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
---------------------
Schedule 13D
(Amendment No. 11)
Under the Securities Exchange Act of 1934
---------------------
REN Corporation-USA
(Name of Subject Company)
REN Acquisition Corp.
(Bidder)
COBE Laboratories, Inc.
Gambro AB
Incentive AB
Common Stock, no par value
(Title of Class of Securities)
7596561010
(CUSIP Number of Class of Securities)
------------------------------
Mats Wahlstrom
REN Acquisition Corp.
1185 Oak Street
Lakewood, Colorado 80215
Telephone: (303) 232-6800
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications on Behalf of Bidder)
---------------------------------
Copy to:
Peter D. Lyons, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telephone: (212) 848-4000
September 19, 1995
CALCULATION OF FILING FEE
Transaction Valuation Amount of Filing Fee
$184,011,639.50* $36,802.33
/ / 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:
--------------------------------------------------
Form or Registration No.:
-------------------------------------------------
Filing Party:
-------------------------------------------------------------
Date Filed:
----------------------------------------------------------------
____________________
* Note: The Transaction Value is calculated by multiplying $20.00, the
----
per share tender offer price, by 9,544,838, the sum of the number of
shares of Common Stock outstanding not already owned by the Bidder and
629,225, the sum of the number of shares of Common Stock subject to
options and warrants outstanding as of September 12, 1995 and the number
of shares of Common Stock subject to an employee stock purchase program
outstanding as of September 30, 1995, and backing out the exercise price
of the options and warrants.
<PAGE>
Cusip No. 7596561010
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of above Person
REN Acquisition Corp.
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See
Instructions) (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions)
AF, BK
- --------------------------------------------------------------------------------
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Tennessee
- --------------------------------------------------------------------------------
7 Aggregate Amount Beneficially Owned by Each Reporting
Person
10,036,221
- --------------------------------------------------------------------------------
8 Check if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions) / /
- --------------------------------------------------------------------------------
9 Percent of Class Represented by Amount in Row (7)
53%
- --------------------------------------------------------------------------------
10 Type of Reporting Person (See Instructions)
CO
Cusip No. 7596561010
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of above Person
COBE Laboratories, Inc.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See
Instructions) (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions)
AF, BK
- --------------------------------------------------------------------------------
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Colorado
- --------------------------------------------------------------------------------
7 Aggregate Amount Beneficially Owned by Each Reporting
Person
10,036,221
- --------------------------------------------------------------------------------
8 Check if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions) / /
- --------------------------------------------------------------------------------
9 Percent of Class Represented by Amount in Row (7)
53%
- --------------------------------------------------------------------------------
10 Type of Reporting Person (See Instructions)
CO
- --------------------------------------------------------------------------------
<PAGE>
Cusip No. 7596561010
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of above Person
Gambro AB
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See
Instructions) (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions)
AF, BK
- --------------------------------------------------------------------------------
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Sweden
- --------------------------------------------------------------------------------
7 Aggregate Amount Beneficially Owned by Each Reporting
Person
10,036,221
- --------------------------------------------------------------------------------
8 Check if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions) / /
- --------------------------------------------------------------------------------
9 Percent of Class Represented by Amount in Row (7)
53%
- --------------------------------------------------------------------------------
10 Type of Reporting Person (See Instructions)
CO
- --------------------------------------------------------------------------------
<PAGE>
Cusip No. 7596561010
- --------------------------------------------------------------------------------
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of above Person
Incentive AB
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See
Instructions) (a) / /
(b) / /
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions)
AF, BK
- --------------------------------------------------------------------------------
5 Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization
Sweden
- --------------------------------------------------------------------------------
7 Aggregate Amount Beneficially Owned by Each Reporting
Person
10,036,221
- --------------------------------------------------------------------------------
8 Check if the Aggregate Amount in Row (7) Excludes
Certain Shares (See Instructions) / /
- --------------------------------------------------------------------------------
9 Percent of Class Represented by Amount in Row (7)
53%
- --------------------------------------------------------------------------------
10 Type of Reporting Person (See Instructions)
CO
- --------------------------------------------------------------------------------
<PAGE>
This Tender Offer Statement on Schedule 14D-1 and Amendment No. 11 to
Schedule 13D (this "Statement") relates to the offer by REN Acquisition
Corp., a Tennessee corporation ("Purchaser") and a wholly owned subsidiary
of COBE Laboratories, Inc., a Colorado corporation ("COBE") and an indirect
wholly owned subsidiary of Gambro AB, a Swedish corporation ("Gambro") and
an indirect subsidiary of Incentive AB, a Swedish corporation
("Incentive"), to purchase all outstanding shares of Common Stock, no par
value (the "Shares"), of REN Corporation-USA, a Tennessee corporation (the
"Company"), at a price of $20.00 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in Purchaser's Offer to
Purchase dated September 19, 1995 (the "Offer to Purchase") and in the
related Letter of Transmittal (which together constitute the "Offer"),
copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively.
Item 1. Security and Subject Company.
(a) The name of the subject company is REN Corporation-USA, a
Tennessee corporation (the "Company"), which has its principal executive
offices at 6820 Charlotte Pike, Nashville, Tennessee 37209.
(b) The class of equity securities being sought is all the
outstanding shares of Common Stock, no par value, of the Company. The
information set forth under "INTRODUCTION" and "THE TENDER OFFER -- Section
1. Terms of the Offer; Expiration Date" in the Offer to Purchase is
incorporated herein by reference.
(c) The information concerning the principal market in which the
Shares are traded and certain high and low sales prices for the Shares in
such principal market is set forth in "THE TENDER OFFER -- Section 5. Price
Range of Shares" in the Offer to Purchase is incorporated herein by
reference.
Item 2. Identity and Background.
(a)-(d) and (g) This Statement is filed by Purchaser, COBE, Gambro
and Incentive. The information concerning the name, state or other place
of organization, principal business and address of the principal office of
each of Purchaser, COBE, Gambro and Incentive, and the information
concerning the name, business address, present principal occupation or
employment and the name, principal business and address of any corporation
or other organization in which such employment or occupation is conducted,
material occupations, positions, offices or employments during the last
five years and citizenship of each of the executive officers and directors
of Purchaser, COBE, Gambro and Incentive are set forth under
"INTRODUCTION", "THE TENDER OFFER -- Section 7. Certain Information
Concerning Purchaser, COBE, Gambro and Incentive" and Schedule I in the
Offer to Purchase and are incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser, COBE,
Gambro or Incentive, and, to the best knowledge of Purchaser, COBE, Gambro
and Incentive, none of the persons listed in Schedule I of the Offer to
Purchase has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) 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.
6
<PAGE>
Item 3. Past Contacts, Transactions or Negotiations with the Subject
Company.
(a) The information set forth under "SPECIAL FACTORS -- Background of
the Offer and the Merger", "SPECIAL FACTORS -- Interests of Certain Persons
in the Offer and the Merger", "SPECIAL FACTORS -- The Merger Agreement" and
"THE TENDER OFFER -- Section 7. Certain Information Concerning Purchaser,
COBE, Gambro and Incentive" in the Offer to Purchase is incorporated herein
by reference.
(b) The information set forth under "INTRODUCTION", "SPECIAL FACTORS
- -- Background of the Offer and the Merger", "SPECIAL FACTORS -- Interests of
Certain Persons in the Offer and the Merger", "SPECIAL FACTORS -- The Merger
Agreement", "SPECIAL FACTORS -- Purpose and Effects of the Offer and the
Merger", "SPECIAL FACTORS -- Plans for the Company After the Offer and the
Merger", "THE TENDER OFFER -- Section 6. Certain Information Concerning the
Company" and "THE TENDER OFFER -- Section 7. Certain Information Concerning
Purchaser, COBE, Gambro and Incentive" in the Offer to Purchase is
incorporated herein by reference.
Item 4. Source and Amount of Funds or Other Consideration.
(a)-(c) The information set forth under "THE TENDER OFFER -- Section
8. Financing of the Offer and the Merger" in the Offer to Purchase is
incorporated herein by reference.
Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidder.
(a)-(e) The information set forth under "INTRODUCTION", "SPECIAL
FACTORS -- Background of the Offer and the Merger", "SPECIAL FACTORS --
Purpose and Effects of the Offer and the Merger", "SPECIAL FACTORS -- Plans
for the Company After the Offer and the Merger" and "SPECIAL FACTORS -- The
Merger Agreement" in the Offer to Purchase is incorporated herein by
reference.
(f) and (g) The information set forth under "SPECIAL FACTORS -- Plans
for the Company After the Offer and the Merger" and "THE TENDER OFFER --
Section 12. Effect of the Offer on the Market for Shares, Exchange Listing
and Exchange Act Registration" in 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", "SPECIAL
FACTORS -- Interests of Certain Persons in the Offer and the Merger", "THE
TENDER OFFER -- Section 7. Certain Information Concerning Purchaser, COBE,
Gambro and Incentive" in 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", "SPECIAL FACTORS --
Background of the Offer and the Merger", "SPECIAL FACTORS -- Purpose and
Effects of the Offer and the Merger", "SPECIAL FACTORS -- Plans for the
Company After the Offer and the Merger", "SPECIAL FACTORS -- Interests of
Certain Persons in the Offer and the Merger", "SPECIAL FACTORS -- The Merger
Agreement", "THE TENDER OFFER -- Section 7. Certain Information Concerning
Purchaser,
7
<PAGE>
COBE, Gambro and Incentive" and "THE TENDER OFFER -- Section 8. Financing of
the Offer and the Merger" in 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 "THE TENDER OFFER --
Section 11. Fees and Expenses" in the Offer to Purchase is incorporated
herein by reference.
