<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO
SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
--------------------
New West Eyeworks, Inc.
(Name Of Subject Company)
___________________
NW Acquisition Corp.
National Vision Associates, Ltd. (Bidders)
--------------------
Common Stock, Par Value $.01 Per Share
(Title Of Class Of Securities)
--------------------
649156 10 6
(CUSIP NUMBER OF CLASS OF SECURITIES)
--------------------
James W. Krause, Chairman And Chief Executive Officer
National Vision Associates, Ltd.
296 Grayson Highway
Lawrenceville, Georgia 30045
(770) 822-3600
(Name, Address And Telephone Number Of Person Authorized To Receive Notices
And Communications On Behalf Of Bidders)
COPIES TO:
Mitchell Goodman, Esq.
National Vision Associates, Ltd.
296 Grayson Highway
Lawrenceville, Georgia 30045
David A. Stockton, Esq.
Kilpatrick Stockton LLP
Suite 2800
1100 Peachtree Street
Atlanta, Georgia (404) 815-6500
___________________
July 14, 1998
(Date Of Event Which Requires Filing Statement On Schedule 13d)
___________________
CALCULATION OF FILING FEE
<TABLE>
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Amount of
Transaction Valuation* Filing Fee
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<S> <C>
$71,615,245 $14,323.05
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</TABLE>
* Estimated for purposes of calculating amount of filing fee only. The
amount assumes the purchase of 5,508,865 shares of Common Stock, par value
$.01 per share (the "Shares"), of New West Eyeworks, Inc., at a price per
share of $13.00 in cash. Such number of Shares represents all the Shares
outstanding as of July 13, 1998 and certain Shares underlying shares of
convertible preferred stock and Warrants for the purchase of Common Stock that
were outstanding on that date and with respect to which commitments have been
obtained from the respective holders thereof to convert or exercise those
securities and to tender the resulting Shares pursuant to the tender offer.
Such number does not include any Shares issuable upon exercise of employee
stock options.
[ ] 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: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
<PAGE> 2
SCHEDULES 14D-1 AND 13D
CUSIP NO. 649156 10 6
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1. NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NW ACQUISITION CORP.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ]
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3. SEC USE ONLY
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4. SOURCES OF FUNDS
AF
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e)
OR 2(f) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,296,839*
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8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 40.3% OF THE SHARES OUTSTANDING AS OF JULY 14, 1998*
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10. TYPE OF REPORTING PERSON
CO
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<PAGE> 3
SCHEDULES 14D-1 AND 13D
CUSIP NO. 649156 10 6
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1. NAME OF REPORTING PERSON:
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NATIONAL VISION ASSOCIATES, LTD.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ]
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3. SEC USE ONLY
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4. SOURCES OF FUNDS
OO
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5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(e) OR 2(f) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
GEORGIA
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7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,296,839*
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8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
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9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
APPROXIMATELY 40.3% OF THE SHARES OUTSTANDING AS OF JULY 13, 1998*
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10. TYPE OF REPORTING PERSON
CO
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* On July 13, 1998 National Vision Associates, Ltd. ("Parent") entered
into agreements (the "Commitment Agreements") with certain holders
(collectively, the "Committed Stockholders") of common stock, convertible
preferred stock and stock purchase warrants of New West Eyeworks, Inc., pursuant
to which each Committed Stockholder agreed, among other things, to tender in the
Offer (as defined in the Offer to Purchase dated July 20, 1998 (the "Offer to
Purchase") and not withdraw all Shares owned or controlled by such Committed
Stockholder or that would be so owned or controlled upon conversion or exercise
of the person's convertible preferred stock or warrants. As of July 14, 1998,
such Shares represented in the aggregate 2,375,410 Shares, or approximately
40.3% of the outstanding Shares, and are reflected above.
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<PAGE> 4
Schedule 14D-1
and
Schedule 13D
of
NW Acquisition Corp.
and
National Vision Associates, Ltd.
Item 1. Security and Subject Company.
(a) The subject company is New West Eyeworks, Inc., a Delaware
corporation (the "Company"), which has its principal executive offices at 2104
West Southern Avenue, Tempe, Arizona 85282.
(b) This Schedule 14D-1 relates to the offer by NW Acquisition Corp.
(the "Purchaser"), a wholly-owned subsidiary of Parent, to purchase all
outstanding shares of common stock, par value $.01 per share (the "Shares"), of
the Company at a price of $13.00 per Share, net to the seller in cash (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Offer"),
copies of which are included as Exhibits (a)(1) and (a)(2) hereto, respectively.
Information concerning the number of outstanding Shares is set forth in the
Offer to Purchase under "INTRODUCTION" and is incorporated herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of the Shares for each quarterly period
during the past two years is set forth in Section 6 - "Price Range of the
Shares" of the Offer to Purchase and is incorporated herein by reference.
Item 2. Identity and Background.
(a)-(g) This Schedule 14D-1 is being filed by the Purchaser, which is a
Delaware corporation, and Parent, which is a Georgia corporation. The Purchaser
is a wholly-owned subsidiary of Parent. Information concerning the principal
business and the address of the principal offices of the Purchaser and Parent is
set forth in Section 9 - "Certain Information Concerning the Purchaser and
Parent" of the Offer to Purchase and is incorporated herein by reference. The
names, business addresses, present principal occupations or employment, material
occupations, positions, offices or employment during the last five years, and
citizenship of the directors and executive officers of the Purchaser and Parent
are set forth in Schedule I to the Offer to Purchase and are incorporated herein
by reference.
Item 3. Past Contacts, Transactions or Negotiations with the Subject Company.
(a) The information set forth in Section 11 - "Contacts with the
Company; Background of the Offer" of the Offer to Purchase is incorporated
herein by reference.
(b) The information set forth in Section 11 - "Contacts with the
Company; Background of the Offer" and Section 12 - "Purpose of the Offer; Plans
for the Company; the Merger Agreement; and the Commitment Agreements" of the
Offer to Purchase is incorporated herein by reference.
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<PAGE> 5
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)-(e) The information set forth in Section 12 - "Purpose of the
Offer; Plans for the Company; The Merger Agreement; and the Commitment
Agreements" of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in 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.
Item 6. Interest in Securities of the Subject Company.
(a) and (b) The information set forth under "Introduction", and Section
9 - "Certain Information Concerning the Purchaser and Parent" and Section 12 -
"Purpose of the Offer; Plans for the Company; the Merger Agreement; and the
Commitment Agreements" of the Offer to Purchase is incorporated herein by
reference.
Item 7. Contracts, Arrangements, Understandings or Relationships with Respect
to the Subject Company's Securities.
The information set forth under "Introduction," and 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; Plans for the Company; the Merger Agreement; and the Commitment
Agreements" of the Offer to Purchase is incorporated herein by reference.
Item 8. Persons Retained, Employed or to be Compensated.
The information set forth under "Introduction" and in Section 15 -
"Fees and Expenses" of the Offer to Purchase is incorporated herein by
reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth in Section 10 - "Source and Amount of Funds"
and Section 9 - "Certain Information Concerning the Purchaser and Parent" under
the subheading "Financial Information" is incorporated herein by reference. The
Purchaser and Parent do not believe that information concerning the financial
condition of the Purchaser, which is a newly formed, uncapitalized acquisition
subsidiary of Parent, is material to a decision by a security holder of the
Company whether to sell, tender or hold Shares.
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<PAGE> 6
Item 10. Additional Information.
(a) The information set forth in Section 12 - "Purpose of the Offer;
Plans for the Company; the Merger Agreement; and the Commitment Agreement"
of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 14 - "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 July 13, 1998, among
Parent, the Purchaser and the Company (the "Merger Agreement") and the Stock
Transfer Agreement, copies of which are included as Exhibits (a)(1), (a)(2),
(c)(1) and (c)(2) hereto, respectively, is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Banks, Trust Companies and
Other Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated July 20, 1998.
(a)(8) Text of Press Release dated July 14, 1998, issued by the
Company.
(b) None.
(c)(1) Agreement and Plan of Merger dated as of July 13, 1998 among
Parent, the Purchaser and the Company, and exhibits thereto.
(c)(2) Stock Tender Agreement between Parent and certain stockholders
of the Company.
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<PAGE> 7
(c)(3) Form of Letter Agreement between Parent and certain stockholders
concerning the exercise of warrants and the tender of underlying
shares.
(c)(4) Form of Letter Agreement between Parent and certain holders of
preferred stock concerning the conversion of preferred stock and
the tender of converted shares.
(c)(5) "Highly Confident" Letter to Parent from Schroder & Co. Inc.
with respect to contemplated financing by Parent.
(d) None.
(e) Not applicable.
(f) None.
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<PAGE> 8
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.
Dated: July 20, 1998
NW ACQUISITION CORP.
By: /s/ JAMES W. KRAUSE
Name: James W. Krause
Title: Chairman and Chief Executive
Officer
NATIONAL VISION ASSOCIATES, LTD.
By: /s/ JAMES W. KRAUSE
Name: James W. Krause
Title: Chairman and Chief Executive
Officer
-8-
<PAGE> 9
EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NUMBER EXHIBIT NAME
<S> <C> <C>
(a)(1) Offer to Purchase..............................................................
(a)(2) Letter of Transmittal..........................................................
(a)(3) Notice of Guaranteed Delivery..................................................
(a)(4) Form of Letter to Brokers, Dealers, Banks, Trust Companies and
Other Nominees.........................................................
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees...........................................
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9..........................................
(a)(7) Form of Summary Advertisement dated July 20, 1998..............................
(a)(8) Text of Press Release dated July 14, 1998 issued by
the Company............................................................
(c)(1) Agreement and Plan of Merger dated as of July 13, 1998
among Parent, the Purchaser and the Company, and exhibits thereto......
(c)(2) Stock Tender Agreement between Parent and certain
stockholders of the Company listed therein.............................
(c)(3) Form of Letter Agreement between Parent and certain
stockholders concerning the conversion or exercise
of warrants and the tender of underlying shares
(included as an Exhibit to the Merger Agreement,
which is Exhibit (c)(1) hereto)........................................
(c)(4) Form of Letter Agreement between Parent and certain
holders of preferred stock concerning the conversion
of preferred stock and the tender of converted shares
(included as an Exhibit to the Merger Agreement,
which is Exhibit (c)(1) hereto)........................................
(c)(5) "Highly Confident" Letter to Parent from Schroder & Co.
Inc. with respect to contemplated financing by Parent..................
</TABLE>
-9-
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW WEST EYEWORKS, INC.
AT
$13.00 NET PER SHARE
BY
NW ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
NATIONAL VISION ASSOCIATES, LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT EASTERN TIME,
ON MONDAY, AUGUST 17, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). SHARES
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
THE BOARD OF DIRECTORS OF NEW WEST EYEWORKS, INC. HAS, BY UNANIMOUS VOTE,
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE
STOCKHOLDERS OF NEW WEST EYEWORKS, INC., AND RECOMMENDS THAT THE STOCKHOLDERS OF
NEW WEST EYEWORKS, INC. ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST 51% OF THE OUTSTANDING SHARES OF COMMON
STOCK OF NEW WEST EYEWORKS, INC. AS DETERMINED IMMEDIATELY PRIOR TO THE
CONSUMMATION OF THE OFFER.
---------------------------
IMPORTANT
---------------------------
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, $.01 par value per share ("Shares"), should either (1)
complete and sign the Letter of Transmittal or a facsimile copy thereof in
accordance with the instructions set forth therein, have such stockholder's
signature thereon guaranteed if required by Instruction 1 to the Letter of
Transmittal, (a) mail or deliver it, together with the certificates for such
Shares and any other required documents to the Depositary or (b) tender such
Shares pursuant to the procedure for book-entry transfer set forth in Section 2
or (2) request such stockholder's broker, dealer, bank, trust company or other
nominee to effect the transaction for such stockholder. A stockholder 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 stockholder desires to tender such Shares.
A stockholder 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.
---------------------------------------------
The Dealer Manager for the Offer is:
SCHRODER & CO. INC.
---------------------------------------------
July 20, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
----
<S> <C>
INTRODUCTION................................................. 3
THE TENDER OFFER............................................. 4
1. Terms of the Offer...................................... 4
2. Procedure for Tendering Shares.......................... 6
3. Withdrawal Rights....................................... 9
4. Acceptance for Payment and Payment...................... 9
5. Certain Federal Income Tax Consequences................. 10
6. Price Range of the Shares............................... 11
7. Effect of the Offer on the Market for the Shares, Stock
Quotation and Exchange Act Registration................. 12
8. Certain Information Concerning the Company.............. 13
9. Certain Information Concerning the Purchaser and
Parent.................................................. 15
10. Source and Amount of Funds.............................. 17
11. Contacts with the Company; Background of the Offer...... 17
12. Purpose of the Offer; Plans for the Company; the Merger
Agreement; and the Commitment Agreements................ 19
13. Certain Conditions of the Offer......................... 27
14. Certain Legal Matters................................... 29
15. Fees and Expenses....................................... 30
16. Miscellaneous........................................... 31
SCHEDULE I -- Directors and Executive Officers............... S-1
SCHEDULE II -- Section 262 (Appraisal Rights Provision) of
the Delaware General Corporation Law....................... S-3
</TABLE>
2
<PAGE> 3
To the Holders of Common Stock of
NEW WEST EYEWORKS, INC.:
INTRODUCTION
NW Acquisition Corp., a Delaware corporation (the "Purchaser") and a
wholly-owned subsidiary of National Vision Associates, Ltd., a Georgia
corporation ("Parent"), hereby offers to purchase all outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of New West Eyeworks,
Inc., a Delaware corporation (the "Company"), at $13.00 per Share, net to the
seller in cash (the "Offer Price"), 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 stockholders 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 Wachovia Bank, N.A., which is acting
as the Depositary (the "Depositary") and Paying Agent ("Paying Agent") for the
Offer, Georgeson & Company Inc., which is acting as Information Agent (the
"Information Agent") for the Offer, and Schroder & Co. Inc., which is acting as
Dealer Manager (the "Dealer Manager") incurred in connection with the Offer. See
Section 15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS, BY UNANIMOUS VOTE, APPROVED THE
OFFER AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS
OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER
AND TENDER THEIR SHARES.
EVEREN Securities, Inc., the Company's financial advisor, has delivered to
the Board of Directors of the Company its written opinion to the effect that the
cash consideration to be received by the holders of Shares in each of the Offer
and the Merger is fair, from a financial point of view, to the stockholders of
the Company as of the date of delivery of such opinion. Such opinion is set
forth in full as exhibits to the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to stockholders
of the Company herewith.
The offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section
1) that number of Shares (the "Minimum Number of Shares") that would represent
at least 51% of the outstanding Shares as determined immediately prior to the
consummation of the Offer (the "Minimum Tender Condition"). The Purchaser
reserves the right (subject to the applicable rules and regulations of the
Securities and Exchange Commission (the "Commission")), which it presently has
no intention of exercising, to waive the Minimum Tender Condition and to elect
to purchase, pursuant to the Offer, fewer than the Minimum Number of Shares. See
Sections 1 and 13.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of July 13, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company, pursuant to which, following the consummation of the Offer 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 (the "Surviving Corporation"). In the Merger,
each outstanding Share (other than Shares held in the Company's treasury or by
any subsidiary of the Company, Shares owned by Parent, the Purchaser or any
other subsidiary of Parent, or Shares held by any stockholders who are entitled
to (and who properly do) exercise appraisal rights under Delaware law) will be
converted into the right to receive the Offer Price in cash, without interest
(the "Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including approval by the
stockholders of the Company, if such approval is required by applicable law. See
Section 12.
The Company has informed the Purchaser that, as of July 13, 1998, there
were (a) 4,887,436 Shares issued and outstanding and (b) 292,500 Shares reserved
for issuance upon the exercise of outstanding Stock Options (as defined herein),
156,563 Shares reserved for issuance upon the exercise of outstanding warrants
3
<PAGE> 4
("Company Warrants"), 471,429 Shares reserved for issuance upon conversion of
3,960 shares of issued and outstanding Series A Convertible 6% Cumulative
Preferred Stock, par value $1,000 per share, and 178,571 Shares reserved for
issuance upon conversion of 1,500 shares of issued and outstanding Series B
Convertible 6% Cumulative Preferred Stock, par value $1,000 per share
(collectively, the "Convertible Preferred Stock"). Based upon the foregoing, and
assuming that, as required pursuant to the Merger Agreement, all shares of
Convertible Preferred Stock and Company Warrants will be converted into Shares,
the Purchaser believes that approximately 2,847,000 Shares constitutes 51% of
the outstanding Shares. Accordingly, based upon the foregoing assumptions the
Minimum Tender Condition will be satisfied if at least 2,847,000 Shares are
validly tendered and not withdrawn prior to the expiration of the Offer.
In connection with the execution of the Merger Agreement, on July 13, 1998
Parent entered into a Stock Tender Agreement (the "Tender Agreement") with
certain holders of Shares (collectively, the "Committed Stockholders"), pursuant
to which each Committed Stockholder has agreed, among other things, to (a)
tender in the Offer and not withdraw all Shares owned or controlled by such
Committed Stockholder (the "Committed Stockholders Outstanding Shares") and (b)
vote all Shares owned or controlled by such Committed Stockholder in favor of
the Merger and against any action that would reasonably be expected to impede
the Offer or the Merger. As of July 13, 1998, the Committed Stockholders Shares
represented in the aggregate 1,675,410 Shares, or approximately 34% of the
outstanding Shares. Certain of the Committed Stockholders have also entered into
letter agreements with Parent (which, together with the Tender Agreement, are
referred to as the "Commitment Agreements") pursuant to which they have agreed
to convert all of the shares of Convertible Preferred Stock owned or controlled
by them into Shares and to exercise all of the Company Warrants owned or
controlled by them for Shares, and to tender all of such Shares in the Offer. As
of July 13, 1998, such committed number of Shares issuable upon such conversions
and exercises represented, in the aggregate, 621,429 Shares, which together with
the Committed Stockholder Outstanding Shares would equal approximately 40.3% of
the then outstanding Shares, assuming the conversion of all the Convertible
Preferred Stock and the exercise of all the Company Warrants.
The Merger Agreement and the Commitment Agreements are more fully described
in Section 12. Certain Federal income tax consequences of a sale of Shares
pursuant to the Offer and the exchange of Shares for the Merger Consideration
pursuant to the Merger are described in Section 5.
THE TENDER OFFER
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, Eastern Time, on Monday, August 17,
1998, unless and until the Purchaser 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. The Purchaser expects that it will be necessary to
extend the Offer beyond the August 17, 1998 date set as the initial Expiration
Date in order to permit adequate time for Parent to obtain the financing
required in order to provide funds for the Purchaser to consummate the Offer and
the Merger. See Section 10.
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, 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.
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
4
<PAGE> 5
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., Eastern 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
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
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 Shares) is delayed in its acceptance for
payment of or payment for Shares or it 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
stockholders 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 such bidder's offer. In addition, as discussed
below, the Merger Agreement contains provisions that limit the Purchaser's
ability to extend the Offer or delay payment for Shares accepted for payment.
In the Merger Agreement, the Purchaser has agreed that it will not, without
the consent of the Company, extend the Offer, except that, without the consent
of the Company, the Purchaser may extend the Offer (a) for a period of not more
than 20 business days beyond the date on which the Offer would otherwise expire
if on the date of such extension any of the conditions to Purchaser's obligation
to purchase Shares shall not be satisfied, until such time as such conditions
are satisfied or waived (other than an extension in order to obtain financing as
contemplated by the Financing Condition (as described in the immediately
following paragraph) for which an extension may be made only pursuant to clause
(c) of this paragraph), (b) for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable to
the Offer, (c) through and including October 14, 1998 solely in order to obtain
financing pursuant to the Financing Condition, and (d) for any reason for a
period of not more than 10 business days beyond the latest expiration date that
would otherwise be permitted under clause (a) or (b) of this sentence. As used
in this Offer to Purchase, "business day" has the meaning set forth in Rule
14d-1 under the Exchange Act.
In addition, the Purchaser has agreed in the Merger Agreement that it will
not, without the consent of the Company, (a) increase the percentage of
outstanding Shares required to be tendered pursuant to the Minimum Tender
Condition, (b) reduce the number of Shares subject to the Offer, (c) reduce the
Offer Price, (d) modify or add to the conditions set forth in Section 13 or (e)
change the form of consideration payable in the Offer. The Company, Parent and
the Purchaser each have the right to terminate the Merger Agreement if the
Purchaser has not purchased Shares pursuant to the Offer by October 15, 1998. In
addition, the Merger Agreement is subject to termination as more fully described
in Section 12.
The Purchaser's obligation to accept and pay for Shares tendered pursuant
to the Offer is expressly conditioned upon Parent's receipt of funds from a
contemplated financing in an amount sufficient to consummate the transactions
contemplated by the Merger Agreement (the "Financing Condition"), which required
amount is approximately $77 million. Parent has initiated a transaction for the
private placement of its high yield debt securities in an amount that would
provide sufficient funds to satisfy the Financing Condition and permit the
Purchaser to accept and pay for Shares pursuant to the Offer, if that private
placement is consummated as expected. If the Purchaser terminates (and does not
consummate) the Offer in reliance upon the Financing Condition, then Parent must
pay a termination fee to the Company equal to $2.5 million (plus expenses of the
Company incurred in connection with the transaction) if such termination is on
or before September 30, 1998, or $3.5 million (plus expenses of the Company
incurred in connection with the transaction) if such termination occurs
thereafter. Certain other conditions to the Purchaser's obligation,
5
<PAGE> 6
which are not related to the Financing Condition, are contained in the Merger
Agreement and are discussed in the Offer to Purchase.
If by 12:00 Midnight, Eastern Time, on 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 to the applicable rules and
regulations of the Commission, to (a) terminate the Offer and not accept for
payment any Shares and return all tendered Shares to tendering stockholders, (b)
waive all the 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, (c) extend the Offer and, subject
to the right of stockholders 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 (d) amend the 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,
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 the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
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 ten business days is generally required to allow for
adequate dissemination to stockholders and investor response.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Tender Condition, the Financing Condition, the expiration or termination of all
waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations thereunder (the "HSR Act") and the other
conditions described in Section 13. Subject to the terms and conditions
contained in the Merger Agreement, the Purchaser reserves the right (but shall
not be obligated) to waive any or all such conditions. However, if the Purchaser
waives or amends the Minimum Tender Condition during the last five business days
during which the Offer is open, the Purchaser will be required to extend the
Expiration Date so that the Offer will remain open for at least five 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 stockholder list
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 stockholder 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 stockholder validly to 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 and any
other required documents, 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
such addresses or such Shares must be delivered pursuant to the procedure for
book-entry transfer set forth below (and a Book-Entry Confirmation (as defined
below) received by the Depositary), in each case prior to the Expiration Date,
or (b) the tendering stockholder 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 and the Philadelphia Depository Trust Company (the
"Book-Entry Transfer Facilities") 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 any of the Book-Entry Transfer Facilities' systems may make
book-entry delivery of Shares by
6
<PAGE> 7
causing a Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with such 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 a
Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
any other required documents, 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 tendering stockholder
must comply with the guaranteed delivery procedure described below. The
confirmation of a book-entry transfer of Shares into the Depositary's account at
a Book-Entry Transfer Facility as described above is referred to herein as a
"Book-Entry Confirmation". DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. 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 (a) the Letter of Transmittal is signed by the registered holder
of Shares (which term, for purposes of this Section, includes any participant in
any of the Book-Entry Transfer Facilities' systems whose name appears on a
security position listing as the owner of the Shares) tendered therewith and
such registered holder has not completed either Box B -- "Special Delivery
Instructions" or Box C -- "Special Payment Instructions" on the Letter of
Transmittal or (b) such Shares are tendered for the account of a firm that is a
member of a registered national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), a commercial bank or trust
company having an office or correspondent in the United States 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 to 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
to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for 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, such stockholder's tender may be
effected if ALL the following conditions are met:
(a) such tender is 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, is received by
the Depositary as provided below prior to the Expiration Date; and
(c) the certificates for all tendered Shares, in proper form for transfer
(or a Book-Entry Confirmation with respect to such Shares), together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees and any
other documents required by the Letter of Transmittal, are received by
the Depositary within three trading days after the date of execution
of such Notice of Guaranteed Delivery. A "trading day" is any day on
which The Nasdaq Stock Market is open for business.
7
<PAGE> 8
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such 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 (a) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (b) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders 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 OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer,
including the Financing Condition described in Section 1.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder'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 stockholder's rights with respect to the Shares tendered by such
stockholder 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 such Shares on or after July 20, 1998. All such proxies shall be considered
coupled with an interest in the tendered Shares. Such appointment will be
effective when, and only to the extent that, the Purchaser accepts for payment
Shares tendered by such stockholder as provided herein. Upon such appointment,
all prior powers of attorney and proxies given by such stockholder with respect
to such 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
such Shares or other securities or rights in respect of any annual, special or
adjourned meeting of the Company's stockholders, 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 such Shares, the Purchaser must be able to
exercise full voting and other rights with respect to such Shares and other
securities or rights, including voting at any meeting of stockholders 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 Dealer Manager, the Information
Agent, or any other person will be under any duty to give notification of any
defects or irregularities in tenders or will incur any liability for failure to
give any such notification. The Purchaser's interpretation of the terms and
conditions of the Offer (including the Letter of Transmittal and the
instructions therein) 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 stockholder surrendering
Shares in the Offer must provide the Depositary with such stockholder's correct
taxpayer identification number ("TIN") on a Substitute Form W-9 and certify
under penalties of perjury that such TIN is correct and that such stockholder is
not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign individuals and entities) are not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails
8
<PAGE> 9
to provide the certifications described above, the Internal Revenue Service
("IRS") may impose a penalty on such stockholder, and payment of cash to such
stockholder pursuant to the Offer may be subject to backup withholding of 31%.
All stockholders 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
stockholders 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 October 14, 1998.
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 such
certificates, the serial numbers shown on such certificates must be submitted to
the Depositary and, unless such 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 appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise must
comply with such 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 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 Dealer Manager, 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 will incur any liability for
failure to give any such notification.
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. Any determination concerning the satisfaction of such
terms and conditions will be within the sole discretion of the Purchaser, and
such determination will be final and binding on all tendering stockholders. See
Sections 1 and 13. 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).
Parent plans to file, and the Company has informed Parent that it intends
to file, promptly a Notification and Report Form with respect to the Offer under
the HSR Act. The waiting period under the HSR Act with respect to the Offer will
expire at 11:59 P.M., Eastern Time, fifteen (15) days after Parent and the
Company
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<PAGE> 10
file such Forms, 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 from Parent.
If such a request is made, such waiting period will expire at 11:59 P.M.,
Eastern Time, on the 10th day after substantial compliance with such request.
See Section 14 hereof for additional information concerning the HSR Act and the
applicability of 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 (a) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (b) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and (c) any other documents required by the Letter of Transmittal. The per Share
consideration paid to any stockholder pursuant to the Offer will be the highest
per Share consideration paid to any other stockholder 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 such 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 stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF 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 such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
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 stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at the
appropriate Book-Entry Transfer Facility), as promptly as practicable after the
expiration or termination of 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 stockholders 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 stockholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the stockholder 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 (or canceled pursuant to the Merger).
If tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by the tendering stockholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
stockholder's holding period for the Shares exceeds one year. Under present law,
long-term capital gain will be subject to a maximum Federal income tax rate of
(i) 20% if the individual's holding period of the Shares is more than 18 months,
or (ii) 28% if the individual's holding period of the Shares is not more than 18
months
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<PAGE> 11
but more than one year. Long-term capital gains recognized by a tendering
corporate stockholder will be taxed at a maximum Federal income tax rate of 35%.
Legislation has been passed by both houses of Congress which, if enacted
into law, will eliminate the 28% maximum Federal income tax rate for long-term
capital gains and will reduce the requisite holding period for the 20% maximum
Federal income tax rate from more than 18 months to more than one year,
effective for capital gains recognized after 1997. No assurance can be made that
such legislation will be enacted into law.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct, or properly certifies that it is
awaiting a TIN. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder 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 stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. 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 stockholder 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.
STOCKHOLDERS 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.
6. PRICE RANGE OF THE SHARES
The Shares are quoted for trading on The Nasdaq SmallCap Stock Market under
the symbol "NEWI", which is the principal trading market for the Shares, and are
also traded on the Pacific Stock Exchange under the symbol "NWE". The following
table sets forth, for each of the periods indicated, the high and low reported
closing prices per Share as reported by The Nasdaq SmallCap Stock Market.
<TABLE>
<CAPTION>
SALES PRICE
------------
YEAR HIGH LOW
- ---- ---- ----
<S> <C> <C>
1996
First Quarter............................................. $ 5 3/4 $ 4
Second Quarter............................................ 6 5
Third Quarter............................................. 6 3/4 5 1/4
Fourth Quarter............................................ 7 1/2 6
1997
First Quarter............................................. $ 7 3/8 $ 5 3/4
Second Quarter............................................ 7 3/8 5 1/4
Third Quarter............................................. 10 7 1/8
Fourth Quarter............................................ 9 3/4 7 3/8
1998
First Quarter............................................. 11 3/8 7 7/8
Second Quarter............................................ 11 3/8 9 1/2
Third Quarter (through July 17, 1998)..................... 12 5/16 9 5/8
</TABLE>
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<PAGE> 12
On July 13, 1998, the last full day of trading before the public
announcement of the Offer and the execution of the Merger Agreement, the
reported closing sale price of the Shares on The Nasdaq SmallCap Stock Market
was $10.50 per Share. On July 17, 1998, the last full day of trading before the
commencement of the Offer, the reported closing sale price of the Shares on The
Nasdaq SmallCap Stock Market was $12.25 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK QUOTATION AND
EXCHANGE ACT REGISTRATION
Market for the Shares. 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 standards of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
SmallCap Market, which require that an issuer have at least 500,000 publicly
held shares with a market value of $1 million held by at least 300 stockholders
holding round lots and having net tangible assets of at least $2 million. If
these standards are not met, the Shares might nevertheless be quoted on the
so-called OTC Electronic Bulletin Board or included in one of the "local lists".
Shares held directly or indirectly by an officer or director of the Company, or
by any beneficial owner of more than 10% of the Shares, ordinarily will not be
considered as being publicly held for this purpose. According to the Company, as
of July 13, 1998, there were approximately 25 holders of record of Shares and
approximately 4,887,436 Shares were outstanding. If, as a result of the purchase
of Shares pursuant to the Offer or otherwise, the Shares no longer meet the NASD
requirements for continued inclusion in the Nasdaq SmallCap Market, and the
Shares are no longer included in the Nasdaq SmallCap Market, the market for such
Shares could be adversely affected.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may also no longer meet the requirements of the Pacific Stock Exchange
for continued listing and may, therefore, be delisted from such exchange. If the
Shares were to be delisted from both such markets, it is possible that 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.
Exchange Act Registration. 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 stockholders 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 stockholders' meetings (and the related
requirement of furnishing an annual report to stockholders), 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 such
securities pursuant to Rule 144 or 144A 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
such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all exchanges and markets, 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
12
<PAGE> 13
brokers to extend credit on the collateral of 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 the Shares under the Exchange Act were
terminated, the Shares would no longer be "margin securities".
8. CERTAIN INFORMATION CONCERNING THE COMPANY
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 or has been provided by the Company. Although the
Purchaser and Parent do not have any knowledge that any such information is
untrue, none of the Purchaser, Parent, the Dealer Manager, or the Information
Agent 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.
General. The Company operates 176 full-service retail optical locations
throughout 13 states, including 52 vision centers located in Fred Meyer stores.
New West operates under the "Vista Optical" brand (11 states) and the "Lee
Optical" brand (two states). The Company offers everyday low prices for quality
eyewear, contact lenses and the services of independent doctors of optometry. In
addition, the Company has an established managed care business, Vista Eyecare
Network LLC. The Company is a Delaware corporation with its principal executive
offices at 2104 West Southern Avenue, Tempe, Arizona 85282.
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 Company's 1997 Form 10-K and
First Quarter Form 10-Q. More comprehensive financial information is included in
such report and other documents filed by the Company with the Commission, and
the following summary is qualified in its entirety by reference to such reports
and such other documents and all the financial information (including any
related notes) contained therein. Such reports and other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information".
13
<PAGE> 14
NEW WEST EYEWORKS, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FIRST QUARTER ENDED FISCAL YEAR ENDED(1)
--------------------- ------------------------------
MARCH 28, MARCH 29, DEC. 27, DEC. 28, DEC. 30,
1998 1997 1997 1996 1995
--------- --------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales........................................... $13,727 $12,791 $49,212 $43,940 $40,033
Gross Profit........................................ 7,089 6,669 24,959 22,221 19,681
Operating income (loss)............................. 653 693 1,318 1,048 (1,986)
Income (loss) before income taxes................. 626 653 1,262 832 (2,025)
Income tax expense (benefit)(2)................... 216 20 (547) 30 --
------- ------- ------- ------- -------
Net income (loss)................................. 410 633 1,809 802 (2,025)
Dividends accrued on preferred stock.............. (81) (81) (324) (328) (329)
------- ------- ------- ------- -------
Net income (loss) applicable to common shares..... $ 329 $ 552 $ 1,485 $ 474 $(2,354)
======= ======= ======= ======= =======
INCOME (LOSS) PER COMMON
SHARES (3):
Basic and diluted income (loss) per share......... $ 0.07 $ 0.13 $ 0.31 $ 0.13 $ (0.63)
======= ======= ======= ======= =======
BALANCE SHEET DATA:
Total assets...................................... $18,082 $15,774 $16,352 $13,127 $11,734
Notes payable and capital lease obligations....... 1,197 758 659 3,162 556
Convertible preferred stock....................... 5,460 5,460 5,460 5,460 5,460
</TABLE>
- ---------------
(1) The Company's fiscal year consists of 52 or 53 weeks ending the last
Saturday of the calendar year.
(2) In fiscal 1997, amount includes income tax benefit of $579,000 from
reversal of a portion of the valuation allowance applicable to the
Company's deferred tax assets. Further information may be obtained from
Note 7 of Notes to Consolidated Financial Statements of the Company's 10-K
for the fiscal year ended December 27, 1997, filed with the Commission.
(3) The Company adopted Statement of Financial Accounting Standards No. 128,
Earnings Per Share, (SFAS128) during the fourth quarter of 1997. Adoption
of SFAS128 did not impact previously reported per share amounts except for
periods prior to the Company's initial public offering in early 1994 as
antidilutive stock options and warrants previously included in the
calculation pursuant to then existing guidelines are no longer included
under SFAS 128 and other related guidance.
Available Information. The Company is subject to the 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, stock
options and other matters, 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
stockholders and filed with the Commission. Such 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, DC
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. Such
reports, proxy statements and other information may also be obtained at the web
site that the Commission maintains at http://www.sec.gov. 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, DC 20549. Such information should also be available for inspection
at the offices of The Nasdaq Stock Market, Reports Section at 1953 K Street,
Washington, D.C. 20006.
14
<PAGE> 15
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
The Purchaser. The Purchaser is a Delaware corporation and a wholly-owned
subsidiary of Parent. The Purchaser 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 296 Grayson Highway, Lawrenceville,
Georgia 30045.
