretion of the court before which any proceeding therefor may be
brought.
(b) The execution and delivery of this Agreement by Parent
does not, and the performance by Parent of its
- 3 -
<PAGE>
obligations hereunder will not, constitute a violation of, conflict with,
or result in a default (or an event which, with notice or lapse of time or
both, would result in a default) under, its articles of incorporation or
by-laws or any contract, commitment, agreement, understanding, arrangement
or restriction of any kind to which Parent is a party or by which Parent is
bound or any judgment, writ, decree, order or ruling applicable to Parent.
(c) Neither the execution and delivery of this Agreement
nor the performance by Parent of its obligations hereunder will violate any
order, writ, injunction, judgment, law, decree, statute, rule or regulation
applicable to Parent or require any consent, authorization or approval of,
filing with, or notice to, any court, administrative agency or other
governmental body or authority, other than any required notices or filings
pursuant to the HSR Act or the federal securities laws.
3. Tender of Shares. The Shareholders shall tender and sell
----------------
(and not withdraw) pursuant to and in accordance with the terms of the
Offer all of the Shares. Upon the purchase of all the Shares pursuant to
the Offer in accordance with this Section 3, this Agreement shall
terminate. In the event, notwithstanding the provisions of the first
sentence of this Section 3, any Shares are for any reason withdrawn from
the Offer or are not purchased pursuant to the Offer, such Shares shall
remain subject to the terms of this Agreement. The Shareholders
acknowledge that the Purchaser's obligation to accept for payment and pay
for the Shares in the Offer is subject to all the terms and conditions of
the Offer.
4. Transfer of Shares. During the term of this Agreement,
------------------
except as otherwise provided herein, the Shareholders shall not (a) offer
to sell, sell, pledge or otherwise dispose of or transfer any interest in
or encumber with any Lien any of the Shares, (b) acquire any shares of
Common Stock or other securities of the Company (otherwise than in
connection with a transaction of the type described in Section 7 and any
such additional shares or securities shall be deemed Shares and included in
the Shares subject to this Agreement), (c) deposit the Shares into a voting
trust, enter into a voting agreement or arrangement with respect to the
Shares or grant any proxy or power of attorney with respect to the Shares,
or (d) enter into any contract, option or other arrangement or undertaking
with respect to the direct or indirect acquisition or sale, assignment or
other disposition of or transfer of any interest in or the voting of any
shares of Common Stock or any other securities of the Company; provided,
however, that the Shareholders may dispose of Shares as gifts or donations
so long as prior to any such disposition, any intended recipient thereof
executes an agreement, in form and substance reasonably satisfactory to
- 4 -
<PAGE>
Parent, that provides that any such Shares and any such person shall become
a party to and be subject to all the obligations of this Agreement as if a
party hereto from the date hereof.
5. Voting of Shares. Each Shareholder, by this Agreement,
----------------
being the sole record and beneficial owner of the Shares listed in Appendix
A hereto opposite such Shareholder's name, does hereby constitute and
appoint Parent, or any nominee thereof, with full power of substitution,
during and for the term of this Agreement, as his true and lawful attorney
and proxy, for and in his, her or its name, place and stead, to vote each
of such Shares at any annual, special or adjourned meeting of the
shareholders of the Company (and this appointment shall include the right
to sign its name (as shareholder) to any consent, certificate or other
document relating to the Company which the laws of the State of Michigan
may require or permit) (a) in favor of the Merger, the execution and
delivery by the Company of the Merger Agreement and the approval and
adoption of the terms thereof and each of the other actions contemplated by
the Merger Agreement and this Agreement and any actions required in
furtherance thereof and hereof; (b) against any action or agreement that
would result in a breach in any respect of any covenant, agreement,
representation or warranty of the Company under the Merger Agreement; and
(c) against the following actions (other than the Merger and the other
transactions contemplated by the Merger Agreement): (i) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving the Company or one of its subsidiaries; (ii) a sale,
lease or transfer of a material amount of assets of the Company or one of
its subsidiaries, or a reorganization, recapitalization, dissolution or
liquidation of the Company or its subsidiaries; (iii)(A) any change in a
majority of the persons who constitute the board of directors of the
Company as of the date hereof; (B) any change in the present capitalization
of the Company or any amendment of the Company's Restated Articles of
Incorporation or By-laws, as amended to date; (C) any other material change
in the Company's corporate structure or business; or (D) any other action
which, in the case of each of the matters referred to in clauses (iii)(A),
(B), (C) and (D), is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone, or adversely affect the Merger and the
other transactions contemplated by this Agreement and the Merger Agreement;
provided, however, that nothing contained in this Section 5 shall prohibit
or restrain any such Shareholder from complying with his or her fiduciary
obligations as a director or officer of the Company, as advised in writing
by independent counsel. This proxy and power of attorney is a proxy and
power coupled with an interest, and such Shareholder declares that it is
irrevocable. Such Shareholder hereby revokes all and any other proxies
with respect to such Shareholder's Shares which he, she or it may have
heretofore made or granted.
- 5 -
<PAGE>
6. Specific Performance. The Shareholders acknowledge that, in
--------------------
the event of any breach by any of them of this Agreement, Parent would be
irreparably harmed and could not be made whole by monetary damages. It is
accordingly agreed that Parent, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and/or to compel specific
performance of this Agreement in any action instituted in any court of the
United States or any state thereof having subject matter jurisdiction.
7. Adjustments. The number and type of securities subject to
-----------
this Agreement shall be appropriately adjusted in the event of any stock
dividends, stock splits, recapitalizations, combinations, exchanges of
shares or the like or any other action that would have the effect of
changing the Shareholders' ownership of the Company's capital stock or
other securities.
