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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 9, 1996
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REGIS CORPORATION
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(Exact name of registrant as specified in its charter)
MINNESOTA
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(State or other jurisdiction of incorporation)
0-11230 41-0749934
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(Commission File Number) (IRS Employer Identification No.)
7201 Metro Boulevard, Minneapolis, MN 55439
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 947-7000
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
The Registrant on May 9, 1996, announced the agreement to acquire 154
hairstyling salons from National Hair Care Centers LLC attached hereto as
Exhibits A and B.
The acquisition is not material to the Registrant and as such is not filed under
Item 2.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
REGIS CORPORATION
Date: May 21, 1996 By:/s/ Frank E. Evangelist
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Frank E. Evangelist
Senior Vice President-Finance
Chief Financial Officer
Signing on behalf of the
registrant and as principal
accounting officer
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EXHIBIT INDEX
Exhibit A Press release announcing the agreement.
Exhibit B Asset purchase agreement between Regis and National Hair Care
Centers LLC.
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"EXHIBIT A"
[REGIS LETTERHEAD]
Contact: REGIS CORPORATION:
Paul D. Finkelstein
Frank E. Evangelist
Randy L. Pearce
(612) 947-7000
MORGEN-WALKE ASSOCIATES:
David Walke/June Filingeri/
Melissa Garelick
Press Contact: Leslie Feldman
(212) 850-5600
REGIS AGREES TO ACQUIRE WAL-MART BASED SALONS
MINNEAPOLIS, MINN. (May 9, 1996) -- Regis Corporation (Nasdaq:RGIS)
announced today it has signed a definitive agreement to acquire 154 hairstyling
salons operating within Wal-Mart stores and Supercenters from National Hair Care
Centers, LLC, based in Little Rock, Arkansas. The salons, located in 27 states,
generate annual revenue of approximately $28 million.
"We are extremely pleased to announce this significant acquisition and our
new relationship with Wal-Mart," said Paul Finkelstein, president of Regis
Corporation. "This represents a most important growth opportunity for the
Company. Entering this relationship with the world's most successful retailer
is extraordinary."
The purchase price will be financed through a combination of the sale of
Company stock and debt. The transaction is scheduled to close May 31, 1996.
"We continue to be well-positioned to benefit from the ongoing
consolidation within the growing hair care industry," said Mr. Finkelstein.
"The method in which we financed this transaction allows us to maintain our
strong balance sheet and investment grade status, enabling us to continue our
successful growth strategy."
Regis Corporation, based in Minneapolis, is the largest owner and operator
of mall-based hair and retail product salons in the world. Regis currently
operates 1,793 salons in four divisions: Regis Hairstylists, MasterCuts, Trade
Secret and International. Globally, Regis has over 18,000 employees.
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ASSET PURCHASE AGREEMENT
BETWEEN
NATIONAL HAIR CARE CENTERS, LLC,
AN ARKANSAS LIMITED LIABILITY COMPANY
("SELLER")
AND
REGIS CORPORATION,
a MINNESOTA CORPORATION
("BUYER")
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of May 7, 1996 by
and between National Hair Care Centers, LLC, an Arkansas Limited Liability
Company ("Seller"), and Regis Corporation, a Minnesota Corporation ("Buyer").
Subject to the terms and conditions set forth herein, Buyer desires to
purchase from Seller and Seller desires to sell to Buyer the business, assets
and properties, operating as a going concern, which constitute Seller's hair
care business ("Business").
The parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.01 BASIC TRANSACTION.
(a) PURCHASED ASSETS. Except as otherwise provided below, on and
subject to the terms established in this Agreement, Buyer hereby agrees to
purchase from Seller, and Seller hereby agrees to sell, convey, assign,
transfer, and deliver as of the Closing Date (as defined in Section 1.04) to
Buyer, all of Seller's right, title and interest in the properties, assets and
rights of any kind, used in or relating to the Business (the "Purchased Assets")
including, but not limited to, the following:
(i) All cash on hand at each salon location, not to exceed
$250 per salon ("Cash"), notes and accounts receivable (whether current or
noncurrent);
(ii) All patents, inventions, shop rights, knowhow, trade
secrets and confidential information; all registered and unregistered
trademarks, service marks, logos, corporate names, trade names, trade dress
and all other trademark rights; all registered and unregistered copyrights;
and all registrations for, and applications for registration of, any of the
foregoing, together with all of Seller's rights to use all of the foregoing
forever and all other rights in, to and under the foregoing in all countries;
all computer programs and software; all goodwill of the Business and all
other intangible properties; and all artwork, advertising and promotional
materials and all other printed or written materials;
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(iii) All discoveries, improvements, processes, formulae
(secret or otherwise), data, engineering, technical and shop drawings, art work,
specifications and ideas (including those in the possession of third parties,
but which are the property of Seller), whether protectable or not, licenses and
other similar agreements, and all drawings, records, books or other indicia,
however evidenced, of the foregoing;
(iv) All rights existing under leases, contracts, licenses,
permits, distribution arrangements, sales and purchase agreements, other
agreements and business arrangements, but only to the extent that the Seller's
obligations under such leases, etc. are expressly assumed by Buyer;
(v) All machinery, fixtures, equipment (including all
transportation and office equipment) and furniture located in any plant,
warehouse, office or other space leased, owned or occupied by Seller;
(vi) All inventory, office supplies, spare parts, other
miscellaneous supplies, and other tangible property of any kind, including,
without limitation, all property of any kind located in any office or other
space leased, owned or occupied by Seller, or in any warehouse where any of
Seller's properties and assets may be situated;
(vii) All claims, causes of action, chooses in action, rights
of recovery and rights of set-off of any kind except any relating to Excluded
Assets (as defined below);
(viii) The rights to receive mail and other communications
except with respect to Excluded Assets;
(ix) To the extent requested by Buyer, all records
pertaining to customers and accounts, personnel records, all lists and
records pertaining to suppliers, and all books, ledgers, files and business
records of every kind, provided that after the Closing Date Buyer shall
provide Seller and its employees, agents and representatives with reasonable
access to the Business' financial records for tax reporting and other
reasonable purposes, which such records shall be maintained by Buyer until no
longer subject to examination or audit by the Internal Revenue Service; and
(x) All other property not referred to above which is
represented on the Final Balance Sheet (as defined in Section 3.03).
(b) EXCLUDED ASSETS. Notwithstanding the foregoing, in addition to
the excluded assets listed on Exhibit A attached hereto, the parties agree that
the following are expressly excluded from the purchase and sale and are not
included in the Purchased Assets:
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(i) Seller's rights under or pursuant to this Agreement and
the other agreements with Buyer contemplated hereby; and
(ii) Seller's minute books and stockholder and stock
transfer records and similar corporate records (provided that after the Closing,
Seller shall provide Buyer or its employees, agents or representatives
reasonable access to such records).