Parent. Parent is a Georgia corporation formed in 1990. Parent is
principally engaged in the retail sale of eyewear and is currently the nation's
fifth largest retail optical company in terms of revenues and locations.
Parent's retail operations offer a full line of optical goods including
spectacles, contact lenses, prescription and non-prescription sunglasses and a
full line of optical accessories. In addition, independent doctors of optometry
are available adjacent to store locations. The principal offices of Parent are
located at 296 Grayson Highway, Lawrenceville, Georgia 30045.
Certain Background Information. 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 hereto.
Except as described in this Offer to Purchase, neither the Purchaser, nor
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 owns any equity security of the Company, and none 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, (a) there have not been any
contacts, transactions or negotiations between any of 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 (b) 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.
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 (a)
has been convicted in a criminal proceeding (excluding traffic violations and
similar misdemeanors) or (b) 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.
Financial Information. Set forth below is a summary of certain
consolidated financial data with respect to Parent and its subsidiaries,
excerpted or derived from audited financial information presented in Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (the
"Parent 1997 10-K") or in Parent's Quarterly Report on Form 10-Q for the quarter
ended March 28, 1998 (the "Parent First Quarter 10-Q"). The financial
information summary set forth below is qualified in its entirety by referenced
to the Parent 1997 10-K, Parent First Quarter 10-Q, and the other documents,
financial information and related notes contained therein which have been filed
with the Commission, which are hereby incorporated herein by reference. Such
reports and other documents may be inspected and copies may be obtained from the
Commission, or the Nasdaq Stock Market in the manner set forth below under
"Available Information".
15
<PAGE> 16
PARENT'S SELECTED CONSOLIDATED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
FIRST QUARTER
ENDED
FISCAL YEAR ENDED(5) ---------------------
------------------------------------------------------ MARCH 29, MARCH 28,
1993 1994(1) 1995(2) 1996(2) 1997(2) 1997 1998
-------- -------- -------- -------- ---------- --------- ---------
(000'S EXCEPT PER SHARE INFORMATION AND STATISTICAL DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net Sales................................... $ 88,340 $119,395 $145,573 $160,376 $186,354 $44,362 $54,408
Cost of Goods sold.......................... 41,445 53,898 67,966 76,692 86,363 20,143 24,465
Gross Profit................................ 46,895 65,497 77,607 83,684 99,991 24,219 29,943
Gross Profit Percentage..................... 53% 55% 53% 52% 54% 54.6% 55.0%
Selling, General, and Administrative
Expenses.................................. 48,602 63,911 74,390 76,920 89,156 20,971 25,557
Provision for Disposition(3)................ 7,727 -- 958 -- -- -- --
Other Nonrecurring Charges(3)............... 2,750 -- 1,053 -- -- -- --
Stock Compensation Expense(3)............... 834 -- -- -- -- -- --
-------- -------- -------- -------- -------- ------- -------
Operating income (loss)..................... (13,018) 1,586 1,206 6,764 10,835 3,248 4,386
Other Income (Expense), Net............... 154 (1,195) (2,626) (2,084) (1,554) 488 277
-------- -------- -------- -------- -------- ------- -------
Income (Loss Before Income)................. (12,864) 391 (1,420) 4,680 9,281 2,760 4,109
Taxes Income Tax Benefit (Expense)........ 900 (40) (100) (1,200) (3,708) 1,107 1,657
-------- -------- -------- -------- -------- ------- -------
Net Income (Loss)......................... $(11,964) $ 351 $ (1,520) $ 3,480 $ 5,573 $ 1,653 $ 2,452
======== ======== ======== ======== ======== ======= =======
Basic Earnings (Loss) Per Common Share(4)... $ (.59) $ .02 $ (.07) $ .17 $ .27 $ 0.08 $ 0.12
======== ======== ======== ======== ======== ======= =======
Diluted Earnings (Loss) Per Common
Share(4).................................. $ (.59) $ .02 $ (.07) $ .17 $ .27 $ 0.08 $ 0.12
======== ======== ======== ======== ======== ======= =======
Earnings (Loss) before Interest, Taxes,
Depreciation and Amortization........... $ (7,506) $ 9,153 $ 11,584 $ 16,922 $ 21,870 $ 5,814 $ 7,309
As a Percentage of Sales.................... (8.5%) 7.7% 8.0% 10.6% 11.7% 13.1% 13.4%
BALANCE SHEET DATA:
Working Capital............................. $ 6,954 $ 8,723 $ 14,556 $ 13,502 $ 12,171 $12,339 $14,102
Total Assets................................ 66,172 77,612 81,237 74,564 83,250 79,666 85,247
Long-Term Debt and Capital Lease
Obligations............................... 15,135 30,479 38,000 26,500 23,725 27,100 21,511
Shareholders' Equity........................ 31,577 29,613 26,326 29,906 36,368 31,561 42,320
Long-Term Debt and Lease Obligations as a
Percentage of Shareholders' Equity........ 48% 103% 144% 89% 65% 85.9% 50.8%
</TABLE>
- ---------------
(1) Financial information for 1994 includes results of international operations
for the 11 months ended November 30, 1994.
(2) Financial information for 1995 and subsequent years include results of
international operations for the 12 months ended November 30. See Note 2 to
consolidated financial statements in Parent's 1997 10-K.
(3) In 1995, the Company decided to dispose of its non-core business operations,
resulting in a $2 million provision. See Note 14 to consolidated financial
statements. In 1993, the Company recorded provisions for nonrecurring
charges related to the disposition of the Canada business, termination of a
proposed acquisition of a frame manufacturer, write off of capitalized costs
for a point of sale system, and compensation expense associated with certain
stock options granted to employees of the Company.
(4) In 1997, the Company adopted SFAS No. 128, "Earnings per Share". Basic
earnings per common share were computed by dividing net income by the
weighted average number of common shares outstanding during the year.
Diluted earnings per common share were computed as basic earnings per common
share, adjusted for outstanding stock options that are dilutive. Outstanding
options with an exercise price below the average price of the Company's
common stock have been included in the computation of diluted earnings per
common share, using the treasury stock method, as of the date of the grant.
Stock options have been excluded from the calculation of weighted average
shares outstanding during 1993 and 1995, as the effect would be
antidilutive. All earnings per share calculations for 1993 through 1996 have
been restated to conform with SFAS No. 128.
(5) Effective January 1, 1995, the Company changed its year end to a 52/53 week
retail calendar (see Note 2 to consolidated financial statements). Fiscal
1997 consisted of 53 weeks ended January 3, 1998. Sales for the 53rd week
approximated $3.0 million in fiscal 1997.
16
<PAGE> 17
Available Information. Parent is subject to the 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
Parent's directors and officers, their remuneration, stock options and other
matters, the principal holders of Parent's securities and any material interest
of such persons in transactions with the Parent is required to be disclosed in
proxy statements distributed to the Parent's stockholders and filed with the
Commission. Such 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, DC 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. Such reports, proxy statements and
other information may also be obtained at the web site that the Commission
maintains at http://www.sec.gov. 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, DC 20549. Such
information should also be available for inspection at the offices of The Nasdaq
Stock Market, Reports Section at 1953 K Street, Washington, D.C. 20006.
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 for the Purchaser and Parent to
consummate the transactions contemplated by the Merger Agreement is estimated to
be approximately $77 million. The Purchaser plans to obtain all such funds
through a private placement by Parent of high-yield debt securities and a
capital contribution and/or an intercompany loan by Parent to Purchaser.
As a result of the Financing Condition in the Merger Agreement, the
Purchaser's obligation to accept and pay for Shares tendered pursuant to the
Offer is conditioned upon Parent's receipt of such funds. Parent has initiated a
transaction for the private placement of its high yield debt securities in an
amount that would provide sufficient funds to satisfy the Financing Condition
and permit the Purchaser to accept and pay for Shares pursuant to the Offer.
Parent has received a "highly confident" letter from an investment banking firm
with respect to the probable consummation of such a private placement of debt
securities (the "Note Offering"); however, there is no assurance that the
financing can or will be consummated on terms that are satisfactory to Parent.
The Purchaser expects that it will be necessary to extend the Offer beyond the
August 17, 1998 date set as the initial Expiration Date in order to permit
adequate time for Parent to obtain the financing required in order to provide
funds for the Purchaser to consummate the Offer and the Merger.
Under the terms of the Merger Agreement, if the Purchaser terminates (and
does not consummate) the Offer in reliance upon the Financing Condition, then
Parent must pay a termination fee to the Company equal to $2.5 million if such
termination is on or prior to September 30, 1998, or $3.5 million if such
termination occurs thereafter and on or prior to October 14, 1998, in either
case plus Company Expenses. "Company Expenses" means all reasonable
out-of-pocket expenses and fees, including, without limitation, fees and
expenses payable to all banks, investment banking firms and other financial
institutions and their advisors and counsel, and all fees and expenses of
counsel, accountants, experts and consultants to the Company incurred or
required to be paid by the Company or any of its affiliates in connection with
the transactions contemplated by the Merger Agreement, including any efforts to
enforce any rights under the Merger Agreement or related agreements.
Parent expects that it will repay any amounts raised in the Note Offering,
if it is consummated, with cash flow from operations, or with the proceeds of
subsequent debt or equity placements.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
Prior to March 1998, neither the Purchaser nor Parent or any officer or
other affiliate of Parent had had any arrangement, relationship or contact with
the Company, other than in the ordinary course of business as participants in
the same industry.
17
<PAGE> 18
In March 1998, as part of its evolving strategy to pursue select
acquisition prospects, Parent engaged in preliminary discussions with an
investment banking firm about representing Parent in connection with its
analyses of the feasibility and desirability of pursuing a possible acquisition
of the Company.
On March 8, 1998, James W. Krause, Chairman and Chief Executive Officer of
Parent, Barry J. Feld, President and Chief Executive Officer of the Company and
Fredric M. Roberts, President of F.M. Roberts & Company, Inc., a financial
advisor to the Company, met and discussed the potential for a strategic
transaction between the Company and Parent, including, among other things,
common business strategies and possible synergies that might be realized from a
merger of Parent and the Company. At the meeting, it was decided that the
parties would pursue further discussions.
On March 11, 1998, Parent and the Company entered into a Confidentiality
Agreement pursuant to which Parent agreed to treat as confidential any
discussions and negotiations and certain information that the Company provided
to it.
On March 18, 1998, investment advisors of Parent and the Company
participated in a telephone conference in which they discussed a possible
transaction between the Company and Parent. On March 31, 1998, Mr. Krause and
Mr. Roberts had additional telephone discussions, and Mr. Krause arranged to
visit certain Vista Optical stores owned by the Company in Montana.
On April 1, 1998, Parent and the Company entered into a Confidentiality
Agreement pursuant to which the Company agreed to treat as confidential any
discussions and negotiations and certain information provided to it by Parent.
As a result, Parent provided the Company with copies of publicly available
information and certain other financial and corporate information concerning
Parent.
During April, Messrs. Feld, Krause and Roberts spoke by telephone on
several occasions regarding a possible transaction and potential synergies
between the two companies, However, on May 1, 1998, Mr. Krause telephoned Mr.
Feld and informed him that Parent considered the acquisition price desired at
the time by the Company to be too high.
On May 6 and 7, 1998, in connection with a trip otherwise planned for
California, Mr. Krause met with Mr. Roberts, Mr. Feld and Jed Sherwindt of
Schroder & Co. Inc. ("Schroders") in San Francisco. At that meeting, a potential
acquisition of the Company by Parent, and a possible range of acquisition
prices, were again discussed. Parent reiterated its position that the earlier
price desired by the Company was too high. The parties, nevertheless, agreed to
continue discussions.
On May 11, 1998, Parent's Board of Directors approved the retention of
Schroders, subject to completion of a satisfactory engagement agreement, to
serve as financial advisor to Parent in pursuing possible negotiations with the
Company for its acquisition, in light of the above development on May 6. Parent
executed an engagement agreement with Schroders on May 24, 1998.
Mr. Feld and Mr. Krause began to tentatively discuss a price of $13 per
Share in a telephone conference on June 15, 1998. On that date, Parent submitted
a letter of intent to the Company, which outlined the proposed acquisition and
included a proposed price of $13.00 per share. On June 18, 1998 the Company
delivered a first draft of the Merger Agreement to Parent, and Parent submitted
a due diligence request to the Company in order to receive detailed business
information for analyses.
On June 23 and 24, 1998, Parent's Chief Financial Officer and General
Counsel and other representatives conducted a series of due diligence
investigations at the Company's offices in Tempe, Arizona. During this visit,
the representatives from Parent met with Messrs. Feld, Roberts, and Darius
DiTallo, Vice President -- Finance and Administration and Chief Financial
Officer of the Company.
On June 30 and July 1, 1998, Mr. Krause visited Tempe, Arizona to review
the Company's operations facilities and visit headquarters and retail locations.
Between July 2 and 8, 1998, Parent and the Company, and their respective
professional advisors, engaged in daily discussions and negotiations regarding
the potential acquisition of the Company by Parent. On July 8,
18
<PAGE> 19
1998, Parent's Board of Directors approved a proposal for the acquisition of
Company for $13 per Share, which approval was communicated to the Company on
that date.
On July 9, 1998, Parent was informed that the Company's Board of Directors
had approved exclusive negotiations with Parent and tentative acceptance of
Parent's $13 per Share price, subject to further negotiation of other terms for
the overall transaction and the completion of an analysis by its financial
advisor of the fairness of such price to the stockholders of the Company.
On July 13, 1998, after such further negotiations regarding the terms of
the Merger Agreement and related documents, Parent's receipt of the "highly
confident" letter from Schroders concerning financing, and the Company's receipt
of a fairness opinion from its financial advisor, EVEREN Securities, Inc., the
Company, Parent and the Purchaser entered into the Merger Agreement. In
addition, the Committed Stockholders, Parent and the Purchaser entered into the
Commitment Agreements. Prior to the opening of stock trading on July 14, 1998,
Parent and the Company issued a joint release publicly announcing the
transactions.
12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER AGREEMENT; AND THE
COMMITMENT AGREEMENTS
Purpose. The purpose of the Offer is to acquire control of the entire
equity interest in the Company. Following 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. Upon consummation of the Merger, the
Company will become a wholly-owned subsidiary of Parent. Accordingly, the Shares
will cease to be publicly traded and will no longer be quoted on The Nasdaq
Stock Market or the Pacific Stock Exchange.
General Plans for the Company. It is expected that, initially following
the Merger, the business and operations of the Company will continue without
substantial change. Parent will continue to evaluate the business and operations
of the Company during the pendency of the Offer and after the consummation of
the Offer and the Merger, will take such further actions as it deems appropriate
under the circumstances then existing. Such actions could include changes in the
Company's business, corporate structure, certificate of incorporation, by-laws,
capitalization, Board of Directors, management or dividend policy, although,
except as disclosed in this Offer to Purchase, Parent has no current plans with
respect to any of such matters.
The Merger Agreement provides that, commencing upon the purchase of Shares
pursuant to the Offer, and from time to time thereafter, Parent will be entitled
to designate directors to serve on the Board of Directors of the Company as
described below under "Merger Agreement -- The Company's Board of Directors".
The Merger Agreement also provides that the directors of the Purchaser at the
effective time of the Merger (the "Effective Time") will, from and after the
Effective Time, be the initial directors of the Company after the Merger.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the Offer Conditions (which are set forth in Section 13), the
Purchaser will purchase all Shares validly tendered pursuant to the Offer. The
Merger Agreement provides that the Purchaser may modify and extend the terms of
the Offer as described in Section 1. Subject to the terms and conditions of the
Offer, the Purchaser shall pay, as soon as reasonably practicable after it is
permitted to do so under applicable law, for all Shares validly tendered and not
withdrawn. See Section 1.
The Merger. The Merger Agreement provides that, following the satisfaction
or waiver of the conditions described below under "Conditions to Each Party's
Obligation to Effect the Merger", the Purchaser will be merged with and into the
Company, and each then outstanding Share (other than Shares held in the
Company's treasury or by any subsidiary of the Company or owned by Parent, which
Shares shall be canceled immediately prior to the Merger, or held by
stockholders, if any, who are entitled to and who properly exercise appraisal
rights under Delaware law) will be converted into the right to receive the
Merger Consideration.
The Merger Agreement. The following is a summary of certain provisions of
the Merger Agreement. The Summary is qualified in its entirety by reference to
the Merger Agreement, which is incorporated herein by reference and a copy of
which has been filed with the Commission as an exhibit to the Schedule 14D-1.
19
<PAGE> 20
The Merger Agreement may be examined and copies may be obtained at the place and
in the manner set forth in Section 9, "Available Information," of this Offer to
Purchase.
Vote Required to Approve Merger. The Delaware General Corporation Law
("DGCL") provides that the adoption of any plan of merger or consolidation
by the Company requires the approval of the Board of Directors and the
affirmative vote of a majority of the outstanding shares entitled to vote
thereon (including the votes of any Shares owned by the Purchaser as a
result of the Offer or otherwise). The Board of Directors of the Company
has authorized and approved the Offer and the Merger. The Company's
Restated Certificate of Incorporation (the "Company Certificate") does not
contain additional voting requirements for the adoption of a plan of merger
or consolidation.
Conditions to Each Party's Obligation to Effect the Merger. The
Merger Agreement provides that the respective obligations of each party to
effect the Merger are subject to the satisfaction or waiver on or prior to
the Effective Time of the following conditions: (a) if required by
applicable law, the Merger Agreement shall have been approved and adopted
by the affirmative vote of the Company's stockholders by the requisite
percentage in accordance with applicable law and the Company Certificate,
and the Certificate of Merger shall have been executed and delivered by the
Surviving Corporation and filed in the Department of State of the State of
Delaware, (b) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that each of the parties has
agreed to use its best efforts to prevent the entry of any such injunction
or other order and to appeal as promptly as possible any injunction or
other order that may be entered, (c) all regulatory approvals (in addition
to any approval contemplated by the HSR Act) shall have been obtained on
terms mutually satisfactory to Parent and the Company, except for any the
failure of which to obtain would not have a material adverse effect on
either Parent or the Surviving Corporation and (d) the Purchaser or its
permitted assignee shall have purchased all Shares validly tendered and not
withdrawn pursuant to the Offer; provided, however, that this condition
shall not be applicable to the obligations of Parent or the Purchaser if,
in breach of the Merger Agreement or the terms of the Offer, the Purchaser
fails to purchase any Shares validly tendered and not withdrawn pursuant to
the Offer.
Termination of the Merger Agreement. The Merger Agreement may be
terminated and the Merger contemplated thereby may be abandoned at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company, (a) by mutual written consent of the Company
and Parent, except if Shares have been purchased pursuant to the Offer, (b)
by any of the Company, Parent or the Purchaser if (i) upon a vote at a duly
held stockholders meeting or any adjournment thereof, any required approval
of the stockholders of the Company shall not have been obtained; (ii) (A)
the Purchaser shall not have commenced the Offer within five business days
after the date of the Merger Agreement, (B) as the result of the failure of
any of the conditions described in Section 13 relating to the Purchaser's
obligations to consummate the Offer, the Offer shall have been terminated
by Parent or expired in accordance with its terms without the Purchaser
having purchased Shares pursuant to the Offer or (C) the Purchaser shall
not have purchased Shares pursuant to the Offer by October 15, 1998;
provided, however, that the passage of the period referred to in clause (C)
shall be tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or action restraining,
enjoining or otherwise prohibiting the purchase of Shares pursuant to the
Offer or the consummation of the Merger; and provided, further, that the
right to terminate the Merger Agreement pursuant to clause (b)(ii) of this
paragraph shall not be available to any party whose failure to fulfill any
of its obligations under the Merger Agreement results in the failure of any
such condition; (iii) the Merger shall not have been consummated on or
before the date six months following the date of the Merger Agreement,
unless the failure to consummate the Merger is the result of a willful and
material breach of the Merger Agreement by the party seeking to terminate
the Merger Agreement; provided, however, that the passage of such period
shall be tolled for any part thereof during which any party shall be
subject to a nonfinal order, decree, ruling or action restraining,
enjoining or otherwise prohibiting the consummation of the Merger or the
calling or holding of a stockholders meeting to consider and vote on the
Merger;
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<PAGE> 21
provided further, that no party shall be entitled to terminate the Merger
Agreement pursuant to this clause (b)(iii) of this paragraph if Shares have
been purchased pursuant to the Offer; or (iv) any governmental entity shall
have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the purchase of
Shares pursuant to the Offer or the Merger and such order, decree, ruling
or other action shall have become final and nonappealable; or (c) by either
Parent or the Company under the circumstances described below under
"Acquisition Proposals".
If the Merger Agreement is terminated by any of the Company, Parent or
the Purchaser as described in the foregoing paragraph, the Merger Agreement
shall forthwith become void and have no effect, without any liability or
obligation on the part of the Company, the Purchaser or Parent, except with
respect to certain specified provisions (including the provisions described
below under "Fees and Expenses") and, in the case of Parent and the
Purchaser, except to the extent that such termination results from the
material breach by Parent or the Purchaser of any of its representations,
warranties, covenants or agreements set forth in the Merger Agreement.
Acquisition Proposals. The Merger Agreement provides that the Company
and its subsidiaries will not, and will cause their respective directors,
officers, employees, or other agents not to, directly or indirectly, (a)
take any action to solicit, initiate or encourage any Acquisition Proposal
(as defined below), provided that no public announcement, or a press
release substantially in the Form of Exhibit B to the Merger Agreement,
made by the Company prior to the date of the Merger Agreement regarding the
transactions contemplated thereby will be deemed a violation of this clause
(a), or (b) engage in discussions or negotiations with, or disclose any
nonpublic information relating to the Company or any of its subsidiaries or
afford access to their respective property, books or records to any person
in connection with an Acquisition Proposal. Notwithstanding the foregoing,
the Company and its Board of Directors (or any committee thereof) will not
be prohibited from taking and disclosing a position with respect to a
tender offer by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated by the Commission under the Exchange Act, or considering,
negotiating, discussing, approving or recommending to the stockholders of
the Company a bona fide Acquisition Proposal not solicited, initiated or
encouraged in violation of the Merger Agreement, if and only to the extent
that: (i) such Board of Directors determines in good faith, upon the advice
of counsel, that such action is required for the Board of Directors to
comply with its fiduciary duties to stockholders imposed by law, and (ii)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, the Company provides written
notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity.
Parent or (provided the Company and its Board of Directors have complied
with the requirements described in this paragraph) the Company may
terminate the Merger Agreement if the Company or its Board of Directors
approves or recommends to the Company's stockholders an Acquisition
Proposal or the Board of Directors of the Company withdraws its
recommendation that the stockholders accept and approve the transactions
contemplated by the Merger Agreement; provided that the Company or its
Board of Directors may take such actions only if the Company or its Board
of Directors has received a written opinion from the Company's investment
advisor that such advisor reasonably believes the party making the
Acquisition Proposal has the financial ability to consummate such
Acquisition Proposal on the proposed terms and that such Acquisition
Proposal may reasonably be expected to provide a per share value greater
than the Offer.
The Merger Agreement defines "Acquisition Proposal" as any proposal or
offer from any person (other than Parent or the Purchaser) relating to (a)
any direct or indirect acquisition or purchase of any equity interest in,
or a substantial amount of assets of, the Company or its subsidiaries, (b)
any tender offer or exchange offer (including a self-tender offer)
involving the equity securities of the Company, (c) any merger,
consolidation, recapitalization, liquidation, business combination or
similar transaction involving the Company other than the transactions
contemplated by the Merger Agreement or (d) any other extraordinary
transaction the consummation of which would or could reasonably be expected
to impede, interfere with, prevent or materially delay the transactions
contemplated by the Merger Agreement.
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<PAGE> 22
Fees and Expenses. The Merger Agreement provides that, except as
provided below, all costs and expenses in connection with the Merger
Agreement and the transactions contemplated by the Merger Agreement shall
be paid by the party incurring such fees or expenses, whether or not the
Merger is consummated.
Parent shall be entitled to receive from the Company a termination fee
in the amount of $2,500,000 if the Merger Agreement is terminated or the
Purchaser does not purchase Shares pursuant to the Offer because (a) the
Company or its Board of Directors approves or recommends to the Company's
stockholders an Acquisition Proposal or (b) in connection with an
Acquisition Proposal, the Board of Directors of the Company withdraws its
recommendation that the stockholders of the Company accept and approve the
transactions contemplated by the Merger Agreement. The Company shall be
entitled to receive a termination fee in the amounts and under the
conditions described above in Section 10.
Parent has also agreed that if it has received the full amount of any
payment to it under the foregoing paragraph, neither Parent nor the
Purchaser, nor any of their respective directors, officers,
representatives, or agents shall assert or pursue, directly or indirectly,
whether arising under tort, contract, or otherwise, any claim or cause of
action against any of the Company or any person making an Acquisition
Proposal or any of their respective directors, officers, representatives,
or agents based in whole or part upon its or their receipt, consideration,
recommendation or approval of an Acquisition Proposal, including the
Company's exercise of its right of termination pursuant to the provisions
of the Merger Agreement. If the Company has received the full amount of any
payment to it under the foregoing paragraph, neither the Company nor any of
its respective directors, officers, representatives, or agents shall assert
or pursue, directly or indirectly, whether arising under tort, contract, or
otherwise, any claim or cause of action against any of Parent or the
Purchaser or any of their respective directors, officers, representatives
or agents based in whole or in part upon the failure of Parent or the
Purchaser to obtain financing pursuant to the Financing Condition and the
termination of the Merger Agreement as a result of such failure.
Conduct of Business by the Company. The Merger Agreement provides
that, unless Parent shall otherwise agree in writing, or except as
otherwise set forth in the Merger Agreement or described in a schedule to
the Merger Agreement, the Company and each of its subsidiaries will conduct
their business in the ordinary course and consistent with past practice and
use their reasonable best efforts to preserve intact their respective
business organizations and relationships and goodwill with third parties
and to keep available the services of their present officers and key
employees. The Merger Agreement further provides that, without limiting the
generality of the foregoing, except as otherwise provided in the Merger
Agreement, during the period from the date of the Merger Agreement to the
Effective Time of the Merger, without the prior written consent of Parent,
which consent shall not be unreasonably withheld: (a) the Company will not
adopt or propose any change in the Company Certificate or By-Laws; (b)
other than declaration and payment of regular quarterly dividends on the
Convertible Preferred Stock, the Company will not, and will not permit any
of its subsidiaries to, declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of the Company, or
contract for or effect any repurchase, redemption or other acquisition or
investment by the Company or any of its subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership
interests in, the Company or any of its subsidiaries or declare or effect
any stock split, reclassification or other change in capital structure; (c)
the Company will not, and will not permit any of its subsidiaries to, enter
into or consummate any joint venture, partnership, or similar arrangement
or form any other new arrangement for the conduct of its business or
acquire or enter into any agreement or letter of intent to merge or
consolidate with any other person; (d) the Company will not and will not
permit any of its subsidiaries to, purchase a material amount of assets or
securities of any other person, except for asset purchases in the ordinary
course of business consistent with past practice or as described in a
disclosure letter provided by the Company to Parent; (e) the Company will
not, and will not permit any of its subsidiaries to, sell, lease, license
or otherwise surrender, relinquish or dispose of any assets or property
which are material to the Company and its subsidiaries, taken as a whole,
except (i) pursuant to existing contracts or commitments (the terms of
which have been disclosed to Parent prior to the date of the Merger
Agreement), or (ii) in the ordinary course of business consistent with past
practice; (f) the Company will
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<PAGE> 23
not settle any material tax audit, make or change any material tax election
or file amended tax returns; (g) the Company will not issue or grant any
securities or option or warrant to acquire any securities (except pursuant
to existing obligations), enter into any amendment of any material term of
any outstanding security of the Company or of any of its subsidiaries,
incur any indebtedness, including notes payable or capital lease
obligations, guarantee obligations of others except pursuant to existing
credit facilities or arrangements, fail to make any required contribution
to any of the Company's employee benefit plans, increase compensation,
bonus or other benefits payable to any employee or former employee,
consultant or agent, adopt any other plan, program, arrangement or practice
providing benefits for or compensation to or on behalf of its employees or
former employees (except, as required by applicable law), or enter into any
settlement or consent with respect to any pending litigation, except in the
ordinary course of business consistent with past practice or as otherwise
permitted by the Merger Agreement; (h) the Company will not change any
method of accounting or accounting practice, or any practice relating to
the maintenance of records, by the Company or any of its subsidiaries,
except for any such required change in generally accepted accounting
principles; and (i) the Company will not, and will not permit any of its
subsidiaries to, agree or commit to do any of the foregoing.
The Merger Agreement also provides that, except to the extent
necessary to comply with the requirements of applicable laws and
regulations, the Company will not, and will not permit any of its
subsidiaries to, (a) take, or agree or commit to take, any action that
would make any representation and warranty of the Company in the Merger
Agreement inaccurate in any respect at, or as of any time prior to, the
Effective Time or (b) omit, or agree or commit to omit, to take any action
necessary to prevent any such representation or warranty from being
inaccurate in any respect at any such time, provided, however that the
Company shall be permitted to take or omit to take such action which can
(without any uncertainty) be cured at or prior to the Effective Time.
The Company's Board of Directors. The Merger Agreement provides that,
subject to compliance with Section 14(f) of the Exchange Act, at the
Effective Time of the Merger, certain persons who have been identified on a
Schedule to the Merger Agreement shall become the directors and officers of
the surviving corporation until their successors are duly elected and
qualified. The Merger Agreement also provides that, promptly upon the
acceptance for payment of and payment by the Purchaser for, any Shares
pursuant to the Offer, the Purchaser will be entitled to designate such
number of directors on the Board of Directors of the Company as will give
the Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on such Board of Directors equal to at least that
number of directors which is the product of (a) the total number of
directors on such Board of Directors who are elected by the holders of
Shares pursuant to the Company Certificate (giving effect to the directors
elected pursuant to this sentence) multiplied by (b) the percentage that
(i) such number of Shares so accepted for payment and paid for by the
Purchaser, plus the number of Shares otherwise owned by the Purchaser or
any other subsidiary of Parent, bears to (ii) the total number of Shares
outstanding, and the Company shall, at such time, cause the Purchaser's
designees to be appointed or elected; provided, however, that, in the event
the Purchaser's designees are to be appointed or elected to the Company's
Board of Directors, until the Effective Time of the Merger, the Board of
Directors of the Company will have at least three directors who were
directors of the Company on the date of the Merger Agreement and who are
not officers of the Company (the "Independent Directors"); and provided
further that, in such event, if the number of Independent Directors shall
be reduced below three for any reason whatsoever, any remaining Independent
Directors (or Independent Director, if there shall be only one remaining)
shall be entitled to designate persons to fill such vacancies, who shall be
deemed to be Independent Directors for purposes of the Merger Agreement,
or, if no Independent Directors then remain, the other directors shall
designate three persons to fill such vacancies who shall not be officers,
stockholders or affiliates of the Company, Parent or the Purchaser, and
such persons shall be deemed to be Independent Directors for purposes of
the Merger Agreement. Subject to applicable law, the Company has agreed to
take all action requested by Parent necessary to effect any such
appointment or election, including mailing to its stockholders an
information statement containing the information required by Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder (the "Information
Statement"). Parent has waived the requirement that the Company make such
mailing with the mailing of the Schedule 14D-9, except Parent reserved the
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<PAGE> 24
right to request the Company to make such mailing at a later date if Parent
deems it necessary or appropriate to do so. In connection with the
foregoing, the Merger Agreement provides that the Company will promptly, at
the option of the Purchaser (which the Purchaser intends to exercise),
either increase the size of the Company's Board of Directors or obtain the
resignation of such number of its current directors as is necessary to
enable the Purchaser's designees to be elected or appointed to the
Company's Board of Directors as provided above.
Stock Plans. The Merger Agreement provides that as soon as
practicable following the date of the Merger Agreement, the Board of
Directors of the Company (or, if appropriate, any committee administering
any Stock Plans (as defined below)) shall adopt such resolutions or take
such other actions as are required to adjust the terms of all outstanding
stock options to purchase Shares ("Stock Options") granted prior to the
date of the Merger Agreement under any stock option program or arrangement
of the Company (collectively, the "Stock Plans") to provide that each Stock
Option outstanding immediately prior to the acceptance for payment of
Shares pursuant to the Offer, whether or not vested, shall be canceled in
exchange for a cash payment to the holder by the Purchaser, within five
business days of the day Shares are purchased pursuant to the Offer, of an
amount equal to (a) the excess, if any, of (i) the price per Share to be
paid pursuant to the Offer over (ii) the exercise price per Share subject
to such Stock Option, multiplied by (b) the number of Shares for which such
Stock Option may then be exercised.
All amounts payable pursuant to the terms described in the preceding
paragraph shall be subject to any required withholding of taxes and shall
be paid without interest. The Company agrees in the Merger Agreement to use
its best efforts to obtain all consents of the holders of the Stock Options
as shall be necessary to effectuate the foregoing. Notwithstanding anything
to the contrary contained in the Merger Agreement, payment shall, at
Parent's request, be withheld in respect of any Stock Option with respect
to any holder until all necessary consents with respect to such holder are
obtained.
The Merger Agreement provides further that all Stock Plans shall
terminate as of the Effective Time of the Merger, and the provisions in any
other benefit, stock or other plan providing for the issuance, transfer or
grant of any capital stock of the Company, any interest in respect of any
capital stock of the Company, or any amounts derived from the value of any
capital stock of the Company shall be deleted at the time of the Merger,
and the Company shall ensure that following the Merger no holder of a Stock
Option or any participant in any Stock Plan will have any right thereunder
to acquire any capital stock of the Company or the Surviving Corporation.
Indemnification, Exculpation and Insurance. The Merger Agreement
provides that the certificate of incorporation of the Surviving Corporation
shall contain provisions with respect to matters occurring prior to the
Effective Time that are no less favorable with respect to indemnification
than are set forth in Article VIII of the Company Certificate, which
provisions shall not be amended, repealed or otherwise modified in any
manner that would have an adverse effect on the rights thereunder of
individuals who as of the date of the Merger Agreement or at the Effective
Time are directors, officers, employees, fiduciaries or agents of the
Company, unless such modification shall be required by law.
The Merger Agreement also provides that the Company shall, to the
fullest extent permitted under applicable law and regardless of whether the
Merger becomes effective, indemnify and hold harmless, and, after the
Effective Time, the Surviving Corporation shall, to the fullest extent
permitted under applicable law, indemnify and hold harmless, each present
and former director, officer, employee, fiduciary and agent of the Company
and each of its subsidiaries and each fiduciary and agent of each such
director and officer (collectively, the "Indemnified Parties") against all
costs and expenses (including attorneys' fees), judgments, fines, losses,
claims, damages, liabilities and settlement amounts ("Losses") paid in
connection with any claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), whether civil,
criminal, administrative or investigative, arising out of or pertaining to
any action or omission in their capacity as an officer, director, employee,
fiduciary or agent of the Company or any of its subsidiaries, occurring
before the Effective Time, until the expiration of the statute of
limitations relating thereto (and shall pay any expenses in advance of the
final disposition of
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<PAGE> 25
such action or proceeding to each Indemnified Party to the fullest extent
permitted under the DGCL, upon receipt from the Indemnified Party to whom
expenses are advanced of any undertaking to repay such advances required
under the DGCL). Parent has agreed to guarantee the obligations of the
Surviving Corporation and, following consummation of the Offer, of the
Company, as described in this paragraph.