8. No Solicitation. During the term of this Agreement, each
---------------
Shareholder (subject to any legal requirements applicable to him or her
solely in his or her capacity as an officer or a director of the Company)
shall not, directly or indirectly, initiate, solicit or encourage any
inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to the Company's
shareholders or any of them, but excluding the Offer and the Merger, or any
public statement of an intention to make, or the consideration of, such a
proposal or offer) with respect to a merger, acquisition, consolidation,
recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase of all or a substantial portion of the assets or
equity securities of, the Company or any of its subsidiaries (any such
proposal or offer being hereinafter referred to as an "Acquisition
Proposal"), engage in any discussions or negotiations with, or provide any
confidential information or data to, any person relating to an Acquisition
Proposal, or otherwise cooperate in any effort or attempt to make,
implement or accept an Acquisition Proposal. Each Shareholder shall notify
Parent immediately if any inquiries, proposals or offers related to an
Acquisition Proposal are received by, any confidential information or data
is requested from, or any negotiations or discussions related to an
Acquisition Proposal are sought to be initiated or continued with, him, her
or it and of the terms and other details of any such Acquisition Proposal
or request and shall keep Parent fully apprised of all developments with
respect thereto.
9. Termination. Except for Section 12 which shall only
-----------
terminate as and when provided therein, this Agreement shall terminate on
the earlier of (a) the date the Merger Agreement is terminated in
accordance with its terms and (b) October 31, 1995; provided, that, if on
such date (i) any applicable waiting period
- 6 -
<PAGE>
under the HSR Act has not expired or been terminated or (ii) there is in
effect an injunction, order, judgment, decree or ruling which has not
become final and nonappealable issued by any federal or state court or
other governmental authority of competent jurisdiction in the United
States, or there shall have been commenced and shall be pending a
proceeding or lawsuit before any such court or authority, which would have
the effect of (x) preventing consummation of the Offer or the Merger or any
other business combination of the Company with Parent or any affiliate of
Parent, or (y) imposing material limitations on the ability of Parent and
the Purchaser to acquire, hold or operate the business of the Company and
its subsidiaries or to exercise full rights of ownership of the Shares,
including, but not limited to, the right to vote the Shares on all matters
properly presented to the shareholders of the Company, then this Agreement
shall terminate only by the earlier of (A) 15 business days after the
expiration or termination of such waiting period or the resolution, in a
manner reasonably satisfactory to Parent, of any injunction, order,
judgment, decree, ruling, proceeding or lawsuit that has occurred and is of
a type set forth in the foregoing proviso and (B) December 31, 1995.
Except for Section 12 which shall only terminate as and when provided
therein, this Agreement shall terminate if it becomes the subject of a
final and nonappealable injunction, order, judgment, decree or ruling
issued by any federal or state court of competent jurisdiction in the
United States prohibiting the enforceability hereof.
10. Expenses. All fees and expenses incurred by either of the
--------
parties hereto shall be borne by the party incurring such fees and
expenses.
11. Brokerage. Parent and the Shareholders represent and
---------
warrant to the other that the negotiations relevant to this Agreement have
been carried on by Parent, on the one hand, and the Shareholders, on the
other hand, directly with the other, and that there are no claims for
finder's fees or brokerage commissions or other like payments in connection
with this Agreement or the transactions contemplated hereby. Parent, on
the one hand, and the Shareholders, on the other hand, shall indemnify and
hold harmless the other from and against any and all claims or liabilities
for finder's fees or brokerage commissions or other like payments incurred
by reason of action taken by it or any of them, as the case may be.
12. Fee. If (a) (i) any person has made an Acquisition Proposal
---
or has acquired beneficial ownership of shares of Common Stock representing
9.9% or more of the outstanding shares of Common Stock and thereafter the
Merger Agreement is terminated by either Parent or the Company pursuant to
Section 9.2(a), 9.2(b) or 9.2(c) thereof, or (ii) Parent terminates the
Merger Agreement pursuant to Section 9.4(a), 9.4(b) or 9.4(c) thereof and
(ii) on or after the date hereof and
- 7 -
<PAGE>
not later than one year from the date of such termination, (x) the Board of
Directors of the Company approves or recommends any Acquisition Proposal
other than from Parent, or (y) the Company enters into an agreement with
respect to a merger, acquisition, consolidation, recapitalization,
liquidation, dissolution or similar transaction involving, or any purchase
of all or a substantial portion of the assets or equity securities of, the
Company, or (z) any person has acquired beneficial ownership of shares of
Common Stock representing 50% or more of the outstanding shares of Common
Stock, and in connection therewith or thereafter, (A) any Shareholder shall
sell, transfer or otherwise dispose of any or all of his, her or its Shares
to any person not an affiliate or an associate of Parent or to the Company
or any affiliate thereof (or realize cash proceeds in respect of such
Shares as a result of a distribution to shareholders of the Company
following the sale of substantially all of the Company's assets) in
connection with a transaction proposed, described or set forth in such
Acquisition Proposal or agreement or pursuant to such acquisition or (B)
the Company shall undergo a recapitalization, dissolution, liquidation or
similar transaction proposed, described or set forth in such Acquisition
Proposal or agreement or the Company shall issue an extraordinary dividend
or other distribution in accordance with such Acquisition Proposal or
agreement (each, a "Subsequent Transaction") at a per share price or with
equivalent per share proceeds, as the case may be, with a value in excess
of $7.60 (the "Subsequent Price"), then such Shareholder shall promptly pay
to Parent an amount equal to 50% of the excess of the Subsequent Price over
$7.60 multiplied by the number of Shares disposed of or otherwise
participating in the Subsequent Transaction.
13. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, whether oral or
written, among the parties hereto with respect to the subject matter hereof
and is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified, except upon the
delivery of a written agreement executed by the parties hereto.
(b) Section headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation
of this Agreement.
(c) All representations and warranties contained herein
shall survive the termination hereof.
(d) This Agreement may be executed in any number of
counterparts, each of which shall, when executed, be deemed to
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<PAGE>
be an original, and all of which shall be deemed to be one and the same
instrument. It shall not be a condition to the effectiveness of this
Agreement that all parties have signed the same counterpart.