(c) LIABILITIES. The parties agree that Buyer will not assume any
liabilities or obligations of Seller, or claims against Seller based on
occurrences prior to Closing, direct or indirect, known or unknown, absolute or
contingent, not expressly provided for herein ("Excluded Liabilities").
Notwithstanding the foregoing, Buyer hereby assumes at Closing all Seller's
liabilities for accrued vacation pay for all Seller's employees, and all
severance pay expenses and costs for all of Seller's salon supervisors and
managers and all other salon employees ("Assumed Liabilities").
1.02 CONSIDERATION FOR PURCHASED ASSETS. The purchase price for the
Purchased Assets ("Purchase Price") shall be Twelve Million Two Hundred Fifty
Thousand Dollars ($12,250,000) payable Ten Million Dollars ($10,000,000) at
Closing and an additional Two Million Two Hundred Fifty Thousand Dollars
($2,250,000) payable in 5 equal annual installments without interest commencing
on the first anniversary of the Closing Date with each of the remaining 4 annual
installments being due and payable on each succeeding anniversary date, as
evidenced by Buyer's Promissory Note in the form attached hereto as Exhibit B
("Promissory Note").
1.03 PURCHASE PRICE ADJUSTMENT. The Purchase Price payable at Closing
is subject to adjustment as follows:
The Purchase Price shall be increased by the sum of (i) the net increase in
the book value of Inventory and Property and Equipment (excluding amortization
and depreciation deductions) from December 31, 1995 through May 31, 1996, as
reflected on the Final Balance Sheet delivered at Closing, and (ii) Cash (as
defined in Section 1.01(a)(i)) and (iii) 50% of the noncapitalized costs related
to new salon openings since December 31, 1995. Prior to Closing, Seller shall
furnish to Buyer such documentation as Buyer shall reasonably request to
establish the amount and nature of such increase.
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1.04 The CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") will take place at the offices of Stephens
Inc., 111 Center Street, Little Rock, Arkansas 72201, at 9:00 a.m. local
time, on May 31, 1996, and shall be effective as of May 31, 1996 ("Closing
Date"). Alternatively, the transactions may be closed by overnight delivery
of documents and by wire transfer of that portion of the Purchase Price
payable at Closing.
ARTICLE 2
CONDITIONS TO CLOSING
2.01 CONDITIONS TO BUYER'S OBLIGATIONS. The obligations of Buyer to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver by Buyer of the following conditions on or before the
Closing Date:
(a) The representations and warranties set forth in Article 3 hereof,
both individually and considered as a whole, will be true and correct in all
material respects at and as of the Closing Date;
(b) Seller will have performed, in all material respects, all of the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing Date;
(c) There will be no material casualty loss or damage to the
Purchased Assets taken as a whole (unless covered by insurance) at and as of the
Closing Date;
(d) All consents by third parties that are required for the
consummation of the transactions contemplated hereby will have been obtained,
including without limitation consents required under contracts and leases
included in the Purchased Assets, and further including the consent of
Wal-Mart Stores, Inc. to the assignments of all its leases with Seller,
without any material changes in the terms and conditions of such leases,
except for such reasonable changes that are requested by Buyer;
(e) No action or proceeding before any court or governmental body
will be pending or threatened wherein a judgement, decree or order would
prevent any of the transactions contemplated hereby or cause such
transactions to be declared unlawful or rescinded or which might adversely
affect the right of Buyer to own, operate or control the Purchased Assets or
the value of the Purchased Assets taken as a whole;
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(f) Seller shall have taken all necessary action by and on behalf of
its members and managers for the approval and authorization of the consummation
of the transactions contemplated hereby;
(g) Buyer will have received from Seller's general counsel, an
opinion addressed to Buyer, dated the Closing Date and in form and substance
reasonably satisfactory to Buyer;
(h) On the Closing Date, Seller will have delivered to Buyer the
following:
(i) An officer's certificate dated the Closing Date
executed by the President of Seller, stating that, to the best of such officer's
knowledge, the conditions specified in subsections (a) through (f) hereof have
been satisfied;
(ii) Such instruments of sale, transfer, assignment,
conveyance and delivery, in form and substance reasonably satisfactory to
counsel for Buyer, as are required in order to transfer to Buyer Seller's right,
title and interest to the Purchased Assets, free and clear of all liens,
security interests and other encumbrances, including without limitation Seller's
rights under contracts and leases included in the Purchased Assets;
(iii) Certified resolutions or written actions of Seller and
SD Lease Management Corporation approving this transaction; and
(iv) Such other documents as Buyer may reasonably request in
connection with the transactions contemplated hereby;
(i) Buyer shall be satisfied with the results of the legal, business
and accounting due diligence investigation of the Business performed by its
attorneys, accountants and representatives;
(j) All proceedings to be taken by Seller in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all documents required to be delivered by Seller in
connection with the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Buyer.
Any condition specified in this Section 2.01 may be waived by Buyer,
provided that no such waiver will be effective unless it is set forth in a
writing executed by Buyer.