The Merger Agreement provides that Parent shall cause the Surviving
Corporation to, and the Surviving Corporation shall maintain in effect for
six years from the Effective Time, if available, the current directors' and
officers' liability insurance policies maintained by the Company (provided
that the Surviving Corporation may substitute therefor policies of at least
the same coverage containing terms and conditions which are not materially
less favorable) with respect to matters occurring prior to the Effective
Time; provided, however, that in no event shall the Surviving Corporation
be required to expend pursuant to this paragraph more than an amount per
year equal to 200% of current annual premiums paid by the Company for such
insurance. If, but for the proviso to the immediately preceding sentence,
the Surviving Corporation would be required to expend more than 200% of
current annual premiums, the Surviving Corporation shall obtain the maximum
amount of such insurance obtainable by payment of annual premiums equal to
200% of current annual premiums.
If the Company or the Surviving Corporation or any of their respective
successors or assigns (a) consolidates with or merges into any other person
and shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (b) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company
or the Surviving Corporation, as the case may be, or at Parent's option,
Parent, shall assume the indemnification obligations described in this
section.
Best Efforts. The Merger Agreement provides that, subject to the
terms and conditions of the Merger Agreement, each of the parties will use
all reasonable efforts to take, or cause to be taken, all actions, and to
do, or cause to be done, and to assist and cooperate with the other parties
in doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer and the
Merger and the other transactions contemplated by the Merger Agreement.
Representations and Warranties. The Merger Agreement contains
customary representations and warranties, in light of the circumstances,
from the Company, Parent and the Purchaser.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that action by a majority of the members of the Board of
Directors of the Company who were members thereof on the date of the Merger
Agreement and remain as such thereafter (or the duly authorized designee of
such members), and approval of such action by a majority of Independent
Directors, is required for the Company to amend or terminate the Merger
Agreement, exercise or waive any of its rights or remedies under the Merger
Agreement, or extend the time for performance of the Purchaser's and
Parent's respective obligations under the Merger Agreement. In the case of
Parent or the Purchaser, action by its respective Board of Directors is
required to take the actions described in the previous sentence.
Employment/Change of Ownership Agreements. Without limitation, Parent and
the Purchaser agree to abide by all the terms of the employment agreements and
change of ownership agreements entered into by the Company with certain of its
employees.
The Commitment Agreements. In connection with the execution of the Merger
Agreement, Parent and the Committed Stockholders entered into the Tender
Agreement, pursuant to which each Committed Stockholder has agreed to tender in
the Offer, no later than 15 business days after commencement of the Offer, and
not withdraw all Shares owned or controlled by such Committed Stockholder,
subject to certain provisions of the Tender Agreement described below. As of
July 13, 1998, the Committed Stockholders Outstanding Shares represented an
aggregate of 1,675,410 Shares, or approximately 34% of the outstanding Shares.
The Committed Stockholders are Mesirow Capital Partners II, Mesirow Capital
Partners III,
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Mesirow Capital Partners IV, Mesirow Capital Partners V, Mesirow Capital
Partners VI, Ronald E. Weinberg and Barry J. Feld.
Certain of the Committed Stockholders who also owned or controlled a
portion of the shares of the Company's Convertible Preferred Stock that are
convertible into Shares, or Company Warrants exercisable for the purchase of
Shares, have also entered into letter agreements with Parent pursuant to which
they have agreed to convert all of their shares of Convertible Preferred Stock
into, and to exercise all of their Company Warrants for the purchase of, the
underlying Shares, and to tender all of such Shares in the Offer. As of July 13,
1998, the committed number of Shares issuable upon such conversions and
exercises represented, in the aggregate, 621,429 Shares, which together with the
Committed Stockholders Outstanding Shares would equal approximately 40.3% of the
then outstanding Shares, assuming the conversion of all the Convertible
Preferred Stock and the exercise of all the Company Warrants.
In addition, the Committed Stockholders have agreed in the Tender Agreement
to vote (or execute a consent in respect of) all Shares owned or controlled by
them (a) in favor of the Merger, the Merger Agreement (as amended from time to
time) and any of the transactions contemplated by the Merger Agreement, (b)
against any action or agreement that would reasonably be expected to result in a
breach, in any material respect, of any covenant, representation or warranty or
any other obligation of the Company under the Merger Agreement and (c) against
any action or agreement that would reasonably be expected to impede, interfere
with, delay, or attempt to discourage the Offer or Merger.
Each of the Committed Stockholders has agreed that, without the prior
written consent of Parent, it will not (a) offer for sale, sell, transfer,
assign, tender, pledge, encumber, assign or otherwise dispose of any or all of
its Shares (other than 5,000 Shares which Mr. Weinberg may gift to charities);
(b) enter into any contract, option or understanding with respect to any
transfer of any or all of the Shares or any interest therein; (c) except as
otherwise provided in the Tender Agreement, grant any proxy, power-of-attorney
or other authorization or consent with respect to the Shares; (d) deposit the
Shares into a voting trust or enter into a voting agreement or arrangement with
respect to the Shares; or (e) take any other action that would in any way
restrict, limit or interfere with the performance of such Committed
Stockholder's obligations under the Tender Agreement or the transactions
contemplated thereby.
Each Committed Stockholder has agreed that such Committed Stockholder will
not, and will cause its officers, directors, partners, employees or other agents
not to, directly or indirectly, (a) take any action to solicit, initiate or
encourage any Acquisition Proposal, provided, however, that certain public
announcements made pursuant to the Merger Agreement shall not be deemed a
violation of this provision; or (b) engage in discussions or negotiations with,
or disclose any nonpublic information relating to the Company or its
subsidiaries, or afford access to their respective properties, books or records
to, any person in connection with an Acquisition Proposal. Each Committed
Stockholder shall immediately cease and cause to be terminated any existing
discussions or negotiations with any person (other than each other, Parent, the
Purchaser and the Company) conducted by such Committed Stockholder before the
effective date of the Tender Agreement with respect to any of the foregoing
transactions referenced in this paragraph. Without limiting the foregoing,
nothing in the Tender Agreement shall prohibit, limit or affect any Committed
Stockholder or any of its officers, directors, partners, employees, or agents,
from taking any action as a director or officer, including, without limitation,
any actions permitted or not prohibited by the Merger Agreement with respect to
any Acquisition Proposal, and nothing in the Tender Agreement shall prohibit the
Company from taking any action permitted under Section 6.10 of the Merger
Agreement, relating to Acquisition Proposals.
The Tender Agreement, and all rights and obligations of the parties
thereunder, will terminate immediately upon the earlier of (a) the acquisition
by Parent, through the Purchaser or otherwise, of all the Shares, (b) the
termination of the Merger Agreement in accordance with its terms (c) the
Effective Time, (d) by any Committed Stockholder, if Parent or the Purchaser
breaches certain covenants relating to the Offer and the purchase of Shares, or
(e) by Parent if any Committed Stockholder breaches any representation or
warranty in any material respect or any covenant, but only with respect to such
breaching Committed Stockholder.
Conversion of Convertible Preferred Stock and Exercise of the Company
Warrants. Concurrently with the execution of the Merger Agreement with respect
to the Committed Stockholders or as soon as practicable
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after such execution with respect to all other holders of Shares, the Company
and the holders of the Convertible Preferred Stock will execute an agreement,
and the Company and the holders of the Company Warrants will execute an
agreement, to provide that the outstanding Company Warrants and Convertible
Preferred Stock, as the case may be, shall be exercised or converted
simultaneously with the closing of the Offer and the purchase of Shares in the
Offer and the Shares issuable upon such exercise or conversion shall be tendered
in the Offer. On the same day that Shares are purchased pursuant to the Offer,
the Purchaser shall pay to the holders of the Convertible Preferred Stock or the
Company Warrants, an amount equal to (a) in the case of the Convertible
Preferred Stock only, the price per Share to be paid pursuant to the Offer
multiplied by the number of Shares into which such Convertible Preferred Stock
may then be converted, and (b) in the case of the Company Warrants only, (i) the
excess, if any, of (x) the price per Share to be paid pursuant to the Offer over
(y) the exercise price per Share of the Company Warrants, multiplied by (ii) the
number of Shares for which such Company Warrants may then be exercised.
Notwithstanding anything to the contrary contained in the Merger Agreement,
payment shall, at Parent's request, be withheld in respect of any Convertible
Preferred Stock or Company Warrants with respect to any holder until all
necessary consents with respect to such holder are obtained.
Appraisal Rights. Holders of Shares do not have appraisal rights as a
result of the Offer. If the Merger is consummated, however, persons who hold
Shares at that time would have the right to appraisal of their Shares in
accordance with Section 262 of the DGCL (which is reproduced in full in Schedule
II hereto). Such appraisal rights, if the statutory procedures are complied
with, would result in a judicial determination of the "fair value" of the Shares
owned by such holders. Any such judicial determination of the fair value of the
Shares could be based upon considerations other than or in addition to the price
paid in the Offer and the Merger and the market value of the Shares, including
asset values, the investment value of the Shares and any other valuation
considerations generally accepted in the investment community. In Weinberger v.
UOP, Inc., the Delaware Supreme Court stated that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. The Weinberger court also noted that under Section 262 of
the DGCL, fair value is to be determined "exclusive of any element of value
arising from the accomplishment or expectation of the merger." In Cede & Co. v.
Technicolor, Inc., however, the Delaware Supreme Court stated that, in the
context of a two-step cash merger, "to the extent that value has been added
following a change in majority control before cash-out, it is still value
attributable to the going concern," to be included in the appraisal process. As
a consequence of the foregoing, the fair value determined for Shares could be
the same as or more or less than the value of the consideration per Share to be
paid pursuant to the Offer or the Merger, and payment of such consideration
would take place subsequent to payment pursuant to the Offer.
Several recent decisions by the Delaware courts have held that a
substantial stockholder of a corporation involved in a merger has a fiduciary
duty to the other stockholders which requires that the merger be fair to such
other stockholders. In determining whether a merger is fair to minority
stockholders, the Delaware courts have considered, among other things, the type
and amount of consideration received by the stockholders and whether there was
fair dealing among the parties. The Delaware Supreme Court indicated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that ordinarily the
remedy available to stockholders in a merger that is found not to be "fair" to
minority stockholders is the right to appraisal described above or a damages
remedy based on essentially the same principles.
No provision has been made by the Company, the Purchaser or Parent to allow
access to the Company's files by unaffiliated stockholders or to obtain counsel
or appraisal services at the expense of the Company, the Purchaser or Parent.
FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
13. CERTAIN CONDITIONS OF THE OFFER
The Merger Agreement provides that the Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-l(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Shares after the
termination
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<PAGE> 28
or withdrawal of the Offer), to pay for any Shares tendered pursuant to the
Offer unless (a) the Minimum Tender Condition shall have been satisfied, (b) the
Financing Condition shall have been satisfied, and (c) any waiting period under
the HSR Act applicable to the purchase of Shares pursuant to the Offer and/or
Merger shall have expired or been terminated. The Merger Agreement also provides
that the Purchaser shall not be required to continue the Offer or accept for
payment or to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate or amend the Offer, if, any of the following conditions
exists:
(1) there shall have been entered in any action or proceeding before
any governmental entity of competent jurisdiction, an injunction or order,
(a) prohibiting or limiting the acquisition by Parent or the Purchaser of
any Shares, (b) restraining or prohibiting or otherwise rendering
unenforceable the consummation of the Merger or any of the other
transactions contemplated by or provisions of the Merger Agreement, (c)
prohibiting or limiting the ownership or operation by the Company of any of
its subsidiaries or of any material portion of the business or assets of
the Company or any of its subsidiaries, or compelling the Company or any of
its subsidiaries to dispose of or hold separate any material portion of the
business or assets of the Company, or any of its subsidiaries, as a result
of the Merger or any of the other transactions contemplated by the Merger
Agreement, (d) imposing limitations on the ability of Parent or the
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Shares, including, without limitation, the right to vote the Shares
purchased by the Purchaser on all matters properly presented to the
stockholders of the Company, or (e) requiring the Company, Parent or the
Purchaser to pay damages that reasonably can be foreseen, or are reasonably
likely, to result in a material adverse effect on the business, assets,
liabilities, results of operations or financial condition of the Company
and its subsidiaries taken as a whole (a "Company Material Adverse
Effect");
(2) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction that is or could reasonably
be likely to result, directly or indirectly, in any of the consequences
referred to in clauses (a) through (e) of paragraph (1) above;
(3) there shall have occurred any material adverse change, or any
development that, insofar as reasonably can be foreseen, is reasonably
likely to result in a Company Material Adverse Effect;
(4) there shall have occurred (a) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States (excluding
any coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (b) any material adverse change in the
financial markets, commodities markets or major stock exchange indices in
the United States, (c) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, or (d) a
commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States;
(5) (a) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
the Purchaser its approval or recommendation of the Offer, the Merger or
the Merger Agreement, or approved or recommended any Acquisition Proposal,
(b) the Company shall have entered into any agreement (other than a
confidentiality agreement or engagement letter with an investment bank)
with respect to any Acquisition Proposal or (c) the Board of Directors of
the Company or any committee thereof shall have resolved to do any of the
foregoing;
(6) any of the representations and warranties of the Company set
forth in the Merger Agreement that are qualified as to materiality shall
not be true and correct and any such representations and warranties that
are not so qualified shall not be true and correct in any material respect,
in each case as if such representations and warranties were made as of such
time;
(7) the Company shall have failed to perform in any material respect
any obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under the
Merger Agreement;
(8) the Merger Agreement shall have been terminated in accordance
with its terms; or
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<PAGE> 29
(9) the Purchaser, Parent and the Company (with the approval of a
majority of its Independent Directors) shall have mutually agreed that the
Purchaser shall terminate the Offer or postpone the acceptance for payment
of or payment for Shares thereunder; which, in the sole judgment of the
Purchaser or Parent, in any such case, and regardless of the circumstances
giving rise to any such condition (including any action or inaction by
Parent or any of its affiliates), makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted or waived by them, 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.
14. CERTAIN LEGAL MATTERS
Except as described in this Section 14, based on a review of publicly
available filings made by the Company with the Commission and other information
made available to Parent and the Purchaser concerning the Company and the review
of certain information furnished by the Company to the Parent, 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 of competent jurisdiction 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 14, 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; 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 13 for certain conditions to the Offer.
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, stockholders, 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
acquirer from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of the outstanding voting stock of the
corporation) unless, among other things, the corporation's board of directions
has given its prior approval to either the business combination or the
transaction that resulted in the stockholder becoming an "interested
stockholder". The Company's Board of Directors has approved the Merger Agreement
and the Purchaser's acquisition of Shares pursuant to the Offer and the
Stockholders Agreement. Therefore, Section 203 of DGCL is inapplicable to the
Merger.
The Purchaser does not believe that any other state takeover statutes
purport to apply to the Offer or the Merger, and neither the Purchaser nor
Parent has made any filings or taken any other action with respect to any other
state takeover statute or regulation. The Purchaser reserves the right to
challenge the applicability or
29
<PAGE> 30
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 otherwise might be delayed in
consummating the Offer or the Merger. In such case, the Purchaser may not be
obliged to accept for payment or pay for any Shares tendered pursuant to the
Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the purchase of Shares under the Offer may be consummated following the
expiration of a 15-calendar day waiting period following the filing by Parent of
a Notification and Report Form with respect to the Offer, unless Parent 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. Parent plans to make such a filing promptly. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 P.M., Eastern Time, on the
tenth calendar day after the date of substantial compliance by Parent 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 Parent. 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
and if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
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.
It is a condition to the obligation of the Purchaser to purchase Shares
tendered in the Offer that any waiting period under the HSR Act shall have
expired or been terminated. It is also a condition to the obligation of the
Purchaser to purchase Shares tendered in the Offer that there not be entered in
any action or proceeding before any governmental entity of competent
jurisdiction any injunction or order having the effect described in paragraph
(1) of Section 13 hereof ("Certain Conditions of the Offer") and that there not
be any statute, rule, regulation, legislation, interpretation, judgment, order
or injunction that has or could have the effect described in paragraph (2) of
Section 13 hereof ("Certain Conditions of the Offer").
15. FEES AND EXPENSES
Schroders is acting as the Dealer Manager in connection with the Offer and
as financial advisor to Parent in connection with its effort to acquire the
Company. In connection with the Offer, Parent has agreed to pay Schroders an
amount equal to 1.5% of the first $50 million, plus 1.0% of the amount above $50
million, paid by the Purchaser and Parent, in the aggregate, as consideration to
consummate the Offer and the Merger. Parent has also agreed to reimburse
Schroders (in its capacity as Dealer Manager and financial advisor) for its
reasonable out-of-pocket expenses incurred in connection with such engagement,
and to indemnify Schroders
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<PAGE> 31
and certain related persons against certain liabilities and expenses in
connection with Schroders' engagement, including certain liabilities under the
federal securities laws. Schroders is expected to render various other
investment banking and financial advisory services to Parent or its affiliates,
for which it will receive customary compensation from Parent and such
affiliates.
Georgeson & Company Inc. ("Georgeson") is acting as Information Agent in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, facsimile, telegraph and personal interviews and may request
brokers, dealers and other nominee stockholders to forward materials relating to
the Offer to beneficial owners of Shares. The Information Agent will receive
reasonable and customary compensation together with reimbursement for its
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses, including certain liabilities under the federal
securities laws.
The Purchaser has retained Wachovia Bank, N.A. ("Wachovia") to serve as the
Depositary and Paying Agent in connection with the Offer. Wachovia will receive
reasonable and customary compensation for its 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 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.
16. 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. Neither the Purchaser nor 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 is
being 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).
July 20, 1998 NW ACQUISITION CORP.
31
<PAGE> 32
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF THE PURCHASER AND PARENT
A. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name, principal business address, present principal occupation or
employment, five-year employment history and certain other information
concerning the directors and executive officers of Parent. Unless otherwise
indicated, the business address of each individual listed below is 296 Grayson
Highway, Lawrenceville, GA 30045, and the position listed is with Parent. Each
person listed is a citizen of the United States of America.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
---- ------------------------------------------------------------
<S> <C>
James W. Krause...................... Age 53; President, Chief Executive Officer and Director of
Parent since April 1994 and Chairman of the Board since June
1995. President and General Manager of the automotive and
international divisions of Sherwin-Williams Company, 1980
through April 1994.
David I. Fuente...................... Age 52; Director of Parent since April 1992. Since 1987,
Chairman and Chief Executive Officer of Office Depot, Inc.
Ronald J. Green...................... Age 50; Director of Parent since December 1990. Partner in
the accounting firm of Stephen M. Berman & Associates,
Atlanta, Georgia, since 1980.
Campbell B. Lanier, III.............. Age 47; Director of Parent since October 1990. Chairman of
the Board and Chief Executive Officer of ITC Holding
Company. Chairman, Chief Executive Officer and director of
Intercel, Inc. Director of Mindspring Enterprises, Inc. and
K&G Men's Center, Inc.
J. Smith Lanier, II.................. Age 70; Director of Parent since October 1990. Chairman and
Chief Executive Officer of J. Smith Lanier & Co., an
insurance sales company. Director of Interface, Inc. (Mr.
Lanier is the uncle of Campbell B. Lanier, III, also a
Director of Parent.)
Michael J. Boden..................... Age 50; Senior Vice President, Retail Operations and
Merchandising, of Parent, since February 1998; Vice
President, Sales and Marketing of Parent, June 1995 through
February 1998; Vice President, Store Operations, This End Up
Furniture Company, 1992 through June 1995.
Eduardo Egusquiza.................... Age 45; Senior Vice President, Information Technology, of
Parent, since March 1998; Vice President of Information
Systems and Services, Musicland Store Corporation, Inc.,
1982 through March 1998.
Mitchell Goodman..................... Age 44; General Counsel and Secretary of Parent since
September 1992 and Vice President since November 1993.
Became Senior Vice President in 1998.
Charles M. Johnson................... Age 48; Senior Vice President, Manufacturing and
Distribution, of Parent since October 1997; Vice President
and Director of Research and Development, Sherwin-Williams
Company, 1988 through October 1997.
</TABLE>
S-1
<PAGE> 33
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND FIVE-YEAR EMPLOYMENT HISTORY
---- ------------------------------------------------------------
<S> <C>
Angus C. Morrison.................... Age 41; Vice President and Corporate Controller of Parent
since February 1995, and Senior Vice President, Finance, and
Treasurer of Parent since March 1998; Controller and Senior
Financial Officer of the Soap Division of The Dial Corp.,
1993 through February 1995, Controller and Senior Financial
Officer of the Food Division of The Dial Corp., 1989 through
1992.
Robert W. Stein...................... Age 42; Vice President, Human Resources, of Parent, since
January 1993; Director of Human Resources of Parent, May
1992 through January 1993.
Patric L. Welch...................... Age 47; Vice President, Professional Services, of Parent,
since February 1997. Director, Eastern Region of Parent,
November 1994 through February 1997. District Manager of
D.O.C. Optics Corp., 1993 through November 1994. Regional
Vice President of Nu Vision, Inc., 1986 through 1993.
</TABLE>
B. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The following table
sets forth the name, principal business address, present principal occupation or
employment, five-year employment history and certain other information
concerning the directors and executive officers of the Purchaser. Unless
otherwise indicated, the business address of each individual listed below is 296
Grayson Highway, Lawrenceville, GA 30045, and the position listed is with the
Purchaser. Each person listed is a citizen of the United States of America.
<TABLE>
<S> <C>
James W. Krause...................... Age 53; Director (Chairman). President and Chief Executive
Officer of the Purchaser. President, Chief Executive Officer
and Director of Parent since April 1994 and Chairman of the
Board since June 1995. President and General Manager of the
automotive and international divisions of Sherwin-Williams
Company, 1980 through April 1994.
Mitchell Goodman..................... Age 44; Director, Senior Vice President and General Counsel.
General Counsel and Secretary of Parent since September 1992
and Vice President since November 1993. Became Senior Vice
President of Parent in 1998.
Angus C. Morrison.................... Age 41; Director, Senior Vice President, Finance and
Treasurer. Vice President and Corporate Controller of Parent
since February 1995, and Senior Vice President, Finance, and
Treasurer of Parent since March 1998.
</TABLE>
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<PAGE> 34
SCHEDULE II
The following is reproduced from Section 262 of the Delaware General
Corporation Law:
SECTION 262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this
State who holds shares of stock on the date of the making of a demand pursuant
to subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to
subsection (g) of sec. 251), 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation pursuant
to sec. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock (or depository
receipts in respect thereof) or depository receipts at the effective
date of the merger or consolidation will be either listed on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under sec. 253 of this title is not
owned by the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.
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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
S-4
<PAGE> 36
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation of any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of stock of all such stockholders. Notwithstanding
the foregoing, at any time within 60 days after the effective date of the merger
or consolidation, any stockholder shall have the right to withdraw his demand
for appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in such a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved as the Court deems advisable. The forms of the notices by mail
and by publication shall be approved by the Court, and the costs thereof shall
be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have been become
entitled to appraisal rights. The Court may require the stockholders who have
demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery
for notation thereon of the pendency of the appraisal proceedings; and if any
stockholder fails to comply with such direction, the Court may dismiss the
proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrower money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertified stock forthwith, and the case of holders of shares
represented by certificates upon the surrender
S-5
<PAGE> 37
to the corporation of the certificates representing such stock. The Court's
decree may be enforced as other decrees in the Court of Chancery may be
enforced, whether such surviving or resulting corporation be a corporation of
this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all of
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceedings in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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 stockholder of the
Company or such stockholder's broker, dealer, bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
S-6
<PAGE> 38
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below:
The Depositary for the Offer is:
WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C>
By Hand: By Mail: New York Drop:
Wachovia Bank -- Depositary Wachovia Bank -- Depositary Wachovia Bank -- Depositary
Shareholder Services Department Corporate Reorganizations c/o Boston EquiServe L.P.
Wachovia East Building, 2nd Floor P.O. Box 9061 Corporate Reorganizations, 3rd
301 North Church Street Boston, MA 02205 Floor
Winston-Salem, NC 27101 55 Broadway
New York, NY 10006
</TABLE>
<TABLE>
<S> <C>
By Overnight Courier: Facsimile for Eligible
Wachovia Bank -- Depositary Institutions: 1-781-794-6352
Corporate Reorganizations
70 Campanelli Drive To confirm fax only: 1-781-848-0505
Braintree, MA 02184
</TABLE>
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 respective telephone
numbers and locations 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:
(GEORGESON & COMPANY INC. LOGO)
Wall Street Plaza, 30th Floor
88 Pine Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
The Dealer Manager for the Offer is:
SCHRODER & CO. INC.
Equitable Center
787 Seventh Avenue
New York, New York 10019
(212) 492-6000
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
NEW WEST EYEWORKS, INC.
PURSUANT TO OFFER TO PURCHASE
DATED JULY 20, 1998
BY
NW ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
NATIONAL VISION ASSOCIATES, LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT EASTERN
TIME, ON MONDAY, AUGUST 17, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
SHARES TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
The Depositary for the Offer is:
WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C>
By Hand: By Mail: New York Drop:
Wachovia Bank -- Depositary Wachovia Bank -- Depositary Wachovia Bank -- Depositary
Shareholder Services Department Corporate Reorganizations c/o Boston EquiServe L.P.
Wachovia East Building, 2nd Floor P.O. Box 9061 Corporate Reorganizations, 3rd
301 North Church Street Boston, MA 02205 Floor
Winston-Salem, NC 27101 55 Broadway
New York, NY 10006
</TABLE>
<TABLE>
<S> <C>
By Overnight Courier: Facsimile for Eligible
Wachovia Bank -- Depositary Institutions: 1-781-794-6352
Corporate Reorganizations
70 Campanelli Drive To confirm fax only: 1-781-848-0505
Braintree, MA 02184
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE
INDICATED ON PAGE 5 BELOW AND COMPLETE AND SIGN THE SUBSTITUTE FORM W-9 PROVIDED
ON PAGE 6.
THE INSTRUCTIONS BEGINNING ON PAGE 7 SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to an account maintained by the Depositary at The Depository
Trust Company or the Philadelphia Depository Trust Company (each, a "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 2 of the
Offer to Purchase. Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders", and other stockholders who
deliver Shares are referred to herein as "Certificate Stockholders".
Stockholders 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 procedures set forth in Section 2 of
the Offer to Purchase. See Instruction 2.
<PAGE> 2
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
-----------------------------------------------------------------------------
Check Box of Book-Entry Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
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):
-----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------------------------------------------------------------
Name of Institution that Guaranteed Delivery:
----------------------------------------------------------------------------
If delivered by book-entry transfer, check box of applicable Book-Entry
Transfer Facility:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number:
-----------------------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------------------------------
2
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
BOX A
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH SIGNED LIST, IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------------
NUMBER
CERTIFICATE SHARES EVIDENCED OF SHARES
NUMBER(S) BY CERTIFICATE(S)* TENDERED**
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed if Shares are tendered by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by any certificate(s) delivered to the
Depositary are being tendered. See Instruction 4.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to NW Acquisition Corp., a Delaware
corporation (the "Purchaser"), the above described shares of Common Stock, par
value $.01 per share (the "Shares"), of New West Eyeworks, Inc., a Delaware
corporation (the "Company"), pursuant to the Purchaser's offer to purchase all
outstanding Shares at the price set forth in the Offer to Purchase dated July
20, 1998 (the "Offer to Purchase"), net to the seller in cash, in accordance
with the terms and conditions of 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.
Upon the terms of the Offer, and 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 July 20, 1998) 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 a 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 represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all Shares or other securities or rights issued or issuable
in respect of such Shares on or after July 20, 1998), and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good 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).
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 irrevocably appoints James W. Krause, Angus C.
Morrison and Mitchell Goodman, 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 stockholders 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 otherwise to 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 July 20, 1998). 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.
3
<PAGE> 4
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described 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.
Unless otherwise indicated herein in Box B -- "Special Payment
Instructions", please issue payment of 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 in Box C -- "Special Delivery
Instructions", please deliver payment of 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". If Box B -- "Special Delivery
Instructions" or Box C -- "Special Payment Instructions" is completed, please
follow the instructions therein with respect to payment of the purchase price
and/or delivery of such payment or other items, as appropriate, in the name of
and to the person or persons so indicated. Unless otherwise indicated in Box
B -- "Special Payment Instructions", in the case of a book-entry delivery of
Shares, please credit the account maintained at the Book-Entry Transfer Facility
indicated above 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.
------------------------------------------------------------
BOX B
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) 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
a Book-Entry Transfer Facility other than that 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 set forth below.
Check appropriate box:
[ ] The Depositary Trust Company
[ ] Philadelphia Depository Trust Company
------------------------------------------------------------
------------------------------------------------------------
BOX C
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)
------------------------------------------------------------
4
<PAGE> 5
- --------------------------------------------------------------------------------
IMPORTANT
SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 AT THE BACK OF THIS LETTER OF
TRANSMITTAL)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
SIGNATURE(S) OF SHAREHOLDER(S)
Dated:
---------------------, 1998.
(Must be signed by registered holder(s) exactly as name(s) appear(s)
on stock certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.)
Name(s)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title)
--------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
(Area Code and Telephone Number)
--------------------------------------------------------------------------
(HOME)
-------------------------------------------------------------------------------
(BUSINESS)
(Tax Identification or Social Security Number)
--------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW
Authorized Signature
--------------------------------------------------------------------------
Name
--------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address:
--------------------------------------------------------------------------
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Name of Firm
--------------------------------------------------------------------------
Dated:
---------------------------------, 1998
Area Code and Telephone Number of Firm
------------------------------------------------------------------------------
Signature(s) Guaranteed:
IN CERTAIN CIRCUMSTANCES, SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE
INSTITUTION (BANKS, SAVINGS AND LOAN ASSOCIATIONS AND BROKERAGE HOUSES
WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM). SEE
INSTRUCTIONS 1 AND 5.
- --------------------------------------------------------------------------------
5
<PAGE> 6
TO BE COMPLETED BY ALL TENDERING STOCKHOLDERS
(SEE INSTRUCTION 9)
PAYER'S NAME: WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Social security number
FORM W-9 PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW OR ------------------------
Employer identification number
--------------------------------------------------------------------------------------
Department of the Treasury
Internal Revenue Service
--------------------------------------------------------------------------------------
PAYER'S REQUEST FOR
TAXPAYER CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT
IDENTIFICATION THE INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND
NUMBER (TIN) COMPLETE.
PART 2 --
CHECK HERE IF YOU
ARE AWAITING YOUR
SIGNATURE DATE TIN [ ]
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENT 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.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECKED THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office, or (b) I intend to mail or deliver an application
in the near future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, thirty-one percent (31%) of
all reportable issuances made to me will be withheld until I provide such
number.
<TABLE>
<S> <C>
- ------------------------------------------------------------ ------------------------------------------
SIGNATURE DATE
</TABLE>
- --------------------------------------------------------------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURE. 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 a 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 Box B -- "Special Delivery
Instructions" or Box C -- "Special Payment Instructions" contained herein, or
(b) if such Shares are tendered for the account of (i) a firm that is a member
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc., (ii) a commercial bank or trust company having an
office or correspondent in the United States or (iii) 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 stockholders either if certificates are to be forwarded herewith or if
delivery of Shares is to be made pursuant to the procedures for book-entry
transfer set forth in Section 2 of the Offer to Purchase. For a stockholder
validly to 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 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 procedures for book-entry transfer set
forth herein and a Book-Entry Confirmation must be received by the Depositary
prior to the Expiration Date or (b) the tendering stockholder must comply with
the guaranteed delivery procedures set forth below and in Section 2 of the Offer
to Purchase.
Stockholders 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 procedures for book-entry transfer prior to the
Expiration Date, may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, such tender must be made by or through an Eligible Institution; 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 the certificates for all physically delivered Shares
(or a Book-Entry Confirmation with respect to all Shares tendered by book-entry
transfer in the Depositary's account at a Book-Entry Transfer Facility), as well
as a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees and any other documents required
by this Letter of Transmittal, must be received by the Depositary within three
Nasdaq Stock Market 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 STOCKHOLDER, AND
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, THEN 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 stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), 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.
4. PARTIAL TENDERS (APPLICABLE TO CERTAIN STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted 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
7
<PAGE> 8
Transmittal, as soon as practicable after the expiration 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 of the Shares
tendered hereby, the signature must correspond with the name 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 trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed 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. 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. 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 person 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. 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.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If payment of the purchase
price 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 payment of the purchase price 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
above, then either or both of Box B and Box C, as appropriate, in this Letter of
Transmittal should be completed. Any stockholder(s) delivering Shares by
book-entry transfer may request that Shares not accepted for payment be credited
to such account maintained at a Book-Entry Transfer Facility as such
stockholder(s) may designate.
7A. LOST OR DESTROYED CERTIFICATE(S). If any stock certificate for Shares
you desire to tender has been lost, stolen or destroyed, you should immediately
notify the Depositary and the Information Agent IN WRITING. Your letter to the
Depositary may be forwarded along with your properly completed Letter of
Transmittal. Once written notification of the loss is received by the
Information Agent, the Information Agent will assist you with contacting the
Company's transfer agent in order to arrange for completion of an affidavit of
loss and indemnity agreement, in order to have the certificate replaced. In the
alternative, you may contact the Company's transfer agent directly to make those
arrangements yourself. In any event, a tender of the Shares will not be valid
until any such missing certificate has been replaced and delivered to the
Depositary.
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.
8
<PAGE> 9
9. FEDERAL TAX WITHHOLDING. Under federal income tax law, the Depositary
is required to file a report with the Internal Revenue Service ("IRS")
disclosing the payment being made to tendering stockholders pursuant to the
Offer. Federal law also requires each such stockholder or transferee, as the
case may be) to provide the Depositary with a correct Taxpayer Identification
Number ("TIN") on a Substitute Form W-9, as set forth in the box on page 6
hereof, and certify under penalties of perjury that such number is correct. If
the Depositary is not provided with the correct TIN, such person may be subject
to the penalties described under "Penalties" in the Guidelines for Certification
of Taxpayer Identification Number (the "Guidelines") that are included with this
Letter of Transmittal. In addition, failure to provide a TIN to the Depositary
may result in imposition of backup withholding. If the person is an individual,
his or her TIN is his or her social security number. The Guidelines can assist
in determining the correct TIN if the person is not an individual. The TIN
should be included in Part 1 of the Substitute Form W-9 provided below.
If backup withholding applies to a person because of a failure to provide a
TIN, the Depositary is required to withhold 31% of any payment otherwise to be
made to the payee. Backup withholding is not an additional federal income tax.
Rather, the federal income tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If backup withholding
results in an overpayment of taxes, a refund may be obtained by filing a tax
return with the IRS. The Depositary cannot refund amounts withheld by reason of
backup withholding.