(e) This Agreement shall be governed by and construed and
enforced in accordance with the substantive laws of the State of Michigan,
without reference to the conflict of laws principles thereof.
(f) Any notice, request, instruction or other document to
be given hereunder by any party to the others shall be in writing and shall
be deemed to have been duly given (i) on the date of delivery, if delivered
personally or by telecopy or telefacsimile upon confirmation of receipt, or
(ii) on the first business day following the date of dispatch, if delivered
by Federal Express or other next-day courier service, or (iii) on the third
business day following the date of mailing, if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices
hereunder shall be addressed as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice.
If to any Shareholder, addressed to him, her or it at
the address listed in Appendix A opposite such Shareholder's
name:
with a copy to:
Jaffe, Raitt, Heuer & Weiss, P.C.
One Woodward Avenue
Suite 2400
Detroit, MI 48226
Attention: David D. Warner
Telecopier: (313) 961-8358
If to Parent, addressed to:
American Vision Centers, Inc.
90 John Street
New York, NY 10038
Attention: Seth R. Poppel
Telecopier: (212) 385-1149
- 9 -
<PAGE>
with a copy to:
Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, PA 15222
Attention: Leonard S. Ferleger
Telecopier: (412) 355-6501
(g) Any waiver by any party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to
any term of this Agreement or one or more sections hereof shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement.
(h) Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except that
Parent may assign, in its sole discretion, any or all of its rights,
interests and obligations under this Agreement to the Purchaser or to any
other wholly owned subsidiary of Parent. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns.
(i) Whenever possible, each provision or portion of any
provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision or portion
of any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision or portion of any provision in such jurisdiction, and this
Agreement shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
(j) All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by
either party shall not preclude the simultaneous or later exercise of any
other such right, power or remedy by such party.
(k) This Agreement is not intended to be for the benefit
of, and shall not be enforceable by, any person or entity who or which is
not a party hereto.
- 10 -
<PAGE>
(l) Each party hereby irrevocably submits to the
jurisdiction of the United States District Court for the Eastern District
of Michigan or any court of the State of Michigan located in the City of
Detroit in any action, suit or proceeding arising in connection with this
Agreement, and waives any objection based on forum non conveniens or any
other objection to venue therein; provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this paragraph (l)
and shall not be deemed to be a general submission to the jurisdiction of
said courts or in the State of Michigan other than for such purposes. Each
party hereto hereby waives any right to a trial by jury in connection with
any such action, suit or proceeding.
IN WITNESS WHEREOF, and intending to be legally bound hereby,
Parent and each of the Shareholders have executed this Agreement on the
date first above written.
AMERICAN VISION CENTERS, INC.
By /s/ Seth R. Poppel
--------------------------
/s/ Eli Shapiro
-----------------------------
Eli Shapiro
/s/ Esther E. Shapiro
-----------------------------
Esther E. Shapiro
/s/ Eli Shapiro
-----------------------------
Eli Shapiro, in his capacity as trustee
of the Eli Shapiro Revocable Living
Trust u/a/d 5/27/93
/s/ Esther E. Shapiro
-----------------------------
Esther E. Shapiro, in her capacity as
trustee of the Esther E. Shapiro
Revocable Living Trust u/a/d 5/27/93
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<PAGE>
Appendix A
Name Shares
- ---- ------
Eli Shapiro and Esther E. Shapiro, 330,920
as joint tenants
Eli Shapiro, as trustee of the 745,284*
Eli Shapiro Revocable Living Trust
u/a/d 5/27/93
Esther E. Shapiro, as trustee of the 61,581
Esther E. Shapiro Revocable Living
Trust u/a/d 5/27/93
All communications to Shareholders should be sent as follows: NuVision,
Inc., P.O. Box 2600, 2284 S. Ballenger Hwy., Flint, MI 48501, Attn.: Eli
Shapiro, O.D., Telecopier:
* 50,000 of these Shares are subject to a Stock Option Agreement dated as
of May 1, 1992 by and between Eli Shapiro and Jonathan and Leslie Raven, as
amended as of April 27, 1995, by a letter agreement by and between Eli
Shapiro, as trustee of the Eli Shapiro Revocable Living Trust u/a/d
5/27/93, and Jonathan and Leslie Raven.
- 12 -
Exhibit (c)(3)
CONFIDENTIALITY AGREEMENT
-------------------------
This Confidentiality Agreement (the "Agreement") is made and
entered into effective as of the 11th day of March, 1993 by and between
NuVision, Inc., 2284 S. Ballenger Hwy., Flint, MI 48503 ("NuVision") and
American Vision Centers, Inc. ("Recipient").
RECITALS
--------
1. In connection with the consideration by Recipient of a
possible transaction with NuVision or its subsidiaries, NuVision has agreed
to furnish certain confidential oral and written communication to
Recipient.
2. Recipient, for good and valuable consideration recited
below, hereby agrees, pursuant to the terms hereof, to hold confidential
oral and written information regarding or possessed by NuVision and not to
use, disseminate, or disclose such information except as provided below.
AGREEMENT
---------
In consideration of a possible transaction by NuVision or its
subsidiaries with Recipient, the receipt and sufficiency of which are
hereby acknowledged by Recipient, and in further consideration of the
mutual promises and covenants contained herein, the parties agree as
follows:
1. Information. Recipient recognizes that NuVision's business
-----------
interest requires a confidential relationship between Recipient and
NuVision and the fullest practical protection and confidential treatment of
NuVision's financial data, balance sheets, statements of income and
surplus, sales policies, trade secrets, information concerning NuVision
store, superstore, and laboratory operations, information concerning
NuVision franchise operations, product designs, plans, programs, ideas,
concepts, improvements, discoveries and any and all other information,
data, knowledge of and ideas relating to NuVision's business, including but
not limited to financial information and projections, sales data and
procedures, costs information, pricing terms and techniques, employee
compensation, creditor relationships, marketing and merchandizing plans and
techniques, methods of doing business and other confidential information
(all of the aforementioned items being hereinafter referred to as the
"Evaluation Material") which is owned by NuVision and its Affiliates (the
term "Affiliates", as used herein, meaning, with respect to a party,
persons or entities controlling, controlled
<PAGE>
by, or under common control of the party, including but not limited to its
subsidiary and parent corporations) or which is used in the operation of
the business of NuVision or its Affiliates. Recipient acknowledges and
agrees that all such Evaluation Material constitutes valuable, special and
unique assets of NuVision and its Affiliates, the disclosure of which would
cause substantial injury and loss of profits and goodwill to NuVision.