2.02 CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction or waiver by Seller of the following conditions on or before the
Closing Date:
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(a) The representations and warranties set forth in Article 4 hereof,
both individually and considered as a whole, will be true and correct in all
material respects at and as of the Closing Date;
(b) Buyer will have performed, in all material respects, all the
covenants and agreements required to be performed by it under this Agreement
prior to the Closing;
(c) No action or proceeding before any court or governmental. body
will be pending or threatened wherein a judgment, decree or order would prevent
any. of the transactions contemplated hereby or cause such transactions to be
declared unlawful or rescinded;
(d) All consents by third parties that are required for consummation
of the transactions contemplated hereby will have been obtained;
(e) Buyer shall have taken all necessary corporate action by and on
behalf of its shareholders and directors for the approval and authorization of
the consummation of the transactions contemplated hereby;
(f) Seller will have received from Buyer's counsel, an opinion
addressed to Seller, dated the Closing Date and in form and substance reasonably
satisfactory to Seller;
(g) On the Closing Date, Buyer will have delivered to Seller the
following:
(i) An officer's certificate executed by the President of
Buyer dated the Closing date, stating that, to the best of such officer's
knowledge, the conditions specified in subsections (a) through (e) hereof have
been satisfied;
(ii) Certified resolutions or written actions of Buyer's
Board of Directors approving this transaction and execution and delivery of the
Promissory Note; and
(iii) Such other documents as Seller may reasonably request
in connection with the transactions contemplated hereby;
(h) Payment of that portion the Purchase Price for the Purchased
Assets payable at Closing and delivery of an executed Promissory Note, all in
accordance with Section 1.02;
(i) Buyer W111 have offered to continue the employment of all
Seller's existing employees (other than approximately 15 to 20 employees
currently performing accounting and nonoperational functions) on terms
consistent and compatible with Seller's current practices, but such offers shall
not be deemed to constitute anything other than for employment at will;
(j) All proceedings to be taken by Buyer in connection with the
consummation
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of the Closing on the Closing Date and the other transactions contemplated
hereby and all documents required to be delivered by Buyer in connection with
the transactions contemplated hereby will be reasonably satisfactory in form and
substance to Seller;
Any condition specified in this Section 2.02 may be waived by Seller,
provided that no such waiver will be. effective unless it is set forth in a
writing executed by Seller.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants as follows:
3.01 ORGANIZATION AND CORPORATE POWER. Seller is a limited liability
company duly organized and validly existing under the laws of the State of
Arkansas. Seller is qualified as a foreign company for the transaction of
business and is in good standing under the laws of each jurisdiction in which it
owns or leases properties or conducts any business so as to require such
qualification, except such jurisdictions where the failure to qualify will not
have a materially adverse effect on the business, prospects or financial
condition of the Business. Seller has all requisite power and authority to
execute, deliver and perform this Agreement. The copies of Seller's Articles of
Organization and Operating Agreement which have been furnished to Buyer reflect
all amendments made thereto at any time prior to the date of this Agreement and
are correct and complete. SD Lease Management Corporation, an Arkansas
corporation owns a 79.99% membership interest in Seller.
3.02 AUTHORIZATION; NO BREACH
(a) The execution, delivery and performance of this Agreement and all
other agreements contemplated hereby and the consummation of the transactions
contemplated hereby have been duly authorized by Seller. Each of this Agreement
and the other agreements contemplated hereby constitute a valid and binding
obligation of Seller, to the extent it is a party to such agreements,
enforceable in accordance with their terms, except to the extent limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the enforcement of creditors' rights or by general equitable
principles.
(b) The execution, delivery and performance of this Agreement by
Seller and all other agreements contemplated hereby and the consummation of
the transactions contemplated hereby do not and will not (i) conflict with or
result in any breach of any of the provisions of, (ii)
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constitute a default under, (iii) result in a violation of, (iv) result in the
creation of any lien, security interest, charge or encumbrance upon the
Purchased Assets pursuant to, (v) give any third party the right to accelerate
any obligation under, or (vi) require any authorization, consent, approval,
exemption or other action by any court, other governmental body or other third
party under the provisions of the Articles of Organization or Operating
Agreement of Seller or any instrument by which Seller is bound or to which any
of the Business' properties are subject or any law, statute, rule, regulation,
judgment or decree to which Seller is subject.
3.03 FINANCIAL STATEMENTS.
(a) Seller has heretofore delivered to Buyer the following unaudited
financial statements: Balance Sheet at December 31, 1994 and Balance Sheet at
December 31, 1995 and Statement of Income for the period ended December 31, 1995
("Financial Statements"), a copy of which is attached hereto as Exhibit C. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
financial position of Seller as of the dates thereof and the results of its
operations and changes in financial position for the periods then ended, subject
to normal year-end adjustments and any other adjustments described therein.
(b) Seller has furnished Buyer or will furnish Buyer prior to Closing
with copies of Seller's unaudited pro-forma balance sheet reflecting only the
Purchased Assets for the Business as of May 31, 1996 ("Final Balance Sheet"), a
copy of which is attached hereto as Exhibit D. The Final Balance Sheet
(including the notes thereto if any), as relates to the Purchased Assets, fairly
presents the books and records of Seller (which are accurate and complete) and
was prepared in accordance with generally accepted accounting principles
consistently applied (except as disclosed therein) as of such date. In
addition, the Final Balance Sheet will indicate changes in Purchased Assets
since December 31, 1995 for purposes of determining the Purchase Price
Adjustment referred to in Section 1.03.
3,04 ABSENCE OF UNDISCLOSED LIABILITIES. As of the Closing Date, Seller
will not have any obligations or liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due) with
respect to the Business except (a) obligations under or contemplated by this
Agreement, and (b) Excluded Liabilities and Assumed Liabilities (as defined in
Section 1.01(c)).
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3.05 ABSENCE OF CERTAIN TRANSACTIONS. Seller has not at any time made any
illegal political contributions or any bribes or kickbacks or any other illegal
or improper payments to or on behalf of any person.
3.06 PROPERTIES.
(a) Seller owns good, insurable and marketable title, free and clear
of all liens and encumbrances (except for liens for current taxes not yet due
and payable and liens securing Excluded Liabilities) to, or a valid leasehold
interest in, all of the personal properties (i) reflected on the Final Balance
Sheet or (ii) used by Seller in the operation of the Business. As of Closing,
all of such properties constituting Purchased Assets shall be free and clear of
all liens and encumbrances.
(b) All of Seller's buildings, machinery, fixtures, equipment and
other tangible assets which are necessary for the conduct of the Business are in
good condition and repair, without material structural or physical defects, and
are usable in the ordinary course of business subject to normal wear and tear.
The Purchased Assets include (i) the assets that are necessary for the conduct
of the Business as conducted on the date of this Agreement and (ii) all assets
which have been used in the conduct of the Business since December 31, 1995,
other than those which have been sold or otherwise disposed of in the ordinary
course of business.
3.07 INVENTORIES. All inventories of the Business, whether or not
reflected on the Financial Statements or the Final Balance Sheet, are of a
quality and quantity usable and saleable in the ordinary course of business
except for obsolete items and items of below standard quality, all of which, in
their aggregate are immaterial in amount. Items included in such inventories
are carried on the books of the Business and are valued on the Financial
Statements and the Final Balance Sheet at the lower of cost or market.
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3.08 ACCOUNTS RECEIVABLE. All accounts receivable of the Business, whether
or not reflected on the Financial Statements or the Final Balance Sheet,
represent transactions in the ordinary course of business, are valid obligations
to the Business, and have been collected or are collectible in the aggregate
recorded amounts thereof in accordance with their terms, subject to reasonable
and appropriate allowances for uncollectible accounts. All material items which
are required by generally accepted accounting principles to be reflected as
accounts receivable on the Financial Statements or the Final Balance Sheet and
on the books and records of the Business are so reflected.
