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By agreeing to a series of transactions, the minority shareholders willimmediately assume management of Nyer and will control approximately 58% ofthe voting power of Nyer. Karen Wright will resign her position as Presidentof Nyer, while continuing as Vice-President-Finance. She, Donald Lewis andDr. Kenneth Nyer will resign their board positions while the Nyer board willelect Mark and David Dumouchel to the board. Mark Dumouchel, president of thepharmacy subsidiary since 1990, will be appointed Chief Executive Officer andPresident of Nyer. Upon closing, certain former subsidiary minorityshareholders will sign three-year employment agreements to serve as executivepharmacy managers. As conditions of the buyout are met, all preferred sharesof the company will be retired.
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Over time and when fully realized upon, Nyer will satisfy its $4 millionobligation through a series of transactions. The agreement provides for a$1.75 million cash payment, the issuance of a new class B2 convertiblepreferred shares to the minority shareholders, and the issuance of two notes,a $350,000 promissory note bearing interest at a rate of 7% per annum maturingin 5 years and a $1.5 million convertible promissory note bearing interest ata rate of 8% per annum maturing in 3 years. The class B2 preferred shareswill convert to 218,000 shares of common stock, subject to adjustment, in 3years provided Nyer meets certain financial obligations to the minorityshareholders. The convertible note is convertible at any time following oneyear at the holders' election into Nyer common stock at an initial conversionrate of $1.84 per share, subject to adjustment, and is redeemable at theholders' election, in whole or in part, based upon the occurrence of certaintransactions. It is anticipated that the cash funding for the transactionwill occur through D.A.W.'s increased available cash flow, as a result of theextension of payment terms by its major supplier.
The new agreement also calls for Nyer to simultaneously acquire 100% ofits outstanding shares of Class A and B preferred stock owned by Samuel Nyerin exchange for a $400,000 promissory note bearing interest at a rate of 7%per annum maturing in 5 years. In addition, the minority shareholders ofD.A.W. have agreed to purchase 597,827 shares of Nyer common stock owned byNyle International Corp. for $1.84 per share.
The change of control that would be caused by these transactions issubject to Nyer shareholder approval and other closing conditions.
"We are very pleased to have reached this agreement and look forward tothe realization of the true value of the Company's stock," said D.A.W.president and incoming Nyer CEO Mark Dumouchel.
"We are excited we have reached an agreement to purchase the remaining 20%of our pharmacy segment, D.A.W., Inc. and will have employment contracts withour five executive pharmacy managers, stated Karen Wright, current Presidentof Nyer Medical Group, Inc. "This is an important time for the Company as westrive to increase profitability and increase shareholder value."
Nyer Medical Group, Inc. is a holding company that operates pharmacies inthe greater Boston area and a medical products distribution business thatdistributes and markets medical equipment and supply products to hospitals,physicians and nursing homes using relationship-based telemarketing, directsales personnel, catalogs and the Internet. These orders are filled by theCompany's distribution centers located in New England and South Florida.
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