The definition of Evaluation Material for the purpose of this
Agreement does not include information that was or becomes generally
available to the public other than as a result of a disclosure by Recipient
or by its directors, officers, employees, agents, representatives,
partners, attorneys, accountants, or advisors ("Representatives").
2. Confidentiality.
---------------
i. Recipient agrees that the Evaluation Material shall be
used by Recipient and its Representatives solely for the purpose of
evaluating a possible transaction between Recipient and NuVision (or a
subsidiary of NuVision).
ii. Recipient agrees that it shall, and shall cause each of
its Representatives to, (a) keep secret and treat confidentially all of the
Evaluation Material; (b) not aid others in learning of or using or planning
the use of any Evaluation Material; (c) neither directly nor indirectly
disclose the Evaluation Material to others outside of Recipient and its
Affiliates; (d) not use the Evaluation Material for its own account
(excepting the use by Recipient to evaluate a possible transaction by
Recipient with NuVision) and not plan for, aid, or abet others in the use
of it for the benefit of anyone other than NuVision; (e) not make or
disclose documents or instruments or copies of documents or instruments
containing disclosures of Evaluation Material; and (f) not otherwise in any
way willfully or intentionally use, disseminate, nor disclose any of the
Evaluation Material, directly or indirectly, without the prior written
consent of NuVision.
iii. Recipient agrees that all files, records, documents,
instruments, information, data, and similar items relating to the business
of NuVision and its Affiliates and constituting Evaluation Material,
whether given to Recipient by NuVision or prepared by Recipient or its
Representatives or otherwise coming into Recipient's possession, shall
remain the exclusive property of NuVision, and upon written request by
NuVision, Recipient shall promptly return said files, records, documents,
instruments, information, data and similar items to NuVision.
- 2 -
<PAGE>
iv. Recipient shall (a) not disclose Material to any of its
Representatives unless the Representative needs to know such Evaluation
Material for the sole purpose of evaluating the possible transaction with
NuVision; (b) inform its Representatives of the confidential nature of the
Evaluation Material; (c) direct the Representatives to treat the Evaluation
Material confidentially; and (d) be responsible for any breach of this
Agreement by Recipient or by its Representatives.
v. Recipient shall not, and shall direct its
Representatives not to, disclose to any person either the fact that any
investigation, discussions, or negotiations are taking place concerning a
possible transaction with NuVision or any of the terms, conditions or other
facts with respect to any such possible transaction, including the status
thereof, except as may be necessary in the opinion of Recipient's counsel
to comply with the requirements of any law, governmental order or
regulation, or subpoena or other lawful process. The term "person" as used
in this Agreement shall be broadly interpreted and shall include, without
limitation, any corporation, company, partnership, joint venture, entity or
individual.
3. Future Acquisitions. Recipient agrees that for a period of
-------------------
three years from the date hereof, Recipient and its Affiliates and
Representatives will not (and Recipient and they will not assist or
encourage others to), directly or indirectly, unless specifically requested
in writing in advance by NuVision's Board of Directors; (i) acquire or
offer, seek, propose or agree to acquire, ownership (including, but not
limited to, beneficial ownership as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) of any of NuVision's property
or any securities issued by NuVision, or any rights or option to acquire
such ownership, (ii) seek or propose to influence or control NuVision's
management or its policies, or (iii) make any public disclosure with
respect to any of the foregoing.
4. Proposals to NuVision. NuVision expressly reserves the
---------------------
right, at its sole discretion, to reject any or all expressions of interest
or proposals made to NuVision and/or to terminate discussion with any
entity at any time. NuVision shall have no legal commitment or obligation
to any entity or person reviewing the Evaluation Material or making any
proposal unless and until a definitive written agreement for a transaction
with NuVision and Recipient has been executed by all parties.
5. Accuracy or Completeness of Information. Recipient agrees
---------------------------------------
and understands that NuVision and its Representatives and NuVision's
Affiliates and their Representatives make no representation or warranty as
to the accuracy or completeness of the Evaluation Material supplied to
Recipient or its Representatives. Recipient agrees that NuVision and its
Representatives and NuVision's Affiliates and their
- 3 -
<PAGE>
Representatives shall not have any liability to Recipient or its affiliates
or any Representative of Recipient resulting from the reliance upon or the
use of the Evaluation Material by them.
6. Independent Relationship. Recipient is not an employee,
------------------------
agent, representative, partner, joint venturer or attorney-in-fact for
NuVision, and Recipient shall have no authority to act for, act in the name
of, or bind NuVision or its Affiliates in any manner whatsoever.
7. Confined to Terms. This Agreement shall establish no
-----------------
rights, duties or obligations between NuVision and Recipient other than
rights, duties or obligations expressly provided by the terms of this
Agreement. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject matter hereof.
8. Remedies. In view of the difficulty in determining the
--------
amount of damages that may result to NuVision and its Affiliates from the
breach of any of Recipient's obligations under this Agreement, it is the
intent of the parties hereto that in addition to monetary damages, NuVision
shall have the right to prevent any such breach in equity or otherwise,
including without limitation, prevention by means or injunctive relief.
Recipient hereby waives any requirement for the securing or posting of any
bond in connection with such remedy.