3.09 TAX MATTERS. Seller has timely filed all federal, foreign, state,
county and local income, excise, property, sales, use and other tax returns
required to be filed by it, and all such returns are true and correct in all
material respects. Seller has paid or will pay all taxes owed by it including
taxes it is obligated to withhold from amounts owing to any e employee, creditor
or third party. Seller's federal income tax returns have not been examined by
the Internal Revenue Service for any fiscal year. Seller has not waived any
statute of limitations in respect of taxes or agreed to any extension of time
with respect to a tax assessment or deficiency; the assessment of any additional
taxes for a period far which returns have been filed is not expected; and there
are no material unresolved questions or claims concerning Seller's tax
liability.
3.10 CONTRACTS AND COMMITMENTS.
(a) Except as otherwise set forth on SCHEDULE 3.10 attached hereto,
with respect to the Purchased Assets, Seller is not a party, with respect to the
Business, to any written or oral (i) collective bargaining agreement or contract
with any labor union; (ii) contract for the employment of any officer,
individual employee or other person on a full-time or consulting basis; (iii)
agreement or indenture relating to the borrowing of money or to mortgaging,
pledging or otherwise placing a lien on any of the Purchased Assets; (iv)
guaranty of any obligation for borrowed money or otherwise; (v) lease or
agreement under which it is lessee of, or holds or operates any property, real
or personal, owned by any other party involving payments in excess of $25,000
annually; (vi) lease or agreement under which it is lessor of or permits any
third party to hold or operate any property, real or personal, owned or
controlled by it involving payments in excess of $25,000 annually; (vii)
contract, purchase order or group of related contracts or purchase orders with
the
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same party for the sale or purchase of products or services under which the
undelivered balance of such products or services has a sales price in excess of
$25,000; (viii) contract prohibiting Seller from engaging in any hair care
activities with respect to any geographic area or person or entity; (ix)
franchise agreement; (x) assignment, license or agreement with respect to any
form of intangible property, including proprietary rights; or (xi) warranty
agreement with respect to products sold.
(b) Seller has performed all material obligations required to be
performed by it and is not in material default under or in breach of nor in
receipt of any claim of material default or material breach under any agreement
required to be listed on SCHEDULE 3.10, and Seller has no knowledge of any
material breach or anticipated material breach by the other parties to any
contract or commitment required to be listed on SCHEDULE 3.10.
(c) The copies of contracts relating to the Business which have been
supplied to Buyer are true and complete copies.
3.11 PROPRIETY RIGHTS. Except as otherwise set forth on SCHEDULE 3.11
attached hereto, there are no patents, patent applications, trademarks, service
marks, trade names, corporate names, copyrights, trade secrets or other
proprietary rights necessary to the conduct of the Business as now conducted.
The Business owns and possesses all right, title and interest in and to the
proprietary rights set forth on SCHEDULE 3.11. SCHEDULE 3.11 describes all
proprietary rights which have been licensed to third parties and those
proprietary rights which are licensed from third parties. The transactions
contemplated by this Agreement will have no material adverse effect on the
Business' right, title and interest in and to any of the proprietary rights
(assuming due assignment to Buyer of the same) set forth on SCHEDULE 3.11.
Seller has taken all necessary or desirable action to protect the proprietary
rights listed on SCHEDULE 3.11. Seller has not received any notices of
infringement, misappropriation, or conflict from any third party with respect to
the proprietary rights which are listed on SCHEDULE 3.11; and to the best of
Seller's knowledge, the Business has not infringed, misappropriated or otherwise
conflicted with any proprietary rights of any third parties.
3.12 LITIGATION Except as otherwise set forth on SCHEDULE 3.12 attached
hereto, there are no actions, suits, proceedings, orders or investigations
pending or threatened against Seller at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign; there are no
arbitration proceedings pending or threatened under collective bargaining
agreements or otherwise; there are
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no governmental inquiries; and to the best of Seller's knowledge, there is no
basis for any of the foregoing. Any and all such actions, suits and proceedings
set forth an SCHEDULE 3.12 shall be Excluded Liabilities (as defined in Section
1.01 (c)).
3.13 BROKERAGE. Seller has not used a broker in connection with the
transactions contemplated by this Agreement, and there are no claims for
brokerage commissions, finders' fees or similar compensation in connection with
the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Seller.
3.14 GOVERNMENTAL AND REGULATORY CONSENTS. No permit, consent, approval
or authorization of any governmental or regulatory authority is required in
connection with the execution, delivery or performance of this Agreement by
Seller or the consummation by Seller of any other transaction contemplated
hereby.
3.15 COMPLIANCE WITH LAWS. Seller, its officers, directors, agents and
employees, have complied in all material respects with all applicable laws and
regulations of foreign, federal, state and local governments and all agencies
thereof applicable to the Business. Seller holds all of the permits, licenses,
certificates or other authorizations of foreign, federal, state and local
governmental agencies required for the conduct of the Business as now conducted.
3.16 EMPLOYEE BENEFIT PLANS.
(a) Except as otherwise set forth on SCHEDULE 3.16, Seller does not
maintain or contribute to (i) any nonqualified deferred compensation,
retirement, stock option, stock purchase, bonus, incentive compensation, or
other nonqualified plans or arrangements, (ii) any qualified defined benefit
retirement plans (the "Pension Plans"); (iii) any qualified defined contribution
retirement plans (the "Defined Contribution Plans"), or (iv) any plan providing
welfare benefits (i.e., health, life insurance, retiree medical benefits) (the
"Welfare Plans") with respect to employees or former employees of the Business.
All such plans shall collectively be referred to as the "Plans."
(b) The Plans (i) comply in all respects with the various applicable
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and meet the requirements of "qualified plans" under Section 401(a)
of the Internal Revenue Code; (ii) all required contributions have been made
and all accrued benefits are fully funded; (iii) all reporting requirements have
been satisfied; and (iv) with respect to the trusts and group annuity contracts
related to the Plans, there have been no prohibited transactions (as that term
is defined in Section
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406 of ERISA).
(c) Seller has furnished to Buyer true and complete copies of (i) the
Plans and any related trust or group annuity contracts; (ii) the most recent
determination letter received from the Internal Revenue Service regarding the
Plans, if any; (iii) the most recent actuarial reports prepared with respect to
the Defined Benefit Plans, if any; the latest financial statement for the Plans
and related trust or group annuity contracts as of the end of the most recent
plan year, if any; and (v) all documents filed with the Internal Revenue
Service, Department of Labor or Pension Benefit Guaranty Corporation with
respect to the Plans, if any.