The box in Part 2 of the Substitute Form W-9 may be checked if the person
has not been issued a TIN, but the person must have either applied for one or
intend to apply for one in the near future. If the box in Part 2 is checked,
then the box entitled "Certificate of Awaiting Taxpayer Identification Number"
must be completed. If the box in Part 2 is checked and the Depositary is not
provided with a TIN within 60 days, the Depositary will withhold 31% of the
payment otherwise due until a properly certified TIN is provided to the
Depositary.
Exempt stockholders (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, that stockholder must submit a statement, signed under penalties of
perjury, certifying to that individual's exempt status. Such statements can be
obtained from the Depositary.) See the accompanying "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions. Stockholders should consult their tax advisors as to
their qualification for exemption from backup withholding and the procedure for
obtaining such exemption.
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 or the Dealer Manager at their respective addresses set forth
below. Questions or requests for assistance may also be directed to the
Information Agent or the Dealer Manager.
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.
9
<PAGE> 10
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:
(GEORGESON & COMPANY INC LOGO)
Wall Street Plaza, 30th Floor
88 Pine Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
The Dealer Manager for the Offer is:
SCHRODER & CO. INC.
Equitable Center
787 Seventh Avenue
New York, New York 10019
(212) 492-6000
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
NEW WEST EYEWORKS, INC.
PURSUANT TO OFFER TO PURCHASE
DATED JULY 20, 1998
BY
NW ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
NATIONAL VISION ASSOCIATES, LTD.
(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
$.01 per share (the "Shares"), of New West Eyeworks, Inc., a Delaware
corporation (the "Company"), are not immediately available, or if the procedures
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 telegram, facsimile transmission or mail, 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:
WACHOVIA BANK, N.A.
<TABLE>
<S> <C> <C>
By Hand: By Mail: New York Drop:
Wachovia Bank -- Depositary Wachovia Bank -- Depositary Wachovia Bank -- Depositary
Shareholder Services Department Corporate Reorganizations c/o Boston EquiServe L.P.
Wachovia East Building, 2nd Floor P.O. Box 9061 Corporate Reorganizations, 3rd
301 North Church Street Boston, MA 02205 Floor
Winston-Salem, NC 27101 55 Broadway
New York, NY 10006
</TABLE>
<TABLE>
<S> <C>
By Overnight Courier: Facsimile for Eligible
Wachovia Bank -- Depositary Institutions: 1-781-794-6352
Corporate Reorganizations
70 Campanelli Drive To Confirm Fax Only: 1-781-848-0505
Braintree, MA 02184
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY 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> 2
Ladies and Gentlemen:
The undersigned hereby tenders to NW Acquisition Corp., a Delaware
corporation (the "Purchaser") and wholly-owned subsidiary of National Vision
Associates, Ltd., a Georgia corporation, upon the terms and subject to the
conditions set forth in the Purchaser's Offer to Purchase, dated July 20, 1998
(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 procedures 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 ONE box if shares will be tendered by
book-entry transfer:
--------------------------------------------------------
Address(es)
[ ] The Depository Trust Company
--------------------------------------------------------
[ ] Philadelphia Depository Trust Company
--------------------------------------------------------
Zip Code
--------------------------------------------------------
Area Code and Telephone Number
Account Number ---------------------------------------
--------------------------------------------------------
Signature(s):
Dated: , 1998
--------------------------------------------
</TABLE>
THE GUARANTEE BELOW MUST BE COMPLETED.
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, and
any other documents required by the Letter of Transmittal within three Nasdaq
Stock Market trading days after the date hereof.
<TABLE>
<S> <C>
- ------------------------------------------------ ------------------------------------------------
Name of Firm Authorized Signature
- ------------------------------------------------ ------------------------------------------------
Address Title
- ------------------------------------------------ ------------------------------------------------
Zip Code Name: (Please Print)
- ------------------------------------------------
Area Code and Telephone No. Dated: , 1998
-----------------------------------
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE.
SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW WEST EYEWORKS, INC.
AT
$13.00 NET PER SHARE
BY
NW ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
NATIONAL VISION ASSOCIATES, LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT EASTERN
TIME, ON MONDAY, AUGUST 17, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
SHARES TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
JULY 20, 1998
To Brokers, Dealers, Banks, Trust Companies and Other Nominees:
We have been appointed by NW Acquisition Corp., a Delaware corporation (the
"Purchaser") and wholly-owned subsidiary of National Vision Associates, Ltd., a
Georgia corporation ("Parent"), to act as Information Agent in connection with
the Purchaser's offer to purchase all outstanding shares of Common Stock, par
value $.01 per share (the "Shares"), of New West Eyeworks, Inc., a Delaware
corporation (the "Company"), at $13.00 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 July 20, 1998 (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;
2. Letter of Transmittal, to be used by stockholders of the Company
accepting the Offer;
3. The Letter to Stockholders of the Company from the Chairman of the
Board 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, EASTERN TIME, ON MONDAY,
AUGUST 17, 1998, UNLESS EXTENDED.
<PAGE> 2
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares that would represent at least 51% of the outstanding Shares as determined
immediately prior to the consummation of the Offer.
The Board of Directors of the Company has, by unanimous vote, approved the
Offer and the Merger (as defined below) and determined that the terms of the
Offer and the Merger are fair to, and in the best interests of, the stockholders
of the Company and recommends that stockholders 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 July 13, 1998 (the "Merger Agreement"), among Parent, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged with
and into the Company, or, at the election of Parent, unless such election would
have a material adverse effect on the financial interests of the Company and its
stockholders, the Company will be merged with and into the Purchaser (in either
case, the "Merger"). In the Merger, each outstanding Share (other than Shares
held by the Company's treasury or by any subsidiary of the Company, Shares owned
by Parent, the Purchaser or any other subsidiary of Parent, or Shares held by
any stockholders who are entitled to (and who properly do) exercise appraisal
rights under Delaware law) will be converted into the right to receive $13.00
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
described 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.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than 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 us, as the Dealer Manager for the Offer, at our address or
telephone number set forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
SCHRODER & CO. 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
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW WEST EYEWORKS, INC.
AT
$13.00 NET PER SHARE
BY
NW ACQUISITION CORP.
A WHOLLY-OWNED SUBSIDIARY
OF
NATIONAL VISION ASSOCIATES, LTD.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT EASTERN
TIME, ON MONDAY, AUGUST 17, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE").
SHARES TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION DATE.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated July 20,
1998 (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 NW Acquisition Corp., a Delaware corporation
(the "Purchaser") and wholly owned subsidiary of National Vision Associates,
Ltd., a Georgia corporation ("Parent"), to purchase all outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of New West Eyeworks,
Inc., a Delaware corporation (the "Company"), at $13.00 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 Stockholders of the Company from the
Chairman of the Board 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 TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all 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 $13.00 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
the terms of the Offer and the Merger are fair to, and in the best
interests of, the stockholders of the Company and recommends that the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is being made for all outstanding Shares.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of July 13, 1998 (the "Merger Agreement"), among Parent,
the Purchaser and the Company pursuant to which, following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the
Purchaser will be merged with and into the
<PAGE> 2
Company, or, at the election of Parent, unless such election would have a
material adverse effect on the financial interests of the Company and its
stockholders, the Company will be merged with and into the Purchaser (in
either case, the "Merger"). In the Merger, each outstanding Share (other
than Shares held by the Company's treasury or by any subsidiary of the
Company, Shares owned by Parent, the Purchaser or any other subsidiary of
Parent, or Shares held by any stockholders who are entitled to (and who
properly do) exercise appraisal rights under Delaware law) will be
converted into the right to receive $13.00 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, Parent's receipt
of funds from a contemplated financing in an amount sufficient to
consummate the Offer and the other transactions contemplated by the Merger
Agreement, and there being validly tendered and not withdrawn prior to the
expiration of the Offer that number of Shares that would represent at least
51% of the outstanding Shares as determined immediately prior to the
consummation of the Offer.
6. The Offer and withdrawal rights will expire at 12:00 Midnight,
Eastern Time, on Monday, August 17, 1998, 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 described 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 to its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
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 not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW WEST EYEWORKS, INC.
BY
NW ACQUISITION CORP.
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated July 20, 1998, of NW Acquisition Corp., a Delaware corporation
(the "Purchaser") and wholly owned subsidiary of National Vision Associates,
Ltd., a Georgia corporation, and the related Letter of Transmittal, relating to
the shares of Common Stock, par value $.01 per share ("Shares"), of New West
Eyeworks, Inc., a Delaware corporation.
You are instructed to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, on the terms and conditions set forth in
such Offer to Purchase and the related Letter of Transmittal.
Number of Shares to be Tendered:*
- --------------------------------------------------------------------------------
Account Number
- --------------------------------------------------------------------------------
Date
- --------------------------------------------------------------------------------
SIGN HERE
Signature(s)
- --------------------------------------------------------------------------------
Please type or print name(s) here
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
- ---------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all your Shares held by us
for your account are to be tendered.
3
<PAGE> 1
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 one
hyphen: i.e. 00-0000000. The table below will help determine the number to give
the payer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE NAME AND
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(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 minor The minor(2)
(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 for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or valid
trust under State law
8. Sole proprietorship account The owner(4)
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -----------------------------------------------------------
<C> <S> <C>
9. A valid trust, estate, or The legal entity (Do
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, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered nominee The broker or nominee
- -----------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's SSN.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN (if you have
one).
(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> 2
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. You can get Forms SS-4 from the IRS by calling 1-800-TAX-FORM
(1-800-829-3676).
PAYEES EXEMPT FROM BACKUP WITHHOLDING
The following payees are specifically exempted from backup withholding on ALL
payments:
- An organization exempt from tax under section 501(a) of the Internal Revenue
Code (the "Code"), an individual retirement plan, or a custodial account
under section 403(b)(7), if the account satisfies the requirements of
section 401(f)(2).
- The United States or any of its agencies or instrumentalities.
- A State, the District of Columbia, a possession of the United States, or any
of their political subdivisions or instrumentalities.
- A foreign government, or any of its political subdivisions, agencies or
instrumentalities.
- An international organization or any of its agencies or instrumentalities.
The following payees may be exempt from backup withholding:
- A corporation.
- A foreign central bank of issue.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A real estate investment trust.
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A common trust fund operated by a bank under section 584(a) of the Code.
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- A financial institution.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- A trust exempt from tax under section 664 or described in section 4947.
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.
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, 6041A(a),
6045, and 6050A of the Code.
PRIVACY ACT NOTICE.--Section 6109 of the Code 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 tax returns. Payers must generally withhold 31%
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 correct 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) 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.
(3) 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.
<PAGE> 1
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
July 20, 1998, and the related Letter of Transmittal and is being made to all
holders of Shares. 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. In any jurisdiction, the securities 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 such jurisdiction, who may be engaged by the
Purchaser for such purpose.
NOTICE OF
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
NEW WEST EYEWORKS, INC.
AT
$13.00 PER SHARE, NET
BY
NW ACQUISITION CORP.
a Wholly-Owned Subsidiary
of
NATIONAL VISION ASSOCIATES, LTD.
NW Acquisition Corp., a Delaware corporation (the "Purchaser") and a
direct, wholly-owned subsidiary of National Vision Associates, Ltd., a Georgia
corporation ("Parent"), is offering to purchase all outstanding shares of Common
Stock, par value $.01 per share (the "Shares"), of New West Eyeworks, Inc., a
Delaware corporation (the "Company"), at $13.00 per Share, net to the seller in
cash (the "Offer Price"), upon the terms and subject to the conditions set forth
in the Offer to Purchase dated July 20, 1998, and the related Letter of
Transmittal (which together, with any amendments or supplements thereto,
constitute the "Offer").
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON MONDAY, AUGUST 17, 1998, UNLESS EXTENDED (THE
"EXPIRATION DATE"). SHARES TENDERED PURSUANT TO THE OFFER MAY BE
WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
- -------------------------------------------------------------------------------
<PAGE> 2
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares that would represent at least 51% of the outstanding Shares as determined
immediately prior to the consummation of the Offer (the "Minimum Tender
Condition") and Parent's receipt of funds from a contemplated financing in an
amount sufficient to consummate the transactions contemplated by the Merger
Agreement (the "Financing Condition"), which required amount is approximately
$77 million, obtaining governmental approvals and the satisfaction of certain
other terms and conditions. Parent has received a "highly confident" letter from
an investment banking firm with respect to, and has initiated a transaction for,
the private placement of its high yield debt securities in an amount that would
provide sufficient funds to satisfy the Financing Condition and permit the
Purchaser to accept and pay for Shares pursuant to the Offer. If the Purchaser
terminates (and does not consummate) the Offer in reliance upon the Financing
Condition, then Parent must pay a termination fee to the Company equal to $2.5
million if such termination is on or prior to September 30, 1998, or $3.5
million if such termination occurs thereafter and on or prior to October 14,
1998, in either case plus certain expenses of the Company.
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of July 13, 1998 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer 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 held in the Company's treasury or by
any subsidiary of the Company, or owned by Parent, the Purchaser or any other
subsidiary of Parent or held by stockholders, if any, who are entitled to and
who properly exercise appraisal rights under Delaware law) will be converted
into the right to receive the Offer Price, without interest. Parent has also
entered into an agreement with certain stockholders of the Company (the
"Committed Stockholders") pursuant to which each Committed Stockholder has
agreed, among other things, to tender in the Offer certain Shares and securities
exercisable for or convertible into Shares owned or controlled by such Committed
Stockholder. As of July 20, 1998, such Shares of the Committed Stockholders were
equal to approximately 40.3% of the Shares on a fully-diluted basis, exclusive
of stock options.
THE BOARD OF DIRECTORS OF THE COMPANY HAS, BY UNANIMOUS VOTE, APPROVED
THE OFFER AND THE MERGER AND DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO AND IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY,
AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER
THEIR SHARES TO PURCHASER PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment and thereby purchase Shares properly tendered to the
Purchaser and not withdrawn as, if, and when the Purchaser gives oral or written
notice to Wachovia Bank, N.A. (the "Depositary") of the Purchaser's acceptance
for payment of such Shares. In all cases, 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 Offer Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Purchaser and transmitting payment to tendering stockholders. Payment
for Shares purchased pursuant to the Offer will be made only after timely
receipt by the Depositary of (a) certificates for such Shares or timely
confirmation of book-entry transfer of such Shares into the Depositary's account
at a Book-Entry Transfer Facility (as defined in the Offer to Purchase) pursuant
to the procedures 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 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 the Shares, regardless of any
delay in making such payment.
-2-
<PAGE> 3
The term "Expiration Date" means 12:00 Midnight, Eastern Time, on
Monday, August 17, 1998, unless and until the Purchaser, subject to the terms of
the Merger Agreement, 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 on which the Offer, as so extended by the Purchaser, shall expire.
The Purchaser expressly reserves the right, subject to the terms of the Merger
Agreement, at any time or from time to time, 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 such extension to the
Depositary. The Purchaser shall not have any obligation to pay interest on the
purchase price for tendered Shares if 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., Eastern 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 the
tendering stockholder to withdraw such stockholder'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, Eastern Time, on Monday, August 17, 1998 (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 and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after October
14, 1998. For a withdrawal to be effective, a written 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 such certificates, the serial
number shown on such certificates must be submitted to the Depositary and,
unless such Shares have been tendered by an Eligible Institution (as defined in
Section 2 of the Offer to Purchase), the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been delivered
pursuant to the procedures for book-entry transfer as set forth in Section 2 of
the Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the appropriate Book-Entry Transfer Facility to be
credited with the withdrawn Shares and otherwise must comply with such
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. All questions as
to the form and the validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding. None of the Purchaser, Parent, the
Depositary, the Information Agent, the Dealer Manager 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.
The Company has provided to the Purchaser its list of stockholders 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 the Shares and furnished
to brokers, dealers, banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the stockholders' list or, if applicable,
who are listed as participants in a clearing agency security position listing,
for subsequent transmittal to beneficial owners of Shares.
-3-
<PAGE> 4
The information required to be disclosed by Rule 14(d)-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 THAT 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:
GEORGESON & COMPANY, INC.
WALL STREET PLAZA
NEW YORK, NEW YORK 10005
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
SCHRODER & CO. INC.
EQUITABLE CENTER
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019
(212) 492-6000
-4-
<PAGE> 1
EXHIBIT (a)(8)
[NATIONAL VISION ASSOCIATES, LTD. LETTERHEAD]
National Vision Associates, Ltd. and New West Eyeworks, Inc. Announce
Definitive Agreement for National Vision to Acquire New West
LAWRENCEVILLE, Ga., and TEMPE, Ariz., July 14 /PRNewswire/ -- National
Vision Associates, Ltd. (Nasdaq: NVAL) and New West Eyeworks, Inc. (Nasdaq:
NEWI) announced today that they have signed a definitive agreement for National
Vision Associates, Ltd. to acquire all the outstanding stock, options, and
warrants of New West Eyeworks for $13.00 per share of common stock or
approximately $77 million in the aggregate (including approximately $2 million
of indebtedness).
To effect the transaction, National Vision Associates, Ltd. will shortly
begin a tender offer for all shares of New West Eyeworks, Inc. As part of the
definitive agreement, certain insiders (representing 40.3% of the common stock
of New West on a fully diluted basis exclusive of outstanding stock options)
have agreed to tender their shares into the offer.
The closing of the tender offer is subject to customary conditions,
including regulatory filings, as well as completion by National Vision of a
high-yield debt offering to finance the acquisition. The agreement also provides
for certain break up fees in certain circumstances if the transaction is not
consummated. The companies expect the tender offer will be completed in
September 1998.
New West Eyeworks, headquartered in Tempe, Arizona, operates 175
full-service retail optical locations throughout 13 states, including 52 vision
centers located in Fred Meyer stores. New West, which has reported positive
comparable store sales for the past 26 consecutive quarters, operates under the
Vista Optical brand (11 states) and the Lee Optical brand (2 states). New West
offers everyday low prices for quality eyewear, contact lenses and the services
of independent doctors of optometry. In addition, the company has an established
managed care business, Vista Eyecare Network. In 1997, New West reported net
sales of $49.2 million and net income of $1.5 million, or $0.31 per share. At
March 28, 1998, New West Eyeworks had total assets of $18.1 million.
(more)
<PAGE> 2
-2-
Currently, National Vision Associates operates 427 domestic retail optical
units. The addition of the 176 New West optical centers and the 290 Frame-n-Lens
optical centers (to be acquired pursuant to a previously announced transaction
that is expected to be completed in July), will bring National Vision's total
domestic operations to 893 locations, of which 334 are free-standing, 371 are in
Wal*Mart, and 188 are in other host concepts. This will further strengthen
National vision Associates' ranking (after giving effect to the Frame-n-Lens
transaction) as the second largest retail optical company in terms of domestic
locations and third in terms of domestic (pro forma) sales.
James W. Krause, chairman and chief executive officer of National Vision
Associates, stated, "We are very excited about acquiring this successful,
value-oriented optical chain. On a near-term basis, we expect the transaction to
dilute 1998 earnings between $0.08 and $0.10 per share. We also believe that, in
the long term, the combined businesses will generate significant revenue and
enhance earnings for our shareholders." Krause went on to say, "Barry Feld and
his management team at New West have done an outstanding job in positioning
their company as a premier provider of value retail optical goods and services.
We look forward to working with Barry as we integrate the New West business into
our Midwest Vision and Frame-n-Lens businesses, and thereby create a national
value branded retail optical company."
New West Eyeworks chief executive officer, Barry Feld, added, "This is a
unique situation in that the two companies have almost identical operating
structures and philosophies. I believe with this acquisition, National Vision
has clearly established itself as the premier value-oriented optical retailer in
the U.S. I am very excited to join National Vision in its continued expansion
and providing the finest eyecare and eyewear at the best value anywhere in the
country.
Ronald E. Weinberg, chairman of New West's board commented, "It has been my
intention to see New West realize its full potential both strategically and
through strong shareholder value. This transaction succeeds on both fronts. It
also enables our chain of stores to participate in the consolidation of optical
retailing and managed eyecare."
In closing, Krause said, "We expect our current operations to significantly
benefit from New West's managed care experience and business, as well as from
their existing and potential strategic alliances with managed care providers.
Other key benefits of the proposed transaction will be operating, advertising
and merchandising efficiencies as well as leveraged product buying power. Given
the unusual degree of similarity between the two companies, we expect the
combination will generate extensive revenue enhancing opportunities."
National Vision Associates, Ltd. was represented in the transaction by New
York-based Schroder & Co., Inc. New West Eyeworks, Inc. was represented by F. M.
Roberts & Co. of Los Angeles, California.
National Vision Associates, Ltd. is currently the nation's fifth largest
optical company in terms of revenues and locations including 50 freestanding
locations that operate under the trade name, Midwest Vision. The Company's
retail operations offer a full line of optical goods including spectacles,
contact lenses, prescription and non-prescription sunglasses and a full line of
optical accessories. In addition, independent doctors of optometry are available
adjacent to store locations.
(more)
<PAGE> 3
- 3 -
New West Eyeworks, Inc. is a leading retailer of specialty eyewear. the
Company's merchandising strategy centers around a "signature" value price point
for a wide selection of quality, brand name eyeglasses (frame and lenses). New
West also sells brand name contact lenses and non-prescription sunglasses and
offers customers on-site eye examinations by independent optometrists. The
stores operate under the Vista Optical brand name, other than the stores
located in Arizona and Utah, which use the Lee Optical brand name. The
Company's optical laboratories and distribution facilities are located in
Tempe, Arizona and near Portland, Oregon.
This press release contains forward-looking statements that are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties, including but not limited to, the uncertainty as to whether the
transaction discussed in this press release will be completed. Other risks and
uncertainties are detailed from time to time in both National Vision's and New
West's periodic reports filed with the Securities and Exchange Commission,
including both company's Annual Reports for 1997 on Form 10-K and first quarter
1998 reports on Form 10-Q.
SOURCE National Vision Associates, Ltd.
-0- 07/14/98
/CONTACT: Angus Morrison, Senior Vice President, CFO & Treasurer of
National Vision Associates, 770-822-4285; or Ronald E. Weinberg, Chairman of
the Board, 216-861-4540, or Barry Feld, President and CEO, 602-438-1330, both
of New West Eyeworks; or Janice J. Kuntz of Fleishman-Hillard, 404-659-4446,
for National Vision Associates/
/Web site: http://www.nationalvision.com/
(NVAL NEWI)
<PAGE> 1
EXHIBIT (C)(1)
AGREEMENT AND PLAN OF MERGER
DATED AS OF JULY 13, 1998,
BY AND AMONG
NATIONAL VISION ASSOCIATES, LTD.
NW ACQUISITION CORP.
AND
NEW WEST EYEWORKS, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I THE OFFER 2
SECTION 1.01. The Offer 2
SECTION 1.02. Company Actions 3
ARTICLE II THE MERGER 4
SECTION 2.01. The Merger 4
SECTION 2.02. Closing 4
SECTION 2.03. Effective Time 5
SECTION 2.04. Effects of the Merger 5
SECTION 2.05. Sub's Certificate of Incorporation and Bylaws 5
SECTION 2.06. Directors and Officers 5
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES 5
SECTION 3.01. Effect on Capital Stock 5
SECTION 3.02. Exchange of Certificates 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES 8
SECTION 4.01. Representations and Warranties of the Company 8
SECTION 4.02. Representations and Warranties of Parent and Sub 20
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER 21
SECTION 5.01. Conduct of Business by the Company 21
ARTICLE VI ADDITIONAL AGREEMENTS 23
SECTION 6.01. Stockholder Approval; Preparation of Proxy Statement 23
SECTION 6.02. Access to Information; Confidentiality 24
SECTION 6.03. Best Efforts; Notification 24
SECTION 6.04. Stock Plans 25
SECTION 6.05. Company Benefits 26
SECTION 6.06. Indemnification 26
SECTION 6.07. Directors 28
SECTION 6.08. Public Announcements 29
SECTION 6.09. Stockholder Litigation 29
SECTION 6.10 Acquisition Proposals 29
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 6.11. Filings; Other Action 30
SECTION 6.12. Additional Agreements 30
SECTION 6.13. Merger Certificate 31
SECTION 6.14. Provision of Funds 31
SECTION 6.15. Employment/Change of Ownership Agreements 31
SECTION 6.16. Conversion of Convertible Preferred Stock and
Exercise of Company Warrants 31
SECTION 6.17. Stockholders' Agreement to Tender 31
ARTICLE VII CONDITIONS PRECEDENT 32
SECTION 7.01. Conditions to Each Party's Obligation to Effect the Merger 32
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER 32
SECTION 8.01. Termination 33
SECTION 8.02. Effect of Termination 34
SECTION 8.03. Amendment 34
SECTION 8.04. Extension; Waiver 34
SECTION 8.05. Procedure for Termination. Amendment, Extension or Waiver 34
SECTION 8.06. Effect of Termination and Abandonment 34
ARTICLE IX GENERAL PROVISIONS 36
SECTION 9.01. Survival of Representations, Warranties and Agreements 36
SECTION 9.02. Notices 36
SECTION 9.03. Descriptive Headings 37
SECTION 9.04. Entire Agreement; Assignment 37
SECTION 9.05. Governing Law 37
SECTION 9.06. Expenses and Fees 37
SECTION 9.07. Counterparts; Effectiveness 37
SECTION 9.08. Severability; Validity; Parties in Interest 38
SECTION 9.09. Jurisdiction 38
</TABLE>
<PAGE> 4
THIS AGREEMENT AND PLAN OF MERGER, dated as of July 13, 1998 (this
"Agreement"), by and among NATIONAL VISION ASSOCIATES, LTD., a Georgia
corporation (the "Parent"), NW ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of Parent (the "Sub"), and NEW WEST EYEWORKS, INC., a
Delaware corporation (the "Company"),
RECITALS:
WHEREAS, the respective Boards of Directors of Parent and Sub have each
determined that it is advisable and in the best interest of the Parent and Sub,
respectively, to engage in a transaction whereby Parent will acquire the Company
on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of the Company has determined that it
is advisable and in the best interest of the Company and its stockholders to
engage in a transaction whereby Parent will acquire the Company on the terms and
subject to the conditions set forth in this Agreement and that the Offer and
Merger are fair to the stockholders of the Company;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the issued and outstanding
shares of Common Stock, par value $.01 per share, of the Company (the "Common
Stock"), at a price per share of Common Stock of $13.00 in cash, upon the terms
and subject to the conditions set forth in this Agreement; and the Board of
Directors of the Company has adopted resolutions approving the Offer and the
Merger and recommending that the Company's stockholders accept the Offer;
WHEREAS, the respective Boards of Directors of Parent, Sub and the
Company have approved the merger of Sub into the Company (the "Merger"), upon
the terms and subject to the conditions set forth in this Agreement, whereby
each issued and outstanding share of Common Stock not owned directly or
indirectly by Parent or the Company, except shares of Common Stock held by
persons who object to the Merger and comply with all the provisions of Delaware
law concerning the right of holders of Common Stock to dissent from the Merger
and require appraisal of their shares of Common Stock ("Dissenting
Stockholders"), will be converted into the right to receive the per share
consideration paid pursuant to the Offer; and
WHEREAS, the Company, Parent and Sub wish to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms and subject to the
conditions hereinafter set forth, and intending to be legally bound, the parties
agree as follows:
<PAGE> 5
ARTICLE I
THE OFFER
SECTION 1.01. THE OFFER. (a) Subject to the provisions of this
Agreement, as promptly as practicable but in no event later than five business
days after the date of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer. The obligation of Sub to, and of Parent to cause Sub to,
commence the Offer and accept for payment, and pay for, any shares of Common
Stock tendered pursuant to the Offer shall be subject to the terms and
conditions set forth in Exhibit A (any of which may be waived by Sub in its sole
discretion, subject to limitations imposed by applicable law). Sub expressly
reserves the right to modify the terms of the Offer, except that, without the
consent of the Company, Sub shall not (i) increase the percentage of outstanding
shares of Common Stock required to be tendered pursuant to the Minimum Tender
Condition (as defined in Exhibit A), (ii) reduce the number of shares of Common
Stock subject to the Offer, (iii) reduce the price per share of Common Stock to
be paid pursuant to the Offer, (iv) modify or add to the conditions set forth in
Exhibit A, (v) except as provided in the following sentence, extend the Offer or
(vi) change the form of consideration payable in the Offer. Notwithstanding the
foregoing, Sub may, without the consent of the Company, (u) extend the Offer for
a period of not more than 20 business days beyond the date on which the Offer
would otherwise expire if on the date of such extension any of the conditions to
Sub's obligation to purchase shares of Common Stock shall not be satisfied,
until such time as such conditions are satisfied or waived (other than an
extension in order to obtain financing pursuant to the Financing Condition (as
defined in Exhibit A) for which an extension may be made only pursuant to clause
(x) below), (w) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, (x) extend the Offer
through and including October 14, 1998 solely in order to obtain financing
pursuant to the Financing Condition, and (y) extend the Offer for any reason for
a period of not more than 10 business days beyond the latest expiration date
that would otherwise be permitted under clause (u) or (w) of this sentence.
Subject to the terms and conditions of the Offer, Sub shall, and Parent shall
cause Sub to, pay for all shares of Common Stock validly tendered and not
withdrawn pursuant to the Offer that Sub becomes obligated to purchase pursuant
to the Offer as soon as practicable after the expiration of the Offer, but no
later than as required by applicable law.
(b) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal and summary advertisement (such Schedule 14D-1 and the documents
included therein pursuant to which the offer will be made, together with any
supplements or amendments thereto, the "Offer Documents") and on such date shall
mail the Offer Documents to the Company's stockholders. The Offer Documents
shall comply as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder and, on the date filed with the SEC and
on the date first published, sent or given to the Company's stockholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances
<PAGE> 6
under which they were made, not misleading, except that no representation is
made by Parent or Sub with respect to information supplied by the Company for
inclusion in the Offer Documents. Each of Parent, Sub and the Company agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect, and each of Parent and Sub further agrees to
take all steps necessary to amend or supplement the Offer Documents and to cause
the Offer Documents as so amended or supplemented to be filed with the SEC and
to be disseminated to the Company's stockholders, in each case as and to the
extent required by applicable law. Parent and Sub agree to provide the Company
and its counsel in writing with any comments Parent, Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments. The Company agrees to share with Parent and
Sub information in its possession necessary to enable Parent and Sub to prepare
the Offer Documents.
(c) Subject to the terms and condition of the Offer, Parent shall
provide or cause to be provided to Sub on a timely basis the funds necessary to
purchase any shares of Common Stock that Sub becomes obligated to purchase
pursuant to the Offer.
SECTION 1.02. COMPANY ACTIONS. (a) The Company hereby approves of and
consents to the Offer and represents and warrants to Parent and Sub that the
Board of Directors of the Company (at a meeting duly called and held) has duly
adopted resolutions approving this Agreement, the Offer and the Merger,
determining that the terms of the Offer and the Merger are fair to, and in the
best interest of, the Company's stockholders and recommending that the Company's
stockholders accept the Offer and tender their shares pursuant to the Offer and,
if required, approve and adopt this Agreement. The Company represents and
warrants to Parent and Sub that, in connection with its consideration of this
Agreement, its Board of Directors received the written opinion of Everen
Securities, Inc. ("Everen") that the consideration to be received by the
Company's stockholders in the Offer and the Merger is fair, from a financial
point of view, to such stockholders. The Company has been or will be authorized
by Everen to include a copy of such opinion in the Offer Documents. A complete
and correct signed copy of such opinion has been delivered by the Company to the
Parent.
(b) On the date the Offer Documents are filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to
time, the "Schedule 14D-9") containing the recommendations described in
paragraph (a) and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Schedule 14D-9 shall comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder and, on the date filed with the SEC and on the date first
published, sent or given to the Company's stockholders, shall not contain any
untrue statement of a material fact or omit to state any 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, except
that no representation is made by the Company with respect to information
supplied by Parent or Sub for inclusion in the Schedule 14D-9. Each of the
Company, Parent and Sub agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
<PAGE> 7
further agrees to take all steps necessary to amend or supplement the Schedule
14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to the Company's stockholders, in each case as and
to the extent required by applicable law. The Company agrees to provide Parent
and its counsel in writing with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments. Parent and Sub agree to share with the
Company information in their possession necessary to enable the Company to
prepare the Schedule 14D-9.
(c) In connection with the Offer, the Company shall cause its transfer
agent to furnish Sub promptly with mailing labels containing the names and
addresses of the record holders of Common Stock as of a recent date and of those
persons becoming record holders subsequent to such date, together with copies of
all lists of stockholders, security position listings and computer files and all
other information in the Company's possession or control regarding the
beneficial owners of Common Stock, and shall furnish to Sub such information and
assistance (including updated lists of stockholders, security position listings
and computer files) as Sub may reasonably request in communicating the Offer to
the Company's stockholders. Subject to the requirements of applicable law, and
except for such steps as are necessary to disseminate the Offer Documents and
any other documents necessary to consummate the Merger, Parent and Sub shall
hold in confidence the information contained in any such labels, listings and
files, will use such information only in connection with the Offer and the
Merger and, if this Agreement shall be terminated, will, upon request, deliver
to the Company all copies of such information then in their possession.
ARTICLE II
THE MERGER
SECTION 2.01. THE MERGER. Upon the terms and subject to the conditions
hereof, and pursuant to Section 251 of the Delaware General Corporation Law (the
"DGCL"), Sub shall be merged with and into the Company at the Effective Time of
the Merger. Following the Merger, the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Sub in accordance with the DGCL, and the separate
corporate existence of Sub shall cease. At the election of Parent, any direct or
indirect subsidiary of Parent may be substituted for Sub as a constituent
corporation in the Merger; provided that no such substitution shall affect
Parent's obligations hereunder. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
SECTION 2.02. CLOSING. The closing of the Merger (the "Closing") shall
take place (i) at 10:00 a.m, on a date to be specified by the parties, which
(subject to satisfaction or waiver of the conditions set forth in Article VII)
shall be no later than the second business day after satisfaction or waiver of
the conditions set forth in Article VII (the "Closing Date"), at the offices
<PAGE> 8
of Kilpatrick Stockton LLP, 1100 Peachtree Street, Atlanta, Georgia, 30309, or
(ii) at such other place and/or on such other date as the parties hereto may
agree in writing.
SECTION 2.03. EFFECTIVE TIME. As soon as practicable following the
satisfaction or waiver of the conditions set forth in Article VII, the parties
shall cause a certificate of merger or other appropriate documents (in any such
case, the "Certificate of Merger") to be executed and filed in the Department of
State of the State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective (i) at the time and date of filing of the
Certificate of Merger in the Department of State of the State of Delaware or
(ii) at such other time as is agreed upon by the parties and specified in the
Certificate of Merger (such time as the Merger becomes effective is hereinafter
referred to as the "Effective Time" of the Merger).
SECTION 2.04. EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the DGCL. As of the Effective Time of the Merger, Parent shall own,
directly or indirectly, all of the issued and outstanding Common Stock of the
Surviving Corporation.