9. Severability. If for any reason any provision contained in
------------
this Agreement should be held invalid in whole or in part by a court of
competent jurisdiction, then it is the intent of the parties hereto that
the balance of this Agreement be enforced to the full extent permitted by
applicable law.
10. Term. The term of this Agreement shall commence on the date
----
hereof and shall continue until it expires three years later.
11. Governing Law. This Agreement shall be construed under the
-------------
laws of the State of Michigan, without giving effect to its conflict of
laws, principles, or rules.
12. Payment of Legal Expenses. In the event that Recipient
-------------------------
shall fail to perform any of its obligations under this Agreement,
Recipient hereby agrees to pay all reasonable expenses, including
reasonable attorney's fees, which may be incurred by NuVision in a
successful enforcement of its rights under this Agreement. This Section 12
shall survive the expiration or termination of this Agreement.
13. Waiver and Amendment. Any term or provision of this
--------------------
Agreement may be waived at any time by the party which is entitled to the
benefits thereof, and any term or provision of
- 4 -
<PAGE>
this Agreement may be amended or supplemented at any time by the written
agreement of the parties. No failure or delay by NuVision in exercising
any right, power or privilege pursuant to this Agreement shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise of any right, power or privilege.
14. Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning of this Agreement.
EXECUTED AND AGREED to as of the date first above written.
NUVISION, INC. AMERICAN VISION CENTERS, INC.
By: /s/ Jonathan E. Raven By: /s/ Seth R. Poppel
---------------------------- --------------------------
Its: Vice President Its: Chairman
--------------------------- -------------------------
- 5 -
Exhibit (c)(4)
CONSULTING AGREEMENT
--------------------
CONSULTING AGREEMENT, dated as of April 27, 1995, between
AMERICAN VISION CENTERS, INC., a New York corporation (the "Company"), and
ELI SHAPIRO (the "Consultant").
WHEREAS, the Consultant is currently employed by NuVision, Inc.,
a Michigan corporation ("Target"), as Chief Executive Officer and Chairman
of the Board of Directors of Target; and
WHEREAS, upon the terms and subject to the conditions of an
Agreement and Plan of Merger dated as of April 27, 1995 (the "Merger
Agreement") by and among the Company, NI Acquiring Corp., a Michigan
corporation and a wholly owned subsidiary of the Company (the
"Subsidiary"), and Target, the Subsidiary will commence a tender offer (the
"Offer") for all outstanding shares of Common Stock, par value $.50 per
share (the "Shares"), of Target and will thereafter merge with Target in a
merger (the "Merger") and thereafter the surviving corporation will be
referred to as the "Employer" hereunder; and
WHEREAS, the Company desires to induce the Consultant after the
first to occur of the consummation of the Offer or the Merger (the
"Effective Date") to act as a consultant to the Company and the Consultant
desires to commit himself to act as a consultant to the Company.
NOW, THEREFORE, in order to effect the foregoing, the Company and
the Consultant wish to enter into a consulting agreement upon the terms and
subject to the conditions set forth below. Accordingly, in consideration
of the respective covenants and agreements of the parties herein contained,
and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Term and Services to be Provided. Commencing on the Effective
--------------------------------
Date and continuing until the fifth anniversary thereof (the "Term"), the
Consultant shall provide consulting services to the Company from time to
time at the reasonable request of the Company. Such consulting services
shall consist of advising the Company and the Employer with respect to
general business matters, issues and strategies relating to the Company's
business, including issues concerning community, governmental and industry
relations and cooperating to the extent reasonably requested by the Company
with appropriate notice and with due regard being given to Consultant's
schedule and subject to Consultant's reasonable agreement in connection
with the defense or prosecution of any litigation, claim or proceeding that
<PAGE>
involves or relates to any acts occurring with respect to the Employer
prior to the Effective Date. Such services shall be rendered from the
locales where the Consultant may generally reside from time to time and may
be provided telephonically or via other electronic transmission media. The
Consultant may be requested to travel to render such services on an
occasional basis, subject to Consultant's agreement and with due regard
being given to Consultant's schedule.
2. Compensation.
------------
(a) As compensation for the services provided in Section 1 and
the covenants contained in Section 4, the Company shall pay the Consultant
the aggregate amount of $1,250,000, payable (i) in 24 equal installments of
$26,042 each commencing on the Effective Date and on the same date in the
23 months thereafter, and (ii) one installment of $625,000 due on the day
after the second anniversary of the Effective Date; provided, however, that
the Company shall have the option to instead pay this amount in two annual
installments of $312,500 each due on the day after the second and the third
anniversaries of the Effective Date. Interest at the rate of 12% per annum
will accrue and be payable on installments not paid on the due date until
the date of payment.
(b) In addition to the cash compensation set forth in Sections
2(a) and 2(c), during the Term, the Company shall provide or make available
(i) to the Consultant and his spouse at the Company's expense the same
medical, health, dental, prescription drug and optical insurance plans or
coverage as the Consultant currently enjoys, or plans or programs providing
the Consultant and his spouse with at least substantially equivalent
benefits; and (ii) to the Consultant, the use of an automobile at least
comparable to the automobiles previously provided to the Consultant by
Target, with expenses (including maintenance and insurance) paid by the
Company to the same extent as currently provided by Target.
(c) In addition to the compensation set forth in Section 2(a),
the Company, promptly following receipt of appropriate documentation, shall
reimburse the Consultant for the reasonable ordinary and necessary business
expenses that he incurs in connection with rendering services under this
Consulting Agreement. Except as otherwise provided in this Consulting
Agreement, all payments and other benefits hereunder (including pursuant to
Section 3 hereof) shall be made without set-off for any reason whatever.
(d) If a "Change in Control" (as defined below) of either the
Company or the Employer occurs during the Term, then on the date of the
Change in Control, the Company shall (i) pay to the Consultant in one lump
sum payment all amounts which then remain to be paid to the Consultant
during the remainder of the Term pursuant to Section 2(a), without
discount, and (ii) make
<PAGE>
provision acceptable to the Consultant for the continuation of the benefits
described in Section 2(b) for the remainder of the Term.