(d) With respect to employees or former employees of the Business,
Seller does not contribute to any multiemployer plan, as defined in Section
3(37) of ERISA, and Seller does not have any actual or potential liability under
Section 4201 of ERISA for any complete or partial withdrawal from a
multiemployer plans.
(e) Neither Seller, any of its directors, officers, employees, nor
any other "fiduciary," as such term is defined in Section 3 of ERISA, has
committed any breach of fiduciary responsibility imposed by ERISA or any other
applicable law with respect to the Plans which would subject Buyer, its
affiliates or any of their respective directors, officers or employees to
liability under ERISA or any applicable law.
3.17 DISCLOSURE. Neither this Agreement, nor any of the schedules,
attachments or exhibits hereto, contain any untrue statement of a material fact
or omit a material fact necessary to make the statements contained herein or
therein, in light of circumstances in which they were made, not misleading.
There is no fact which has not been disclosed to Buyer of which Seller is aware
and which materially affects adversely or could reasonably be anticipated to
materially affect adversely the Business or its financial condition, operating
results, assets, client relations, employee relations or business prospects.
14
<PAGE>
3.18 INSURANCE. SCHEDULE 3.18 lists and briefly describes each insurance
policy maintained by Seller. All of such insurance policies are in full force
and effect, and Seller is not in default with respect to its obligations under
any of such insurance policies. Such insurance coverage is customary in type
and amount for companies engaged in similar lines of business in the same
geographical areas and of similar size.
3.19 LABOR CONTROVERSIES. There are no controversies pending, or to the
best knowledge of Seller threatened, between Seller and (i) any union, or (ii)
Seller's employees. Seller is not currently subject to (i) any threats of
strikes or work stoppages, or (ii) any organizational efforts or demands for
collective bargaining or any union organization. Seller is in substantial
compliance with applicable labor laws.
3.20 NO MATERIAL ADVERSE CHANGES. Since December 31, 1995, there have not
been (i) any adverse changes in the financial condition or in the operations,
business, prospects, properties or assets of Seller from that shown on the
December 31, 1995 Financial Statements, except to the extent disclosed by Seller
to Buyer, or (ii) any damage, destruction or loss to any of the properties or
assets of Seller, whether or not covered by insurance, which has adversely
affected or impaired or which does or may adversely affect or impair the ability
of Seller to conduct its business, or (iii) any negotiations, or requests for
negotiations, for any representation or any labor contract or any event or
condition relating to Seller's business of any character which has materially
adversely affected or which does or may materially adversely affect or impair
the business of Seller.
3.21 CLOSING DATE. All of the representations and warranties of Seller
contained in this Article 3 and elsewhere in this Agreement and all information
related thereto and delivered in any schedule, attachment or exhibit hereto are
true and correct in all material respects as of the Closing Date.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants:
4.01 CORPORATE ORGANIZATION AND POWER. Buyer is a corporation duly
organized and validly existing under the laws of the State of Minnesota, with
full corporate power and authority to execute, deliver and perform this
Agreement, the Promissory Note, and the other agreements contemplated hereby.
15
<PAGE>
4.02 AUTHORIZATION. The execution, delivery and performance by Buyer of
this Agreement, the Promissory Note, and the other agreements contemplated
hereby have been duly and validly authorized by all requisite corporate action
and no other corporate proceedings are necessary to authorize the execution or
delivery of this Agreement and the other agreements contemplated hereby. This
Agreement and the other agreements contemplated hereby each constitute a valid
and binding obligation of Buyer, enforceable in accordance with its terms,
except to the extent limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the enforcement of creditors'
rights or by general equitable principles.
4.03 NO VIOLATION. The execution, delivery and performance of this
Agreement and all other agreements contemplated hereby by Buyer and the
consummation of the transactions contemplated hereby do not and will not (a)
conflict with or result in any breach of, (b) constitute a default under, (c)
result in a violation of, or (d) give any third party the right to accelerate
any obligation under the provisions of Buyer's certificate of incorporation or
bylaws or any indenture, mortgage, lease, loan agreement or other agreement or
instrument to which Buyer is bound or affected, or any law, statute, rule,
regulation, judgment or decree to which Buyer or its assets is subject.
4.04 BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement made by or on behalf of
Buyer.
4.05 LITIGATION. There are no actions, suits, proceedings, orders or
investigations pending or threatened against or affecting Buyer at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which might adversely affect Buyer's performance under this Agreement
or the consummation of the transactions contemplated hereby.
4.06 CLOSING DATE. All of the representations and warranties of Buyer
contained in this Article 4 and elsewhere in this Agreement and all information
delivered in any schedule, attachment or exhibit hereto are true and correct as
of the Closing Date.
16
<PAGE>
4.07 GOVERNMENTAL AND REGULATORY CONSENTS. No permit, consent, approval
or authorization of any governmental or regulatory authority is required in
connection with the execution, delivery or performance of this Agreement by
Buyer or the consummation by Buyer of any other transaction contemplated hereby.
ARTICLE 5
COVENANTS OF SELLER
Seller agrees that prior to the Closing:
5.01 COOPERATION. Seller will use its best efforts to (i) cause the
transactions contemplated by this Agreement to be consummated and, without
limiting the generality of the foregoing, to (ii) obtain all consents and
authorizations of third parties, and to (iii) make all filings with and give all
notices to third parties which may be necessary or reasonably required in order
to effect the transactions contemplated hereby. Seller will use its best
efforts to preserve Seller's business organizations intact and to keep available
the services of its employees and representatives and will preserve the goodwill
of its employees, customers, suppliers and others having business relations with
Seller. Seller will use its best efforts to obtain consents to the transactions
contemplated hereby from all landlords where such consent is required to
maintain all leases in full force and effect.
5.02 TRANSACTIONS OUT OF ORDINARY COURSE OF BUSINESS. Seller will not,
except with the prior written consent of Buyer, enter into any transaction out
of the ordinary course of business, including, but not limited to, the execution
of any new lease or the modification of any existing lease.
5.03 MAINTENANCE OF PROPERTIES, ETC. Seller will maintain all its
properties in good repair, order and condition, reasonable wear and use and
damage by fire or other casualty excepted, and will maintain insurance upon all
its properties with respect to the conduct of its business, in such amounts and
of such kinds comparable to that in effect on the date of this Agreement.
5.04 MAINTENANCE OF INVENTORIES. Seller will maintain its inventories at
normal and customary levels.
5.05 MAINTENANCE OF BOOKS AND RECORDS. Seller will maintain its books,
accounts and records in the usual manner on a basis consistent with prior years.
Seller will duly comply in all material respects with all laws and decrees
applicable to it and to the conduct of its Business.