SECTION 2.05. SUB'S CERTIFICATE OF INCORPORATION AND BYLAWS. At the
Effective Time, Sub's Certificate of Incorporation and By-laws shall be the
Certificate of Incorporation and By-laws of the Surviving Corporation; except
that (i) Article First of Sub's Certificate of Incorporation shall be amended to
read "The name of the Corporation is Glasses, Inc." and (ii) such other
amendments as are necessary to effectuate the provisions of Section 6.06 hereof
shall be adopted.
SECTION 2.06. DIRECTORS AND OFFICERS. At the Effective Time of the
Merger, the persons listed on Schedule 2.06 shall become the directors and
officers of the Surviving Corporation until their successors are duly elected
and qualified.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. EFFECT ON CAPITAL STOCK. At the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock or any shares of capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each share of common stock, par
value $0.01 per share, of Sub shall be converted into and become one fully paid
and nonassessable, issued and outstanding share of common stock, par value $0.01
per share, of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT OWNED STOCK.
Each share of Common Stock issued and held immediately prior to the Effective
Time of the Merger in the Company's treasury and each share of Common Stock that
is owned by Parent, Sub or any other
<PAGE> 9
subsidiary of Parent shall automatically be canceled and retired without payment
of any consideration therefor and cease to exist.
(c) CONVERSION OF COMMON STOCK. Subject to Section 3.01(d),
each share of Common Stock issued and outstanding immediately prior to the
Effective Time of the Merger that is not owned by the Parent or Sub or any other
subsidiary of Parent (other than shares to be canceled in accordance with
Section 3.01(b)) shall be converted into the right to receive from the Surviving
Corporation in cash, without interest, the price per share of Common Stock paid
pursuant to the Offer (the "Merger Consideration"). As of the Effective Time of
the Merger, all such shares of Common Stock shall no longer be outstanding and
shall automatically be canceled and retired and shall cease to exist, and each
holder of a certificate representing any such shares of Common Stock shall cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration, without interest.
(d) SHARES OF DISSENTING STOCKHOLDERS. Notwithstanding
anything in this Agreement to the contrary, any issued and outstanding shares of
Common Stock held by a Dissenting Stockholder shall not be converted as
described in Section 3.01(c) but shall become the right to receive such
consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the laws of the State of Delaware; provided, however, that the
shares of Common Stock outstanding immediately prior to the Effective Time of
the Merger and held by a Dissenting Stockholder who shall, after the Effective
Time of the Merger, withdraw his demand for appraisal or lose his right of
appraisal, in either case pursuant to the DGCL, shall be deemed to be converted
as of the Effective Time of the Merger into the right to receive the Merger
Consideration. The Company shall give Parent (i) prompt notice of any written
demands for appraisal of shares of Common Stock received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to any
such demands. The Company shall not, without the prior written consent of
Parent, voluntarily make any payment with respect to, or settle, offer to settle
or otherwise negotiate, any such demands.
SECTION 3.02. EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Prior to the Effective Time of the Merger, Parent
shall select a bank or trust company to act as paying agent (the "Paying Agent")
for the payment of the Merger Consideration upon surrender of certificates
representing Common Stock. Unless Parent notifies the Company otherwise, the
Paying Agent will be Wachovia Bank, N.A.
(b) PARENT TO PROVIDE FUNDS. Subject to the provisions of this
Agreement, Parent shall take all steps necessary to enable and cause the
Surviving Corporation to provide to the Paying Agent on a timely basis, as and
when needed after the Effective Time of the Merger, funds necessary to pay for
the shares of Common Stock pursuant to Section 3.01.
(c) EXCHANGE PROCEDURE. As soon as reasonably practicable after the
Effective Time of the Merger, the Paying Agent shall mail to each record holder
of a certificate or certificates which immediately prior to the Effective Time
of the Merger represented outstanding shares of Common Stock (the
"Certificates") whose shares were converted into the right to receive the
<PAGE> 10
Merger Consideration pursuant to Section 3.01, (i) a notice and letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify, including instructions with respect
to lost certificates) and advising such holder of the effectiveness of the
Merger, and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by the Parent, together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereon, and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to receive in exchange
therefor the amount of cash into which the shares of Common Stock theretofore
represented by such Certificate shall have been converted pursuant to Section
3.01, and the Certificate so surrendered shall forthwith be canceled. In the
event of a transfer of ownership of Common Stock which is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 3.02, each Certificate shall be deemed at any
time after the Effective Time of the Merger to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
shares of Common Stock theretofore represented by such Certificate shall have
been converted pursuant to Section 3.01. No interest will be paid or will accrue
on the cash payable upon the surrender of any Certificate.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK. All cash paid upon the
surrender of Certificates in accordance with the terms of this Article III shall
be deemed to have been paid in full satisfaction of all rights pertaining to the
shares of Common Stock theretofore represented by such Certificates, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Common Stock which were outstanding
immediately prior to the Effective Time of the Merger. If, after the Effective
Time of the Merger, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article
III.
(e) NO LIABILITY. Any portion of the funds delivered to the Paying
Agent in accordance with Section 3.02(b) hereof and which remain unclaimed by
the former stockholders of the Company one year after the Effective Time shall
be delivered by the Paying Agent to Parent. Any former stockholders of the
Company who have not theretofore complied with this Article III shall thereafter
look only to Parent for payment of the Merger Consideration, without any
interest thereon. None of Parent, Sub, the Company or the Paying Agent or any
other person will be liable to any former holder of Common Shares for any amount
properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
<PAGE> 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as
otherwise disclosed to Parent and Sub in a letter delivered to them prior to the
execution hereof (which letter shall contain appropriate references to identify
the representations and warranties herein to which the information in such
letter relates) (the "Company Disclosure Letter"), the Company represents and
warrants to Parent and Sub as follows:
(a) ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted or presently
proposed to be conducted. The Company is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified could not reasonably be expected to have individually or in the
aggregate a material adverse effect on the business, assets, liabilities,
results of operations or financial condition of the Company and the Company
Subsidiaries, taken as a whole (a "Company Material Adverse Effect"); provided,
however, that "Company Material Adverse Effect" when used in connection with
Company or any of the Company Subsidiaries shall exclude (i) items disclosed in
the Company SEC Reports prior to the date hereof and (ii) departures of
officers, directors, consultants, employees or agents of the Company or the
Company Subsidiaries resulting from the announcement or expectation of the
transactions contemplated hereby. Prior to the date hereof, a true, correct and
complete copy of the Company's Restated Certificate of Incorporation and By-Laws
have been provided by the Company to Parent.
(b) CAPITALIZATION. The authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock and 1,140 shares of
Cumulative Preferred Stock, par value $1,000 per share (the "Senior Preferred
Stock"), 5,460 shares of Convertible 6% Cumulative Preferred Stock, par value
$1,000 per share (the "Convertible Preferred Stock"), 500,000 shares of
Preferred Stock, par value $.01 per share (the "Serial Preferred Stock" and
together with the Senior Preferred Stock and the Convertible Preferred Stock,
the "Company Preferred Shares"). As of July 1, 1998, (i) 4,887,436 shares of
Common Stock were issued and outstanding, (ii) stock options to acquire 292,500
shares of Common Stock were outstanding under all stock option plans and
agreements of the Company, (iii) warrants to acquire 156,563 shares of Common
Stock were outstanding under all warrant agreements of the Company (the "Company
Warrants"), (iv) no shares of Senior Preferred Stock were outstanding, (v) 3,960
shares of Series A Convertible Preferred Stock were outstanding and are
convertible into 471,429 shares of Common Stock, (vi) 1,500 shares of Series B
Convertible Preferred Stock were outstanding and are convertible into 178,571
shares of Common Stock and (vii) no shares of Serial Preferred Stock were
outstanding. The Company has issued no shares of Common Stock or Company
Preferred Shares, has issued no warrants and has granted no stock options since
July 1, 1998. The Company has no outstanding stock appreciation rights or stock
purchase rights. All of the issued and outstanding
<PAGE> 12
shares of Common Stock are validly issued, fully paid and nonassessable and free
of preemptive rights. Except as set forth above, as of the date of this
Agreement, there are no shares of capital stock of the Company issued or
outstanding or any options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating Company to issue,
transfer, sell, redeem, repurchase or otherwise acquire any shares of its
capital stock or securities.
(c) SUBSIDIARIES.
(i) Each of the subsidiaries of the Company (the
"Company Subsidiaries") is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate or other power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority could not
reasonably be expected to have individually or in the aggregate a Company
Material Adverse Effect. Each Company Subsidiary is duly qualified or licensed
and in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except in such jurisdictions
where the failure to be so duly qualified or licensed and in good standing could
not reasonably be expected to have individually or in the aggregate a Company
Material Adverse Effect.
(ii) The Company is, directly or indirectly, the
record and beneficial owner of all of the outstanding shares of capital stock or
membership interests of each of the Company Subsidiaries, there are no proxies
with respect to any such shares or membership interests, and no equity
securities or membership interests of any Company Subsidiary are or may become
required to be issued by reason of any options, warrants, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable or exercisable for, shares of any
capital stock or membership interests of any Company Subsidiary, and there are
no contracts, commitments, understandings or arrangements by which the Company
or any Company Subsidiary is or may be bound to issue, redeem, purchase or sell
additional shares of capital stock or membership interests of any Company
Subsidiary or securities convertible into or exchangeable or exercisable for any
such shares or membership interests. All of such shares or membership interests
so owned by the Company are validly issued, fully paid and nonassessable and are
owned by it free and clear of any claim, mortgage, deed of trust, pledge, lien,
security interest, charge, encumbrance, or similar agreement of any kind or
nature whatsoever ("Lien"), restraint on alienation, or any other restriction
with respect to the transferability or assignability thereof (other than
restrictions on transfer imposed by federal or state securities laws).
(d) MATERIAL INVESTMENTS. The Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation (other than a subsidiary), partnership, joint venture or other
business association or entity which is material to the Company.
<PAGE> 13
(e) AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the
power to enter into this Agreement and to carry out its obligations hereunder
(subject only, with respect to the Merger, to the approval and adoption of this
Agreement and the transactions contemplated hereby by the holders of at least
fifty percent (50%) of the outstanding shares of Common Stock entitled to vote
in accordance with the DGCL and the Company's Restated Certificate of
Incorporation and By-Laws). The execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by the Company's Board of
Directors and, except for the approval of its stockholders (if required under
applicable law), no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or the transactions contemplated hereby.
Subject to the foregoing, this Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding agreement of
the Company, enforceable against the Company in accordance with its terms. The
Company has taken all action necessary so that the restrictions set forth in
Section 203 of the DGCL will not and do not apply to the Merger.
(f) CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act of 1933, as amended (the
"Securities Act"), the Exchange Act (the HSR Act, Securities Act and Exchange
Act, collectively, the "Governmental Requirements), state or foreign laws
relating to takeovers, if applicable, state securities or blue sky laws, and the
filing of the Certificate of Merger, no filing with, and no permit,
authorization, consent or approval of, any court, tribunal or Governmental
Person is necessary for the execution, delivery and performance of this
Agreement by the Company of the transactions contemplated by this Agreement.
Neither the execution, delivery and performance of this
Agreement by the Company, nor the consummation by the Company of the
transactions contemplated hereby, nor compliance by the Company with any of the
provisions hereof, will (i) conflict with or result in any breach of any
provisions of the Restated Certificate of Incorporation or By-Laws of Company or
the Certificate or Articles of Incorporation, as the case may be, or By-Laws of
any of the Company Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default under
(or give rise to any right of termination, cancellation, vesting, payment,
exercise, acceleration, suspension or revocation), any of the terms, conditions
or provisions of any note, bond, mortgage, deed of trust, security interest,
indenture, lease, license, contract, agreement, insurance policy, plan or other
instrument or obligation to which the Company or any of the Company Subsidiaries
is a party or by which any of them or any of their properties or assets may be
bound or affected, (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, any of the Company Subsidiaries or
any of their properties or assets, (iv) result in the creation or imposition of
any Lien on any asset of the Company or any Company Subsidiary or (v) cause the
suspension, termination or revocation of any certificates of need,
accreditation, registrations, licenses, permits and other consents or approvals
of Governmental Persons, except in the case of clauses (ii), (iii), (iv) and (v)
for violations, breaches, defaults, terminations, cancellations, accelerations,
creations, impositions, suspensions or revocations which could not reasonably be
expected to have individually or in the aggregate a Company Material Adverse
Effect. "Governmental Person"
<PAGE> 14
means any governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, agency, bureau, body or entity of the United States
of America or of any state, county, municipality or other political subdivision
located therein.
(g) COMPANY SEC REPORTS. Exclusive of the exhibits thereto,
the Company has delivered to Parent true and complete copies of each
registration statement, periodic and other reports and information or proxy
statements, including, without limitation, its Annual Reports to Stockholders
incorporated in material part by reference in certain of such reports, in the
form (including any amendments thereto) required to be filed with the SEC since
January 1, 1997 (collectively, the "Company SEC Reports"). As of the respective
dates the Company SEC Reports were filed or, if any such Company SEC Report was
amended or supplemented, as of the date such amendment or supplement was filed,
each of the Company SEC Reports (i) complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act, and the
rules and regulations promulgated thereunder, and (ii) 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. Each of the
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company (including any related notes and schedules)
included (or incorporated by reference) in its Annual Reports on Form 10-K for
each of the fiscal years ended December 27, 1997, and December 28, 1996 and its
Quarterly Reports on Form 10-Q for all interim periods subsequent to December
27, 1997 were prepared based upon and are consistent with the books and records
of the Company and the Company Subsidiaries (which books and records are correct
and complete in all material respects) and fairly present, in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated in the notes thereto), the consolidated financial
position of the Company as of its date and the consolidated results of
operations and changes in financial position for the period then ended (subject
to normal year-end adjustments in the case of any unaudited interim financial
statements).
(h) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 27,
1997 (the "Company Financial Statement Date"), except as set forth in the SEC
Reports, the Company and the Company Subsidiaries have in all material respects
conducted their business in the ordinary course consistent with past practices
and there has not occurred: (i) any Company Material Adverse Effect; (ii) any
amendments or changes in the Restated Certificate of Incorporation or By-Laws of
the Company; (iii) any sale of, or material pledge of or material encumbrance
upon, property of the Company with a value in excess of $250,000; (iv) any
material change by the Company in its accounting methods, principles or
practices except as required by any change in GAAP or as a result of a change in
law; or (v) any material revaluation by Company of any of its assets, including,
without limitation, writing down the value of inventory or writing off notes or
accounts receivable other than in the ordinary course of business.
(i) LITIGATION. Except for litigation disclosed in the Company
SEC Reports, there is no suit, action or proceeding (whether at law or equity,
before or by any federal, state or foreign commission, court, tribunal, board,
agency or instrumentality, or before any arbitrator) pending or, to the
knowledge of the Company, threatened against or affecting the Company or
<PAGE> 15
any of the Company Subsidiaries, nor is there any judgment, decree, injunction,
rule or order of any court, tribunal, arbitrator or Governmental Person
outstanding against the Company or any of the Company Subsidiaries which could
reasonably be expected to have any such effect.
(j) ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
or obligations which are accrued or reserved against in the Company's financial
statements (or reflected in the notes thereto) included in the SEC Reports or
which were incurred after the Company Financial Statement Date in the ordinary
course of business and consistent with past practices, the Company and the
Company Subsidiaries do not have any material liabilities or obligations
(whether absolute, accrued, contingent or otherwise).
(k) NO DEFAULT. Neither the Company nor any of the Company
Subsidiaries is in violation or breach of, or default under (and no event has
occurred which with notice or the lapse of time or both would constitute a
violation or breach of, or a default under) any term, condition or provision of
(i) its Restated Certificate of Incorporation or By-Laws, (ii) any note, bond,
mortgage, deed of trust, security interest, indenture, license, agreement, plan,
contract, lease, insurance policy, commitment or other instrument or obligation
to which the Company or any of the Company Subsidiaries is a party or by which
they or any of their properties or assets may be bound or affected, (iii) any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company or any of the Company Subsidiaries or any of their properties or assets,
or (iv) any license, permit and other consent or approval of Governmental
Persons, except in the case of clauses (ii), (iii) and (iv) above for breaches,
defaults or violations which could not reasonably be expected to have
individually or in the aggregate a Company Material Adverse Effect.
(l) TAXES.
(A) The Company and each of the Company Subsidiaries
has (i) timely filed (or has had timely filed on its behalf) or will cause to be
timely filed all material Tax Returns required by applicable law to be filed by
any of them for tax years ended prior to the date of this Agreement and all such
Tax Returns and amendments thereto are or will be true, complete, and correct in
all material respects, (ii) paid (or has had paid on its behalf) all Taxes due
or has properly accrued or reserved for all such Taxes for such periods and
(iii) accrued for all Taxes for periods commencing after the periods covered by
such Tax Returns and ending prior to the date hereof. Neither the Company nor
any Company Subsidiary is currently the beneficiary of any extension of time
within which to file any tax return.
(B) There are no material liens for Taxes upon the
assets of the Company or any of the Company Subsidiaries, except liens for taxes
not yet due.
(C) There are no material deficiencies or adjustments
for Taxes that have been proposed or assessed by any Tax Authority against the
Company or any of the Company Subsidiaries and which remain unpaid. There is no
dispute or claim concerning any liability for Taxes of the Company or any
Company Subsidiary, and no Audit of the aforesaid Tax Returns is currently
underway or threatened.
<PAGE> 16
(D) Neither the Company nor any Company Subsidiary
has any all material Tax sharing, Tax indemnity, or similar agreements to which
the Company or any of the Company Subsidiaries is a party, is bound by, or has
any obligation or liability for Taxes.
(E) The Company and the Company Subsidiaries have not
paid, and do not expect to pay, in any taxable year commencing on or after
December 30, 1995, remuneration that would result in a disallowance of any
material amount of tax deductions under section 162(m) of the Internal Revenue
Code of 1986, as amended, and any regulations or published rulings promulgated
or issued thereunder (the "Code"). There are no changes in the tax accounting
methods subject to section 481(a) of the Code which have an ongoing material
effect on Company or any of the Company Subsidiaries. No "consent" within the
meaning of section 341(f) of the Code has been filed with respect to the Company
or any of the Company Subsidiaries.
(F) As used herein, (i) "Audit" shall mean any audit,
assessment of taxes, other examination by any Tax Authority, proceeding or
appeal of such proceeding relating to Taxes, (ii) "Taxes" shall mean all
Federal, state, local and foreign taxes, and other assessments of a similar
nature (whether imposed directly or through withholding and whether or not shown
on any tax return), including any interest, additions to tax, or penalties
applicable thereto, (iii) "Tax Authority" shall mean the Internal Revenue
Service and any other domestic or foreign governmental authority responsible for
the administration of any Taxes, and (iv) "Tax Returns" shall mean all Federal,
state, local and foreign tax returns, declarations, statements, reports,
schedules, forms and information returns and any amended Tax Return relating to
Taxes.
(m) TITLE TO CERTAIN PROPERTIES; ENCUMBRANCES. The Company or
the Company Subsidiaries, as the case may be, hold (i) good and marketable title
to all real and personal property purported to be owned by them and (ii) good
leasehold title to all real and personal property purported to be leased by
them, in each case free and clear of all Liens, except for: (x) any Lien for
current Taxes not yet due and payable, and (y) Liens that could not reasonably
be expected to have individually or in the aggregate a Company Material Adverse
Effect and that otherwise do not adversely effect the value or the use by the
Company or the Company Subsidiaries, as the case may be, of the property that is
the subject of such Liens. The Company has provided Parent with copies of all
real property leases to which the Company or a Company Subsidiary is a party and
has provided to Parent a list of all real property owned or leased by the
Company or a Company Subsidiary except such leases or property which
individually or in the aggregate are immaterial. No consent by or of any party
to any such lease is required in order to consummate the transactions
contemplated by this Agreement without causing a breach or violation of or
default or increased charges under such lease.
(n) COMPLIANCE WITH APPLICABLE LAW. Each of the Company and
the Company Subsidiaries is in compliance with all applicable laws, except where
the failure to be in such compliance could not reasonably be expected to have
individually or in the aggregate a Company Material Adverse Effect.
<PAGE> 17
(o) LABOR MATTERS. Neither Company nor any of the Company
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. There is no unfair labor practice or labor arbitration proceeding
pending or, to the knowledge of the Company, threatened against the Company or
the Company Subsidiaries relating to their business, except for any such
proceedings which could not reasonably be expected to have individually or in
the aggregate a Company Material Adverse Effect. To the knowledge of the
Company, there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of the Company or any of the Company Subsidiaries, nor, does any labor
union or organization claim to represent the employees of the Company or any of
the Company Subsidiaries. There is no labor strike, dispute, slow down, work
stoppage, or lockout actually pending or, to the knowledge of the Company,
threatened against the Company or the Company Subsidiaries. The Company has
provided Parent with all collective bargaining agreements to which the Company
or any Company Subsidiary is a party or may be bound.
(p) EMPLOYEE BENEFIT PLANS; ERISA.
(A) With respect to each of the bonus, deferred
compensation, incentive compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement plan,
program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement of the Company and the Company's Subsidiaries
(the "Company Plans") in force on or after December 30, 1995, except for
multi-employer plans as defined in Section 3(37)(A) of the Employee Retirement
Income Security Act of 1974, as amended, and any regulations or published
rulings promulgated or issued thereunder ("ERISA"), the Company has heretofore
delivered to Parent true and complete copies of each of the following documents:
(i) a copy of the Company Plans (including all amendments thereto), (ii) a copy
of the annual report and actuarial report, if required under ERISA, with respect
to each of the Company Plans that is an "employee benefit plan," as that term is
defined in Section 3(3) of ERISA (the "Company ERISA Plans"), for the last two
years, (iii) a copy of the most recent Summary Plan Description, together with
each Summary of Material Modifications, required under ERISA with respect to the
Company ERISA Plans, (iv) if the Company Plans are funded through a trust or any
third party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements thereof,
and (v) the most recent determination letter received from the Internal Revenue
Service with respect to each Company ERISA Plan intended to qualify under
Section 401(a) of the Code.
(B) No liability under Title IV of ERISA has been
incurred by the Company, any Company Subsidiary or any company that is an
affiliate of the Company under ERISA (a "Company ERISA Affiliate") since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to the Company, any Company Subsidiary or
any Company ERISA Affiliate of incurring any liability under such Title (other
than liability for premiums due to the Pension Benefit Guarantee Corporation).
To the extent this representation applies to Sections 4064, 4069 or 4204 of
Title IV of ERISA, it is made not only with respect to the Company ERISA Plans
but also with respect to any employee benefit
<PAGE> 18
plan, program, agreement or arrangement subject to Title IV of ERISA to which
the Company, a Company Subsidiary or a Company ERISA Affiliate made, or was
required to make, contributions during the five-year period ending on the date
of this Agreement.
(C) With respect to each Company ERISA Plan which is
subject to Title IV of ERISA, the present value of accrued benefits under such
plan, based upon the actuarial assumptions used for financial reporting purposes
in either the most recent actuarial report prepared by such plan's actuary with
respect to such plan or in information disclosed to the Company by a
multiemployer plan as defined in Section 3(37)(A) of ERISA, did not exceed, as
of its latest valuation date, the then current value of the assets of such plan
allocable to such accrued benefits.
(D) No Company ERISA Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Company ERISA Plan ended
prior to the date of this Agreement, and all contributions required to be made
with respect thereto (whether pursuant to the terms of any Company ERISA Plan or
otherwise) on or prior to the date of this Agreement have been timely made.
(E) No ERISA Plan is a "multi-employer pension plan,"
as defined in Section 3(37)(A) of ERISA, nor is any Company ERISA Plan a plan
described in Section 4063(a) of ERISA.
(F) Except for any multiemployer plan as defined in
Section 3(37)(A) of ERISA, each of the Company Plans has been operated and
administered in all material respects in accordance with applicable laws,
including, but not limited to, ERISA and the Code except for requirements which
could not reasonably be expected to have individually or in the aggregate a
Company Material Adverse Effect.
(G) No amounts payable under the Company Plans or any
other contract, arrangement or agreement will fail to be deductible for federal
income tax purposes by virtue of Section 280G of the Code.
(H) No Company Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of the Company, any Company Subsidiary or
any Company ERISA Affiliate beyond such employees' retirement or other
termination of service, other than (i) coverage mandated by applicable law, (ii)
death benefits or retirement benefits under any "employee pension plan", as that
term is defined in Section 3(2) of ERISA, (iii) deferred compensation benefits
accrued as liabilities on the books of the Company, any Company Subsidiary or
any Company ERISA Affiliate or (iv) benefits the full cost of which is borne by
such employees or their beneficiaries.
(I) The consummation of the transactions contemplated
by this Agreement will not (i) entitle any current or former employee or officer
of the Company, any Company Subsidiary or any Company ERISA Affiliate to
severance pay, unemployment
<PAGE> 19
compensation or any other payment, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting, or increase the
amount, of any compensation due any such employee or officer.
(q) INTELLECTUAL PROPERTY. The Company and the Company
Subsidiaries, as the case may be, have the lawful right to use all intellectual
property currently used in any of their businesses, and no such use infringes
upon the lawful rights of any other person, except as could not reasonably be
expected to have individually or in the aggregate a Company Material Adverse
Effect. No person is using any intellectual property in a manner which infringes
upon the lawful rights of the Company or any Company Subsidiary, except as could
not reasonably be expected to have individually or in the aggregate in a Company
Material Adverse Effect.
(r) INSURANCE. The Company and each Company Subsidiary has
provided true and correct copies of insurance policies maintained by the Company
and Company Subsidiaries. Such policies are in full force and effect, all
premiums due on such policies have been paid, and neither the Company nor any
Company Subsidiary has received any notice of cancellation with respect hereto.
Neither the Company nor any Company Subsidiary has any obligation, liability or
indebtedness for premiums or for retroactive premium adjustments for any period
through the date hereof which obligation, liability or indebtedness could
reasonably be expected to have individually or in the aggregate a Company
Material Adverse Effect. There are no claims by the Company or any of the
Company Subsidiaries under any of the Company's insurance policies as to which
any insurance company is denying liability or defending under a reservation of
rights clause, in each case except as could not reasonably be expected to have
individually or in the aggregate a Company Material Adverse Effect.
(s) BROKERS. No broker, finder or investment banker (other
than F.M. Roberts & Company, Inc. ("F.M. Roberts & Company") and Everen) is
entitled to any brokerage, finder's fee or other fee or commission payable by
the Company in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company.
(t) CUSTOMERS AND SUPPLIERS. No customer or supplier of the
Company or any Company Subsidiary with aggregate sales to the Company and the
Company Subsidiaries in the 12-month period ending December 27, 1997 of $500,000
or more has terminated its relationship with, or materially reduced its
purchases from or sales to, as the case may be, the Company or any Company
Subsidiary. The Company does not expect that any such customer or supplier will
do so as a result of the transactions contemplated by this Agreement, except as
could not reasonably be expected to have individually or in the aggregate a
Company Material Adverse Effect.
(u) GOVERNMENTAL PERMITS. The Governmental Permits obtained by
the Company have been validly acquired, are in full force and effect and, except
as could not reasonably be expected to have individually or in the aggregate a
Company Material Adverse Effect, represent all Governmental Permits necessary
under applicable law for the Company or any Company Subsidiary to carry on its
business as now being conducted and to own, occupy or
<PAGE> 20
use its properties and assets. The Company and the Company Subsidiaries are in
compliance with all such Governmental Permits, except where the failure to so
comply could not reasonably be expected to have a Company Material Adverse
Effect. "Government Permit" means any permit, license, franchise, certificate,
authorization, approval or consent obtained from or issued by any Governmental
Person which is necessary for the Company or the Company Subsidiary to carry on
its business as now being conducted or to own, operate or use its properties and
assets.
(v) ENVIRONMENTAL MATTERS.
(A) No Hazardous Substances have been or are being
generated, used, processed, treated, stored, released, transported or disposed
of by the Company and the Company Subsidiaries, except in material compliance
with applicable Environmental Rules;
(B) to the Company's knowledge, no Hazardous
Substances are present on or under any real property owned, leased, occupied or
used by the Company or any Company Subsidiary, or in any improvement located
thereon, in quantities or at levels which require reporting or remediation under
any applicable Environmental Rule; and
(C) to the Company's knowledge, no event has occurred
and no condition exists with respect to Company or any Company Subsidiary or
their business, properties or assets which could reasonably be expected to have
individually or in the aggregate a Company Material Adverse Effect under any
applicable Environmental Rule, and neither the Company nor any Company
Subsidiary has received any notice from any Governmental Person of its intention
to impose any liability, cost or expense upon the Company under any applicable
Environmental Rule which could reasonably be expected to have individually or in
the aggregate a Company Material Adverse Effect.
As used in this Agreement, "Environmental Rule" means
any governmental rule which relates to Hazardous Substances, pollution or
protection of the environment, natural resources or public health or safety,
including without limitation any governmental rule relating to the generation,
use, processing, treatment, storage, release, transport or disposal of Hazardous
Substances and any common laws of nuisance, negligence and strict liability
relating thereto, together with all rules, regulations and orders issued
thereunder.
As used in this Agreement, "Hazardous Substance"
means any substance which constitutes, in whole or in part, a pollutant,
contaminant or toxic or hazardous substance or waste under, or the generation,
use, processing, treatment, storage, release, transport or disposal of which is
regulated by, any governmental rule, and shall specifically include without
limitation any substance which constitutes a "hazardous substance" under the
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., or a "hazardous waste" under the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., or constitutes asbestos, urea
formaldehyde, chlorinated biphenyls (polychlorinated or monochlorinated) or
petroleum products.
<PAGE> 21
(w) MATERIAL AGREEMENTS. Each contract, agreement, instrument
or document involving the payment by or to the Company or any Company Subsidiary
(whether direct or indirect, fixed or contingent) of more than $250,000 over the
term thereof (a "Material Contract"), each real property lease to which the
Company is a party, each labor agreement to which the Company is a party and
each agreement, document, instrument that creates, evidences or secures any
indebtedness of $250,000 or more of the Company or any Company Subsidiary or
pursuant to which the Company or any Company Subsidiary has guaranteed
indebtedness or other obligations of $250,000 or more, and each Company ERISA
Plan (each a "Company Material Agreement") is in full force and effect and is
enforceable in accordance with its terms. The Company or the Company Subsidiary,
as the case may be, is in compliance with each Company Material Agreement,
except, in each case, for such non-compliance that could not reasonably be
expected to have a Company Material Adverse Effect. All other parties to the
Company Material Agreements are in substantial compliance with the terms thereof
except, in each case, for such non-compliance that could not reasonably be
expected to have a Company Material Adverse Effect. Other than real and personal
property leases which require consent, the Company does not expect that the
consummation of the transactions contemplated by this Agreement will have a
material adverse effect on any Company Material Agreement or the relationship of
the parties thereto, except as could not reasonably be expected to have
individually or in the aggregate a Company Material Adverse Effect.
(x) TRANSACTIONS WITH AFFILIATES. Except as disclosed in the
Company SEC Reports or specifically excluded pursuant to the last sentence of
this subsection (x):
(A) none of the customers, suppliers, distributors or
sales representatives of the Company are Affiliates of the Company;
(B) none of the properties or assets of the Company
are owned or used by or leased to any Affiliate of the Company;
(C) no Affiliate of the Company is a party to any
agreement with the Company; and
(D) any agreement between the Company and any
Affiliate of the Company contains commercially reasonable terms and conditions.
(E) As used in this Agreement, "Affiliate" means with
respect to any person, any person who directly or indirectly controls or is
controlled by, or is under common control with, such person. As used in this
definition, the term "control" shall mean, with respect to any person, the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such person, whether through ownership of voting
securities, by contract or otherwise.
It is understood and agreed that no disclosure under
this subsection (x) is required for any of the items listed in (A) through (D)
above if disclosure thereof would not be required in any of the Company SEC
Reports.
<PAGE> 22
(y) NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Agreement, anything described
in or listed in the Company Disclosure Letter, or any other document delivered
pursuant to this Agreement, neither the Company nor any other person makes any
representation or warranty to Parent or Sub, express or implied, and the Company
and each Company Subsidiary hereby disclaims any such representation or
warranty, whether by the Company or a Company Subsidiary or any of their
respective officers, directors, employees, agents or representatives or any
other person of any document or other information. No representations,
warranties or statements of the Company contained in this Agreement or any other
document delivered pursuant to this Agreement contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
herein and therein, in light of the circumstances in which they were made, not
misleading.
(z) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in (i)
the Offer Documents, (ii) the Schedule 14D-9, or (iii) if required, the
information to be filed by the Company in connection with the Offer pursuant to
Rule 14f-1 promulgated under the Exchange Act (the "Rule 14f-1 Statement") or
any proxy or information statement will, at the respective times the Offer
Documents, the Schedule 14D-9 and the Rule 14f-1 Statement are filed with the
SEC or first published, sent or given to the Company's stockholders or, in the
case of any proxy or information statement, at the time the proxy or information
statement is first mailed to the Company's stockholders or at the time of the
meeting of the Company's stockholders held to vote on approval and adoption of
this Agreement, if necessary, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Schedule 14D-9, the Rule 14f-1 Statement and any such proxy or information
statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Parent or Sub for inclusion or incorporation by reference therein.
(aa) CERTAIN EXPENSES. The Company has previously disclosed to
Parent the Company's fee arrangements with F.M. Roberts & Company and Everen and
with the Company's other professional advisors, and such arrangements continue
and will continue in effect without alteration.
SECTION 4.02. REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB. Parent
and Sub represent and warrant to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Sub is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as it is now being
conducted or presently proposed to be conducted.
(b) AUTHORITY. Each of Parent and Sub has the power to enter
into this Agreement and to carry out its obligations hereunder. The execution,
delivery and performance of
<PAGE> 23
this Agreement by each of Parent and Sub and the consummation by each of Parent
and Sub of the transactions contemplated hereby have been duly authorized by the
Board of Directors of each of Parent and Sub and by the sole Shareholder of Sub
and, no other corporate proceedings on the part of Parent or Sub are necessary
to authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent and
Sub and constitutes a legal, valid and binding agreement of each of Parent and
Sub, enforceable against each of Parent and Sub in accordance with its terms.
(c) CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
applicable Governmental Requirements, state or foreign laws relating to
takeovers, if applicable, state securities or blue sky laws, and the filing of
the Certificate of Merger, no filing with, and no permit, authorization, consent
or approval of, any court, tribunal or Governmental Person is necessary for the
execution, delivery and performance of this Agreement by Parent or Sub of the
transactions contemplated by this Agreement. Neither the execution, delivery and
performance of this Agreement by Parent or Sub, nor the consummation by Parent
or Sub of the transactions contemplated hereby, nor compliance by Parent or Sub
with any of the provisions hereof, will (i) conflict with or result in any
breach of any provisions of the Articles or Certificate of Incorporation or
By-Laws of Parent or Sub, as the case may be, (ii) except as previously
disclosed by Parent to the Company in writing, result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation, vesting,
payment, exercise, acceleration, suspension or revocation) under, any of the
terms, conditions or provisions of any note, bond, mortgage, deed of trust,
security interest, indenture, lease, license, contract, agreement, insurance
policy plan or other instrument or obligation to which Parent or Sub is a party
or by which either of them or either of their properties or assets may be bound
or affected, (iii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or Sub or any of their properties or assets,
(iv) result in the creation or imposition of any Lien on any asset or (v) cause
the suspension, termination or revocation of any registrations, licenses,
permits and other consents or approvals of Governmental Persons, except in the
case of clauses (ii), (iii), (iv) and (v) for violations, breaches, defaults,
terminations, cancellations, accelerations, creations, impositions, suspensions
or revocations which could not reasonably be expected to have a individually or
in the aggregate a material adverse effect on the business, assets, liabilities,
results of operations or financial condition of the Parent and its subsidiaries
taken as whole (a "Parent Material Adverse Effect") or prevent the consummation
of the transactions contemplated hereby.