Item 9. Financial Statements of Certain Bidders.
The information set forth under "THE TENDER OFFER -- Section 7.
Certain Information Concerning Purchaser, COBE, Gambro and Incentive" in
the Offer to Purchase is incorporated herein by reference.
Item 10. Additional Information.
(a) Not applicable.
(b)-(c) The information set forth under "THE TENDER OFFER -- Section
13. Certain Legal Matters and Regulatory Approvals" in the Offer to
Purchase is incorporated herein by reference.
(d) The information set forth under "THE TENDER OFFER -- Section 12.
Effect of the Offer on the Market for the Shares, Exchange Listing and
Exchange Act Registration" in the Offer to Purchase is incorporated herein
by reference.
(e) The information set forth under "SPECIAL FACTORS -- Certain
Litigation Relating to the Offer and the Merger" in the Offer to Purchase
is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Agreement and Plan of Merger, dated as of September 12,
1995, among Gambro, COBE, Purchaser and the Company, copies of which are
attached hereto as Exhibits (a)(1), (a)(2) and (c)(1), respectively, is
incorporated herein by reference.
Item 11. Material to Be Filed as Exhibits.
(a)(1) Form of Offer to Purchase dated September 19, 1995.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street Journal on
September 19, 1995.
(a)(8) Text of Press Release issued by COBE on September 13, 1995.
(b)(1) Revolving Credit Facility, dated as of May 11, 1993, among
Gambro, BNP Capital Markets Limited (as Arranger), certain
banks named therein and Banque Nationale de Paris (as
Agent).
(b)(2) Revolving Credit and Term Loan Facility, dated as of November 30,
1994, among Gambro, BNP Capital Markets Limited (as
Arranger), certain banks named therein and Banque Nationale
de Paris (as Agent).
8
<PAGE>
(b)(3) Uncommitted Line of Credit Agreement, dated as of January 14,
1991, as amended through September 25, 1992, between COBE
and Union Bank of Switzerland, New York Branch.
(b)(4) Revolving Credit Facility, dated as of April 28, 1995, between
COBE and Commerzbank, Los Angeles Branch.
(b)(5) Line of Credit Facility, dated as of April 28, 1995, between COBE
and Commerzbank, Los Angeles Branch.
(b)(6) Uncommitted Revolving Credit Facility, dated as of January 7,
1991, as amended through March 29, 1994, between COBE and Societe
Generale, New York Branch.
(b)(7) Committed Revolving Credit Facility, dated as of July 29, 1995,
between COBE and The First National Bank of Boston.
(b)(8) Discretionary Line of Credit, date as of July 29, 1995, between
COBE and The First National Bank of Boston.
(c)(1) Agreement and Plan of Merger, dated as of September 12, 1995,
among Gambro, COBE, Purchaser and the Company.
(c)(2) The Stock Purchase Agreement, dated as of May 11, 1991 as amended
through April 26, 1994, between COBE and the Company.
(c)(3) The Stock Purchase Agreement, dated as of February 9, 1992 as
amended through March 17, 1992, between COBE and the
Company.
(c)(4) The Stock Purchase Agreement, dated as of July 2, 1992 as amended
through September 15, 1992, between COBE and the Company.
(c)(5) Employment Agreement, dated as of July 14, 1993, between Lawrence
J. Centella and the Company.
(c)(6) Letter, dated September 14, 1992, between Juha P. Kokko, M.D.,
and the Company.
(d) None.
(e) Not applicable.
(f) None.
9
<PAGE>
After reasonable 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.
September 19, 1995
REN ACQUISITION CORP.
By: /s/ Ralph Z. Levy, Jr.
------------------------------
Name: Ralph Z. Levy, Jr.
Title: Vice President
10
<PAGE>
After reasonable 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.
September 19, 1995
COBE LABORATORIES, INC.
By: /s/ Herbert S. Lawson
------------------------------
Name: Herbert S. Lawson
Title: Chief Financial Officer
11
<PAGE>
After reasonable 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.
September 19, 1995
GAMBRO AB
By: /s/ Berthold Lindqvist
-------------------------------
Name: Berthold Lindqvist
Title: President
12
<PAGE>
After reasonable 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.
September 19, 1995
INCENTIVE AB
By: /s/ Mikael Lilius
--------------------------
Name: Mikael Lilius
Title: President
13
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
- --------- ----------- ----------------
(a)(1) Form of Offer to Purchase dated September 19, 1995 . . . . . . .
(a)(2) Form of Letter of Transmittal . . . . . . . . . . . . . . . . . .
(a)(3) Form of Notice of Guaranteed Delivery . . . . . . . . . . . . . .
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees . . . . . . . . . . . . . . . . . . . . .
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees to Clients . . . . . . . . . . . . . . . .
(a)(6) Form of Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 . . . . . . . . . . . . . . . . . .
(a)(7) Summary Advertisement as published in The Wall Street Journal on
September 19, 1995 . . . . . . . . . . . . . . . . . . . . . . .
(a)(8) Text of Press Release issued by COBE on September 13, 1995 . . .
(b)(1) Revolving Credit Facility, dated as of May 11, 1993, among
Gambro, BNP Capital Markets Limited (as Arranger), certain banks
named therein and Banque Nationale de Paris (as Agent) . . . . .
(b)(2) Revolving Credit and Term Loan Facility, dated as of November 30,
1994, among Gambro, BNP Capital Markets Limited (as Arranger),
certain banks named therein and Banque Nationale de Paris (as
Agent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(b)(3) Uncommitted Line of Credit Agreement, dated as of January 14,
1991, as amended through September 25, 1992, between COBE and
Union Bank of Switzerland, New York Branch . . . . . . . . . . .
(b)(4) Revolving Credit Facility, dated as of April 28, 1995, between
COBE and Commerzbank, Los Angeles Branch . . . . . . . . . . . .
(b)(5) Line of Credit Facility, dated as of April 28, 1995, between COBE
and Commerzbank, Los Angeles Branch . . . . . . . . . . . . . . .
(b)(6) Uncommitted Revolving Credit Facility, dated as of January 7,
1991, as amended through March 29, 1994, between COBE and Societe
Generale, New York Branch.
(b)(7) Committed Revolving Credit Facility, dated as of July 29, 1995,
between COBE and The First National Bank of Boston.
(b)(8) Discretionary Line of Credit, date as of July 29, 1995, between
COBE and The First National Bank of Boston.
(c)(1) Agreement and Plan of Merger, dated as of September 12, 1995,
among Gambro, COBE, Purchaser and the Company . . . . . . . . . .
(c)(2) The Stock Purchase Agreement, dated as of May 11, 1991 as amended
through April 26, 1994, between COBE and the Company . . . . . .
(c)(3) The Stock Purchase Agreement, dated as of February 9, 1992 as
amended through March 17, 1992, between COBE and the Company . .
(c)(4) The Stock Purchase Agreement, dated as of July 2, 1992 as amended
through September 15, 1992, between COBE and the Company . . . .
14
<PAGE>
EXHIBIT INDEX
Sequentially
Exhibit Numbered
No. Description Page
- --------- ----------- ----------------
(c)(5) Employment Agreement, dated as of July 14, 1993, between Lawrence
J. Centella and the Company . . . . . . . . . . . . . . . . . . . .
(c)(6) Letter, dated September 14, 1992, between Juha P. Kokko, M.D., and
the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
REN CORPORATION-USA
AT
$20.00 NET PER SHARE
BY
REN ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GAMBRO AB
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 17, 1995, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE THEN OUTSTANDING SHARES, OTHER THAN SHARES OWNED BENEFICIALLY BY
OR OF RECORD BY GAMBRO OR ANY OF ITS AFFILIATES.
THE BOARD OF DIRECTORS OF REN CORPORATION-USA, ACTING ON THE UNANIMOUS
RECOMMENDATION OF A SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS, UNANIMOUSLY HAS
DETERMINED THAT EACH OF THE OFFER AND THE MERGER AND THE TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT IS FAIR TO, AND IN THE BEST INTERESTS OF,
THE STOCKHOLDERS OF REN CORPORATION-USA OTHER THAN GAMBRO AND ITS AFFILIATES,
AND RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES
PURSUANT TO THE OFFER.
-------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of his shares of
Common Stock, no par value (the "Shares"), of REN Corporation-USA should either
(1) complete and sign the Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and mail or
deliver it together with the certificate(s) evidencing tendered Shares, and any
other required documents, to the Depositary or tender such Shares pursuant to
the procedure for book-entry transfer set forth in "THE TENDER OFFER -- Section
3. Procedures for Accepting the Offer and Tendering Shares" or (2) request his
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for him. Any stockholder whose Shares are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if he
desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in "THE TENDER
OFFER -- Section 3. Procedures for Accepting the Offer and Tendering Shares".
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Manager at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
-------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
PASSED UPON THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE
ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
-------------------
The Dealer Manager for the Offer is:
UBS SECURITIES INC.