17
<PAGE>
5.06 CERTAIN PROHIBITED TRANSACTIONS. Except with the prior written
consent of Buyer, Seller will not enter into any contract to merge or
consolidate with or sell all or any substantial part of its assets to any other
party or change the character of its Business.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.01 SURVIVAL. Subject to Section 6.02 below which provides the sole
remedy for breach of Articles 3 and 4 of this Agreement, the representations,
warranties, covenants and agreements set forth in this Agreement, (other than
in Section 3.09, which shall survive the Closing Date for a period of
eighteen (18) months), or in any writing delivered in connection with this
Agreement, will survive the Closing Date and the consummation of the
transactions contemplated hereby for a period of 180 days.
6.02 Indemnification.
(a) Seller agrees to indemnify Buyer and hold it harmless against
any loss, liability, damage or expense (including reasonable legal expenses
and costs) (collectively, "Losses") which Buyer may suffer, sustain or become
subject to, as the result of a breach of any representation, warranty,
covenant or agreement by Seller contained in this Agreement, or the failure
of Seller to pay, discharge or perform any of the Excluded Liabilities.
(b) Buyer agrees to indemnify Seller and hold it harmless against any
Losses which it may suffer, sustain or become subject to, as the result of a
breach of any representation, warranty, covenant, or agreement by Buyer
contained in this Agreement, including, without limitation, any breach by Buyer
of its obligations under Section 2.02(i) which result in unemployment claims
against Seller.
(c) Promptly after obtaining knowledge of any claim under this
Section, the indemnified party will notify the indemnifying party thereof, but
the omission to give such notice will not relieve the indemnifying party from
any liability hereunder except to the extent that the indemnifying party has
been damaged by such omission. After the indemnifying party has acknowledged in
writing that it is indemnifying the indemnified party with respect to any claim,
the indemnifying party will be entitled to assume the defense of any such
litigation, provided that the indemnified party may at its election and sole
cost participate in any such defense. At the indemnifying party's reasonable
request, the indemnified party will cooperate with the lndemnifying
18
<PAGE>
party in the preparation of any such defense. The indemnified party shall not
have the right to settle any claim or litigation without the written consent of
the indemnifying party.
6.03 CONTINUED EMPLOYMENT of RIFFLE. For a period of 6 months from and
after the Closing Date, Buyer shall continue the employment of Mr. Wayne Riffle
at a salary of $12,500 per month and equivalent benefits as existed on the
Closing Date. Buyer agrees that any services requested of Seller and its
employees (including Mr. Riffle) after Closing and any use of Seller's present
offices or facilities which do not form part of the Purchased Assets shall be
reimbursed as agreed upon between Buyer and Seller.
6.04 CONTINUING ASSISTANCE. Subsequent to the Closing Date, Buyer will
provide to Seller and Seller will provide to Buyer, whatever assistance the
other party reasonably requests in connection with the transfer of ownership and
control of the Business. Subsequent to the Closing Date, Seller will refer all
customer, supplier, and other inquiries relating to the Business to Buyer.
6.05 EXPENSES. Except as otherwise expressly provided herein, each party
will pay all of its own expenses, including attorneys' and accountants' fees, in
connection with the negotiation of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated
hereby. Buyer shall pay all sales, stamp, documentary, transfer or similar
taxes which may be payable as a result of the transactions contemplated hereby,
and all costs required to be paid to Seller's landlords to obtain landlord's
consents to the lease assignments, where such consents are required to
prevent a default under any of the leases.
6.06 PRESS RELEASES AND ANNOUNCEMENTS. No press releases, announcements or
other disclosure related to this Agreement or the transactions contemplated
hereby will be issued or made without the joint approval of Buyer and Seller;
provided, however, that either party may make any public disclosure it believes
in good faith is required by applicable law or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing party
will use reasonable efforts to advise the other party prior to making the
disclosure).
19
<PAGE>
6.07 FURTHER TRANSFERS. Seller will execute and deliver such further
instruments of conveyance and transfer and take such additional action as Buyer
may reasonably request to effect, consummate, confirm or evidence the transfer
to Buyer of the Purchased Assets.
6.08 NONCOMPETITION.
(a) Seller and S D Lease Management Corporation ("SDL") jointly and
severally agree that for a period of 5 years from and after the Closing Date
(the "Seller Noncompetition Period"), and Mr. Wayne Riffle ("Riffle") agrees
that for a period of 1 year from and after the Closing Date ("Riffle
Noncompetition Period"), they and each of them will not, directly or indirectly,
either for themselves or for any other person, partnership, corporation or
company, permit their names to be used by or participate in any enterprise
involved in the hair care business, including but not limited to haircutting,
hairstyling and related services and the sale of hair care, beauty, skin or nail
products in the United States ("Noncompete Covenant"), PROVIDED, HOWEVER,
that the only restriction or limitation imposed on Riffle by the Noncompete
Covenant shall only be with respect to Wal-Mart Stores, Inc. For purposes of
this Agreement, the term "participate" includes any direct or indirect interest
in any enterprise, whether as stockholder (other than as a stockholder of a
company whose shares are publicly traded), partner, or otherwise. Seller, SDL
and Riffle agree that this Noncompete Covenant is reasonably designed to protect
Buyer's substantial investment and is reasonable with respect to its duration,
geographical area and scope.
(b) During the Seller Noncompetition Period, Seller and SDL shall
not, and during the Riffle Noncompetition Period, Riffle shall not induce or
attempt to induce any employee of the Business to leave the employ of the
Business or in any way interfere with the relationship between the Business and
any employee of the Business.
(c) If, at the time of enforcement of any provision of (a) above, a
court of competent jurisdiction holds that the restrictions stated therein are
unreasonable under circumstances then existing, the parties hereto agree that
the maximum period, scope or geographical area reasonable under such
circumstances, as determined by such court, will be substituted for the stated
period, scope or area.
(d) In the event of breach by Seller, SDL or Riffle of any material
provision of this Section 6.08, Buyer or its successors or assigns may, in
addition to its rights and remedies existing in its favor, apply to any court of
competent jurisdiction for specific performance and/or
20
<PAGE>
injunctive or other relief in order to enforce or prevent any violations of the
provisions hereof (including the extension of either of the Noncompetition
Periods by a period equal to the length of the violation of this Section 6.08.)
In the event of an alleged breach or violation by Seller, SDL or Riffle of any
of the provisions of this Section 6.08, both Noncompetition Periods will be
tolled until such alleged breach or violation is resolved. Seller, SDL and
Riffle agree that these restrictions are reasonable.