(d) INFORMATION SUPPLIED. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
the Offer Documents, the Schedule 14D-9, the Rule 14F-1 Statement or any proxy
or information statement will, at the respective times the Offer Documents, the
Schedule 14D-9 and the Rule 14F-1 Statement are filed with the SEC or first
published, sent or given to the Company's stockholders, or, in the case of any
proxy or information statement, at the time any proxy or information statement
is first mailed to the Company's stockholders or at the time of the meeting of
the Company's stockholders held to vote on approval and adoption of this
Agreement, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The
<PAGE> 24
Offer Documents will comply as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation or warranty is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
(e) BROKERS. No broker, investment banker, financial advisor
or other person, other than Schroder & Co. Inc. ("Parent's Investment Advisor"),
the fees and expenses of which will be paid by Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub.
(f) FINANCING. Parent has provided to the Company a complete
and correct copy of a letter from Parent's Investment Advisor as to the ability
of Parent to finance the transactions contemplated by this Agreement (the
"Highly Confident Letter"). The Highly Confident Letter is in full force and
effect.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. CONDUCT OF BUSINESS BY THE COMPANY. From the date hereof
until the Effective Time, unless Parent shall otherwise agree in writing, or
except as set forth on Schedule 5.01 of the Company Disclosure Letter, or as
otherwise contemplated by this Agreement, the Company and the Company
Subsidiaries shall conduct their business in the ordinary course consistent with
past practice and shall use their reasonable best efforts to preserve intact
their business organizations and relationships and goodwill with third parties
and to keep available the services of their present officers and key employees,
subject to the terms of this Agreement. Without limiting the foregoing and
except as otherwise provided in this Agreement, from the date hereof until the
Effective Time, without the prior written consent of Parent, which consent shall
not be unreasonably withheld:
(a) The Company will not adopt or propose any change in its
Restated Certificate of Incorporation or By-Laws;
(b) Other than the regular quarterly dividend payable on the
Convertible Preferred Stock, the Company will not, and will not permit any
Company Subsidiary to, declare, set aside or pay any dividend or other
distribution with respect to any shares of capital stock of the Company, or
contract for or effect any repurchase, redemption or other acquisition or
investment by the Company or any Company Subsidiary of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Company or any Company Subsidiary, or declare or effect any stock split,
reclassification or other change in capital structure;
<PAGE> 25
(c) The Company will not, and will not permit any Company
Subsidiary to, enter into or consummate any joint venture, partnership, or other
similar arrangement or form any other new arrangement for the conduct of its
business or acquire or enter into any agreement or letter of intent to merge or
consolidate with any other person;
(d) The Company will not, and will not permit any Company
Subsidiary to, purchase a material amount of assets or securities of any other
person, except for asset purchases in the ordinary course of business consistent
with past practice or as described in the Company Disclosure Letter;
(e) The Company will not, and will not permit any Company
Subsidiary to, sell, lease, license or otherwise surrender, relinquish or
dispose of any assets or property which are material to the Company and the
Company Subsidiaries, taken as a whole, except (x) pursuant to existing
contracts or commitments (the terms of which have been disclosed to Parent prior
to the date hereof), or (y) in the ordinary course of business consistent with
past practice;
(f) The Company will not settle any material Audit, make or
change any material Tax election or file amended Tax Returns;
(g) The Company will not issue or grant any securities or
option or warrant to acquire any securities (except pursuant to existing
obligations), enter into any amendment of any material term of any outstanding
security of the Company or of any Company Subsidiary, incur any indebtedness,
including notes payable or capital lease obligations, or guarantee obligations
of others except pursuant to existing credit facilities or arrangements, fail to
make any required contribution to any Company ERISA Plan, take any action to
amend or terminate any Company Plan, increase compensation, bonus or other
benefits payable to any employee or former employee, consultant or agent, adopt
any other plan, program, arrangement or practice providing benefits for or
compensation to or on behalf of its employees or former employees (except as
required by applicable law), or enter into any settlement or consent with
respect to any pending litigation, except in the ordinary course of business
consistent with past practice or as otherwise permitted by this Agreement;
(h) The Company will not change any method of accounting or
accounting practice, or any practice relating to the maintenance of records, by
the Company or any Company Subsidiary, except for any such required change by
GAAP;
(i) The Company will not, and will not permit any Company
Subsidiary to, agree or commit to do any of the foregoing; and
(j) except to the extent necessary to comply with the
requirements of applicable laws and regulations, the Company will not, and will
not permit any Company Subsidiary to (i) take, or agree or commit to take, any
action that would make any representation and warranty of the Company hereunder
inaccurate in any respect at, or as of any time prior to, the Effective Time or
(ii) omit, or agree or commit to omit, to take any action necessary to prevent
any such representation or warranty from being inaccurate in any respect at any
such
<PAGE> 26
time, provided, however that the Company shall be permitted to take or omit to
take such action which can (without any uncertainty) be cured at or prior to the
Effective Time.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. STOCKHOLDER APPROVAL; PREPARATION OF PROXY STATEMENT.
(a) If stockholder approval of this Agreement is required by law, the
Company will, at Parent's request, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Stockholders' Meeting") for the purpose of
approving this Agreement and the transactions contemplated by this Agreement.
The Company will, through its Board of Directors, recommend to its stockholders
approval of this Agreement and the transactions contemplated by this Agreement,
in the event a Stockholders' Meeting is required to approve the Merger.
Notwithstanding the foregoing, if Parent shall acquire such number of the
outstanding shares of Common Stock as to be able to cause the Merger to become
effective without a Stockholders' Meeting, the parties shall, at the request of
Parent, take all necessary and appropriate action to cause the Merger to become
effective without a Stockholders' Meeting in accordance with the Company's
Restated Certificate of Incorporation and Section 253 of the DGCL.
(b) If stockholder approval of this Agreement is required by law, the
Company will, at Parent's request, prepare and file a preliminary Proxy
Statement with the SEC and will use its best efforts to respond to any comments
of the SEC or its staff and to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after such filing. The Company
will notify Parent promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the Proxy Statement or for additional information and will supply Parent with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement or the Merger. If at any time prior to the approval of this
Agreement by the Company's stockholders there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the Company
will promptly prepare and mail to its stockholders such an amendment or
supplement. The Company will not mail any Proxy Statement, or any amendment or
supplement thereto, to which Parent reasonably objects.
(c) Sub agrees to vote, and Parent agrees to cause, all shares of
Common Stock purchased pursuant to the Offer and all other shares of Common
Stock owned by Sub or any other subsidiary of Parent to be voted in favor of the
approval of this Agreement.
SECTION 6.02. ACCESS TO INFORMATION; CONFIDENTIALITY. During the period
prior to the Effective Time of the Merger, the Company will, and will cause each
Company Subsidiary to, (a) give Parent, and Parent's officers, employees,
accountants, counsel, financial advisors and other authorized representatives,
at Parent's expense, (i) access during regular business hours to such offices,
warehouses and other properties, to such employees, agents, independent
<PAGE> 27
accountants and to such books, records, financial and operating data, contracts
and commitments as the Company believes is reasonably necessary in light of the
transactions contemplated hereby and, during such period, the Company will, and
will cause each Company Subsidiary to, furnish promptly to Parent a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of Federal or state securities laws;
and (b) permit Parent, at its own expense, and its authorized representatives to
make such inspections of real property and the improvements thereon, including,
without limitation, environmental assessments or surveys, during regular
business hours as the Company believes is reasonably necessary in light of the
transactions contemplated hereby; provided, however, that such access shall be
conducted in such a manner as to (i) avoid any undue disruption of the normal
business operations of the Company and the Company Subsidiaries and (ii)
maintain the confidentiality of the Material, as defined in the Confidentiality
Agreement, dated March 11, 1998 (the "Confidentiality Agreement"), between
Parent and the Company, in accordance with the provisions set forth therein.
SECTION 6.03. BEST EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer and the Merger, and the other transactions contemplated
by this Agreement, including (i) the obtaining of all necessary actions or
nonactions, waivers, consents and approvals from Governmental Persons and the
making of all necessary registrations and filings (including filings with
Governmental Persons, if any) and the taking of all reasonable steps as may be
necessary to obtain
<PAGE> 28
an approval or waiver from, or to avoid an action or proceeding by, any
Governmental Person, (ii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of any of the transactions contemplated by this Agreement,
including seeking to have any stay or temporary restraining order entered by any
court or other Governmental Person vacated or reversed and (iv) the execution
and delivery of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. In connection with and without limiting the foregoing and to the
extent possible under applicable law, the Company, Parent and Sub and their
respective Boards of Directors shall (x) take all action necessary to ensure
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Offer, the Merger, this Agreement or any of the other
transactions contemplated by this Agreement, other than any such statutes or
regulations the sole effect of which is to require a filing or notice, provided
that the Company, Parent and Sub, as applicable, shall take all action necessary
to comply with such filing and notice requirements, and (y) if any state
takeover statute or similar statute or regulation becomes applicable to the
Offer, the Merger, this Agreement or any other transaction contemplated by this
Agreement, take all action necessary to ensure that the Offer, the Merger and
the other transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger and the other transactions contemplated by this Agreement. Nothing herein
shall require Parent or Sub to accept any financing.
(b) The Company shall give prompt notice to Parent, and Parent or Sub
shall give prompt notice to the Company, of (i) any representation or warranty
made by it contained in this Agreement becoming untrue or inaccurate in any
material respect, including if necessary, by amendment to the Company Disclosure
Letter (which amendments shall not affect or amend the representations and
warranties of the Company set forth herein), and (ii) any failure by it to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement; provided, however, that no such
notification shall impair or in any way affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
SECTION 6.04. STOCK PLANS.
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of the Company (or, if appropriate, any committee
administering the Stock Plans), shall adopt such resolutions or take such other
actions as are required to adjust the terms of all outstanding stock options to
purchase shares of Common Stock ("Stock Options") heretofore granted under any
stock option, program or arrangement of the Company (collectively, the "Stock
Plans") to provide that each Stock Option outstanding immediately prior to the
acceptance for payment of shares of Common Stock pursuant to the Offer, whether
or not vested, shall be canceled in exchange for a cash payment by Sub within
five business days of the day shares of Common Stock are purchased pursuant to
the Offer, an amount equal to (i) the excess, if any, of (x) the price per share
of Common Stock to be paid pursuant to the Offer over (y) the exercise price per
share of Common Stock subject
<PAGE> 29
to such Stock Option, multiplied by (ii) the number of shares of Common Stock
for which such Stock Option may then be exercised (the "Option Consideration").
(b) All amounts payable pursuant to this Section 6.04 shall be subject
to any required withholding of taxes and shall be paid without interest. The
Company shall use its best efforts to obtain all consents of the holders of the
Stock Options as shall be necessary to effectuate the foregoing. Notwithstanding
anything to the contrary contained in this Agreement, payment shall, at Parent's
request, be withheld in respect of any Stock Option with respect to any holder
until all necessary consents with respect to such holder are obtained.
(c) The Stock Plans shall terminate as of the Effective Time of the
Merger, and the provisions in any other employee benefit, stock or other plan of
the Company providing for the issuance, transfer or grant of any capital stock
of the Company, any interest in respect of any capital stock of the Company, or
any amounts derived from the value of any capital stock of the Company shall be
deleted as of the Effective Time of the Merger, and the Company shall ensure
that following the Effective Time of the Merger no holder of a Stock Option or
any participant in any Stock Plan or other Company Plan shall have any right
thereunder to acquire any capital stock of the Company or the Surviving
Corporation.
SECTION 6.05. COMPANY BENEFITS. Except as may be required by law,
Parent agrees, and shall cause Sub, to treat all employees of the Company or the
Company Subsidiaries no less favorably than the Parent or Sub treat its own
employees. For purposes of Parent or Sub's vacation, holiday and sick pay
benefits, Parent and Sub shall provide credit to all employees of the Company
and the Company Subsidiaries for their years of service with the Company or the
Company Subsidiaries.
SECTION 6.06. INDEMNIFICATION.
(a) The Certificate of Incorporation of the Surviving Corporation shall
contain provisions with respect to matters occurring prior to the Effective Time
that are no less favorable with respect to indemnification than are set forth in
Article VIII of the Restated Certificate of Incorporation of the Company, which
provisions shall not be amended, repealed or otherwise modified in any manner
that would have an adverse effect on the rights thereunder of individuals who as
of the date of this Agreement or at the Effective Time are directors, officers,
employees, fiduciaries or agents of the Company, unless such modification shall
be required by law.
(b) The Company shall, to the fullest extent permitted under applicable
law and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, the Surviving Corporation shall, to the
fullest extent permitted under applicable law, indemnify and hold harmless, each
present and former director, officer, employee, fiduciary and agent of the
Company and each Company Subsidiary and each fiduciary and agent of each such
director and officer (collectively, the "Indemnified Parties") against all costs
and expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts ("Losses") paid in connection with
any claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), whether civil, criminal, administrative or
<PAGE> 30
investigative, arising out of or pertaining to any action or omission in their
capacity as an officer, director, employee, fiduciary or agent of the Company or
any Company Subsidiary, occurring before the Effective Time, until the
expiration of the statute of limitations relating thereto (and shall pay any
expenses in advance of the final disposition of such action or proceeding to
each Indemnified Party to the fullest extent permitted under Delaware Law, upon
receipt from the Indemnified Party to whom expenses are advanced of any
undertaking to repay such advances required under Delaware Law). In the event of
any claim, action, suit, proceeding or investigation, to the extent provided in
the Company's Restated Certificate of Incorporation or the Certificate of the
Surviving Corporation, as the case may be, (i) the Company or the Surviving
Corporation, as the case may be, shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Company or the Surviving Corporation, promptly after
statements therefor are received, and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); and provided, further, that neither the Company nor
the Surviving Corporation shall be obligated pursuant to this Section 6.06(b) to
pay the fees and expenses of more than one counsel (plus appropriate local
counsel) for all Indemnified Parties in any single action except to the extent
that two or more of such Indemnified Parties shall have conflicting interests in
the outcome of such action, in which case such additional counsel (including
local counsel) as may be required to avoid any such likely conflict may be
retained by the Indemnified Parties at the expense of the Company or the
Surviving Corporation, to the extent that payment of such expense is permitted
under the Company's Restated Certificate of Incorporation or the Certificate of
the Surviving Corporation, as the case may be; and provided further that, in the
event that any claim for indemnification is asserted or made, all rights to
indemnification in respect of such claim shall continue until the disposition of
such claim. Parent hereby guarantees the obligations of the Surviving
Corporation and, following consummation of the Offer, of the Company under this
Section 6.06(b).
(c) Parent shall cause the Surviving Corporation to, and the Surviving
Corporation shall maintain in effect for six years from the Effective Time, if
available, the current directors' and officers' liability insurance policies
maintained by the Company (provided that the Surviving Corporation may
substitute therefore policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring prior to the Effective Time; provided, however, that in no event shall
the Surviving Corporation be required to expend pursuant to this Section 6.06(c)
more than an amount per year equal to 200% of current annual premiums paid by
the Company for such insurance. In the event that, but for the proviso to the
immediately preceding sentence, the Surviving Corporation would be required to
expend more than 200% of current annual premiums, the Surviving Corporation
shall obtain the maximum amount of such insurance obtainable by payment of
annual premiums equal to 200% of current annual premiums.
(d) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
<PAGE> 31
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 6.06.
(e) Each of the Indemnified Parties is made a third party beneficiary
of the obligations of the Parent, Sub, Company and Surviving Corporation under
this Section 6.06.
SECTION 6.07. DIRECTORS. Promptly upon the acceptance for payment of,
and payment by Sub for, shares of Common Stock pursuant to the Offer, Sub shall
be entitled to designate such number of directors on the Board of Directors of
the Company as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, representation on such Board of Directors equal to at least that
number of directors, rounded up to the next whole number, which is the product
of (a) the total number of directors on such Board of Directors who are elected
by the holders of Common Stock pursuant to the Company's Restated Certificate of
Incorporation (giving effect to the directors elected pursuant to this sentence)
multiplied by (b) the percentage that (i) such number of shares of Common Stock
so accepted for payment and paid for by Sub plus the number of shares of Common
Stock otherwise owned by Sub or any other subsidiary of Parent bears to (ii) the
total number of shares of Common Stock outstanding, and the Company shall, at
such time, cause Sub's designees to be appointed or elected; provided, however,
that in the event that Sub's designees are to be appointed or elected to the
Board of Directors of the Company such Board of Directors shall have, until the
Effective Time of the Merger, at least three directors who are directors on the
date of this Agreement and who are not officers of the Company (the "Independent
Directors"); and provided further that, in such event, if the number of
Independent Directors shall be reduced below three for any reason whatsoever,
any remaining Independent Directors (or Independent Director, if there shall be
only one remaining) shall be entitled to designate persons to fill such
vacancies who shall be deemed to be Independent Directors for purposes of this
Agreement or, if no Independent Directors then remain, the other directors shall
designate three persons to fill such vacancies who shall not be officers,
stockholders or affiliates of the Company, Parent or Sub, and such persons shall
be deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable law, the Company shall take all action requested by Parent necessary
to effect any such appointment or election, including mailing to its
stockholders the Information Statement containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, and the
Company agrees to make such mailing with the mailing of the Schedule 14D-9
(provided that Sub shall have provided to the Company on a timely basis all
information required to be included in the Information Statement with respect to
Sub's designees). In connection with the foregoing, the Company will promptly,
at the option of Sub, either increase the size of the Company's Board of
Directors or obtain the resignation of such number of its current directors as
is necessary to enable Sub's designees to be elected or appointed to the
Company's Board of Directors as provided above.
SECTION 6.08. PUBLIC ANNOUNCEMENTS. Parent and Sub, on the one hand,
and the Company, on the other hand, will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any press
release or other public statements with respect to the transactions contemplated
by this Agreement, including the Offer and the Merger,
<PAGE> 32
and shall not issue any such press release or make any such public statement
prior to such consultation, except as any party may reasonably believe to be
required by applicable law, court process or by obligations pursuant to any
listing agreement with, or regulations or requirements of, any securities
exchange. The parties agree that the initial press release to be issued with
respect to the transactions contemplated by this Agreement will be substantially
in the form set forth in Exhibit B to this Agreement.
SECTION 6.09. STOCKHOLDER LITIGATION. The Company shall consult with
Parent in the defense or settlement of any stockholder litigation against the
Company and its directors relating to any of the transactions contemplated by
this Agreement; provided, however, that no such settlement shall be agreed to
without Parent's consent, which consent shall not be unreasonably withheld.
SECTION 6.10. ACQUISITION PROPOSALS.
(a) From the date hereof until the termination hereof, the Company and
the Company Subsidiaries will not, and will cause their respective officers,
directors, employees or other agents not to, directly or indirectly, (i) take
any action to solicit, initiate or encourage any Acquisition Proposal provided
that no public announcement made by the Company prior to the date hereof
regarding the transactions contemplated hereby or pursuant to the last sentence
of Section 6.08 shall be deemed a violation of this Section 6.10(a)(i), or (ii)
engage in discussions or negotiations with, or disclose any nonpublic
information relating to the Company or the Company Subsidiaries, respectively,
or afford access to their respective properties, books or records to any person
in connection with an Acquisition Proposal. Nothing contained in this Section
6.10 shall prohibit the Company and its Board of Directors (or any committee
thereof) from (x) taking and disclosing a position with respect to a tender
offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated by the
SEC under the Exchange Act, or (y) considering, negotiating, discussing,
approving or recommending to the stockholders of the Company a bona fide
Acquisition Proposal not solicited, initiated or encouraged in violation of this
Agreement if and only to the extent that, (A) such Board of Directors determines
in good faith upon the advice of counsel that such action is required for the
Board of Directors to comply with its fiduciary duties to stockholders imposed
by law, and (B) prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, the Company provides
written notice to Parent to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity. Either
Parent or (provided the Company and its Board of Directors have complied with
the requirements of this Section 6.10(a)) the Company may terminate this
Agreement if the Company or its Board of Directors approves or recommends to the
Company's stockholders an Acquisition Proposal or the Board of Directors of the
Company withdraws its recommendation that the stockholders accept and approve
the transactions contemplated by this Agreement; provided that the Company or
its Board of Directors may take such actions only if the Company or such Board
of Directors has received a written opinion from the Company's investment
advisors that it reasonably believes the party making the Acquisition Proposal
has the financial ability to consummate such Acquisition Proposal on the
proposed terms and that such Acquisition Proposal may reasonably be expected to
provide a per share value greater than the Offer.
<PAGE> 33
(b) The term "Acquisition Proposal" as used herein means any proposal
or offer from any person (other than Parent or Sub) relating to (i) any direct
or indirect acquisition or purchase of any equity interest in, or a substantial
amount of assets of, the Company or the Company Subsidiaries, (ii) any tender
offer or exchange offer (including a self-tender offer) involving the equity
securities of the Company, (iii) any merger, consolidation, recapitalization,
liquidation, business combination or similar transaction involving the Company
other than the transactions contemplated by this Agreement or (iv) any other
extraordinary transaction the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the transactions
contemplated by this Agreement.
(c) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than each other)
conducted heretofore with respect to any of the foregoing transactions
referenced in this Section 6.10.
SECTION 6.11. FILINGS; OTHER ACTION. Subject to the terms and
conditions herein provided, as promptly as practicable, the Company, Parent and
Sub shall: (i) promptly make all filings and submissions under the HSR Act as
may be required to be made in connection with this Agreement and the
transactions contemplated hereby, (ii) use all reasonable efforts to cooperate
with each other in (A) determining which filings are required to be made prior
to the Effective Time with, and which material consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from any
Governmental Person in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby and (B)
timely making all such filings and timely seeking all such consents, approvals,
permits or authorizations, and (iii) use all reasonable efforts to take, or
cause to be taken, all other action and do, or cause to be done, all other
things necessary or appropriate to consummate the transactions contemplated by
this Agreement. In connection with the foregoing, the Company will provide
Parent, and Parent and Sub will provide the Company, with copies of
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between such party or any of its representatives, on the one
hand, and any Governmental Person or members of its respective staff, on the
other hand, with respect to this Agreement and the transactions contemplated
hereby. Each of Parent, Sub and the Company acknowledge that certain actions may
be necessary with respect to the foregoing in making notifications and obtaining
clearances, consents, approvals, waivers or similar third party actions which
are material to the consummation of the transactions contemplated hereby, and
each of Parent, Sub and the Company agree to take such action as is necessary to
complete such notifications and obtain such clearances, approvals, waivers or
third party actions.
<PAGE> 34
SECTION 6.12. ADDITIONAL AGREEMENTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals in connection with the Governmental
Requirements, to effect all necessary registrations and filings and to obtain
all necessary financing. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and/or directors of Parent, Sub and the Company
shall take all such necessary action.
SECTION 6.13. MERGER CERTIFICATE. Parent shall file or cause Sub to
file the Certificate of Merger referenced in Section 7.01(a) as soon as
practicable, but in no event more than two business days after the satisfaction
of the conditions set forth in Article VII.
SECTION 6.14. PROVISION OF FUNDS. Parent shall make available to Sub
all funds required to consummate the Offer and the Merger.
SECTION 6.15. EMPLOYMENT/CHANGE OF OWNERSHIP AGREEMENTS. Without
limitation, Parent and Sub agree to abide by all the terms of the Employment
Agreements and Change of Ownership Employment Agreements entered into by the
Company with certain of its employees, copies of which have previously been
provided to Parent and Sub.
SECTION 6.16. CONVERSION OF CONVERTIBLE PREFERRED STOCK AND EXERCISE OF
THE COMPANY WARRANTS. Concurrently with the execution hereof with respect to the
stockholders identified on the signature page of Exhibit E or as soon as
practicable hereafter with respect to all other holders, the Company and the
holders of the Convertible Preferred Stock will execute an agreement
substantially in the form of Exhibit C hereto and the Company and the holders of
the Company Warrants will execute an agreement substantially in the form of
Exhibit D hereto to provide that the outstanding Company Warrants and
Convertible Preferred Stock shall be exercised or converted simultaneously with
the closing of the Offer and the purchase of shares of Common Stock in the Offer
and the shares of Common Stock issuable upon such exercise or conversion shall
be tendered in the Offer. On the same day that shares of Common Stock are
purchased pursuant to the Offer, Sub shall pay to the holders of the Convertible
Preferred Stock or the Company Warrants, an amount equal to (a) in the case of
the Convertible Preferred Stock only, the price per share of Common Stock to be
paid pursuant to the Offer multiplied by the number of shares of Common Stock
into which such Convertible Preferred Stock may then be converted, and (b) in
the case of the Company Warrants only, (i) the excess, if any, of (x) the price
per share of Common Stock to be paid pursuant to the Offer over (y) the exercise
price per share of the Company Warrants, multiplied by (ii) the number of shares
of Common Stock for which such Company Warrants may then be exercised.
Notwithstanding anything to the contrary contained in this Agreement, payment
shall, at Parent's request, be withheld in respect of any Convertible Preferred
Stock or Company Warrants with respect to any holder until all necessary
consents with respect to such holder are obtained.
<PAGE> 35
SECTION 6.17. STOCKHOLDERS' AGREEMENT TO TENDER. Concurrently with the
execution hereof, Sub and the stockholders identified on the signature page of
Exhibit E will enter into an agreement substantially in the form of Exhibit E,
whereby such stockholders will agree to tender all of the shares of Common Stock
owned or controlled by them to Sub in the Offer.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver on or prior to the Effective Time of the
Merger of the following conditions:
(a) STOCKHOLDER APPROVAL. If required by applicable law, this
Agreement shall have been approved and adopted by the affirmative vote of the
stockholders of the Company by the requisite percentage in accordance with
applicable law and the Company's Restated Certificate of Incorporation, and the
Certificate of Merger shall have been executed and delivered by the Surviving
Corporation and filed in the Department of State of the State of Delaware.
(b) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used its best efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.
(c) REGULATORY APPROVALS. All regulatory approvals (in
addition to any approval contemplated by the HSR Act) shall have been obtained
on terms mutually satisfactory to Parent and the Company, except for any the
failure of which to obtain would not have a material adverse effect on either
Parent or the Surviving Corporation.
(d) OFFER. Sub or its permitted assignee shall have purchased
all Common Stock validly tendered and not withdrawn pursuant to the Offer;
provided, however, that this condition shall not be applicable to the
obligations of Parent or Sub if, in breach of this Agreement or the terms of the
Offer, Sub fails to purchase any Common Stock validly tendered and not withdrawn
pursuant to the Offer.
<PAGE> 36
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the stockholders of the Company, but prior to the Effective Time of
the Merger, in any one of the following circumstances:
(a) by mutual written consent of Parent and the Company,
except if shares of Common Stock have been purchased pursuant to the Offer;
(b) by any of Parent, Sub or the Company:
(i) if, upon a vote at a duly held Stockholders
Meeting or any adjournment thereof, any required approval of the Stockholders of
the Company shall not have been obtained;
(ii) if (x) Sub shall not have commenced the Offer
within the time required by Section 1.01 of this Agreement, (y) as the result of
the failure of any of the conditions set forth in Exhibit A to this Agreement,
the Offer shall have been terminated by Parent or expired in accordance with its
terms without Sub having purchased shares of Common Stock pursuant to the Offer
or (z) Sub shall not have purchased shares of Common Stock by October 15, 1998;
provided, however, that the passage of the period referred to in clause (z)
shall be tolled for any part thereof during which any party shall be subject to
a nonfinal order, decree, ruling or action restraining, enjoining or otherwise
prohibiting the purchase of shares of Common Stock pursuant to the Offer or the
consummation of the Merger; and provided further that the right to terminate
this Agreement pursuant to this Section 8.01(b)(ii) shall not be available to
any party whose failure to fulfill any of its obligations under this Agreement
results in the failure of any such condition;
(iii) if the Merger shall not have been consummated
on or before the date six (6) months following the date of this Agreement,
unless the failure to consummate the Merger is the result of a willful and
material breach of this Agreement by the party seeking to terminate this
Agreement; provided, however, that the passage of such period shall be tolled
for any part thereof during which any party shall be subject to a nonfinal
order, decree, ruling or action restraining, enjoining or otherwise prohibiting
the consummation of the Merger or the calling or holding of the Stockholders
Meeting; provided, further that no party shall be entitled to terminate this
Agreement pursuant to this Section 8.01(b)(iii) if shares of Common Stock have
been purchased pursuant to the Offer; or
(iv) if any Governmental Person shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the purchase of shares of Common Stock
pursuant to the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or
<PAGE> 37
(c) by either Parent or the Company pursuant to Section 6.10.
SECTION 8.02. EFFECT OF TERMINATION. Subject to Section 8.06(b), in the
event of termination of this Agreement by either the Company, Parent or Sub as
provided in Section 8.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of (i) the Company,
other than the provisions of Sections 8.06 and 9.06 or (ii) on the part of
Parent or Sub, other than the provisions of Section 9.06, except to the extent
that such termination results from the material breach by Parent or Sub of any
of its representations, warranties, covenants or agreements set forth in this
Agreement.
SECTION 8.03. AMENDMENT. To the extent permitted by applicable law,
this Agreement may be amended by the parties at any time before or after any
required approval of matters presented in connection with the Merger by the
stockholders of the Company; provided, however, that after any such approval,
there shall not be made any amendment that by law requires further approval by
such stockholders without the further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
SECTION 8.04. EXTENSION; WAIVER. At any time prior to the Effective
Time of the Merger, the parties may (a) extend the time for the performance of
any of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties contained in this Agreement
or in any document delivered pursuant to this Agreement or (c) subject to the
proviso of Section 8.03, waive compliance with any of the agreements or
conditions contained in this Agreement. Any agreement on the part of a party to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
SECTION 8.05. PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR
WAIVER. A termination of this Agreement pursuant to Section 8.01, an amendment
of this Agreement pursuant to Section 8.03 or an extension or waiver pursuant to
Section 8.04 shall, in order to be effective, require (a) in the case of Parent,
Sub or the Company, action by its Board of Directors or the duly authorized
designee of its Board of Directors and (b) in the case of the Company, action by
a majority of the members of the Board of Directors of the Company who were
members thereof on the date of this Agreement and remain as such thereafter or
the duly authorized designee of such members and approval by a majority of
Independent Directors.
SECTION 8.06. EFFECT OF TERMINATION AND ABANDONMENT.
(a) TERMINATION FEES AND EXPENSES. Parent shall be entitled to receive
from the Company a termination fee in the amount of $2,500,000 if this Agreement
is terminated or Sub does not purchase shares of Common Stock pursuant to the
Offer because the Company or its Board of Directors approves or recommends to
the Company's stockholders an Acquisition Proposal or in connection with an
Acquisition Proposal the Board of Directors of the Company
<PAGE> 38
withdraws its recommendation that the stockholders of the Company accept and
approve the transactions contemplated by this Agreement; or
(b) The Company shall be entitled to receive from Parent a termination
fee in the amount of $2,500,000, plus Company Expenses, if this Agreement is
terminated or Sub does not purchase shares of Common Stock pursuant to the Offer
on or prior to September 30, 1998 because Parent or Sub determines that the
Financing Condition has not been met, unless Sub shall have notified the Company
in writing on or prior to September 30, 1998 that it will extend the Offer
beyond September 30, 1998 and Parent assumes the responsibility to pay the
termination fee described in the next sentence. The Company shall be entitled to
receive from Parent a termination fee in the amount of $3,500,000, plus Company
Expenses, if this Agreement is terminated or Sub does not purchase shares of
Common Stock pursuant to the Offer after September 30, 1998 and on or prior to
October 14, 1998 because the Financing Condition has not been met. "Company
Expenses" shall mean all reasonable out-of-pocket expenses and fees, including,
without limitation, fees and expenses payable to all banks, investment banking
firms and other financial institutions and their advisors and counsel, and all
fees and expenses of counsel, accountants, experts and consultants to the
Company incurred or required to be paid by the Company or any of its affiliates
in connection with the transactions contemplated by this Agreement, including
any efforts to enforce any rights under this Agreement or any other agreement
relating hereto.
(c) If Parent has received the full amount of any payment under Section
8.06(a), neither Parent nor Sub nor any of their respective directors, officers,
representatives or agents shall assert or pursue, directly or indirectly,
whether arising under tort, contract, or otherwise, any claim or cause of action
against any of the Company or any person making an Acquisition Proposal or any
of their respective directors, officers, representatives or agents based in
whole or part upon its or their receipt, consideration, recommendation or
approval of an Acquisition Proposal, including the Company's exercise of its
right of termination pursuant to this Article VIII. If Company has received the
full amount of any payment under Section 8.06(b), neither Company nor any of its
respective directors, officers, representatives or agents shall assert or
pursue, directly or indirectly, whether arising under tort, contract, or
otherwise, any claim or cause of action against any of Parent or Sub or any of
their respective directors, officers, representatives or agents based in whole
or part upon the failure of Parent and Sub to obtain financing pursuant to the
Financing Condition and the termination of this Agreement as a result thereof.
(d) It is understood and agreed by the parties hereto that the
termination fees provided for in Sections 8.06(a) and 8.06(b) are intended to
constitute liquidated damages, since the actual amount of damages which would be
sustained by Parent and Sub in the case of Section 8.06(a) and the Company in
the case of Section 8.06(b) as a result of such termination is difficult, if not
impossible, to ascertain and that the agreement of the parties with regard to
the payment of the foregoing sum as liquidated damages represents a good faith
effort by each of the parties to establish the reasonable amount of restitution
necessary to provide for recovery of all costs and expenses associated with
efforts to consummate the Offer and the Merger, including, without limitation,
opportunity costs.
<PAGE> 39
(e) The provisions of this Article VIII shall survive termination of
this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
No representations or warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive beyond the Effective Time.
This Section 9.01 shall not limit any covenant or agreement after the Effective
Time.
SECTION 9.02. NOTICES. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand or (c) the expiration of
five business days after the day when mailed by registered or certified mail
(postage prepaid, return receipt requested), addressed to the respective parties
at the following addresses (or such other address for a party as shall be
specified by like notice):
(a) If to Parent or Sub, to:
National Vision Associates, Ltd.
296 Grayson Highway
Lawrenceville, Georgia 30245
Attention: Senior Vice President & General Counsel
Facsimile: 770-822-2029
with a copy to:
Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309
Attention: David A. Stockton, Esquire
Facsimile: 404-815-6555
(b) if to Company, to:
New West Eyeworks, Inc.