"Change in Control" means any of the following events occurring
after the Effective Date: (i) the acquisition (or disclosure of the
previous acquisition) by any person who is not a shareholder on the
Effective Date of the beneficial ownership of shares of the Company's or
the Employer's outstanding stock of any class which results in such person
possessing or having the right to possess, in the aggregate, more than 50%
of the total voting power exercisable by all the Company's or the
Employer's shareholders in the election of directors; or (ii) the merger by
the Company or the Employer into or the consolidation of the Company or the
Employer with any person which will result in the shareholders of the
Company or the Employer immediately prior to such merger or consolidation
possessing less than 50% of the total voting power exercisable by all of
the shareholders of the surviving or resulting corporation or other entity
in the election of directors; or (iii) the transfer by the Company or the
Employer of all or substantially all of its assets to any person.
Notwithstanding the foregoing, a "Change in Control" shall not be deemed to
have occurred (A) for purposes of clause (i) or (ii) of the preceding
sentence, (x) if the Employer mergers into or consolidates with the Company
or any other subsidiary of the Company of (y) unless, after any such
acquisition, merger or consolidation, the Company no longer beneficially
owns, directly or indirectly, shares possessing or having the right to
possess more than 50% of the total voting power exercisable by all of the
Employer's shareholders in the election of directors; (B) solely as a
result of any sale of all or substantially all of the assets of Employer to
any other subsidiary of the Company; (C) solely as a result of any transfer
or other disposition of up to 35 Employer owned stores as contemplated by
the Company following the Merger; or (D) solely as a result of any
conversion of stores owned by Employer into franchisee-owned stores; so
long, in the cases of clauses (A) and (B), as the surviving or resulting
corporation or the acquiror of any such assets expressly assumes the
obligation of the Employer to the Consultant under Section 16 pursuant to a
written instrument reasonably satisfactory to the Consultant, and, after
any such transaction, the Company beneficially owns, directly or
indirectly, shares possessing or having the right to possess more than 50%
of the total voting power exercisable by all of such entity's shareholders
in the election of directors.
3. Termination.
-----------
(a) Death. The Consultant's consulting relationship with the
-----
Company hereunder shall terminate upon his death; provided that, if the
Consultant dies during the Term, the Company shall pay to the Consultant's
spouse, if living, or if she dies, to the Eli Shapiro Revocable Living
Trust u/a/d 5/27/93, or in any case to such other beneficiary as may be
<PAGE>
designated by the Consultant by written notice to the Company, the cash
compensation set forth in Section 2(a) that would have been paid to
Consultant hereunder for the remainder of the Term. Such compensation
shall be paid in the same amounts and at the same times as provided in
Section 2(a). In addition, the Company shall continue to provide to the
Consultant's spouse the benefits provided in Section 2(b) for the remainder
of the Term.
(b) Disability. If, as a result of the Consultant's incapacity
----------
due to physical or mental illness, Consultant shall be unable to perform
the consulting services described herein for a continuous period of six
months, the Company may terminate the Consultant's consulting relationship
with the Company. In such event, the Consultant shall continue to receive
the compensation provided in Section 2(a) and the Consultant and his spouse
shall receive the benefits provided in Section 2(b) for the remainder of
the Term.
(c) Merger Agreement. In the event that neither the Merger nor
----------------
the Offer is consummated prior to October 31, 1995 or the Merger Agreement
is terminated prior thereto, without any shares having been purchased in
the Offer, this Consulting Agreement shall be canceled and terminated and
shall be of no force or effect.
4. Noncompetition; Confidentiality.
-------------------------------
(a) During the Term the Consultant shall not:
(i) directly or indirectly, as owner, partner, officer,
employee, agent or consultant or in any other capacity, engage in
or be employed in any way by any business that is engaged in the
business of optical retailing that is competitive with the
business of the Company and/or the Employer then being conducted
in the States of Michigan, Indiana and New Jersey (provided that
the Consultant may be an owner or partner in one optical boutique
in the Somerset Mall, Troy, Michigan);
(ii) whether for his own account or for the account of any
other person, willfully and intentionally interfere with the
relationship of the Company and/or the Employer with any person
who at any time during the Term was an employee, customer or
supplier of, or in the habit of dealing with, the Company, the
Employer and/or any of their subsidiaries or affiliates;
provided, however, that the Consultant may own up to ten percent of any
- -------- -------
class of stock of a publicly-traded company.
(b) The Consultant, either during or after the Term, shall not,
except as may otherwise be required by law, directly or indirectly,
willfully or knowingly disclose or make available
<PAGE>
to any person, firm, corporation, association or other entity for any
reason or purpose whatsoever, or willfully or knowingly use or cause to be
used in any manner adverse to the interests of the Employer or the Company
any Confidential Information (as defined below). The Consultant shall,
upon termination of services as a consultant of the Company, return all
Confidential Information in his possession that is in written or other
tangible form (together with all copies or duplicates thereof) to the
Company, and thereafter no Confidential Information shall be retained by
the Consultant or furnished to any third party, either by sample,
facsimile, film, audio or video cassettes, electronic data, verbal
communication or any other means of communication; provided, however, that
-------- -------
the Consultant shall not be obligated to treat as confidential, or return
to the Company copies of, any Confidential Information that (1) was
publicly known at the time of disclosure to the Consultant, (2) becomes
publicly known or available thereafter other than by any means in violation
of this Consulting Agreement or (3) is lawfully disclosed to the Consultant
by a third party.