6.09 BULK TRANSFER LAWS The parties do not contemplate complying with the
provisions of any so-called bulk transfer laws of any jurisdiction in connection
with the sale of the Purchased Assets.
6.10 ASSIGNMENT OF CORPORATE NAME. Seller hereby sells, assigns, transfers
and conveys to Buyer all of Seller's right, title and interest in and to the
name National Hair Care Centers, and Seller shall not hereafter use or adopt any
such name or any name confusingly similar to such name.
ARTICLE 7
MISCELLANEOUS
7.01 AMENDMENT AND WAIVER.
(a) This Agreement may be amended, or any provision of this Agreement
may be waived, provided that any such amendment or waiver will be binding upon
Buyer only if set forth in a writing executed by Buyer, and any such amendment
or waiver will be binding upon Seller only if set forth in a writing executed by
Seller.
(b) No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
7.02 Notices. Except as otherwise expressly set forth in this
Agreement, all notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given (i) when personally delivered;
or (ii) 3 days after deposit in first class mail, return receipt requested;
or (iii) the next day after deposit with an overnight courier service; or
(iv) upon receipt of a facsimile transmission.
Notices, demands and communications to Buyer, Seller, SDL or Riffle will,
unless otherwise is specified in writing, be sent as indicated below:
21
<PAGE>
NOTICES TO SELLER, SDL OR RIFFLE
National Hair Care Centers, LLC
2402 Wildwood Avenue, Suite 116
Sherwood, AR 72120
Telecopier: (501) 834-1104
Attn: Wayne Riffle
with a copy to:
Michael B. Johnson
Associate General Counsel
Stephens Group, Inc.
111 Center Street, Suite 2500
Little Rock, AR 72201
Telecopier: (501) 377-2677
NOTICES TO BUYER:
Regis Corporation
7201 Metro Blvd.
Minneapolis, MN 55439
Telecopier: (612) 947-7900
Attn: President
with a copy to:
Bert Gross
Phillips & Gross
90 S. 7th Street, Suite 5420
Minneapolis, MN 55402
Telecopier: (612) 349-2824
7.03 ASSIGNMENT. This Agreement and all of the provisions hereof will
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by either party without the prior written consent of the other party.
7.04 SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provisions shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
22
<PAGE>
7.05 NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any person.
7.06 CAPTIONS. The captions used in this Agreement are for convenience of
reference only and do not constitute a part of this Agreement and will not be
deemed to limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced and construed
as if no caption had been used in this Agreement.
7.07 COMPLETE AGREEMENT. This document and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
7.08 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
7.09 CONTROLLING LAW, COURTS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arkansas without regard to
principles of conflicts of law. The parties hereby consent to personal
jurisdiction and service and venue in any court in the State of Arkansas in
which any claim which is subject to this Agreement is brought.
7.10 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any person other than the parties and their respective
successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
SELLER:
NATIONAL HAIR CARE CENTERS, LLC
By: /s/ Wayne Riffle
----------------------------------------
Its: President
---------------------------------------
23
<PAGE>
BUYER:
REGIS CORPORATION
By: /s/ Paul D. Finkelstein
----------------------------------------
Its: President
---------------------------------------
SD LEASE MANAGEMENT CORPORATION
(With respect to Section 6.08 only)
By:
----------------------------------------
Its:
---------------------------------------
-------------------------------------------
WAYNE RIFFLE
(With respect to Section 6.08 only)
24
<PAGE>
BUYER:
REGIS CORPORATION
By:
----------------------------------------
Its:
---------------------------------------
SD LEASE MANAGEMENT CORPORATION
(With respect to Section 6.08 only)
By: /s/ Don Wright
----------------------------------------
Its: President
---------------------------------------
-------------------------------------------
WAYNE RIFFLE
(With respect to Section 6.08 only)
24
<PAGE>
BUYER:
REGIS CORPORATION
By:
----------------------------------------
Its:
---------------------------------------
SD LEASE MANAGEMENT CORPORATION
(With respect to Section 6.08 only)
By:
----------------------------------------
Its:
---------------------------------------
/s/ Wayne Riffle
-------------------------------------------
(With respect to Section 6.08 only)
24
<PAGE>
EXHIBITS
Exhibit A - Excluded Assets
Exhibit B - Promissory Note
Exhibit C - Financial Statements
Exhibit D - Final Balance Sheet
SCHEDULES
Schedule 3.10 - Contracts and Commitments
Schedule 3.11 - Proprietary Rights
Schedule 3.12 - Litigation
Schedule 3.16 - Employee Benefits
Schedule 3.18 - Insurance
25
<PAGE>
EXHIBIT A
NATIONAL HAIR CARE CENTERS, LLC
SCHEDULE OF EXCLUDED ASSETS
Estimated Value
---------------
Cash (any amount over $250 per location)
Notes Receivable - Bob Schulte $50,000
- Wayne Riffle $150,000
- EcoGas $1,925000
Accrued interest on above notes
Warrants of EcoGas
Land Golf Course Lots $10,000
Land Office Building $300,000
Office Building $2,613,000
Rents Receivable from Office Building $7000
Deposits that relate to Office Building $3,000
Prepaid Leasing Commissions $11,000
Prepaid Insurance $50,000
Prepaid Loan Costs (Loan from Texas Commerce Bank) $36,000
Any other assets that are not related to the hair care business
This schedule prepared May 6, 1996
<PAGE>
Exhibit B
PROMISSORY NOTE
$2,250,000 Little Rock, Arkansas
May 31, 1996
For value received, Regis Corporation ("Maker") promises to pay to the
order of National Hair Care Centers, LLC, its successors and assigns ("Holder"),
in the City of Little Rock, Arkansas, or at such other place as the Holder may
from time to time designate in writing, the principal sum of Two Million Two
Hundred FIFTY Thousand Dollars ($2,250,000) without interest, said principal to
be paid as follows:
Principal shall be due in 5 equal, successive annual installments of
$450,000 each commencing on May 31, 1997, with each of the remaining 4
installments being due on each successive May 31 thereafter.
Each payment hereunder not paid when due shall bear interest thereafter at
the highest rate allowed by law. If total or partial default be made in the
payment of any sums owing hereunder, as the same mature, and the same shall not
be cured within 10 days after written notice to Maker, the entire principal sum
and any accrued interest shall at once become due and payable without notice at
the option of the Holder. Failure to exercise this option shall not constitute
a waiver of the right to exercise the same in the event of any subsequent
default or if such default be a continuing one.