September 19, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION.......................................................................... -1-
SPECIAL FACTORS....................................................................... -3-
Background of the Offer and the Merger............................................ -3-
Recommendation of the Special Committee and the Company's Board of Directors;
Fairness of the Offer and the Merger............................................. -8-
Presentation and Opinion of Financial Advisor to the Special Committee............ -9-
Position of Gambro, COBE and Purchaser Regarding Fairness of the Offer and the
Merger.......................................................................... -12-
Report of Financial Advisor to COBE............................................... -12-
Purpose and Effects of the Offer and the Merger................................... -14-
Plans for the Company After the Offer and the Merger.............................. -15-
Appraisal Rights of Stockholders.................................................. -16-
Interests of Certain Persons in the Offer and the Merger.......................... -17-
The Merger Agreement.............................................................. -19-
Certain U.S. Federal Income Tax Consequences...................................... -23-
Certain Litigation Relating to the Offer and the Merger........................... -24-
Fees and Expenses................................................................. -24-
THE TENDER OFFER...................................................................... -25-
1. Terms of the Offer; Expiration Date................................................ -25-
2. Acceptance for Payment and Payment for Shares...................................... -26-
3. Procedures for Accepting the Offer and Tendering Shares............................ -27-
4. Withdrawal Rights.................................................................. -28-
5. Price Range of Shares.............................................................. -29-
6. Certain Information Concerning the Company......................................... -30-
7. Certain Information Concerning Purchaser, COBE, Gambro and Incentive............... -33-
8. Financing of the Offer and the Merger.............................................. -37-
9. Dividends and Distributions........................................................ -40-
10. Certain Conditions of the Offer................................................... -40-
11. Fees and Expenses................................................................. -41-
12. Effect of the Offer on the Market for the Shares, Exchange Listing and Exchange
Act Registration...................................................................... -41-
13. Certain Legal Matters and Regulatory Approvals.................................... -42-
14. Miscellaneous..................................................................... -44-
</TABLE>
SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER, COBE,
GAMBRO AND INCENTIVE
SCHEDULE II TEXT OF CHAPTER 23 OF THE TENNESSEE BUSINESS CORPORATION ACT
SCHEDULE III FINANCIAL INFORMATION CONCERNING REN CORPORATION-USA
SCHEDULE IV OPINION OF ALEX. BROWN & SONS INCORPORATED
<PAGE>
To the Holders of Common Stock of
REN Corporation-USA:
INTRODUCTION
REN Acquisition Corp., a Tennessee corporation ("Purchaser") and a wholly
owned subsidiary of COBE Laboratories, Inc., a Colorado corporation ("COBE"),
hereby offers to purchase all outstanding shares of Common Stock, no par value
(the "Shares"), of REN Corporation-USA, a Tennessee corporation (the "Company"),
other than Shares owned beneficially by or of record by Gambro (as defined
below), COBE, Purchaser or any of their affiliates, at a price of $20.00 per
Share (the "Per Share Amount"), net to the seller in cash, upon the terms and
subject to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which together constitute the "Offer").
COBE is a Colorado corporation. Its principal executive offices are located
at 1185 Oak Street, Lakewood, Colorado 80215. COBE and its subsidiaries design,
develop, manufacture, distribute, sell and service medical and therapeutic
systems for four medical market segments: cardiovascular, nephrology, apheresis
and blood banking. COBE is a direct wholly owned subsidiary of Gambro GmbH, a
German corporation, which is a direct wholly owned subsidiary of Gambro AB, a
Swedish corporation ("Gambro"). Gambro GmbH's principal executive offices are
located at Holger Crafoord, Strasse 26, Postfach 1323, D7450, Hechingen,
Germany. Gambro is a global medical technology company engaged principally in
the design, development, production, distribution, sale and service of medical
and therapeutic systems and products in three areas: renal care; cardiovascular
surgery; and blood component technology. Gambro's principal executive offices
are located at P.O. Box 10101 Magistratsvagen 16, S-220 10 Lund, Sweden.
Incentive AB, a Swedish corporation ("Incentive"), owns shares representing
approximately 58.4% of the total voting power of Gambro. Incentive is an
international industrial group engaged principally in the following areas:
medical technology; engineering and manufacturing for the automative industry;
the manufacture of indoor environment control and monitoring products and
systems; and the production, sale and service of materials handling equipment,
especially for marine cargo. Incentive's principal executive offices are located
at Hamngatan 2, P.O. Box 7373, 10391, Stockholm, Sweden.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
UBS Securities Inc. ("UBS"), which is acting as Dealer Manager for the Offer (in
such capacity, the "Dealer Manager"), Bank of New York (the "Depositary") and
Georgeson & Company Inc. (the "Information Agent") incurred in connection with
the Offer. See "THE TENDER OFFER -- Section 11. Fees and Expenses".
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD"), ACTING ON THE UNANIMOUS
RECOMMENDATION OF A SPECIAL COMMITTEE OF INDEPENDENT DIRECTORS OF THE BOARD (THE
"SPECIAL COMMITTEE"), UNANIMOUSLY HAS DETERMINED THAT EACH OF THE OFFER AND THE
MERGER AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT IS FAIR TO, AND
IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY OTHER THAN GAMBRO,
COBE, PURCHASER AND THEIR AFFILIATES, AND RECOMMENDS THAT STOCKHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
The Special Committee's financial advisor, Alex. Brown & Sons Incorporated
("Alex. Brown"), has delivered to the Special Committee its written opinion that
the $20.00 per Share cash consideration to be received by the holders of Shares,
other than Gambro, Purchaser, COBE or any of their affiliates, pursuant to the
Merger Agreement is fair to the holders of such Shares from a financial point of
view as of the date of delivery of such opinion. A copy of the opinion of Alex.
Brown is set forth in Schedule IV hereto and is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders herewith. See "SPECIAL
FACTORS -- Presentation and Opinion of Financial Advisor to the Special
Committee".
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A
MAJORITY OF THE THEN OUTSTANDING SHARES, OTHER THAN SHARES OWNED BENEFICIALLY BY
OR OF RECORD BY GAMBRO, COBE, PURCHASER OR ANY OF THEIR AFFILIATES (THE "MINIMUM
CONDITION"). THE MINIMUM CONDITION MAY NOT BE WAIVED WITHOUT THE PRIOR WRITTEN
CONSENT OF THE SPECIAL COMMITTEE. SEE "THE TENDER OFFER -- SECTION 10. CERTAIN
CONDITIONS OF THE OFFER", WHICH SETS FORTH IN FULL THE CONDITIONS TO THE OFFER.
<PAGE>
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of September 12, 1995 (the "Merger Agreement"), among Gambro, COBE, Purchaser
and the Company. The Merger Agreement provides that, among other things, as
promptly as practicable after the purchase of Shares pursuant to the Offer and
the satisfaction of the other conditions set forth in the Merger Agreement and
in accordance with the relevant provisions of the Tennessee Business Corporation
Act ("Tennessee Law"), Purchaser will be merged with and into the Company (the
"Merger"). Following consummation of the Merger, the Company will continue as
the surviving corporation (the "Surviving Corporation") and will become a wholly
owned subsidiary of COBE. At the effective time of the Merger (the "Effective
Time"), each Share outstanding immediately prior to the Effective Time (other
than Shares held by the Company or owned by Purchaser, COBE or any direct or
indirect wholly owned subsidiary of COBE or of the Company, and other than
Shares held by stockholders who shall have demanded and perfected appraisal
rights under Tennessee Law) will be cancelled and converted automatically into
the right to receive $20.00 in cash, or any higher price that may be paid per
Share in the Offer, without interest (the "Merger Consideration"). The Merger
Agreement is more fully described in "SPECIAL FACTORS -- The Merger Agreement".
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the purchase by Purchaser of all Shares validly
tendered in the Offer and the approval and adoption of the Merger and the Merger
Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares, as required by Tennessee Law and the Charter of the Company.
See "SPECIAL FACTORS -- Purpose and Effects of the Offer and the Merger". The
Company has advised Purchaser that as of September 13, 1995, there were
18,951,834 Shares issued and outstanding, 530 record holders of Shares, 542,225
shares of Common Stock subject to options (the "Options") granted pursuant to
the Company's Non-Statutory Stock Option Plan of 1988, as amended (the "Stock
Option Plan"), 9,344 shares of Common Stock subject to Options granted pursuant
to the Company's Employee Stock Purchase Plan, as amended, of July 1, 1994 (the
"ESPP") and warrants (the "Warrants") to acquire 74,000 shares of Common Stock.
On September 12, 1995, COBE contributed to the capital of Purchaser all the
Shares owned by COBE. Accordingly, Purchaser presently owns 10,036,221 of the
outstanding Shares, constituting approximately 53% of the outstanding Shares.
Pursuant to the Merger Agreement, Gambro, COBE and Purchaser have agreed to
cause all Shares owned by them and their subsidiaries to be voted in favor of
the approval and adoption of the Merger and the Merger Agreement and the
transactions contemplated thereby at any meeting of stockholders at which such
matters are to be voted upon. Even if all of the outstanding Options and
Warrants were to be exercised, thereby resulting in the issuance of 625,569
additional Shares, Purchaser will have sufficient voting power to approve and
adopt the Merger and the Merger Agreement without the approval of any other
stockholder of the Company. However, because it is a condition to the Merger
that Purchaser have purchased all Shares validly tendered in the Offer and the
Minimum Condition is a condition to the Offer, the Merger cannot be consummated
unless the Minimum Condition is satisfied or waived. The Minimum Condition
cannot be waived without the prior written consent of the Special Committee.
Under Tennessee Law, if Purchaser acquires (pursuant to the Offer or
otherwise) at least 90% of the then outstanding Shares, Purchaser will be able
to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger, without calling a meeting of the Company's
stockholders and without the approval of the Company's stockholders. In
accordance with Tennessee Law, in the event that Purchaser acquires at least 90%
of the then outstanding Shares, Gambro, COBE, Purchaser and the Company have
agreed to take, at the request of Purchaser, all necessary and appropriate
action to cause the Merger to become effective as soon as reasonably practicable
after such acquisition, without a meeting and approval by vote of the Company's
stockholders. If, however, Purchaser does not acquire at least 90% of the then
outstanding Shares pursuant to the Offer or otherwise and a meeting and the
approval of the Company's stockholders is required under Tennessee Law, as
described in the preceding paragraph, a significantly longer period of time will
be required to effect the Merger. See "SPECIAL FACTORS -- Purpose and Effects of
the Offer and the Merger".