(c) In the event that the Consultant is required (by deposition,
interrogatories, subpoena, Civil Investigative Demand or similar process)
to disclose any Confidential Information, the Consultant will provide the
Company with prompt notice of such request(s) so that it may seek an
appropriate protective order and/or waive the Consultant's compliance with
this Section. If, in the absence of a protective order or the receipt of a
waiver hereunder, the Consultant is nonetheless, in the reasonable opinion
of his counsel, compelled to disclose information concerning the Company to
any court or governmental agency or authority or to a civil litigant or any
other party or else stand liable for contempt or suffer other censure or
penalty, the Consultant may disclose such information to such tribunal
without liability hereunder.
(d) As used in this Consulting Agreement the term "Confidential
Information" means:
(i) information disclosed to Consultant or known by the
Consultant as a consequence of or through his relationship with
the Employer or the Company not generally known in the retail
optical industry about the Employer or the Company or the
Employer's or the Company's clients, advertising methods, public
relations methods, business methods, organization, procedures or
finances, including, without limitation, information of or
relating to the retail optical industry, advertising programs,
advertising copy, advertising techniques, art work, designs,
contracts, arrangements, research, trade secrets, information
regarding trademarks or other intellectual property rights,
customer lists, product and service lines, marketing data and any
related or other technical, corporate or trade information; and
<PAGE>
(ii) information disclosed to the Consultant or known by the
Consultant as a consequence of or through his relationship with
the Employer or the Company, not generally known in the
businesses in which the Company's or any of its subsidiaries'
clients are or may be engaged, about the products, processes, and
services of the Company's or any of its subsidiaries' clients,
including, without limitation, information of or relating to the
retail optical industry, publicity, publications, media,
research, development, inventions, manufacture, purchase,
engineering, designs, methods, processes, analytical results and
any related or other technical, corporate, professional or trade
information.
(e) The Consultant understands that the agreements contained in
this Section 4 are necessary to protect, among other things, the trade
secrets, proprietary information, confidential information, customer and
supplier lists and know-how by preventing the Consultant from engaging in
activities that would inherently create a risk of the Consultant engaging
in unfair trade practices.
5. Remedies; Cessation of Payment Obligation. In the event of a
-----------------------------------------
claimed material, willful and continuing breach by the Consultant of the
terms of this Consulting Agreement, the Company shall, after giving the
Consultant notice and a reasonable opportunity to cure such claimed breach,
be entitled to institute legal proceedings to obtain damages for any such
breach. Only after the successful adjudication resulting in a final,
nonappealable judgment in favor of the Company or the Employer to the
effect that the Consultant has materially and willfully breached this
Consulting Agreement, then all rights of the Consultant under this
Consulting Agreement shall immediately terminate and neither the Employer
nor the Company shall thereafter have any obligation to pay any amounts to
the Consultant in connection with the obligations of the Employer or the
Company under this Consulting Agreement or otherwise and the Company shall
be entitled to exercise such remedies cumulatively or in conjunction with
all other rights and remedies provided by law or in equity. The Consultant
acknowledges, however, that the remedies at law for any breach by him of
the provisions of Section 4 may be inadequate and that the Company shall be
entitled to injunctive relief against him in the event of any such breach.
6. Expenses. On the Effective Date, the Company will reimburse the
--------
Consultant for up to $10,000 of his expenses incurred in connection with
this Consulting Agreement. In the event of any litigation in any action to
enforce a right under this Consulting Agreement, the losing party thereto
shall reimburse the prevailing party for its expenses.
<PAGE>
7. Notice. For the purposes of this Consulting Agreement, notices,
------
demands and all other communications provided for in this Consulting
Agreements shall be in writing and shall be deemed to have been duly given
when delivered or (unless otherwise specified) mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Consultant: Eli Shapiro
3110 Hawthorne
Flint, Michigan 48503
with a copy to: David D. Warner, Esq.
Jaffe, Raitt, Heuer & Weiss,
Professional Corporation
One Woodward Avenue, Suite 2400
Detroit, Michigan 48226
If to the Employer
or the Company: American Vision Centers, Inc.
90 John Street
New York, New York 10038
with a copy to: Robert Zinn, Esq.
Kirkpatrick & Lockhart
1500 Oliver Building
Pittsburgh, Pennsylvania 15222
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
8. Consultant's Independence and Discretion.
----------------------------------------
(a) Nothing herein contained shall be construed to constitute
the parties hereto as partners or as joint venturers, or either as agent of
the other, or as employer and employee. By virtue of the relationship
described herein, the Consultant's relationship to the Company during the
Term shall only be that of an independent contractor and the Consultant
shall perform all services pursuant to this Consulting Agreement as an
independent contractor.
(b) Subject only to such specific limitations as are contained
in this Consulting Agreement, the manner, means, details or methods by
which the Consultant performs his obligations under this Consulting
Agreement shall be solely within his discretion.
9. Modifications; Waiver Discharge. This Consulting Agreement is
-------------------------------
entered into between the Company and the Consultant for the benefit of each
of the Company and the Consultant and for the benefit of the Employer. No
provisions of this Consulting Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is in writing and
signed by the Consultant and the Company's Chief Executive Officer or such
<PAGE>
other officer as may be designated by the Board of Directors of the
Company. No waiver by any party hereto at any time of any breach by the
other party hereto of any provision of this Consulting Agreement to be
performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or
subsequent time.
10. Validity. The invalidity or unenforceability of any provision or
--------
provisions of this Consulting Agreement shall not affect the validity or
enforceability of any other provision of this Consulting Agreement, which
shall remain in full force and effect; provided, however, that if any one
-----------------
or more of the terms contained in Section 4 shall for any reason be held to
be excessively broad with regard to time, duration, geographic scope or
activity, that term shall not be deleted but shall be reformed and
construed in a manner to enable it to be enforced to the extent compatible
with applicable law.
11. Entire Agreement. This Consulting Agreement sets forth the
----------------
entire agreement of the parties hereto in respect of the subject matter
contained herein and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral
or written, by any officer, employee or representative of any party hereto,
and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated. No agreements or
representations, oral or otherwise, expressed or implied, with respect to
the subject matter hereof have been made by either party that are not set
forth expressly in this Consulting Agreement.