2104 West Southern Avenue
Tempe, Arizona 85282
<PAGE> 40
Attention: President and Chief Executive Officer
Facsimile: 602-431-0329
with a copy to:
Kohrman Jackson & Krantz P.L.L.
1375 East 9th Street
One Cleveland Center, 20th Floor
Cleveland, OH 44114
Attention: Marc C. Krantz, Esquire
Facsimile: 216-621-6536
SECTION 9.03. DESCRIPTIVE HEADINGS. Headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 9.04. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (including
the Schedules, Exhibits and other documents and instruments referred to herein
which are incorporated herein and made a part of this Agreement) (a) constitutes
the entire agreement and supersedes all other prior agreements and
understandings both written and oral among the parties or any of them, with
respect to the subject matter hereof, including, without limitation, any
transaction between or among the parties hereto except the terms of the
Confidentiality Letter shall remain in full force and effect; (b) is not
intended to confer upon any other person any rights or remedies hereunder; and
(c) shall not be assigned by operation of law or otherwise.
SECTION 9.05. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law.
SECTION 9.06. EXPENSES AND FEES. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses, subject, however, to the provisions of Section 8.06(b).
The provisions of Section 9.06 shall survive the termination of this Agreement.
SECTION 9.07. COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by all of the other parties hereto.
SECTION 9.08. SEVERABILITY; VALIDITY; PARTIES IN INTEREST. If any
provision of this Agreement, or the application thereof to any person or
circumstance is held invalid or unenforceable, the remainder of this Agreement,
and the application of such provision to other persons or circumstances, shall
not be affected thereby, and to such end, the provisions of this Agreement are
agreed to be severable. Except as set forth in Section 6.06, nothing in this
<PAGE> 41
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.09. JURISDICTION. Any legal action or proceeding with respect
to this Agreement or any document related hereto shall be brought by Company,
Parent or Sub in the Chancery Court of the State of Delaware or the United
States District Court for the State of Delaware, and by execution and delivery
of this Agreement or any document related hereto, each of the Company, Parent or
Sub hereby consents, for itself and in respect of its property, to this
jurisdiction of the aforesaid courts. Each of the parties hereto hereby
irrevocably waives, to the extent permitted by applicable law, any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which such party may now or hereafter have
to the bringing of any action or proceeding in such jurisdiction in respect of
this Agreement or any document related hereto.
<PAGE> 42
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by an officer thereunto duly authorized on the day and
year first above written,
NEW WEST EYEWORKS, INC.
By: /s/ Ronald E. Weinberg
---------------------------------------
Name: Ronald E. Weinberg
Title: Chairman of the Board
NW ACQUISITION CORP.
By: /s/ James W. Krause
---------------------------------------
Name: James W. Krause
Title: Chairman & Chief Executive Officer
NATIONAL VISION ASSOCIATES, LTD.
By: /s/ James W. Krause
---------------------------------------
Name: James W. Krause
Title: Chairman & Chief Executive Officer
<PAGE> 43
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or the Agreement
and Plan of Merger dated July 13,1998 among National Vision Associates, Ltd., a
Georgia corporation (the "Parent"), NW Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent (the "Sub"), and New West Eyeworks,
Inc., a Delaware corporation, (the "Merger Agreement"), Sub shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-l(c) under the Exchange Act (relating
to Sub's obligation to pay for or return tendered shares of Common Stock after
the termination or withdrawal of the Offer), to pay for any shares of Common
Stock tendered pursuant to the Offer unless (i) there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer that number of
shares of Common Stock which would represent at least 51% of the outstanding
shares of Common Stock as determined immediately prior to the acceptance of
shares tendered in the Offer (the "Minimum Tender Condition"), (ii) Sub shall
have received funds from a financing in an amount sufficient to consummate the
transactions contemplated by the terms of the Merger Agreement (the "Financing
Condition") and (iii) any waiting period under the HSR Act applicable to the
purchase of shares of Common Stock pursuant to the Offer and/or the Merger shall
have expired or been terminated. Furthermore, notwithstanding any other term of
the Offer or the Merger Agreement, Sub shall not be required to commence or
continue the Offer or accept for payment or, subject as aforesaid, to pay for
any shares of Common Stock not theretofore accepted for payment or paid for, and
may terminate or amend the Offer if, at any time on or after the date of the
Merger Agreement and before the acceptance of such shares for payment or the
payment therefor, any of the following conditions exists:
(a) There shall have been entered in any action or proceeding
before any Governmental Person an injunction or order, (i) prohibiting
or limiting the acquisition by Parent or Sub of any shares of Common
Stock, (ii) restraining or prohibiting or otherwise rendering
unenforceable the consummation of the Merger or any of the other
transactions contemplated by or provisions of the Merger Agreement,
(iii) prohibiting or limiting the ownership or operation by the Company
of the Company Subsidiaries or of any material portion of the business
or assets of the Company or any of the Company Subsidiaries, or to
compel the Company or the Company Subsidiaries to dispose of or hold
separate any material portion of the business or assets of the Company
or any of the Company Subsidiaries, as a result of the Merger or any of
the other transactions contemplated by the Merger Agreement, (iv)
imposing limitations on the ability of Parent or Sub to acquire or
hold, or exercise full rights of ownership of, any shares of Common
Stock, including, without limitation, the right to vote the Common
Stock purchased by Sub on all matters properly presented to the
stockholders of the Company, or (v) requiring the Company, Parent or
Sub to pay damages that reasonably can be foreseen, or are reasonably
likely, to result in a Company Material Adverse Effect; or
<PAGE> 44
(b) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction that is or could
reasonably be expected to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a)
above; or
(c) there shall have occurred any material adverse change, or
any development that, insofar as reasonably can be foreseen, is
reasonably likely to result in a Company Material Adverse Effect; or
(d) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States (excluding any coordinated trading halt triggered solely as a
result of a specified decrease in a market index), (ii) any material
adverse change in the financial markets, commodities markets or major
stock exchange indices in the United States, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, or (iv) a commencement of a war or armed hostilities
or other national or international calamity directly or indirectly
involving the United States; or
(e) (i) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Acquisition Proposal,
(ii) the Company shall have entered into any agreement (other than a
confidentiality agreement or engagement letter with an investment bank)
with respect to any Acquisition Proposal or (iii) the Board of
Directors of the Company or any committee thereof shall have resolved
to do any of the foregoing; or
(f) (i) any of the representations and warranties of the
Company set forth in the Merger Agreement that are qualified as to
materiality shall not be true and correct and any such representations
and warranties that are not so qualified shall not be true and correct
in any material respect, in each case as if such representations and
warranties were made as of such time; or (ii) the Company shall have
failed to perform in any material respect any obligation or to comply
in any material respect with any agreement or covenant of the Company
to be performed or complied with by it under the Merger Agreement; or
(g) the Merger Agreement shall have been terminated in
accordance with its terms, including without limitation a termination
by Parent or the Company pursuant to Section 6.10; or
(h) Sub, Parent and the Company (with the approval of a
majority of its Independent Directors) shall have mutually agreed that
Sub shall terminate the Offer or postpone the acceptance for payment of
or payment for shares of Common Stock thereunder;
<PAGE> 45
which, in the sole judgment of Sub or Parent, in any such case, and
regardless of the circumstances giving rise to any such condition
(including any action or inaction by Parent or any of its affiliates),
makes it inadvisable to proceed with such acceptance for payment or
payment,
The foregoing conditions are for the sole benefit of Sub and Parent and
may be asserted by Sub or Parent regardless of the circumstances giving rise to
such condition or may be waived by Sub and Parent in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent, Sub
or any other affiliate of Parent 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 such right
shall be deemed an ongoing right that may be asserted at any time and from time
to time.
Capitalized terms used herein and not otherwise defined shall have the
meanings set forth in the Merger Agreement.
<PAGE> 46
EXHIBIT B
FORM OF PRESS RELEASE
<PAGE> 47
[NATIONAL VISION ASSOCIATES, LTD. LETTERHEAD]
National Vision Associates, Ltd. and New West Eyeworks, Inc. Announce
Definitive Agreement for National Vision to Acquire New West
LAWRENCEVILLE, Ga., and TEMPE, Ariz., July 14 /PRNewswire/ -- National
Vision Associates, Ltd. (Nasdaq: NVAL) and New West Eyeworks, Inc. (Nasdaq:
NEWI) announced today that they have signed a definitive agreement for National
Vision Associates, Ltd. to acquire all the outstanding stock, options, and
warrants of New West Eyeworks for $13.00 per share of common stock or
approximately $77 million in the aggregate (including approximately $2 million
of indebtedness).
To effect the transaction, National Vision Associates, Ltd. will shortly
begin a tender offer for all shares of New West Eyeworks, Inc. As part of the
definitive agreement, certain insiders (representing 40.3% of the common stock
of New West on a fully diluted basis exclusive of outstanding stock options)
have agreed to tender their shares into the offer.
The closing of the tender offer is subject to customary conditions,
including regulatory filings, as well as completion by National Vision of a
high-yield debt offering to finance the acquisition. The agreement also provides
for certain break up fees in certain circumstances if the transaction is not
consummated. The companies expect the tender offer will be completed in
September 1998.
New West Eyeworks, headquartered in Tempe, Arizona, operates 175
full-service retail optical locations throughout 13 states, including 52 vision
centers located in Fred Meyer stores. New West, which has reported positive
comparable store sales for the past 26 consecutive quarters, operates under the
Vista Optical brand (11 states) and the Lee Optical brand (2 states). New West
offers everyday low prices for quality eyewear, contact lenses and the services
of independent doctors of optometry. In addition, the company has an established
managed care business, Vista Eyecare Network. In 1997, New West reported net
sales of $49.2 million and net income of $1.5 million, or $0.31 per share. At
March 28, 1998, New West Eyeworks had total assets of $18.1 million.
(more)
<PAGE> 48
-2-
Currently, National Vision Associates operates 427 domestic retail optical
units. The addition of the 176 New West optical centers and the 290 Frame-n-Lens
optical centers (to be acquired pursuant to a previously announced transaction
that is expected to be completed in July), will bring National Vision's total
domestic operations to 893 locations, of which 334 are free-standing, 371 are in
Wal*Mart, and 188 are in other host concepts. This will further strengthen
National vision Associates' ranking (after giving effect to the Frame-n-Lens
transaction) as the second largest retail optical company in terms of domestic
locations and third in terms of domestic (pro forma) sales.
James W. Krause, chairman and chief executive officer of National Vision
Associates, stated, "We are very excited about acquiring this successful,
value-oriented optical chain. On a near-term basis, we expect the transaction to
dilute 1998 earnings between $0.08 and $0.10 per share. We also believe that, in
the long term, the combined businesses will generate significant revenue and
enhance earnings for our shareholders." Krause went on to say, "Barry Feld and
his management team at New West have done an outstanding job in positioning
their company as a premier provider of value retail optical goods and services.
We look forward to working with Barry as we integrate the New West business into
our Midwest Vision and Frame-n-Lens businesses, and thereby create a national
value branded retail optical company."
New West Eyeworks chief executive officer, Barry Feld, added, "This is a
unique situation in that the two companies have almost identical operating
structures and philosophies. I believe with this acquisition, National Vision
has clearly established itself as the premier value-oriented optical retailer in
the U.S. I am very excited to join National Vision in its continued expansion
and providing the finest eyecare and eyewear at the best value anywhere in the
country.
Ronald E. Weinberg, chairman of New West's board commented, "It has been my
intention to see New West realize its full potential both strategically and
through strong shareholder value. This transaction succeeds on both fronts. It
also enables our chain of stores to participate in the consolidation of optical
retailing and managed eyecare."
In closing, Krause said, "We expect our current operations to significantly
benefit from New West's managed care experience and business, as well as from
their existing and potential strategic alliances with managed care providers.
Other key benefits of the proposed transaction will be operating, advertising
and merchandising efficiencies as well as leveraged product buying power. Given
the unusual degree of similarity between the two companies, we expect the
combination will generate extensive revenue enhancing opportunities."
National Vision Associates, Ltd. was represented in the transaction by New
York-based Schroder & Co., Inc. New West Eyeworks, Inc. was represented by F. M.
Roberts & Co. of Los Angeles, California.
National Vision Associates, Ltd. is currently the nation's fifth largest
optical company in terms of revenues and locations including 50 freestanding
locations that operate under the trade name, Midwest Vision. The Company's
retail operations offer a full line of optical goods including spectacles,
contact lenses, prescription and non-prescription sunglasses and a full line of
optical accessories. In addition, independent doctors of optometry are available
adjacent to store locations.
(more)
<PAGE> 49
- 3 -
New West Eyeworks, Inc. is a leading retailer of specialty eyewear. the
Company's merchandising strategy centers around a "signature" value price point
for a wide selection of quality, brand name eyeglasses (frame and lenses). New
West also sells brand name contact lenses and non-prescription sunglasses and
offers customers on-site eye examinations by independent optometrists. The
stores operate under the Vista Optical brand name, other than the stores
located in Arizona and Utah, which use the Lee Optical brand name. The
Company's optical laboratories and distribution facilities are located in
Tempe, Arizona and near Portland, Oregon.
This press release contains forward-looking statements that are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. Actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties, including but not limited to, the uncertainty as to whether the
transaction discussed in this press release will be completed. Other risks and
uncertainties are detailed from time to time in both National Vision's and New
West's periodic reports filed with the Securities and Exchange Commission,
including both company's Annual Reports for 1997 on Form 10-K and first quarter
1998 reports on Form 10-Q.
SOURCE National Vision Associates, Ltd.
-0- 07/14/98
/CONTACT: Angus Morrison, Senior Vice President, CFO & Treasurer of
National Vision Associates, 770-822-4285; or Ronald E. Weinberg, Chairman of
the Board, 216-861-4540, or Barry Feld, President and CEO, 602-438-1330, both
of New West Eyeworks; or Janice J. Kuntz of Fleishman-Hillard, 404-659-4446,
for National Vision Associates/
/Web site: http://www.nationalvision.com/
(NVAL NEWI)
<PAGE> 50
EXHIBIT C
FORM OF CONVERSION AGREEMENT
<PAGE> 51
[Name]
July __, 1998
Page 1
[The Company Letterhead]
July __, 1998
RE: CONVERSION OF CONVERTIBLE PREFERRED STOCK TO COMMON STOCK OF NEW
WEST EYEWORKS, Inc. Dear :
New West Eyeworks, Inc., a Delaware corporation (the "Company"), has
entered into an Agreement and Plan of Merger, dated as of July __, 1998, by and
among National Vision Associates, Ltd., a Georgia corporation ("Parent"), a
wholly-owned subsidiary of Parent ("Sub"), and the Company (the "Merger
Agreement"). Pursuant to the Merger Agreement, Parent proposes to cause Sub to
purchase all the issued and outstanding shares of Common Stock, par value $0.01
per share, of the Company (the "Common Stock"), at a price per share of Common
Stock of $13.00 in cash (the "Offer"), upon the terms and subject to the
conditions set forth in the Merger Agreement.
Pursuant to Section 6.16 of the Merger Agreement, the Company is
requesting that you agree to convert to Common Stock all of the ______ shares of
Series A Convertible 6% Cumulative Preferred Stock, par value $1,000 per share
("Series A Preferred Stock")/________ shares of Series B Convertible 6%
Cumulative Preferred Stock, par value $1,000 per share ("Series B Preferred
Stock"), held by you and to tender such shares of Common Stock to Sub in the
Offer. Any such conversion will occur simultaneously with the closing of the
Offer and the payment for the shares of Common Stock tendered pursuant to the
Offer. If for any reason the Offer is not closed or the shares of Common Stock
tendered pursuant to the Offer are not paid for in accordance with the terms of
the Offer, the conversion will be deemed not to have occurred. If you so agree
to convert and tender, and you deliver your Series A Preferred Stock/Series B
Preferred Stock as requested below, Sub will pay to you on the same day that
shares of Common Stock are purchased pursuant to the Offer the price per share
of Common Stock to be paid pursuant to the Offer ($13.00 per share of Common
Stock) multiplied by the number of shares of Common Stock into which your Series
A Preferred Stock/Series B Preferred Stock may then be converted (_______ shares
of Common Stock). Upon such payment, your shares of Series A Preferred
Stock/Series B Preferred Stock will be cancelled and the Common Stock issued
upon conversion will be owned by Sub. Neither Parent nor Sub shall take any of
the actions set forth in Section 1.01 (a)(i)-(v) of the Merger Agreement,
without your consent.
Until the closing of the Offer and the payment for shares of Common
Stock tendered pursuant to the Offer, the terms of the Series A Preferred
Stock/Series B Preferred Stock remain in full force and effect.
<PAGE> 52
[Name]
July __, 1998
Page 2
If for any reason the Offer is not closed pursuant to the terms of the
Merger Agreement or the shares of Common Stock tendered pursuant to the Offer
are not paid for in accordance with the terms of the Offer, (1) the certificate
representing your shares of Series A Preferred Stock/Series B Preferred Stock
will be returned to you, (2) the conversion referenced in this letter agreement
will be deemed not to have occurred, and (3) the terms of the Series A Preferred
Stock/Series B Preferred Stock will remain in full force and effect, as if this
letter agreement never existed.
[ADD THIS PARAGRAPH FOR ALL RECIPIENTS EXCEPT RONALD E. WEINBERG,
BARRY J. FELD AND MESIROW CAPITAL PARTNERS II, MESIROW CAPITAL PARTNERS III,
MESIROW CAPITAL PARTNERS IV, MESIROW CAPITAL PARTNERS V AND MESIROW CAPITAL
PARTNERS VI] You may cancel this letter agreement at any time prior to the
closing of the Offer by written notice to the Company.
[ADD THIS PARAGRAPH FOR RONALD E. WEINBERG, BARRY J. FELD AND MESIROW
CAPITAL PARTNERS III, MESIROW CAPITAL PARTNERS IV, MESIROW CAPITAL PARTNERS V
AND MESIROW CAPITAL PARTNERS VI] This letter agreement, and all rights and
obligations of the parties hereunder, shall terminate immediately upon the
earlier of (i) the acquisition by Parent, through Sub or otherwise, of all the
shares of Common Stock tendered upon conversion pursuant to this letter
agreement, (ii) the termination of the Merger Agreement in accordance with its
terms, (iii) the Effective Time (as defined in the Merger Agreement), (iv) by
you, if Parent or Sub breaches any of the covenants set forth in the second
paragraph of this letter agreement, or (v) by Parent, if you breach any of your
covenants in this letter agreement.
[ADD THIS PARAGRAPH ONLY FOR RECIPIENTS THAT ARE DIRECTORS OR OFFICERS
OF THE COMPANY] Notwithstanding anything in this letter agreement to the
contrary, this letter agreement shall not prohibit, limit or effect you, solely
in your capacity as a director or officer of the Company, from taking any
actions as a director or officer, including without limitation any actions
permitted or not prohibited by the Merger Agreement with respect to any
Acquisition Proposal (as defined in the Merger Agreement) and nothing in this
letter agreement shall prohibit the Company from taking any action permitted
under Section 6.10 of the Merger Agreement.
Please indicate your agreement to comply with all of the requests of
the Company set forth herein by signing and dating the enclosed copy of this
letter and the enclosed power of attorney and returning them to Christopher J.
Hubbert in the envelope provided, ALONG WITH YOUR STOCK CERTIFICATE, by
___________, 1998. If you cannot locate your stock certificate, please
immediately contact Christopher J. Hubbert at 216-736-7215 so that the
appropriate arrangements can be made. The power of attorney appoints Byron S.
Krantz, Marc C. Krantz and Christopher J. Hubbert as your attorneys-in-fact, to
effect the tender referenced in this letter agreement. This letter agreement may
be executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement. Please
sign and date the power of attorney and return it, along with this letter and
your stock certificate, in the envelope provided.
Very truly yours,
NEW WEST EYEWORKS, INC.
<PAGE> 53
[Name]
July __, 1998
Page 3
By:
---------------------------------------
Ronald E. Weinberg, Chairman
AGREEMENT
On this ____ day of July, 1998, _____________________ agrees and
consents to all of the requests of the Company contained in this letter.
------------------------------------------
On this ___ day of July, 1998, Parent and Sub agree and consent to be
bound by all of the terms of this letter agreement.
NATIONAL VISION ASSOCIATES, LTD.
------------------------------------------
By:
Its:
SUB
------------------------------------------
By:
Its:
<PAGE> 54
[Name]
July __, 1998
Page 4
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the undersigned hereby constitutes and
appoints each of Byron S. Krantz, Marc C. Krantz and Christopher J. Hubbert,
signing singly, the undersigned's true and lawful attorney-in-fact to tender
your shares of Common Stock of New West Eyeworks, Inc., a Delaware corporation
(the "Company"), that will be issued upon conversion of your Series A Preferred
Stock/Series B Preferred Stock pursuant to the letter agreement between you and
the Company.
The undersigned hereby grants to each such attorney-in-fact full power
and authority to do and perform any and every act and thing whatsoever
requisite, necessary, or proper to be done in the exercise of any of the rights
and powers herein granted, as fully to all intents and purposes as the
undersigned might or could do if personally present, with full power of
substitution or revocation, hereby ratifying and confirming all that such
attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall
lawfully do or cause to be done by virtue of this Power of Attorney and the
rights and powers herein granted.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney
to be executed as of July __, 1998.
-------------------------------------------
[Name]
<PAGE> 55
EXHIBIT D
FORM OF WARRANT EXERCISE AGREEMENT
<PAGE> 56
[Name]
July __, 1998
Page 1
[The Company Letterhead]
July __, 1998
[Name and Address]
RE: EXERCISE OF WARRANT TO PURCHASE COMMON STOCK OF NEW WEST EYEWORKS,
INC.
Dear :
New West Eyeworks, Inc., a Delaware corporation (the "Company"), has
entered into an Agreement and Plan of Merger, dated as of July __, 1998, by and
among National Vision Associates, Ltd., a Georgia corporation ("Parent"), a
wholly-owned subsidiary of Parent ("Sub"), and the Company (the "Merger
Agreement"). Pursuant to the Merger Agreement, Parent proposes to cause Sub to
purchase all the issued and outstanding shares of Common Stock, par value $0.01
per share, of the Company (the "Common Stock"), at a price per share of Common
Stock of $13.00 in cash (the "Offer"), upon the terms and subject to the
conditions set forth in the Merger Agreement.
Pursuant to Section 6.16 of the Merger Agreement, the Company is
requesting that you agree to exercise the warrant held by you to purchase
_______ shares of Common Stock dated as of __________, 19__ (the "Warrant") and
to tender such shares of Common Stock to Sub in the Offer. Any such exercise
will occur simultaneously with the closing of the Offer and the payment for the
shares of Common Stock tendered pursuant to the Offer. If for any reason the
Offer is not closed or shares of Common Stock tendered pursuant to the Offer are
not paid for in accordance with the terms of the Offer, the exercise will be
deemed not to have occurred. If you so agree to exercise and tender, and you
deliver your Warrant as requested below, Sub will pay to you on the same day
that shares of Common Stock are purchased pursuant to the Offer the excess, if
any, of the price per share of Common Stock to be paid pursuant to the Offer
($13.00 per share of Common Stock) over the exercise price per share of your
Warrant ($8.00/6.11 per share of Common Stock), multiplied by the number of
shares of Common Stock for which your Warrant may then be exercised. Upon such
payment, your Warrant will be cancelled and the Common Stock issued upon
exercise will be owned by Sub. Neither Parent nor Sub shall take any of the
actions set forth in Section 1.01 (a)(i)-(v) of the Merger Agreement, without
your consent.
As may be necessary to effect the terms of this letter agreement, the
Warrant is hereby amended to allow for this form of exercise. Until the closing
of the Offer and the payment for shares of Common Stock tendered pursuant to the
Offer, the terms of the Warrant remain in full force and effect.
<PAGE> 57
[Name]
July __, 1998
Page 2
If for any reason the Offer is not closed pursuant to the terms of the
Merger Agreement or the shares of Common Stock tendered pursuant to the Offer
are not paid for in accordance with the terms of the Offer, (1) the Warrant will
be returned to you, (2) the exercise referenced in this letter agreement will be
deemed not to have occurred, and (3) the terms of the Warrant will remain in
full force and effect, as if this letter agreement never existed.
[ADD THIS PARAGRAPH FOR ALL RECIPIENTS EXCEPT RONALD E. WEINBERG, BARRY
J. FELD AND MESIROW CAPITAL PARTNERS V AND MESIROW CAPITAL PARTNERS VI] You may
cancel this letter agreement at any time prior to the closing of the Offer by
written notice to the Company.
[ADD THIS PARAGRAPH FOR RONALD E. WEINBERG, BARRY J. FELD AND MESIROW
CAPITAL PARTNERS V AND MESIROW CAPITAL PARTNERS VI] This letter agreement, and
all rights and obligations of the parties hereunder, shall terminate immediately
upon the earlier of (i) the acquisition by Parent, through Sub or otherwise, of
all the shares of Common Stock tendered upon exercise of the Warrant pursuant to
this letter agreement, (ii) the termination of the Merger Agreement in
accordance with its terms, (iii) the Effective Time (as defined in the Merger
Agreement), (iv) by you, if Parent or Sub breaches any of the covenants set
forth in the second paragraph of this letter agreement, or (v) by Parent, if you
breach any of your covenants in this letter agreement.
[ADD THIS PARAGRAPH ONLY FOR RECIPIENTS THAT ARE DIRECTORS OR OFFICERS
OF THE COMPANY] Notwithstanding anything in this letter agreement to the
contrary, this letter agreement shall not prohibit, limit or effect you, solely
in your capacity as a director or officer of the Company, from taking any
actions as a director or officer, including without limitation any actions
permitted or not prohibited by the Merger Agreement with respect to any
Acquisition Proposal (as defined in the Merger Agreement) and nothing in this
letter agreement shall prohibit the Company from taking any action permitted
under Section 6.10 of the Merger Agreement.
Please indicate your agreement to comply with all of the requests of
the Company set forth herein by signing and dating the enclosed copy of this
letter and the enclosed power of attorney and returning them to Christopher J.
Hubbert in the envelope provided, along with your Warrant, by July __, 1998. If
you cannot located your Warrant, please immediately contact Christopher J.
Hubbert at 216-736-7215 so that the appropriate arrangements can be made. The
power of attorney appoints Byron S. Krantz, Marc C. Krantz and Christopher J.
Hubbert as your attorneys-in-fact, to effect the tender referenced in this
letter agreement. This letter agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
shall constitute one and the same agreement. Please sign and date the power of
attorney and return it, along with this letter and your Warrant, in the envelope
provided.
<PAGE> 58
[Name]
July __, 1998
Page 3
Very truly yours,
NEW WEST EYEWORKS, INC.
By:
-------------------------------------
Ronald E. Weinberg, Chairman
AGREEMENT
On this ____ day of July, 1998, _____________________ agrees and
consents to all of the requests of the Company contained in this letter.
----------------------------------------
On this ____ day of July, 1998, Parent and Sub agree and consent to be
bound by all of the terms of this letter agreement.
PARENT
--------------------------------------
By:
Its:
SUB
--------------------------------------
By:
Its:
<PAGE> 59
[Name]
July __, 1998
Page 4
POWER OF ATTORNEY
Know All by These Presents, that the undersigned hereby constitutes and
appoints each of Byron S. Krantz, Marc C. Krantz and Christopher J. Hubbert,
signing singly, the undersigned's true and lawful attorney-in-fact to tender
your shares of Common Stock of New West Eyeworks, Inc., a Delaware corporation
(the "Company"), that will be issued upon exercise of your Warrant pursuant to
the letter agreement between you and the Company.
The undersigned hereby grants to each such attorney-in-fact full power
and authority to do and perform any and every act and thing whatsoever
requisite, necessary, or proper to be done in the exercise of any of the rights
and powers herein granted, as fully to all intents and purposes as the
undersigned might or could do if personally present, with full power of
substitution or revocation, hereby ratifying and confirming all that such
attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall
lawfully do or cause to be done by virtue of this Power of Attorney and the
rights and powers herein granted.
In Witness Whereof, the undersigned has caused this Power of Attorney
to be executed as of July __, 1998.
-------------------------------------------
[Name]
<PAGE> 60
EXHIBIT E
FORM OF STOCKHOLDERS' AGREEMENT TO TENDER
<PAGE> 61
STOCK TENDER AGREEMENT
THIS STOCK TENDER AGREEMENT (this "Agreement") is made this ___ day of
July, 1998, by and among NATIONAL VISION ASSOCIATES, LTD., a Georgia corporation
("Parent"), NW ACQUISITION CORP., a wholly-owned subsidiary of Parent and a
Delaware corporation ("Sub"), and each of the parties listed on the signature
pages hereto (each a "Stockholder", and collectively, the "Stockholders").
WHEREAS, each of the Stockholders is, as of the date hereof, the record
and beneficial owner of the shares of common stock, par value $.01 per share
(the "Common Stock"), of New West Eyeworks, Inc., a Delaware corporation (the
"Company"), set forth opposite its name on Annex I hereto;
WHEREAS, Parent, Sub and the Company concurrently herewith are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the acquisition of the
Company by Parent by means of a cash tender offer (the "Offer") by Sub for all
of the issued and outstanding shares of Common Stock and for the subsequent
merger (the "Merger") of Sub with and into the Company upon the terms and
subject to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Sub to enter
into the Merger Agreement, and in order to induce Parent and Sub to enter into
the Merger Agreement, the Stockholders have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Parent and Sub of the Merger Agreement and the mutual representations,
warranties, covenants and agreements set forth herein and therein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Stockholder. Each of
the Stockholders hereby represents and warrants to Parent and Sub, severally and
not jointly, as follows:
(a) Such Stockholder is the record and beneficial owner of the shares
of Common Stock set forth opposite its name on Annex I to this Agreement (as the
shares may be adjusted from time to time pursuant to Section 6 hereof, the
"Shares"). On the date hereof, the Shares opposite such Stockholder's name
constitute all of the Shares owned by such Stockholder (exclusive of Shares held
of record by Flag Partners, and options, warrants or preferred stock that may be
exercised for or converted into Common Stock). Such Stockholder has the
exclusive right to vote or dispose of (or exercise the voting or disposition of)
such Shares. Notwithstanding any of the terms contained in this Agreement,
Ronald E. Weinberg may gift to charities of his choice up to 5,000 Shares, which
Shares shall not be subject to the terms of this Agreement.
(b) Such Stockholder is an individual or is a limited partnership, as
the case may be, duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of organization, and such Stockholder has
all requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby, and in the case of such Stockholder that
is a
<PAGE> 62
limited partnership, has taken all partnership action necessary to authorize the
execution, delivery and performance of this Agreement.
(c) In the case of such Stockholder that is a limited partnership, this
Agreement has been duly authorized, validly executed and delivered by such
Stockholder. Assuming this Agreement has been duly and validly authorized,
executed and delivered by Parent and Sub, this Agreement constitutes the legal,
valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(d) The execution and delivery of this Agreement by such Stockholder do
not, and the performance by such Stockholder of its obligations hereunder will
not, (i) conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give to
any person any right of termination, cancellation, modification or acceleration
of, or result in the creation or imposition of any Lien upon any of the assets
or properties of such Stockholder under, any of the terms, conditions or
provisions of (A) the certificates or articles of incorporation or bylaws (or
other comparable charter documents) , as applicable, of such Stockholder or (B)
(x) any Law or Order of any Governmental or Regulatory Authority applicable to
such Stockholder or any of such Stockholder's respective assets or properties,
or (y) any Contract to which such Stockholder is a party or by which such
Stockholder or any of its respective assets or properties is bound, excluding
from the foregoing clauses (x) and (y) conflicts, violations, breaches,
defaults, terminations, cancellations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a material adverse effect on the
ability of such Stockholder to consummate the transactions contemplated by this
Agreement, or (ii) require any filing by such Stockholder with, or any permit,
authorization, consent or approval of, any Governmental or Regulatory Authority
or any third party other than an amendment to a Schedule 13D, 13G, Form 4 and/or
Form 5. There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which such Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation by
such Stockholder of the transactions contemplated hereby.
(e) Other than the Shares subject to the Escrow and Subordination
Agreement, dated as of December 1, 1993, by and between the Company, the
Huntington Trust Company, N.A., as Escrow Agent, and Barry J. Feld and Ronald E.
Weinberg, the Shares and the certificates representing the Shares owned by such
Stockholder are now and at all times during the term hereof will be held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all Liens, proxies, voting trusts or agreements, except for
any such Liens, proxies, voting trusts or agreements arising hereunder.
SECTION 2. Representations and Warranties of Parent and Sub. Each of
Parent and Sub hereby represents and warrants to the Stockholders as follows:
(a) Parent and Sub are corporations duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation, and each of Parent and Sub has full corporate power and authority
to enter into this Agreement and to consummate the transactions
-2-
<PAGE> 63
contemplated hereby and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
each of Parent and Sub and constitutes the legal, valid and binding obligation
of each of Parent and Sub, enforceable against each of them in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance by Parent and Sub of their obligations hereunder and
the consummation of the transactions contemplated hereby will not, (i) conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of termination, cancellation, modification or acceleration of, or result
in the creation or imposition of any Lien upon any of the assets or properties
of Parent or Sub under, any of the terms, conditions or provisions of (A) the
certificates or articles of incorporation or bylaws of Parent or Sub or (B) (x)
any Law or Order of any Governmental or Regulatory Authority applicable to
Parent or Sub or any of their respective assets or properties, or (y) any
Contract to which Parent or Sub is a party or by which Parent or Sub or any of
their respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement, or (ii) require any filing by
Parent or Sub with, or any permit, authorization, consent or approval of, any
Governmental or Regulatory Authority, other than a Schedule 13D filing.
(d) Securities Law Compliance. Neither Parent nor Sub will effect any
offer or sale of the Shares which offer or sale would cause any Stockholder to
violate the registration requirements of the Securities Act of 1933, as amended,
or the registration or qualification requirements of the securities laws of any
other jurisdiction.
SECTION 3. Tender of the Shares. Each of the Stockholders hereby agrees
to tender the Shares set forth opposite its name on Annex I to this Agreement
into the Offer promptly, and in any event no later than the fifteenth business
day following the commencement of the Offer pursuant to Section 1.01 of the
Merger Agreement and not to withdraw any Shares so tendered unless the Merger
Agreement is terminated or the Offer has expired; provided that if such
Stockholder shall thereafter acquire shares of Common Stock, then any such
additional shares shall be tendered on the next succeeding business day after
such acquisition. Sub hereby agrees to purchase all the Shares so tendered at
the price of $13.00 per Share, as such price may be modified in accordance with
the Merger Agreement and this Agreement; provided, however, that Sub'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 set forth in the Merger Agreement
and Exhibit A thereto. Neither Parent nor Sub shall take any of the actions set
forth in Section 1.01 (a)(i) - (v) of the Merger Agreement without the consent
of the Stockholders.