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE>
SPECIAL FACTORS
BACKGROUND OF THE OFFER AND THE MERGER
Pursuant to three stock purchase agreements described below (collectively,
the "Stock Purchase Agreements") between COBE and the Company, COBE purchased
from the Company a total of 9,337,399 Shares, representing approximately 51.1%
of the Shares. The Stock Purchase Agreements referred to in the preceding
sentence are (i) the Stock Purchase Agreement, dated as of May 11, 1991, as
amended through April 26, 1994, (ii) the Stock Purchase Agreement, dated as of
February 9, 1992, as amended through March 17, 1992 and (iii) the Stock Purchase
Agreement, dated as of July 2, 1992, as amended through September 15, 1992. In
addition, pursuant to Letter Agreements dated as of July 14, 1993, COBE acquired
204,020 Shares from Elizabeth G. Tannenbaum, individually and as custodian and
trustee, and 489,280 Shares from Jerome S. Tannenbaum, M.D., the Company's
former Chairman, President and Chief Executive Officer, in privately negotiated
transactions at a price of $16 per Share, or an aggregate purchase price of
$11,092,800. Of this amount, $9,092,800 was paid in cash and $2 million was paid
by a promissory note to Dr. Tannenbaum. COBE currently owns 10,036,221 Shares,
representing approximately 53% of the total outstanding Shares.
The Stock Purchase Agreements provide that, subject to certain exceptions,
during the time period specified therein, COBE shall not directly or indirectly
acquire or agree, offer, seek or propose to acquire, or cause to be acquired,
ownership of any securities of the Company, unless specifically requested to do
so in writing in advance by the Board (the "Standstill Provision").
On July 13, 1995, the boards of directors of Gambro and COBE approved an
acquisition of all of the Shares which COBE did not already own at $18.00 per
Share and authorized Mr. Mats Wahlstrom, who is the Chairman of the Board and
also the President of COBE, to present a proposal for an acquisition on those
terms to the Board.
Later on July 13, 1995, the Board held a meeting at which Mr. Wahlstrom
informed the Board that COBE was interested in purchasing all of the remaining
Shares that COBE did not already own. Mr. Wahlstrom expressed that COBE believed
that COBE and the Company must grow, by acquisition or otherwise, to compete
effectively in the healthcare industry and that this growth could be achieved
more effectively if the Company becomes a wholly owned subsidiary of COBE.
Mr. Wahlstrom discussed the terms on which COBE was willing to make a
proposal and explained that the Standstill Provision prevented COBE from making
a proposal to acquire Shares unless the Board requested it to do so in writing.
Mr. Wahlstrom also stated that, if the Board were to invite COBE to make such a
proposal, a special committee of independent directors of the Board to represent
the interests of stockholders other than COBE or its affiliates should be
established and that that committee should consist of Dr. J. Kenneth Jacobs and
Dr. Juha P. Kokko, who are not affiliated with COBE or Gambro.
The Board unanimously determined to waive the Standstill Provision for the
limited purpose of allowing COBE to deliver a proposal to the Company on the
terms discussed by Mr. Wahlstrom. However, the Standstill Provision continued to
prohibit COBE or its affiliates from actually acquiring Shares without a further
waiver. The Board then established the Special Committee, consisting of Dr.
Jacobs and Dr. Kokko, for the purpose of considering, negotiating and submitting
a recommendation to the Board concerning the terms of the proposal to be made by
COBE.
The Company then delivered the following letter to COBE:
July 13, 1995
COBE Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Mats Wahlstrom
Re: Request for Proposal to Acquire Common Stock
3
<PAGE>
Gentlemen:
As of the date hereof and pursuant to Section 5.11 of the Stock Purchase
Agreement dated as of May 24, 1991 between REN Corporation-USA (the
"Corporation") and COBE Laboratories, Inc. ("COBE"), as amended as of October 1,
1992 (the "Stock Purchase Agreement"), the Corporation, pursuant to the duly
authorized action of its Board of Directors, hereby permits COBE to submit its
proposal to acquire all the common shares, no par value, of the Corporation that
COBE does not currently own pursuant to the letter attached hereto from COBE
addressed to the Board of Directors of the Corporation and dated as of July 13,
1995.
Very truly yours,
REN CORPORATION-USA
By: /s/ LAWRENCE J. CENTELLA
..................................
Name: Lawrence J. Centella
Title: President and Chief
Executive Officer
COBE delivered the following letter to the Board containing its proposal
(the "Proposed Transaction"):
July 13, 1995
Board of Directors of REN Corporation-USA
Gentlemen:
I am pleased to offer on behalf of COBE Laboratories, Inc. ("COBE"), to
acquire the equity interest represented by all of the issued and outstanding
common shares, no par value, of REN Corporation-USA ("REN") not currently owned
by COBE including all common shares that may be issued upon the exercise of
options and warrants outstanding on the date hereof (the "Public Shares"). The
principal terms of our offer are as follows:
1. The transaction would be a cash merger in which each holder of a Public
Share would receive $18 per share, or an aggregate of approximately $170
million based on the number of Public Shares outstanding on July 12,
1995.
2. Consummation of the acquisition would be subject to among other things,
approval by the Board of Directors of REN and other conditions customary
in a transaction of this type.
3. COBE proposes to finance the acquisition of the Public Shares from bank
borrowings.
4. We anticipate that, upon completion of the acquisition, COBE will cause
the common shares of REN to be delisted from trading on the NASDAQ
National Market System and to cause deregistration of such common shares
with the Securities and Exchange Commission.
We believe that our offer is fair to, and in the best interests of, REN and
its public shareholders. The proposed acquisition price is equivalent to an 18%
premium over the average closing price of the common shares on the NASDAQ
National Market System over the 60 trading days ended July 12, 1995.
We believe that the investment by COBE in REN has been beneficial to COBE
and its parent, Gambro AB, and also to REN's public shareholders. However, COBE
and REN are facing an increasingly competitive environment and the prospect of
industry-wide consolidation. We believe that COBE and REN must grow, by
acquisition or otherwise, to compete effectively in this rapidly changing
environment and that this growth can be achieved much more effectively if REN
becomes a wholly owned subsidiary.
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<PAGE>
We wish to make it clear that we are not interested under any circumstances
in selling our interest in REN and that there is thus no prospect of a sale of
controlling interest to a third party. Our offer is made pursuant to your letter
dated as of July 13, 1995 to COBE.
We understand that you may wish to deliberate on this offer through a
special committee of independent directors and that such committee may wish to
retain its own advisors to assist in those deliberations. We invite your
representatives to meet with our advisors to discuss this proposal at your
earliest convenience.
We hope you will give this proposal your prompt attention. We reserve the
right to amend or withdraw this proposal at any time in our discretion.
Sincerely,
/s/ MATS WAHLSTROM
......................................
Mats Wahlstrom
President
COBE Laboratories, Inc.
The Company issued the following press release, dated July 14, 1995, in
connection with the Proposed Transaction:
"COBE LABORATORIES, INC. PROPOSES TO BUY PUBLIC INTEREST IN ITS
REN CORPORATION-USA SUBSIDIARY FOR $18.00 PER SHARE.
COBE Laboratories, Inc., a wholly-owned subsidiary of Gambro AB, today
announced a proposal to acquire all of the equity interests in REN
Corporation-USA (NASDAQ National Market System: RENL) not currently owned by
COBE Laboratories, Inc., including all common shares that may be issued upon the
exercise of options and warrants outstanding on July 12, 1995.
Under the proposed transaction, the public shareholders of REN
Corporation-USA would receive $18.00 a share in cash, or an aggregate of
approximately $170.2 million for all the shares of common stock, no par value
(the "Common Stock"), of REN Corporation-USA held by the public. As of the date
hereof, COBE Laboratories, Inc. owns approximately 53% of the Common Stock of
REN Corporation-USA.
The offer is subject to the approval of the Board of Directors of REN
Corporation-USA, and other conditions customary in transactions of this type.
The offer also noted that the proposed acquisition price is equivalent to an
approximately 17.9% premium over the average closing price of REN
Corporation-USA Common Stock on the NASDAQ National Market System over the 60
trading days ended July 12, 1995.
In response to the offer by COBE Laboratories, Inc., the Board of REN
Corporation-USA has established a special committee of its independent directors
to consider the terms of the offer and to make recommendations in connection
with the offer to the Board of Directors of REN Corporation-USA.
UBS Securities, Inc. is acting as financial advisor to COBE Laboratories,
Inc. in connection with the proposed transaction.
July 14, 1995"
In the second half of July 1995, the Special Committee retained Alex. Brown
as its financial advisor and also retained independent legal counsel. Beginning
at the end of July 1995, the Special Committee's financial and legal
5
<PAGE>
advisors commenced an investigation of the Company and its business. As part of
that investigation, officers of the Company met with, and supplied information
to, the Special Committee's financial and legal advisors.
On August 8, 1995, the Special Committee held a telephonic meeting with its
financial and legal advisors. At that meeting, the Special Committee discussed
the results of the investigation of the Company and its business (which was
still ongoing) that the Special Committee's financial and legal advisors were
conducting and the possible structure and terms of any agreement that might be
reached with COBE. Between August 8 and August 28, 1995, the financial and legal
investigation of the Company and its business continued.