12. Assignment. This Consulting Agreement may not be assigned by the
----------
Consultant. It may be assigned by the Company to any successor to its
business and will inure to the benefit and be binding upon any such
successor, although no such assignment will relieve the Company or the
Employer of its obligations or liabilities as provided hereunder.
13. Counterparts. This Consulting Agreement may be executed in
------------
several counterparts, each of which shall be deemed to be an original but
all of which together will constitute one and the same instrument.
14. Headings. The headings contained herein are for reference
--------
purposes only and shall not in any way affect the meaning or interpretation
of this Consulting Agreement.
15. Governing Law. The validity, interpretation, construction and
-------------
performance of this Consulting Agreement shall be governed by the laws of
the State of Michigan without regard to principles of conflicts of laws.
16. Guaranty. In recognition of the fact that the Consultant's
--------
services hereunder will inure to the benefit of the
<PAGE>
Employer, Employer hereby guarantees the timely performance of and payment
(and not merely collection) by the Company of all of its obligations
hereunder. The Employer hereby waives notice of or consent to any defaults
by the Company and modifications to or waivers of any of the Company's
obligations hereunder. Notwithstanding the foregoing, in the event of any
litigation or other action by the Consultant to enforce a right under this
Consulting Agreement, the Employer shall be entitled to assert any defense
that the Company would have been entitled to assert in connection with such
litigation or other action.
17. Termination of Employment Agreement. On and from the Effective
-----------------------------------
Date and immediately following payment of all amounts owed pursuant to
Section 10(c)(iii) of the Employment Agreement made as of March ___, 1990,
as amended to date, between the Consultant and Target, any and all other
rights of the Consultant under such Agreement shall terminate and cease to
exist.
IN WITNESS WHEREOF, the parties have executed this Consulting
Agreement on the date and year first above written.
AMERICAN VISION CENTERS, INC.
By: /s/ Seth R. Poppel
------------------------------
Its: Chairman
------------------------------
NI ACQUIRING CORP.
By: /s/ Seth R. Poppel
-------------------------------
Its: President
------------------------------
/s/ Eli Shapio
-----------------------------------
Eli Shapiro
Exhibit (c)(5)
AGREEMENT REGARDING SPLIT DOLLAR LIFE INSURANCE AGREEMENT
This Agreement is entered into on April 27, 1995 among NuVision, Inc.,
a Michigan corporation (the "Corporation"), Brad Jeffrey Shapiro, Leslie
Michelle Raven and Jan Lori Albert, NI Acquiring Corp. ("Purchaser") and
American Vision Centers, Inc. ("Parent").
FACTUAL BACKGROUND
A. Certain of the parties listed above are presently parties to that
certain Split Dollar Life Insurance Agreement dated April 5, 1987 as
amended on April 17, 1989 (the "Split Dollar Agreement"). All capitalized
terms used herein which are not defined herein shall have the meanings
ascribed in the Split Dollar Agreement.
B. As of the date hereof, the total amount of the cumulative premium
payments made by the Corporation in respect of the Policy, together with
accrued interest, is $ 567,279.
C. The Purchaser, Parent and the Corporation are entering into a
certain Agreement and Plan of Merger dated even date herewith, pursuant to
which the Purchaser intends to acquire the entire outstanding equity
interest in the Corporation (the "Merger Agreement").
D. The parties wish to execute this Agreement in order to terminate
the Split Dollar Agreement and to express certain agreements as to various
provisions relating to obligations under the Split Dollar Agreement.
In consideration of the covenants and agreements contained herein, it
is agreed as follows:
1. This Agreement will be effective only upon the first to
occur of the date and time (the "Effective Time") that the Purchaser either
(i) merges with the Corporation pursuant to the Merger Agreement; or (ii)
accepts for payment and purchases shares of the Corporation's common stock
properly tendered pursuant to the Offer (as defined in the Merger
Agreement).
2. Effective at the Effective Time, the Corporation shall
release and discharge all of the Owners from any obligation for repayment
of the Repayment Amount or any other obligation to the Corporation under or
related to the Split Dollar Agreement, irrevocably and absolutely.
Further, effective at the Effective Time (i) the Corporation shall
terminate the Collateral Assignment and otherwise release and relinquish
any security or similar collateral interest it may have in the Policy.
<PAGE>
3. Effective at the Effective Time: (i) the Corporation shall
assign all of its rights and delegate all of its duties to the Owners,
severally in accordance with the Owners' respective interests in the
Policy, (ii) the Owners severally in accordance with the Owners' respective
interests in the Policy shall assume and discharge all obligations of the
Corporation pursuant to the Split Dollar Agreement, and (iii) the Owners
shall release the Corporation from any further obligation or liability
under or related to the Split Dollar Agreement irrevocably and absolutely.
4. Except as otherwise provided in this Agreement, the Split
Dollar Agreement and the Collateral Assignment shall terminate as of the
Effective Time and shall be of no further force and effect thereafter.
5. The Purchaser and Parent hereby consent to the agreements
contained in this Agreement.
6. This Agreement shall terminate and be of no force and effect
if the Merger Agreement is terminated.
IN WITNESS WHEREOF, the parties have executed this Agreement.
NUVISION, INC.
By: /s/ Jonathan E. Raven
-------------------------
Its: President
-------------------------
/s/ Brad Jeffrey Shapiro
-----------------------------
Brad Jeffrey Shapiro
NI ACQUIRING CORP.
By: /s/ Seth R. Poppel /s/ Leslie Michelle Raven
------------------------- -----------------------------
Leslie Michelle Raven
Its: Chairman/Pres.
-------------------------
AMERICAN VISION CENTERS, INC.
/s/ Jan Lori Albert
-----------------------------
Jan Lori Albert
By: /s/ Seth R. Poppel
-------------------------
Its: Pres./Chairman
-------------------------
- 2 -