-3-
<PAGE> 64
SECTION 4. Transfer of the Shares; Proxies and Non-Interference. Prior
to the termination of this Agreement, except as otherwise provided herein, each
Stockholder agrees severally, and not jointly, that it shall not shall, directly
or indirectly, (i) offer for sale, sell, transfer, tender, pledge, encumber,
assign, or otherwise dispose of, any or all of the Shares; (ii) enter into any
Contract, option or understanding with respect to any transfer of any or all of
the Shares or any interest therein; (iii) except as provided herein, grant any
proxy, power-of-attorney or other authorization or consent in or with respect to
the Shares; (iv) deposit the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares; or (v) take any other
action that would in any way restrict, limit or interfere with the performance
of such Stockholder's obligations hereunder or the transactions contemplated
hereby.
SECTION 5. Stockholder Capacity. No person executing this Agreement,
either in his individual capacity or on behalf of a Stockholder, who is or
becomes during the term hereof a director of the Company, makes any agreement or
understanding herein in his or her capacity as such director. Each Stockholder
signs solely in his or her capacity as the owner of, or the trustee of a trust
whose beneficiaries are the owners of, such Stockholder's Shares. Without
limiting the foregoing, nothing in this Agreement shall prohibit, limit or
affect any Stockholder or any of its officers, directors, partners, employees or
agents, acting solely in their capacities as a director or officer of the
Company, from taking any action as a director or officer including, without
limitation, any actions permitted or not prohibited by the Merger Agreement with
respect to any Acquisition Proposal (as defined in the Merger Agreement) and
nothing in this Agreement shall prohibit the Company from taking any action
permitted under Section 6.10 of the Merger Agreement.
SECTION 6. Certain Events. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by any Stockholder, the number of Shares shall be adjusted
appropriately, and this Agreement and the rights and obligations hereunder shall
attach to any additional shares of Common Stock or other securities or rights of
the Company issued to or acquired by any such Stockholder.
SECTION 7. Acquisition Proposals. From the date hereof until the
termination hereof, each of the Stockholders will not, and will cause their
respective officers, directors, partners, employees or other agents not to,
directly or indirectly, (i) take any action to solicit, initiate or encourage
any Acquisition Proposal (as defined in the Merger Agreement) provided that no
public announcement made by the Company pursuant to the last sentence of Section
6.08 of the Merger Agreement shall be deemed a violation of this Section 7, or
(ii) engage in discussions or negotiations with, or disclose any nonpublic
information relating to the Company or the Company Subsidiaries (as defined in
the Merger Agreement), respectively, or afford access to the properties, books
or records of the Company or any Company Subsidiary to any person in connection
with an Acquisition Proposal. Each Stockholder shall immediately cease and cause
to be terminated any existing discussions or negotiations with any persons
(other than each other, the Parent, the Sub and the Company) conducted by such
Stockholder heretofore with respect to any of the foregoing transactions
referenced in this Section 7.
SECTION 8. Voting of Shares. Each of the Stockholders agrees that,
during the time this Agreement is in effect, at any meeting of the stockholders
of the Company, however called, and in any action by written consent of the
stockholders of the Company, such Stockholder shall, to the extent
-4-
<PAGE> 65
applicable, (a) vote (or execute a consent in respect of) all of the Shares
owned by such Stockholder in favor of the Merger, the Merger Agreement (as
amended from time to time) and any of the transactions contemplated by the
Merger Agreement; (b) vote (or execute a consent in respect of) such Shares
against any action or agreement that would reasonably be expected to result in a
breach, in any material respect, of any covenant, representation or warranty or
any other obligation of the Company under the Merger Agreement; and (c) vote (or
execute a consent in respect of) such Shares against any action or agreement
that would reasonably be expected to impede, interfere with, delay or attempt to
discourage the Offer or Merger, including, but not limited to: (i) any
extraordinary corporate transaction (other than the Merger), such as a merger,
reorganization, recapitalization, or liquidation involving the Company or any
Company Subsidiary or any proposal made in opposition to or in competition with
the Merger, (ii) a sale or transfer of a material amount of assets of the
Company or any of its Subsidiaries; (iii) any change in the management or board
of directors of the Company, except as otherwise agreed to in writing by Parent;
(iv) any material change in the present capitalization or dividend policy of the
Company; or (v) any other material change in the corporate structure or business
of the Company or any Company Subsidiary.
SECTION 9. Further Assurances. Each of the Stockholders shall, upon
request of Parent or Sub, take such further actions as may reasonably be
necessary or desirable to carry out the provisions hereof, provided that the
Stockholders shall not be required to incur any additional costs or expenses or
receive less than the agreed price without their consent.
SECTION 10. Termination. This Agreement, and all rights and obligations
of the parties hereunder, shall terminate immediately upon the earlier of (i)
the acquisition by Parent, through Sub or otherwise, of all the Shares, (ii) the
termination of the Merger Agreement in accordance with its terms, (iii) the
Effective Time (as defined in the Merger Agreement), (iv) by any Stockholder, if
Parent or Sub breaches any of the covenants set forth in the last two sentences
of Section 3 hereof, or (v) by Parent if any Stockholder breaches any
representation or warranty in any material respect or any covenant, but only
with respect to such breaching Stockholder; provided, however, that Section 11
shall survive any termination of this Agreement.
SECTION 11. Expenses. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
SECTION 12. Public Announcements. Each of the Stockholders agrees that
it will not issue any press release or otherwise make any public statement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of Parent; provided, however, that such disclosure can be made
without obtaining such prior consent if (i) the disclosure is required by law,
and (ii) the party making such disclosure has first used its best efforts to
consult with the other party about the form and substance of such disclosure.
SECTION 13. Definitions. As used in this Agreement, the following terms
shall have the meanings indicated below:
"Contract" means any agreement, lease, evidence of indebtedness,
mortgage, indenture, security agreement or other contract (whether written or
oral).
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<PAGE> 66
"Law" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
SECTION 14. Miscellaneous.
(a) All notices, claims, demands and other communications hereunder
shall be in writing and shall be deemed given upon (a) confirmation of receipt
of a facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand or (c) the expiration of five business days
after the day when mailed by registered or certified mail (postage prepaid,
return receipt requested), addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
(A) if to any or all the Mesirow Capital Partner signatories:
[Name of Entity]
350 North Clark Street
Chicago, Illinois 60610
Telephone: (312) 595-6095
Facsimile: (312) 595-6211
Attention: William P. Sutter, Jr.
(B) if to Ronald E. Weinberg or Barry J. Feld, to:
Mr. Weinberg or Mr. Feld
[as appropriate]
c/o New West Eyeworks, Inc.
2104 West Southern Avenue
Tempe, Arizona 85282
Telephone: (602) 438-1330
Facsimile: (602) 431-1060
with copies, in the case of both (A) or (B) to:
Kohrman Jackson & Krantz P.L.L.
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<PAGE> 67
1375 East 9th Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Telephone: (216) 696-8700
Facsimile: (216) 621-6536
Attention: Marc C. Krantz, Esq.
and
(C) if to Parent or Sub, to:
National Vision Associates, Ltd.
296 Grayson Highway
Lawrenceville, Georgia 30245-5737
Telephone: (770) 822-3600
Facsimile: (770) 822-2029
Attention: Senior Vice President & General Counsel
with a copy to:
Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309-4530
Telephone: (404) 815-6444
Facsimile: (404) 815-6555
Attention: David A. Stockton, Esq.
(b) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(d) This Agreement and the Merger Agreement constitute the entire
agreement, and supersede all prior agreements and understandings, whether
written and oral, among the parties hereto with respect to the subject matter
hereof.
(e) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
(f) Any legal action or proceeding with respect to this Agreement or
any document related hereto shall be brought in the Chancery Court of the State
of Delaware or the United States District Court for the State of Delaware, and
by execution and delivery of this Agreement or any document related hereto, each
of the parties hereto hereby consents, for itself and in respect of its
property, to this jurisdiction of the aforesaid courts. Each of the parties
hereto hereby irrevocably waives, to the extent permitted by applicable law, any
objection, including, without limitation, any objection to the laying of
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<PAGE> 68
venue or based on the grounds of forum non conveniens, which such party may now
or hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of this Agreement or any document related hereto.
(g) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, and any such purported assignment shall be null and void. This
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors, and the provisions of this
Agreement are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(h) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) will waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement.
(j) No amendment, modification or waiver in respect to this Agreement
shall be effective unless it shall be in writing and signed by each party
hereto; provided that Annex I hereto may be supplemented by Parent by adding the
name and other relevant information concerning any stockholder of the Company
who agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added stockholder shall be treated
as a "Stockholder" for all purposes of this Agreement.
[remainder of page left blank intentionally]
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<PAGE> 69
IN WITNESS WHEREOF, each of Parent, the Sub and the Stockholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
NATIONAL VISION ASSOCIATES, LTD.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
"SUB"
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
STOCKHOLDERS:
---------------------------------------------
Ronald E. Weinberg
MESIROW CAPITAL PARTNERS II
By:
------------------------------------------
Name:
-------------------------------------
MESIROW CAPITAL PARTNERS III
By:
------------------------------------------
Name:
-------------------------------------
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<PAGE> 70
MESIROW CAPITAL PARTNERS IV
By:
--------------------------------------
Name:
---------------------------------
MESIROW CAPITAL PARTNERS V
By:
--------------------------------------
Name:
---------------------------------
MESIROW CAPITAL PARTNERS VI
By:
--------------------------------------
Name:
---------------------------------
-----------------------------------------
Barry J. Feld
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<PAGE> 71
ANNEX I
STOCKHOLDER SHARES OF COMMON STOCK HELD DIRECTLY
- ------------------------------------- ------------------------------------
Barry J. Feld 198,747
Mesirow Capital Partners II 64,519
Mesirow Capital Partners III 74,719
Mesirow Capital Partners V 333,386
Mesirow Capital Partners VI 170,135
Ronald E. Weinberg 833,904
---------
1,675,410
=========
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<PAGE> 72
SCHEDULE
2.06
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION AT
EFFECTIVE TIME OF MERGER
<PAGE> 73
SCHEDULE 2.06
DIRECTORS AND OFFICERS OF SURVIVING CORPORATION
Directors
James W. Krause, Chairman
Barry J. Feld
Mitchell Goodman
Angus C. Morrison
Officers
James W. Krause, Chief Executive Officer
Barry J. Feld, President
Mitchell Goodman, Vice President, General Counsel and Secretary
Angus C. Morrison, Vice President, Chief Financial Officer and Treasurer
<PAGE> 74
DEFINITIONS
The following terms are defined in this Agreement as indicated below:
"accumulated funding deficiency" is defined in Section 4.01(p)(D)
"Affiliate" is defined in Section 4.01(x)(E)
"Acquisition Proposal" is defined in Section 6.10(b)
"Agreement" is defined in the first sentence
"Audit" is defined in Section 4.01(l)(F)
"Certificate of Merger" is defined in Section 2.03
"Closing Date" is defined in Section 2.03
"Common Stock" is defined in recitals
"Company Disclosure Letter" is defined in Section 4.01
"Company ERISA Plan" is defined in Section 4.01(p)(A)
"Company Expenses" is defined in Section 8.06(b)
"Company Financial Statement Date" is defined in Section 4.01(h)
"Company Material Adverse Effect" is defined in Section 4.01(a)
"Company Preferred Shares" is defined in Section 4.01(b)
"Confidentiality Agreement" is defined in Section 6.02
"consent" is defined in Section 4.01(l)(E)
"control" is defined in Section 4.01(x)(E)
"Convertible Preferred Stock" is defined in Section 4.01(b)
"Effective Time" is defined in Section 2.03
"employee pension Plan" is defined in Section 4.01(H)
<PAGE> 75
"Environmental Rule" is defined in Section 4.01(v)(C)
"Everen" is defined in Section 1.02
"Exchange Act" is defined in Section 1.0(b)
"Financing Condition" is defined in Exhibit A
"F.M. Roberts & Company" is defined in Exhibit A
"GAAP" is defined in Section 4.01(g)
"Government Permits" is defined in Section 4.01(u)
"Governmental Person" is defined in Section 4.01(f)
"HSR Act" is defined in Section 4.01(f)
"hazardous substance" is defined in Section 4.01(v)(C)
"Hazardous Substance" is defined in Section 4.01(v)(C)
"Indemnified Parties" is defined in Section 6.06(b)
"Independent Directors" is defined in Section 6.07
"Losses" is defined in Section 6.06(b)
"Material Contract" is defined in Section 4.01(w)
"Merger" is defined in recitals
"Merger Consideration" is defined in Section 3.01(c)
"multi-employer pension plan" is defined in section 4.01(p)(E)
"Offer" is defined in recitals
"Offer Documents" is defined in Section 1.01(b)
"Option Consideration" is defined in Section 6.04
"Parent" is defined in the first sentence
"Parent's Investment Advisor" is defined in Section 4.02(e)
"Parent's Material Adverse Effect" is defined in Section 4.02(e)
"Paying Agent" is defined in Section 3.02(a)
"Rule 14f-1 Statement" is defined in Section 4.01(z)
"SEC" is defined in Section 1.01
"Securities Act" is defined in Section 4.01(f)
"Serial Preferred Stock" is defined in Section 4.10(b)
"Stock Options" is defined in Section 6.04
"Stock Plans" is defined in Section 6.04
"Stockholders' Meeting" is defined in Section 6.01(a)
"Sub" is defined in the first sentence
"Surviving Corporation" is defined in Section 2.01
"Taxes" is defined in Section 4.01(l)(F)
"Tax Authority" is defined in Section 4.01(l)(D)
iv
<PAGE> 1
EXHIBIT (c)(2)
STOCK TENDER AGREEMENT
THIS STOCK TENDER AGREEMENT (this "Agreement") is made this 13th day of
July, 1998, by and among NATIONAL VISION ASSOCIATES, LTD., a Georgia corporation
("Parent"), NW ACQUISITION CORP., a wholly-owned subsidiary of Parent and a
Delaware corporation ("Sub"), and each of the parties listed on the signature
pages hereto (each a "Stockholder", and collectively, the "Stockholders").
WHEREAS, each of the Stockholders is, as of the date hereof, the record
and beneficial owner of the shares of common stock, par value $.01 per share
(the "Common Stock"), of New West Eyeworks, Inc., a Delaware corporation (the
"Company"), set forth opposite its name on Annex I hereto;
WHEREAS, Parent, Sub and the Company concurrently herewith are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, for the acquisition of the
Company by Parent by means of a cash tender offer (the "Offer") by Sub for all
of the issued and outstanding shares of Common Stock and for the subsequent
merger (the "Merger") of Sub with and into the Company upon the terms and
subject to the conditions set forth in the Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Sub to enter
into the Merger Agreement, and in order to induce Parent and Sub to enter into
the Merger Agreement, the Stockholders have agreed to enter into this Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Parent and Sub of the Merger Agreement and the mutual representations,
warranties, covenants and agreements set forth herein and therein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Stockholder. Each of
the Stockholders hereby represents and warrants to Parent and Sub, severally and
not jointly, as follows:
(a) Such Stockholder is the record and beneficial owner of the shares
of Common Stock set forth opposite its name on Annex I to this Agreement (as the
shares may be adjusted from time to time pursuant to Section 6 hereof, the
"Shares"). On the date hereof, the Shares opposite such Stockholder's name
constitute all of the Shares owned by such Stockholder (exclusive of Shares held
of record by Flag Partners, and options, warrants or preferred stock that may be
exercised for or converted into Common Stock). Such Stockholder has the
exclusive right to vote or dispose of (or exercise the voting or disposition of)
such Shares. Notwithstanding any of the terms contained in this Agreement,
Ronald E. Weinberg may gift to charities of his choice up to 5,000 Shares, which
Shares shall not be subject to the terms of this Agreement.
(b) Such Stockholder is an individual or is a limited partnership, as
the case may be, duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of organization, and such Stockholder has
all requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby, and in the case of such Stockholder that
is a
<PAGE> 2
limited partnership, has taken all partnership action necessary to authorize the
execution, delivery and performance of this Agreement.
(c) In the case of such Stockholder that is a limited partnership, this
Agreement has been duly authorized, validly executed and delivered by such
Stockholder. Assuming this Agreement has been duly and validly authorized,
executed and delivered by Parent and Sub, this Agreement constitutes the legal,
valid and binding obligation of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(d) The execution and delivery of this Agreement by such Stockholder do
not, and the performance by such Stockholder of its obligations hereunder will
not, (i) conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give to
any person any right of termination, cancellation, modification or acceleration
of, or result in the creation or imposition of any Lien upon any of the assets
or properties of such Stockholder under, any of the terms, conditions or
provisions of (A) the certificates or articles of incorporation or bylaws (or
other comparable charter documents) , as applicable, of such Stockholder or (B)
(x) any Law or Order of any Governmental or Regulatory Authority applicable to
such Stockholder or any of such Stockholder's respective assets or properties,
or (y) any Contract to which such Stockholder is a party or by which such
Stockholder or any of its respective assets or properties is bound, excluding
from the foregoing clauses (x) and (y) conflicts, violations, breaches,
defaults, terminations, cancellations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a material adverse effect on the
ability of such Stockholder to consummate the transactions contemplated by this
Agreement, or (ii) require any filing by such Stockholder with, or any permit,
authorization, consent or approval of, any Governmental or Regulatory Authority
or any third party other than an amendment to a Schedule 13D, 13G, Form 4 and/or
Form 5. There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which such Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation by
such Stockholder of the transactions contemplated hereby.
(e) Other than the Shares subject to the Escrow and Subordination
Agreement, dated as of December 1, 1993, by and between the Company, the
Huntington Trust Company, N.A., as Escrow Agent, and Barry J. Feld and Ronald E.
Weinberg, the Shares and the certificates representing the Shares owned by such
Stockholder are now and at all times during the term hereof will be held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
free and clear of all Liens, proxies, voting trusts or agreements, except for
any such Liens, proxies, voting trusts or agreements arising hereunder.
SECTION 2. Representations and Warranties of Parent and Sub. Each of
Parent and Sub hereby represents and warrants to the Stockholders as follows:
(a) Parent and Sub are corporations duly organized, validly existing
and in good standing under the laws of their respective jurisdictions of
incorporation, and each of Parent and Sub has full corporate power and authority
to enter into this Agreement and to consummate the transactions
-2-
<PAGE> 3
contemplated hereby and has taken all necessary corporate action to authorize
the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
each of Parent and Sub and constitutes the legal, valid and binding obligation
of each of Parent and Sub, enforceable against each of them in accordance with
its terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors' rights
generally and by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance by Parent and Sub of their obligations hereunder and
the consummation of the transactions contemplated hereby will not, (i) conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of termination, cancellation, modification or acceleration of, or result
in the creation or imposition of any Lien upon any of the assets or properties
of Parent or Sub under, any of the terms, conditions or provisions of (A) the
certificates or articles of incorporation or bylaws of Parent or Sub or (B) (x)
any Law or Order of any Governmental or Regulatory Authority applicable to
Parent or Sub or any of their respective assets or properties, or (y) any
Contract to which Parent or Sub is a party or by which Parent or Sub or any of
their respective assets or properties is bound, excluding from the foregoing
clauses (x) and (y) conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of Liens which,
individually or in the aggregate, could not be reasonably expected to have a
material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement, or (ii) require any filing by
Parent or Sub with, or any permit, authorization, consent or approval of, any
Governmental or Regulatory Authority, other than a Schedule 13D filing.
(d) Securities Law Compliance. Neither Parent nor Sub will effect any
offer or sale of the Shares which offer or sale would cause any Stockholder to
violate the registration requirements of the Securities Act of 1933, as amended,
or the registration or qualification requirements of the securities laws of any
other jurisdiction.
SECTION 3. Tender of the Shares. Each of the Stockholders hereby agrees
to tender the Shares set forth opposite its name on Annex I to this Agreement
into the Offer promptly, and in any event no later than the fifteenth business
day following the commencement of the Offer pursuant to Section 1.01 of the
Merger Agreement and not to withdraw any Shares so tendered unless the Merger
Agreement is terminated or the Offer has expired; provided that if such
Stockholder shall thereafter acquire shares of Common Stock, then any such
additional shares shall be tendered on the next succeeding business day after
such acquisition. Sub hereby agrees to purchase all the Shares so tendered at
the price of $13.00 per Share, as such price may be modified in accordance with
the Merger Agreement and this Agreement; provided, however, that Sub'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 set forth in the Merger Agreement
and Exhibit A thereto. Neither Parent nor Sub shall take any of the actions set
forth in Section 1.01 (a)(i) - (v) of the Merger Agreement without the consent
of the Stockholders.
-3-
<PAGE> 4
SECTION 4. Transfer of the Shares; Proxies and Non-Interference. Prior
to the termination of this Agreement, except as otherwise provided herein, each
Stockholder agrees severally, and not jointly, that it shall not shall, directly
or indirectly, (i) offer for sale, sell, transfer, tender, pledge, encumber,
assign, or otherwise dispose of, any or all of the Shares; (ii) enter into any
Contract, option or understanding with respect to any transfer of any or all of
the Shares or any interest therein; (iii) except as provided herein, grant any
proxy, power-of-attorney or other authorization or consent in or with respect to
the Shares; (iv) deposit the Shares into a voting trust or enter into a voting
agreement or arrangement with respect to the Shares; or (v) take any other
action that would in any way restrict, limit or interfere with the performance
of such Stockholder's obligations hereunder or the transactions contemplated
hereby.
SECTION 5. Stockholder Capacity. No person executing this Agreement,
either in his individual capacity or on behalf of a Stockholder, who is or
becomes during the term hereof a director of the Company, makes any agreement or
understanding herein in his or her capacity as such director. Each Stockholder
signs solely in his or her capacity as the owner of, or the trustee of a trust
whose beneficiaries are the owners of, such Stockholder's Shares. Without
limiting the foregoing, nothing in this Agreement shall prohibit, limit or
affect any Stockholder or any of its officers, directors, partners, employees or
agents, acting solely in their capacities as a director or officer of the
Company, from taking any action as a director or officer including, without
limitation, any actions permitted or not prohibited by the Merger Agreement with
respect to any Acquisition Proposal (as defined in the Merger Agreement) and
nothing in this Agreement shall prohibit the Company from taking any action
permitted under Section 6.10 of the Merger Agreement.
SECTION 6. Certain Events. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by any Stockholder, the number of Shares shall be adjusted
appropriately, and this Agreement and the rights and obligations hereunder shall
attach to any additional shares of Common Stock or other securities or rights of
the Company issued to or acquired by any such Stockholder.
SECTION 7. Acquisition Proposals. From the date hereof until the
termination hereof, each of the Stockholders will not, and will cause their
respective officers, directors, partners, employees or other agents not to,
directly or indirectly, (i) take any action to solicit, initiate or encourage
any Acquisition Proposal (as defined in the Merger Agreement) provided that no
public announcement made by the Company pursuant to the last sentence of Section
6.08 of the Merger Agreement shall be deemed a violation of this Section 7, or
(ii) engage in discussions or negotiations with, or disclose any nonpublic
information relating to the Company or the Company Subsidiaries (as defined in
the Merger Agreement), respectively, or afford access to the properties, books
or records of the Company or any Company Subsidiary to any person in connection
with an Acquisition Proposal. Each Stockholder shall immediately cease and cause
to be terminated any existing discussions or negotiations with any persons
(other than each other, the Parent, the Sub and the Company) conducted by such
Stockholder heretofore with respect to any of the foregoing transactions
referenced in this Section 7.
SECTION 8. Voting of Shares. Each of the Stockholders agrees that,
during the time this Agreement is in effect, at any meeting of the stockholders
of the Company, however called, and in any action by written consent of the
stockholders of the Company, such Stockholder shall, to the extent
-4-
<PAGE> 5
applicable, (a) vote (or execute a consent in respect of) all of the Shares
owned by such Stockholder in favor of the Merger, the Merger Agreement (as
amended from time to time) and any of the transactions contemplated by the
Merger Agreement; (b) vote (or execute a consent in respect of) such Shares
against any action or agreement that would reasonably be expected to result in a
breach, in any material respect, of any covenant, representation or warranty or
any other obligation of the Company under the Merger Agreement; and (c) vote (or
execute a consent in respect of) such Shares against any action or agreement
that would reasonably be expected to impede, interfere with, delay or attempt to
discourage the Offer or Merger, including, but not limited to: (i) any
extraordinary corporate transaction (other than the Merger), such as a merger,
reorganization, recapitalization, or liquidation involving the Company or any
Company Subsidiary or any proposal made in opposition to or in competition with
the Merger, (ii) a sale or transfer of a material amount of assets of the
Company or any of its Subsidiaries; (iii) any change in the management or board
of directors of the Company, except as otherwise agreed to in writing by Parent;
(iv) any material change in the present capitalization or dividend policy of the
Company; or (v) any other material change in the corporate structure or business
of the Company or any Company Subsidiary.
SECTION 9. Further Assurances. Each of the Stockholders shall, upon
request of Parent or Sub, take such further actions as may reasonably be
necessary or desirable to carry out the provisions hereof, provided that the
Stockholders shall not be required to incur any additional costs or expenses or
receive less than the agreed price without their consent.
SECTION 10. Termination. This Agreement, and all rights and obligations
of the parties hereunder, shall terminate immediately upon the earlier of (i)
the acquisition by Parent, through Sub or otherwise, of all the Shares, (ii) the
termination of the Merger Agreement in accordance with its terms, (iii) the
Effective Time (as defined in the Merger Agreement), (iv) by any Stockholder, if
Parent or Sub breaches any of the covenants set forth in the last two sentences
of Section 3 hereof, or (v) by Parent if any Stockholder breaches any
representation or warranty in any material respect or any covenant, but only
with respect to such breaching Stockholder; provided, however, that Section 11
shall survive any termination of this Agreement.
SECTION 11. Expenses. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
SECTION 12. Public Announcements. Each of the Stockholders agrees that
it will not issue any press release or otherwise make any public statement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of Parent; provided, however, that such disclosure can be made
without obtaining such prior consent if (i) the disclosure is required by law,
and (ii) the party making such disclosure has first used its best efforts to
consult with the other party about the form and substance of such disclosure.
SECTION 13. Definitions. As used in this Agreement, the following terms
shall have the meanings indicated below:
"Contract" means any agreement, lease, evidence of indebtedness,
mortgage, indenture, security agreement or other contract (whether written or
oral).
-5-
<PAGE> 6
"Law" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States, any foreign country
or any domestic or foreign state, county, city or other political subdivision or
of any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
SECTION 14. Miscellaneous.
(a) All notices, claims, demands and other communications hereunder
shall be in writing and shall be deemed given upon (a) confirmation of receipt
of a facsimile transmission, (b) confirmed delivery by a standard overnight
carrier or when delivered by hand or (c) the expiration of five business days
after the day when mailed by registered or certified mail (postage prepaid,
return receipt requested), addressed to the respective parties at the following
addresses (or such other address for a party as shall be specified by like
notice):
(A) if to any or all the Mesirow Capital Partner signatories:
[Name of Entity]
350 North Clark Street
Chicago, Illinois 60610
Telephone: (312) 595-6095
Facsimile: (312) 595-6211
Attention: William P. Sutter, Jr.
(B) if to Ronald E. Weinberg or Barry J. Feld, to:
Mr. Weinberg or Mr. Feld
[as appropriate]
c/o New West Eyeworks, Inc.
2104 West Southern Avenue
Tempe, Arizona 85282
Telephone: (602) 438-1330
Facsimile: (602) 431-1060
with copies, in the case of both (A) or (B) to:
Kohrman Jackson & Krantz P.L.L.
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<PAGE> 7
1375 East 9th Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Telephone: (216) 696-8700
Facsimile: (216) 621-6536
Attention: Marc C. Krantz, Esq.
and
(C) if to Parent or Sub, to:
National Vision Associates, Ltd.
296 Grayson Highway
Lawrenceville, Georgia 30245-5737
Telephone: (770) 822-3600
Facsimile: (770) 822-2029
Attention: Senior Vice President & General Counsel
with a copy to:
Kilpatrick Stockton LLP
1100 Peachtree Street
Atlanta, Georgia 30309-4530
Telephone: (404) 815-6444
Facsimile: (404) 815-6555
Attention: David A. Stockton, Esq.
(b) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(d) This Agreement and the Merger Agreement constitute the entire
agreement, and supersede all prior agreements and understandings, whether
written and oral, among the parties hereto with respect to the subject matter
hereof.
(e) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
(f) Any legal action or proceeding with respect to this Agreement or
any document related hereto shall be brought in the Chancery Court of the State
of Delaware or the United States District Court for the State of Delaware, and
by execution and delivery of this Agreement or any document related hereto, each
of the parties hereto hereby consents, for itself and in respect of its
property, to this jurisdiction of the aforesaid courts. Each of the parties
hereto hereby irrevocably waives, to the extent permitted by applicable law, any
objection, including, without limitation, any objection to the laying of
-7-
<PAGE> 8
venue or based on the grounds of forum non conveniens, which such party may now
or hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of this Agreement or any document related hereto.
(g) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, and any such purported assignment shall be null and void. This
Agreement will be binding upon, inure to the benefit of and be enforceable by,
the parties and their respective successors, and the provisions of this
Agreement are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(h) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(i) Each of the parties hereto acknowledges and agrees that in the
event of any breach of this Agreement, each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties hereto (i) will waive, in any
action for specific performance, the defense of adequacy of a remedy at law and
(ii) shall be entitled, in addition to any other remedy to which they may be
entitled at law or in equity, to compel specific performance of this Agreement.
(j) No amendment, modification or waiver in respect to this Agreement
shall be effective unless it shall be in writing and signed by each party
hereto; provided that Annex I hereto may be supplemented by Parent by adding the
name and other relevant information concerning any stockholder of the Company
who agrees to be bound by the terms of this Agreement without the agreement of
any other party hereto, and thereafter such added stockholder shall be treated
as a "Stockholder" for all purposes of this Agreement.
[remainder of page left blank intentionally]
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<PAGE> 9
IN WITNESS WHEREOF, each of Parent, the Sub and the Stockholders have caused
this Agreement to be duly executed and delivered as of the date first written
above.
NATIONAL VISION ASSOCIATES, LTD.
By: /s/ James W. Krause
------------------------------------------
Name: James W. Krause
----------------------------------------
Title: Chairman & Chief Executive Officer
---------------------------------------
"SUB"
By: /s/ James W. Krause
------------------------------------------
Name: James W. Krause
----------------------------------------
Title: Chairman & Chief Executive Officer
---------------------------------------
STOCKHOLDERS:
/s/ Ronald E. Weinberg
---------------------------------------------
Ronald E. Weinberg
MESIROW CAPITAL PARTNERS II
By: /s/ W.P. Sutter, Jr.
------------------------------------------
Name: William P. Sutter, Jr.
-------------------------------------
MESIROW CAPITAL PARTNERS III
By: /s/ William P. Sutter, Jr.
------------------------------------------
Name: William P. Sutter, Jr.
-------------------------------------
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<PAGE> 10
MESIROW CAPITAL PARTNERS IV
By: /s/ W.P. Sutter, Jr.
--------------------------------------
Name: William P. Sutter, Jr.
---------------------------------
MESIROW CAPITAL PARTNERS V
By: /s/ W.P. Sutter, Jr.
--------------------------------------
Name: William P. Sutter, Jr.
---------------------------------
MESIROW CAPITAL PARTNERS VI
By: /s/ W.P. Sutter, Jr.
--------------------------------------
Name: William P. Sutter, Jr.
---------------------------------
/s/ Barry J. Feld
-----------------------------------------
Barry J. Feld
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<PAGE> 11
ANNEX I
STOCKHOLDER SHARES OF COMMON STOCK HELD DIRECTLY
- ------------------------------------- ------------------------------------
Barry J. Feld 198,747
Mesirow Capital Partners II 64,519
Mesirow Capital Partners III 74,719
Mesirow Capital Partners V 333,386
Mesirow Capital Partners VI 170,135
Ronald E. Weinberg 833,904
---------
1,675,410
=========
-11-
<PAGE> 1
EXHIBIT (c)(5)
[SCHRODERS LETTERHEAD]
July 13, 1998
James W. Krause
President & CEO
National Vision Associates, Ltd.
296 Grayson Highway
Lawrenceville, GA 30045-5737
Gentlemen:
You have advised us of your intention to enter into a tender offer purchase
(the "Transaction") involving New West Eyeworks, Inc. ("New West"). You have
indicated interest in retaining Schroder & Co. Inc. ("Schroders") to assist you
in raising funds required to consummate the Transaction through the sale or
placement of up to $120 million principal amount of Senior Unsecured Notes (the
"Securities"), to be issued by National Vision Associates, Ltd. ("National
Vision").
Subject to the factors listed below, we are highly confident in our ability
to sell or place the Securities to be issued by National Vision. The structure,
covenants and terms of the Securities will be as determined by Schroders in
consultation with you (to be mutually accepted by both parties) based on market
conditions at the time of the offering or placement. The offering or placement
of the Securities is subject to (i) there having been in Schroders' sole
judgment no material adverse change in the financial condition, results of
operations, business or prospects of the New West or National Vision, considered
as a whole, since June 30, 1998, (ii) there not having been any material adverse
change in the market for high yield securities or the capital markets in
general, in the opinion of Schroders, (iii) consolidated pro forma
capitalization of National Vision, assuming the consummation of the Transaction
and related permanent financings, acceptable to Schroders, (iv) audited and
unaudited historical financial statements (including unaudited pro forma
financial statements) of National Vision and its subsidiaries acceptable to
Schroders and conforming to the requirements of the Securities Act of 1933, as
amended, and the rules and regulations promulgated pursuant thereto for
registration statements filed thereunder, (v) our not having discovered or
otherwise becoming aware of any information not previously disclosed to us that
we believe to be inconsistent in a material and adverse manner with our
understanding, based on the information provided to us prior to the date hereof,
of the business, operations, property, condition (financial or otherwise) or
prospects of National Vision, (vi) terms, structure and arrangements regarding
the bank financing and all other financing for the Transaction being
satisfactory to Schroders, (vii) the execution of a customary underwriting
agreement or placement agreement and other documents and satisfaction of the
conditions stated therein, (viii) the execution and delivery of definitive
documentation relating to and encompassing the terms
<PAGE> 2
of the Transaction (including the obtaining of all consents thereto), (ix)
receipt of all requisite regulatory approvals with respect to the Transaction,
(x) satisfactory completion of a due diligence review by Schroders, and (xi) no
change or proposed change in United States law, or the laws of any jurisdiction
in which the Company operates, that could reasonably be expected to adversely
affect the economic consequences, including tax treatment, that National Vision
contemplates deriving from the Transaction. The terms and conditions of the
items enumerated above shall be in form and substance acceptable to Schroders.
It should be understood that this letter shall not constitute or give rise
to any obligation on the part of Schroders to purchase any Securities or to
provide any advisory or placement services; any such obligations would arise
only under separate written agreement acceptable to Schroders in its sole
discretion.
The letter is solely for use by you and New West, and may not be disclosed,
except in any offering documents distributed to the shareholders of New West,
without our prior written consent, to anyone other than your officers,
employees, attorneys, and advisors; and the officers, employees, attorneys, and
advisors of New West, in each case on a confidential and need-to-know basis.
This letter shall be effective upon the date hereof and shall expire 90 days
from the date hereof.
Very truly yours,
SCHRODER & CO. INC.
By: /s/ R. Douglas Carleton
------------------------
Name: Douglas Carleton
Title: Managing Director