On August 28, 1995, the Special Committee held a meeting in Nashville,
Tennessee with its financial and legal advisors. The Special Committee reviewed
and discussed with its counsel its fiduciary duties and the rights and powers of
the Special Committee under applicable law, the Charter and By-laws of the
Company and under the Stock Purchase Agreement. The Special Committee was
advised that its purpose was to negotiate at arm's length with COBE in order to
protect the interests of the Company's stockholders other than COBE and its
affiliates. The Special Committee was further advised that it was under no
obligation to reach any agreement at all with COBE unless the Special Committee
determined that such an agreement was in the best interests of the Company's
stockholders other than COBE and its affiliates. The Special Committee also
discussed the possibility, and the benefits and detriments, of the use of forms
of consideration other than cash in a transaction with COBE and discussed the
possible structure of a transaction with COBE, including the benefits and
detriments of the use of a tender offer and of a single-step merger transaction
and the possibility of requiring majority of the minority tendering or voting
conditions.
At the August 28, 1995 meeting, Alex. Brown made a financial presentation
about the Company to the Special Committee, which included various analyses,
including a review of the reported price and trading activity for the Shares, a
comparison of certain financial and stock market information for the Company
with similar information for certain other companies whose securities are
publicly traded, a review of the financial terms of certain recent business
combinations and a discounted cash flow analysis. The Special Committee also
received a presentation from its legal advisors on certain proposed and pending
federal legislative and regulatory initiatives, including in the Medicare
reimbursement area, and discussed and considered the possible impact of those
initiatives on the Company. The Special Committee's legal advisors also
discussed with the Committee the terms of a draft merger agreement that had been
submitted to the Special Committee's legal advisors by COBE's legal advisors.
In light of the foregoing, the Special Committee discussed at the August 28,
1995 meeting whether any transaction with COBE would be desirable at this time
and determined that it would be in the best interests of the Company's
shareholders other than COBE or its affiliates to enter into negotiations with
COBE regarding a possible transaction. At the August 28, 1995 meeting, the
Special Committee authorized its financial advisors to approach COBE's financial
advisors with a proposal for a transaction at $22.00 per Share. The Special
Committee also authorized its legal advisors to attempt to negotiate open issues
with respect to the non-financial terms of a merger agreement with COBE's legal
advisors. The Special Committee's legal advisors commenced that process
following the August 28 meeting.
On August 30, 1995, the financial advisors for COBE and the Special
Committee met, at which time the Special Committee's financial advisors proposed
a price of $22.00 per Share and also requested COBE to consider a transaction in
which Gambro stock would be used as consideration, possibly in addition to cash.
COBE's financial advisors stated that a price of $22.00 per Share price was far
too high and also stated that COBE and Gambro were unwilling to use Gambro stock
instead of cash.
On September 6, 1995, COBE's financial advisors proposed to the Special
Committee's financial advisors that the transaction be effected through a cash
tender offer, followed by a merger, at $19.25 per Share. During the next several
days, the members of the Special Committee discussed that proposal with their
financial and legal advisors and representatives of the Special Committee held
discussions with representatives of COBE.
On September 9, 1995, the Special Committee held a telephonic meeting to
discuss COBE's proposal at $19.25 per Share. The Special Committee decided to
reject COBE's $19.25 per Share proposal and negotiate for a higher price. The
Special Committee also discussed the advantages and disadvantages of effecting a
transaction through a tender offer.
6
<PAGE>
On September 10, 1995, the Special Committee and Mr. Wahlstrom, representing
COBE, met with their respective financial advisors. After some discussion and an
unsuccessful effort by Mr. Wahlstrom to persuade the Special Committee to accept
a price of less than $20.00 per Share, Mr. Wahlstrom proposed a price of $20.00
per Share in a transaction effected through a tender offer. Mr. Wahlstrom stated
that COBE would not pay a higher price. The Special Committee indicated that it
would accept this proposal subject to negotiation of the terms of a definitive
merger agreement. Following that meeting, the Special Committee authorized its
legal advisors to continue negotiations on the terms of a definitive merger
agreement, including the terms and conditions of the proposed tender offer,
subject to approval by the Special Committee and the Board. Those negotiations
took place during September 11 and 12, 1995.
On September 12, 1995, the Special Committee held a telephonic meeting with
its financial and legal advisors. The Special Committee reviewed the Merger
Agreement as it had been finally negotiated between its legal advisors and
COBE's legal advisors. Alex. Brown rendered its oral opinion that the
consideration of $20.00 per Share, in cash, to be received by the Company's
stockholders, other than Gambro, COBE, Purchaser and their affiliates, pursuant
to the Merger Agreement was fair from a financial point of view to such
shareholders as of the date of the opinion. That opinion has since been
confirmed in writing and is attached hereto as Schedule IV.
After reviewing the foregoing analysis and receiving the oral opinion of
Alex. Brown, the Special Committee recommended that the Board approve and adopt
the Merger Agreement and approve and consent to the Offer.
Also on September 12, 1995, and immediately following the Special Committee
meeting, the Board held a telephonic meeting at which the opinion of Alex. Brown
and the recommendations of the Special Committee were presented and the Board
approved and adopted the Merger Agreement.
On September 12, 1995, the Board also delivered to the Board of COBE the
following letter requesting that Gambro, COBE and Purchaser enter into the
Merger Agreement and consummate the transactions contemplated thereby in
accordance with the terms and conditions of the Merger Agreement:
September 12, 1995
COBE Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Mats Wahlstrom
Re: Request for Proposal to Acquire Common Stock
Gentlemen:
As of the date hereof and pursuant to Section 5.11 of the Stock Purchase
Agreement dated as of May 24, 1991 between REN Corporation-USA (the
"Corporation") and COBE Laboratories, Inc. ("COBE"), as amended through April
26, 1994, the Corporation, pursuant to the duly authorized action of its Board
of Directors, hereby requests Gambro AB, a Swedish company ("Gambro"), COBE, a
wholly owned indirect subsidiary of Gambro, and REN Acquisition Corp., a
Tennessee corporation and a wholly owned subsidiary of COBE ("Purchaser"), to
enter into an Agreement and Plan of Merger, dated as of September 12, 1995,
among Gambro, COBE, Purchaser and the Corporation and to consummate the
transactions contemplated thereby in accordance with the terms and conditions
thereof.
Very truly yours,
REN CORPORATION-USA
By: /s/ LAWRENCE J. CENTELLA
..................................
Name: Lawrence J. Centella
Title: President and Chief
Executive Officer
7
<PAGE>
The Merger Agreement was executed and delivered by the parties thereto on
September 12, 1995 and the transaction was announced on the morning of September
13, 1995. The Company issued the following press release, dated September 13,
1995, in connection with the Merger Agreement:
"REN CORPORATION-USA ANNOUNCES SIGNING OF DEFINITIVE MERGER AGREEMENT
NASHVILLE, Tenn., September 13, 1995--REN Corporation-USA, a Tennessee
corporation (NASDAQ: RENL), today announced that it has signed a definitive
merger agreement with Gambro AB (NASDAQ: GAMBY) and COBE Laboratories, Inc., the
Lakewood, Colorado-based wholly owned subsidiary of Gambro ("COBE"), providing
for the acquisition of REN's publicly held shares at a price of $20 per share,
net to the seller in cash. Pursuant to the merger agreement, a newly formed
wholly owned subsidiary of COBE ("Purchaser") will commence a tender offer for
all of the issued and outstanding shares of common stock of REN not currently
owned by COBE. Purchaser will commence the tender offer no later than September
19, 1995. Following the tender offer, Purchaser will be merged into REN, and all
REN shares not purchased pursuant to the tender offer will be converted into a
right to receive $20 per share in cash in a second-step merger to be consummated
as soon as practicable after the tender offer. Upon consummation of the merger,
REN will become a wholly owned subsidiary of COBE and an indirect wholly owned
subsidiary of Gambro.
The tender offer will be conditioned upon, among other things, at least a
majority of the REN shares, other than the REN shares owned by COBE or its
affiliates, being validly tendered and not withdrawn prior to the expiration of
the tender offer. COBE and its affiliates presently own approximately 53% of the
outstanding REN shares.
The merger agreement has been unanimously approved by a special committee of
independent directors of REN and, based on the recommendation of the special
committee, the Board of Directors of REN has unanimously approved the merger
agreement and recommended that holders tender their REN shares pursuant to the
tender offer.
UBS Securities Inc. is acting as financial advisor to COBE in connection
with the transaction and is acting as sole Dealer Manager in connection with the
tender offer.
Alex. Brown & Sons Incorporated is acting as financial advisor to the
special committee and has rendered an opinion that the consideration to be
received by the public shareholders of REN pursuant to the merger agreement is
fair from a financial point of view.
REN is the nation's fourth largest provider of kidney dialysis services. REN
owns and operates 68 dialysis centers, located across 18 states and the District
of Columbia. Several of these centers are associated with prominent academic
institutions. Overall, the company has over 1,150 treatment stations servicing
approximately 5,700 patients. In 1994, REN performed 646,000 dialysis
treatments. REN also performs blood and urine testing services for its centers
and others."
RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE COMPANY'S BOARD OF DIRECTORS;
FAIRNESS OF THE OFFER AND THE MERGER
The Company, acting through the Board acting upon the unanimous
recommendation of the Special Committee, has approved of and consented to the
Offer and has represented that the Board, acting upon the unanimous
recommendation of the Special Committee, at a meeting duly called and held on
September 12, 1995, has unanimously (A) determined that the Merger Agreement and
the transactions contemplated thereby, including each of the Offer and the
Merger, are fair to and in the best interests of the holders of Shares other
than COBE or its affiliates, (B) approved and adopted the Merger Agreement, the
execution of the Merger Agreement and the transactions contemplated by the
Merger Agreement (which approval includes the approval of a majority of the
Company's disinterested directors, as required both by Tennessee Law and by
Article X of the Company's By-laws), and (C) recommended that the stockholders
of the Company accept the Offer and approve and adopt the Merger Agreement and
the transactions contemplated thereby. The Company has been advised by each of
its directors and executive officers that they intend either to tender all
Shares beneficially owned by them to Purchaser pursuant to
8
<PAGE>
the Offer or to vote such Shares in favor of the approval and adoption by the
stockholders of the Company of the Merger Agreement and the transactions
contemplated thereby.