The Maker, endorsers, sureties, guarantors, and all other persons now or
hereafter liable hereon waive presentment, demand for payment, notice of
protest, protest, and notice of dishonor, and consent that Holder shall have
the right, without notice, to deal in any way at any time, with any party
hereto, or to grant any such party any extensions of time for payment of any
said indebtedness or any other indulgences or forbearances whatsoever,
without in any way affecting the personal liability of any party hereunder.
<PAGE>
The Maker may prepay all or any part of the principal indebtedness owing
hereunder at any time without penalty or premium, any prepayments so made shall
be applied to principal in inverse order of maturity.
Time is of the essence of this instrument. If this Promissory Note is
collected by law or through an attorney, Maker agrees to pay all costs of
collection, including attorneys' fees.
REGIS CORPORATION
By:
----------------------------------------
Title:
-------------------------------------
<PAGE>
EXHIBIT C
NATIONAL HAIR CARE CENTERS
COMPARATIVE BALANCE SHEET
December 31,
<TABLE>
<CAPTION>
ASSETS 1994 1995
--------------------------
<S> <C> <C>
Current Assets
Cash $ 84,297 $(131,709)
Notes & Accounts Receivables 244,022 144,223
Prepaid expenses & supplies 271,323 357,860
Inventories 1,325,235 1,522,692
--------------------------
Total Current Assets 1,924,877 1,893,066
--------------------------
--------------------------
Property & Equipment 4,615,450 5,657,989
Less accumulated depreciation (352,839) (1,210,763)
--------------------------
Total Property & Equipment 4,262,611 4,447,226
--------------------------
--------------------------
Other Assets
Goodwill 6,853,416 6,852,558
Less accumulated amortization (289,016) (762,416)
Development/Organizational costs 60,473 67,538
Other 20,401 55,294
--------------------------
Total Other Assets 6,645,274 6,212,974
--------------------------
--------------------------
TOTAL ASSETS $12,832,762 $12,553,266
--------------------------
--------------------------
LIABILITIES & EQUITY
Current Liabilities
Accounts Payable $176,960 $787,644
Accrued expenses 766,990 581,032
Notes Payables-SDLM 2,200,000 4,000,000
Taxes Payable 0 (573,287)
Current Maturities of Long-Term Debt 850,000 1,100,000
Total Current Liabilities 3,993,950 5,895,389
--------------------------
--------------------------
Long Term Liabilities
Notes Payables-SDLM 4,850,000 4,000,000
Deferred Expenses 900,000 700,000
Less Current Maturities (850,000) (1,100,000)
Total Long-Term Debt 4,900,000 3,600,000
--------------------------
--------------------------
Total Liabilities 8,893,950 9,495,389
--------------------------
--------------------------
Stockholder's Equity
Common Stock 1 1
Paid-in-Capital 4,274,687 4,274,687
Deficit (335,876) (1,216,811)
--------------------------
Total Stockholder's Equity 3,938,812 3,057,877
--------------------------
--------------------------
TOTAL LIABILITIES & EQUITY $12,832,762 $12,553,266
--------------------------
--------------------------
</TABLE>
<PAGE>
EXHIBIT C
NATIONAL HAIR CARE CENTERS, INC.
Statements of Operations
Year ended December 31, 1995 and period from
April 4, 1994 (inception) to December 31, 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Revenues:
Services $ 20,401,709 10,413,972
Product sales 7,189,484 4,150,941
------------ -----------
Total revenues 27,591,193 14,564,913
------------ -----------
Operating expenses:
Salaries and related benefits 15,106,218 8,101,457
occupancy expense (note 5) 4,221,097 2,038,387
Cost of product sales 3,897,411 2,195,731
Advertising 245,907 37,111
Consumed products 847,696 493,322
General and administrative expenses 2,851,682 1,376,385
Depreciation and amortization 1,287,372 641,855
------------ -----------
Total operating expenses 28,457,383 14,884,248
------------ -----------
Loss from operations (866,190) 1319,335)
------------ -----------
Other income (expense):
Interest expense (572,273) (262,476)
OTHER (102,745) 37,625
------------ -----------
Net other expense (675,018) (224,851)
------------ -----------
Loss before income tax benefit (1,541,208) (544,186)
income tax benefit (note 4) 571,816 208,310
------------ -----------
Net loss (969,392) (335,876)
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
Exhibit D
FINAL BALANCE SHEET
(to be provided at Closing)
<PAGE>
SCHEDULE 3.10
NATIONAL HAIR CARE CENTERS, LLC
SCHEDULE OF CONTRACTS AND COMMITMENTS
PROPOSE ASSIGNMENT TO REGIS:
Lease with Wal-Mart Stores, Inc. dated December 5, 1990
Lease with Wal-Mart Stores, Inc. dated September 27, 1993
Contract with Stylistics for computer support
Contract with various floor maintenance companies
Contract with advertising agency for promotional materials
Commitments to TCB Associates to build out new locations
PROPOSE RETENTION BY SELLER:
Lease with Heritage Properties dated October 1, 1995
Loan from S D Lease Management
Guaranty to Texas Commerce Bank
Contract with AT&T for long distance services (Cancel)
Copier Lease*
Storage Buildings* (sale of equipment-proceeds to Regis)
Postage Machine/Scales*
* Less than $25,000 annually
This schedule prepared May 6, 1996.
<PAGE>
SCHEDULE 3.11
NATIONAL HAIR CARE CENTERS, LLC
SCHEDULE OF PROPRIETARY RIGHTS
Registered Trademarks - National Hair Care Centers (logo)
- Rapidcut
This schedule prepared May 6, 1996
<PAGE>
SCHEDULE 3.12
NATIONAL HAIR CARE CENTERS, LLC
SCHEDULE OF LITIGATION
Paula Aaron (EEOC suit)
Samantha Hailey (EEOC suit)
Terrell Perry (EEOC suit)
Patsy Eichelberger (Employee Injury suit)
Various wage and hour claims
This schedule prepared May 6, 1996
<PAGE>
SCHEDULE 3.16
NATIONAL HAIR CARE CENTERS, LLC
SCHEDULE OF EMPLOYEE BENEFITS
Vacation
Group health insurance with AD&D and term life
Disability insurance
Car allowance
Employee discounts
This schedule prepared May 6, 1996
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SCHEDULE 3.18
NATIONAL HAIR CARE CENTERS, LLC
SCHEDULE OF INSURANCE
CARRIER
Workers Compensation Various carriers as
provided through
Marsh & McLennan, Inc.
Property and Casualty "
General Liability "
Professional Liability "
Crime Policy "
Health Insurance Fortis Benefits
Disability Insurance Fortis Benefits
The Seller proposes to retain these policies.
This schedule prepared May 6, 1996