In reaching their conclusions, the Special Committee considered a number of
factors (some of which had been discussed at earlier meetings), including,
without limitation, the following:
(i) The price of $20.00 per Share represents a substantial premium over the
market price of the Shares prior to the announcement of the Proposed
Transaction and was higher than the highest historical market price for
the Shares prior to such announcement.
(ii) The fact that stock market prices, both for the Company and in the
United States in general, are at or near historic highs, indicating
that the timing of a transaction is not unfavorable for the minority
stockholders.
(iii) The Special Committee's perception, after consultation with its
financial advisors, that $20.00 per Share is, based on a number of
tests, including a comparison of recent comparable transactions
involving the buy-out of minority stockholders, a reasonable price for
the minority stockholders' Shares.
(iv) The Special Committee's knowledge of the Company's business, measured
against the possibility of changes in the legal and regulatory climate
in the healthcare industry and other factors that might affect the
Company's business.
(v) The existence of the Standstill Provision prohibiting COBE and its
affiliates from purchasing Shares and a covenant not to compete with the
Company by COBE and its affiliates in the Stock Purchase Agreements,
Article X of the Company's By-laws (prohibiting a transaction between
the Company and an affiliate without the approval of a majority of
disinterested directors), the fact that the Standstill Provision will
expire on May 24, 1996 and that the Company's By-laws can be amended by
the holders of two-thirds of the Shares.
(vi) The possibility that, because of a decline in the Company's business,
the trading price of the Shares or the stock market in general, the
consideration that the minority stockholders would obtain for their
Shares in a future transaction might be less advantageous than the
consideration they would receive pursuant to the Offer and the Merger.
(vii) The opinion of Alex. Brown that the consideration to be received by
the stockholders of the Company other than Gambro, COBE, Purchaser and
their affiliates pursuant to the Merger Agreement was fair from a
financial point of view to such stockholders as of the date of the
opinion.
None of the factors considered by the Special Committee, including the
foregoing factors, was dispositive to the Special Committee's conclusions, nor
did the Special Committee assign any relative priority to the various factors
considered.
PRESENTATION AND OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE
Alex. Brown delivered to the Special Committee its oral opinion, which
opinion was subsequently confirmed in writing, that, as of September 12, 1995,
the consideration to be received by the holders of Shares, other than Gambro,
COBE, Purchaser and their affiliates, pursuant to the Merger Agreement was fair
from a financial point of view to such holders. No limitations were imposed by
the Special Committee upon Alex. Brown with respect to the investigations made
or procedures followed by it in rendering its opinion. Alex. Brown relied, with
the permission of the Special Committee, on the statement made by COBE that it
would not dispose of its Shares or vote its Shares in favor of any transaction
involving the sale of the Company and Alex. Brown was not requested or
authorized to solicit, and did not solicit, interest from any party with respect
to the acquisition of the Shares or the assets of the Company or any of its
constituent businesses.
The full text of the opinion of Alex. Brown dated as of September 12, 1995,
which sets forth the assumptions made, matters considered and limitations on the
review undertaken, is attached as Schedule IV. Holders of Shares are urged to
read this opinion in its entirety. Alex. Brown's opinion is directed only to the
fairness from a financial point of view of the consideration to be received by
the holders of Shares and does not constitute a recommendation
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to any holder of Shares as to whether such holder should tender Shares in the
Offer. The following summary of the opinion of Alex. Brown is qualified in its
entirety by reference to the full text of such opinion.
In connection with its opinion, Alex. Brown reviewed the Merger Agreement
and certain publicly available financial information concerning the Company.
Alex. Brown also reviewed certain internal financial analyses and other
information, including financial projections furnished to it by the Company and
held discussions with members of the senior management of the Company regarding
the business and prospects of the Company. In addition, Alex. Brown (i) reviewed
the reported prices and trading activity for the Shares, (ii) compared certain
financial and stock market information for the Company with similar information
for certain other companies whose securities are publicly traded, (iii) reviewed
the financial terms of certain recent business combinations and (iv) performed
such other studies and analyses and considered such other factors as it deemed
appropriate.
As described in the opinion, Alex. Brown assumed, without independent
verification, the accuracy and completeness of the information that it reviewed
and relied upon for purposes of rendering its opinion. With respect to the
financial projections furnished to it, Alex. Brown assumed that they had been
reasonably prepared on bases reflecting the best currently available estimates
and judgements of the senior management of the Company as to the likely future
financial performance of the Company. In addition, Alex. Brown did not make an
independent valuation or appraisal of the assets of the Company, nor was it
furnished with any such valuation or appraisal. Alex. Brown's opinion stated
that such opinion was based on market, economic, financial and other conditions
as they existed and could be evaluated as of the date of the opinion.
The following is a summary of the report presented by Alex. Brown to the
Special Committee on September 12, 1995 (the "Alex. Brown Report") in connection
with its September 12, 1995 opinion.
Stock Trading History. Alex. Brown reviewed the historical trading volume
and market prices for the Shares. In addition, Alex. Brown reviewed and analyzed
the relationship between movements of the price of the Shares and movements in
the Standard & Poor's average of 500 stocks and movements in the prices of
companies considered by Alex. Brown to be reasonably similar to the Company.
This analysis showed that the $20.00 per Share offer price was 20.3% higher than
the highest closing price for the Shares prior to announcement of the Proposed
Transaction by COBE on July 14, 1995.
Comparison of the Company with Selected Publicly Traded Companies. Alex.
Brown compared certain financial information for the Company with corresponding
data and ratios for the following group of six publicly traded health care
services companies: American Medical Response, Inc., HEALTHSOUTH Corporation,
Lincare Holdings Inc., Renal Treatment Centers, Inc., Surgical Care Affiliates,
Inc. and Vivra Incorporated. Such financial information included market value,
aggregate market value (market value adjusted by adding debt and subtracting
cash and marketable securities), profitability, returns, growth rates and
implied multiples of revenues, operating cash flow (earnings before
depreciation, amortization, interest and taxes less minority interest),
operating income (earnings before interest and taxes less minority interest),
net income and estimated future earnings per share (as reported by I/B/E/S) for
the calendar years 1995 and 1996. This analysis showed that on September 8,
1995, the ratio of stock price to projected calendar 1995 earnings per share for
the six companies listed above ranged from 16.5x to 25.3x and with a mean of
20.7x and the ratio of stock price to projected calendar 1996 earnings per share
ranged from 13.7x to 19.9x with a mean of 16.9x. The implied equity value per
share based on the mean multiples and the Company's projected calendar 1995 and
1996 net income was $14.14 and $16.61, respectively. Alex. Brown noted that the
ratio of the $20.00 offer price to the Company's projected calendar 1995
earnings per Share was 29.4x and the ratio of the offer price to the Company's
projected calendar 1996 earnings per Share was 20.4x.
Analysis of Selected Health Care Merger and Acquisition Transactions. Alex.
Brown analyzed, based on thirteen recent mergers and acquisitions in the
alternate-site health care delivery market, the financial multiples of equity
purchase price to last twelve months' net income and to forward twelve months'
net income and the multiples of aggregate purchase price (equity purchase price
adjusted by adding debt and subtracting cash and marketable securities) to last
twelve months' revenues, operating cash flow and operating income. Alex. Brown
also analyzed the premiums of the purchase price over stock prices prior to
transaction announcement in these transactions. Alex. Brown calculated the
implied equity value per share of the Company by applying the Company's actual
and forecasted financial results to the mean multiple for each of the measures
derived from this analysis. For the thirteen
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transactions in the alternate-site health care delivery market, the implied
equity value per Share ranged from $15.25 to $23.72.
Analysis of Selected Minority Buyouts. Using publicly available information,
Alex. Brown analyzed the purchase prices and premiums of the purchase price over
stock prices prior to transaction announcement paid in 31 minority buyout
transactions with values greater than $25.0 million since 1990. This analysis
resulted in a range of purchase price premiums to the stock price one day prior
to announcement of (9.8%) to 66.7%, with a mean purchase price premium of 26.6%
and a median purchase price premium of 24.3%. Alex. Brown also analyzed the
range of purchase price premiums to the stock price one month prior to
transaction announcement which indicated a range of 16.5% to 88.6% with a mean
purchase price premium of 32.7% and a median purchase price premium of 28.9%.
Alex. Brown calculated the implied Company purchase price per Share based on
these premiums. This analysis implied purchase prices per Share of $19.94 and
$19.58 based on the mean and median premiums, respectively, to the stock price
one day prior to announcement, and implied purchase prices per Share of $19.58
and $19.01 based on the mean and median premiums, respectively, to the stock
price one month prior to announcement.
Discounted Cash Flow Analysis. Using a discounted cash flow analysis, Alex.
Brown calculated the present value of the future cash flows that the Company
could produce over a five-year period from 1996 through the end of 2000 under
various assumptions. The cash flows were based on financial forecasts prepared
by the Company's management for 1995 through 1998 and estimates for 1999 and
2000 which were based on an extrapolation of the 1998 data and were reviewed
with the Company's management. Alex. Brown discounted these cash flows to
September 30, 1995, at discount rates ranging from 11.0% to 15.0% based upon the
consideration of a number of factors, including cost of capital, required rates
of return to investors and risks attributable to the uncertainty of achieving
the projected cash flows. The terminal value was computed based on projected
earnings before depreciation, amortization, interest and taxes less minority
interest in calendar year 2000 and a range of terminal multiples of 7.0x to
9.0x. The foregoing analysis resulted in a present value range for the Company
of $18.63 to $27.63 per share.
The summary set forth above does not purport to be a complete description of
the presentation by Alex. Brown of the Alex. Brown Report to the Special
Committee or the analyses performed and factors considered by Alex. Brown in
connection with its opinion dated September 12, 1995. A copy of the Alex. Brown
Report has been filed as an Exhibit to the Schedule 13E-3. Alex. Brown believes
that its analyses and the summary set forth above must be considered as a whole
and that selecting portions of its analyses, without considering all analyses,
or selecting portions of the above summary, without considering all factors and
analyses, could create an incomplete view of the process underlying the analyses
set forth in the opinion and the Alex. Brown Report. In performing its analyses,
Alex. Brown made numerous assumptions with respect to industry performance,
general business, economic, market and financial conditions and other matters,
many of which are beyond the control of the Company. The analyses performed by
Alex. Brown are not necessarily indicative of actual values or future results,
which may be significantly more or less favorable than those which are suggested
by such analyses.
Alex. Brown is a nationally recognized investment banking firm and, as a
customary part of its investment banking business, is engaged in the valuation
of businesses and their securities in connection with mergers and acquisitions,
negotiated underwritings, private placements and valuations for corporate and
other purposes. Alex. Brown regularly publishes research reports regarding the
health care industry and the businesses and securities of publicly traded
companies in that industry.
Pursuant to a letter agreement dated as of August 10, 1995 (the "Alex. Brown
Engagement Letter") between the Special Committee, the Company and Alex. Brown,
the Company paid Alex. Brown a fee of $100,000 in consideration of its services
as the Special Committee's financial advisor. In addition, the Company agreed to
pay Alex. Brown an additional fee of $800,000 for its services as the Special
Committee's financial advisor upon the earlier to occur of (i) the conclusion of
the Special Committee's work with regard to the Proposed Transaction (regardless
of whether there was an agreement regarding any business combination transaction
or whether any business combination transaction was consummated), (ii) the
execution of a definitive agreement for a business combination transaction or
(iii) 90 days from the date of the Alex. Brown Engagement Letter. The Alex.
Brown Engagement Letter also provides that if Alex. Brown is requested to
deliver any additional opinions with respect to
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amended or revised offers, the Company will pay Alex. Brown an additional fee of
$100,000 upon delivery of each such additional opinion. The Company also agreed
to indemnify and hold harmless Alex. Brown and each of its directors, officers,
agents, employees and controlling persons against any losses, claims, damages or
liabilities related to or arising out of Alex. Brown's engagement. If such
indemnification is not available, the Company agreed to contribute to the
losses, claims, damages or liabilities in proportion to the relative benefits
received by the Company and the party seeking contribution as well as in
proportion to the relative faults of the Company and the party seeking
contribution. The Company also agreed to pay all of Alex. Brown's reasonable
out-of-pocket expenses, including reasonable fees and disbursements of counsel.
POSITION OF GAMBRO, COBE AND PURCHASER REGARDING FAIRNESS OF THE OFFER AND THE
MERGER
Gambro, COBE and Purchaser regard the acquisition of the Company as the most
feasible means of improving the long-term viability of, and protecting the value
of their investment in, the Company. Gambro, COBE and Purchaser believe that the
Company and COBE must in the future grow, by acquisition or otherwise, to
compete effectively in an increasingly competitive and rapidly changing
healthcare marketplace, which is characterized by industry-wide consolidation.
Gambro, COBE and Purchaser believe that this growth can be achieved much more
effectively if the Company becomes a wholly owned subsidiary of COBE.
Gambro, COBE and Purchaser believe that the consideration to be received by
the Company's stockholders under the Offer and in the Merger is fair to the
Company's stockholders. Gambro, COBE and Purchaser base their belief on (i) the
fact that the Board, acting upon the unanimous recommendation of the Special
Committee, and the Special Committee, based on the factors considered by the
Special Committee as set forth above, concluded that the Offer and Merger are
fair to and in the best interests of the Company's stockholders, (ii) the fact
that Gambro, COBE and Purchaser and their financial and legal advisors
negotiated the Merger Agreement with the Special Committee on an arm's-length
basis, (iii) the financial analysis of UBS provided to certain senior executives
of COBE as described below, (iv) the current and historical market prices for
the Shares and fact that the consideration to be paid in the Offer and the
Merger represents a premium of approximately 27% over the closing price for the
Shares on the National Association of Securities Dealers Automated
Quotation--National Market System ("NASDAQ") on July 13, 1995, the last trading
day prior to the public announcement of the Proposed Transaction and (v) the
fact that COBE is not interested under any circumstances in selling its interest
in the Company and that there is thus no prospect for the sale of a controlling
interest in the Company to a third party. Gambro, COBE and Purchaser have
reviewed the factors considered by the Special Committee in support of its
decision, as described above, and had no basis to question their consideration
of or reliance on those factors. Neither Gambro, COBE nor Purchaser found it
practicable to assign, nor did any of them assign, relative weights to the
individual factors considered in reaching their conclusion as to fairness.
REPORT OF FINANCIAL ADVISOR TO COBE
UBS was retained by COBE to act as its financial advisor in connection with
the transactions contemplated hereby. On July 6, 1995, representatives of UBS
met with certain senior executives of COBE and presented certain financial
analyses of the Company (the "UBS Presentation"). UBS was not requested to, and
did not, render any opinion with respect to the fairness of the consideration to
be received by holders of Shares pursuant to the Offer or the Merger, nor does
UBS express any opinion thereon.
In preparing its report and making its analyses, UBS assumed and relied
without independent verification upon the accuracy and completeness of the
information reviewed by it for purposes of its report and analyses. UBS assumed
that the financial forecasts supplied by the Company had been reasonably
prepared on bases reflecting the best currently available estimates and
judgments of the future financial performance of the Company. UBS did not make,
nor was it provided with, any independent valuation appraisals. UBS' analyses
were based on economic, market and other conditions on the date of the
presentation and the information made available to UBS as of such date. The UBS
Presentation was one of many factors taken into consideration by COBE in making
its determination to present the Offer. Consequently, the UBS Presentation
should not be viewed as determinative of COBE's decision to proceed with the
Offer.
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The following is a summary of certain of the analyses performed by UBS in
connection with the UBS Presentation:
Historical Stock Price Performance. UBS reviewed the historical stock market
performance of the Shares and of the common shares of Renal Treatment Centers,
Inc. and Vivra Incorporated (the "Selected Companies"), publicly traded
companies that UBS deemed relevant for the purposes of its analyses, over
approximately a three-year period (from June 26, 1992 to June 30, 1995) and a
twelve-month period (from June 30, 1994 to June 30, 1995). UBS compared the
market prices for the Shares to an index comprised of the Selected Companies
weighted by market capitalization and to the Standard & Poor's 500 Index over
the aforementioned time periods.
Analysis of Selected Companies. UBS compared certain financial information
and operating statistics of the Company with corresponding financial information
and operating statistics of the Selected Companies, based upon the most recent
publicly available information. Such financial information and operating
statistics included, among other things, certain historical and projected growth
rates, certain historical margins, market values of equity, total enterprise
values and certain market multiples. The analysis of such financial information
and operating statistics yielded implied per Share values ranging from $9.77 to
$20.70.
Discounted Cash Flow Analysis. UBS performed a discounted cash flow analysis
using financial forecasts furnished by the Company's management for 1995 through
1998 and an estimate for 1999 based upon an extrapolation of 1998 data. Based on
such forecasts, UBS calculated the Company's earnings before interest, taxes,
depreciation and amortization ("EBITDA") and free cash flow (determined for this
purpose as forecasted unleveraged net income adjusted for forecasted
depreciation and amortization, forecasted capital expenditures and forecasted
working capital requirements) for 1995 through 1999. UBS discounted such stream
of free cash flows back to June 30, 1995, using discount rates ranging from
10.0% to 14.0%. To estimate the residual value of the Company at the end of
1999, UBS applied terminal multiples of 6.5x to 7.5x to the forecasted 1999
EBITDA and discounted such value estimates back to June 30, 1995, using discount
rates ranging from 10.0% to 14.0%. UBS determined the range of discount rates
and terminal multiples based on a variety of factors, including, among other
things, analyses of the estimated cost of capital of the Company, the range of
market multiples for the Selected Companies and general market conditions. UBS
then added the present values of the free cash flows and the present values of
the residual values to derive a range of implied enterprise values for the
Company. These calculations resulted in implied per Share values ranging from
$16.95 to $22.41.
Analysis of Selected Minority Buyout Transactions. UBS reviewed 22 selected
acquisitions of minority shareholdings valued at more than $10 million since
January 1990 and evaluated the premiums over the prevailing market prices paid
by buyers in such acquisitions. The analysis indicated that the premiums
represented by the purchase price over the market prices of the subject
companies one day and one month prior to the announcement of the subject
transaction ranged from 2.2% to 57.1%, with a median of 22.8% (which resulted in
an implied per Share value of $19.49), and 4.8% to 61.1%, with a median of 31.1%
(which resulted in an implied per Share value of $18.52).
The UBS Presentation summarized above was prepared solely for internal use
and not with a view to public disclosure. The foregoing summary of the UBS
Presentation is included in this Offer to Purchase solely because such
information was furnished by UBS to COBE. In performing its analyses, UBS made
numerous assumptions with respect to industry performance, general business and
economic conditions and other matters, many of which are beyond the control of
COBE or the Company. The analyses performed by UBS are not necessarily
indicative of actual values, which may be significantly more or less favorable
than those which are suggested by such analyses. Such analyses do not purport to
be appraisals or to reflect the prices at which the Shares might actually be
sold.
The foregoing summary does not purport to be a complete description of the
UBS Presentation or of UBS' oral presentation to certain senior executives of
COBE on July 6, 1995. A copy of the UBS Presentation has been filed as an
Exhibit to the Schedule 13E-3, and copies thereof will be made available for
inspection and copying at the principal executive offices of the Company during
regular business hours by any interested shareholder of the Company or any
representative designated in writing and may also be obtained in the manner
described under "THE TENDER OFFER -- Section 6. Certain Information Concerning
the Company" (except that copies are not available at the regional offices of
the Commission).
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No limitations were placed by COBE on UBS with respect to the investigations
made or the procedures followed by UBS.
UBS is an internationally recognized investment banking and advisory firm.
UBS, as part of its investment banking business, is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. COBE retained UBS as its financial advisor based on UBS'
qualifications, experience and expertise. In the ordinary course of its
business, UBS actively trades the Shares for its own account and for the
accounts of its customers, and, accordingly, may at any time hold long or short
positions in such securities.
A summary of the terms under which UBS has been engaged by COBE as its
financial advisor in connection with the Proposed Transaction is set forth in
"THE TENDER OFFER -- Section 11. Fees and Expenses".
PURPOSE AND EFFECTS OF THE OFFER AND THE MERGER
The Offer and the Merger are being made pursuant to the Merger Agreement.
The purpose of the Offer and the Merger is for COBE to acquire the entire equity
interest in the Company. In order to facilitate a prompt and orderly transfer of
ownership to COBE of the Shares owned by public shareholders, the acquisition
transaction has been structured as a cash tender offer followed by a merger of
Purchaser with and into the Company in which the remaining equity interest in
the Company not acquired by Purchaser pursuant to the Offer will be converted
into the right to receive the Merger Consideration and will thus be indirectly
acquired by COBE.
As a result of the Offer, the interest of COBE in the Company's net book
value and net income will increase to the extent of the number of Shares
acquired under the Offer. If the Merger is consummated, COBE's interest in such
items will increase to 100% and COBE and its subsidiaries will be entitled to
all benefits resulting from that interest, including all income generated by the
Company's operations and any future increase in the Company's value. Similarly,
COBE will also bear the risk of any decrease in the income or value of the
Company after the Merger.
Under Tennessee Law, the approval of the Board and the affirmative vote of
the holders of a majority of the outstanding shares of Common Stock is required
to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger. The Board has unanimously approved and adopted
the Merger Agreement and the transactions contemplated thereby (which approval
includes the approval of a majority of the Company's disinterested directors, as
required both by Tennessee Law and by Article X of the Company's By-laws) and,
unless the Merger is consummated pursuant to the short-form merger provisions
under Tennessee Law described below, the only remaining corporate action of the
Company required for the consummation of the Merger is the approval and adoption
of the Merger Agreement and the transactions contemplated thereby by the
affirmative vote of the holders of a majority of the Shares. In the Merger
Agreement, the Company has agreed to take all action necessary to convene a
meeting of its stockholders as soon as practicable after the consummation of the
Offer for the purpose of considering and taking action on the Merger Agreement
and the transactions contemplated thereby.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval and adoption of the Merger and the
Merger Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares, as required by Tennessee Law and the Charter of the Company,
and the purchase by the Purchaser of all Shares validly tendered in the Offer.
See "SPECIAL FACTORS -- The Merger Agreement -- Conditions to the Merger". The
Company has advised Purchaser that as of September 13, 1995, there were
18,951,834 Shares issued and outstanding, 530 record holders of Shares, 542,225
shares of Common Stock subject to Options granted pursuant to the Stock Option
Plan, 9,344 shares of Common Stock subject to Options granted pursuant to the
ESPP and Warrants to acquire 74,000 shares of Common Stock. On September 12,
1995, COBE contributed to Purchaser all the Shares owned by COBE. Accordingly,
Purchaser presently owns 10,036,221 of the outstanding Shares, constituting
approximately 53% of the outstanding Shares. Pursuant to the Merger Agreement,
Gambro, COBE and Purchaser have agreed to cause all Shares owned by them and
their subsidiaries to be voted in favor of the approval and adoption of the
Merger Agreement and the transactions contemplated thereby at any meeting of the
Company's stockholders at which such matters are to be voted upon. Accordingly,
assuming that all
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of the outstanding Options and Warrants were to be exercised, thereby resulting
in the issuance of 625,569 additional Shares, Purchaser will have sufficient
voting power to approve and adopt the Merger and Merger Agreement without the
approval of any other stockholder of the Company. However, because it is a
condition to the Merger that Purchaser have purchased all Shares validly
tendered in the Offer and the Minimum Condition is a condition to the Offer, the
Merger cannot be consummated unless the Minimum Condition is satisfied or
waived. The Minimum Condition cannot be waived without the prior written consent
of the Special Committee.
Under Tennessee Law, if Purchaser acquires (pursuant to the Offer or
otherwise) at least 90% of the outstanding Shares, Purchaser will be able to
approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger, without calling a meeting of the Company's
stockholders and without the approval of the Company's stockholders. In
accordance with Tennessee Law, in the event that Purchaser acquires at least 90%
of the then outstanding Shares, Gambro, COBE, Purchaser and the Company have
agreed in the Merger Agreement to take, at the request of Purchaser, all
necessary and appropriate action to cause the Merger to become effective as soon
as reasonably practicable after such acquisition, without a meeting and approval
by vote of the Company's stockholders. If, however, Purchaser does not acquire
at least 90% of the outstanding Shares pursuant to the Offer or otherwise and a
meeting and the approval of the Company's stockholders is required under
Tennessee Law, as described in the preceding paragraph, a significantly longer
period of time would be required to effect the Merger.
Pursuant to the Offer and the Merger, the Company's stockholders will
receive a cash price of $20.00 per Share which represents a premium of
approximately 27% over the $15.75 closing price of the Shares on July 13, 1995,
the last full trading day prior to the public announcement of the Proposed
Transaction. On September 12, 1995, the last full trading day prior to the
announcement of the execution of the Merger Agreement and of Purchaser's
intention to commence the Offer, the closing price per Share was $19 25/32. The
closing price per Share on September 18, 1995, the last full trading day prior
to commencement of the Offer, was $19.75. See "THE TENDER OFFER -- Section 5.
Price Range of Shares".
Following consummation of the Offer, the Shares may cease to be listed on
NASDAQ and registration of the Shares under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), may be terminated. Upon consummation of the
Merger, the Surviving Corporation will become a wholly owned subsidiary of COBE.
Accordingly, for the Company's stockholders other than Gambro, COBE, Purchaser
and their affiliates, the Merger will result in a termination of their rights as
stockholders. They will not participate in the earnings and growth of the
Surviving Corporation after the Merger and will not have any right to vote on
corporate matters. Similarly, such stockholders will not face the risk of
decline in the value of the Company after the Merger. See "THE TENDER
OFFER -- Section 12. Effect of the Offer on the Market for the Shares, Exchange
Listing and Exchange Act Registration" for further information concerning the
effect of the de-listing and de-registration of the Shares.
PLANS FOR THE COMPANY AFTER THE OFFER AND THE MERGER
It is expected that, initially following the Merger, the business and
operations of the Company will, except as set forth in this Offer, be continued
by the Surviving Company substantially as they are currently being conducted.
Gambro, COBE and Purchaser 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, and will take such actions as it deems appropriate
under the circumstances then existing. Gambro and COBE intend to conduct a
comprehensive review of the Surviving Company's business, operations,
capitalization and management with a view to optimizing exploitation of the
Surviving Company's potential in conjunction with COBE's businesses. It is
expected that the business and operations of the Surviving Company will form an
important part of COBE's future business plans. Gambro and COBE believe that the
Company and COBE must in the future grow, by acquisition or otherwise, to
compete effectively in an increasingly competitive and rapidly changing
environment in which industry-wide consolidation is taking place. Gambro and
COBE believe that this growth can be achieved much more effectively if the
Company becomes a wholly owned subsidiary of COBE.
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APPRAISAL RIGHTS OF STOCKHOLDERS
No appraisal rights are available in connection with the Offer. However, if
the Merger is consummated, stockholders may, if certain statutory procedures are
complied with, have certain rights under the Tennessee Law to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares.
Pursuant to Section 48-23-102(c) of the Tennessee Law, no shareholder may
dissent as to any shares of a security which, as of the date of the effectuation
of a transaction that would otherwise give rise to dissenters' rights, is listed
on an exchange registered under Section 6 of the Exchange Act or is a "national
market system security." However, the purchase of the Shares pursuant to the
Offer may result in the Shares no longer meeting the standards for continued
inclusion in the NASDAQ. Accordingly, in the event that prior to the effective
date of the Merger, the Shares are no longer included in the NASDAQ,
stockholders will have certain rights under Tennessee Law to dissent and demand
payment for the fair value of their Shares if the Merger is consummated. See
"THE TENDER OFFER -- Section 12. Effect of the Offer on the Market for the
Shares, Exchange Listing and Exchange Act Registration" regarding the possible
de-listing of the Shares from NASDAQ.
Such rights to dissent, if the statutory procedures are complied with, could
lead to a judicial determination of the fair value of the Shares, as of the time
immediately before the effectuation of the Merger or similar business
combination to which the dissenter objects (excluding any appreciation or
depreciation in anticipation of the corporate action), which value is required
to be paid in cash to such dissenting holders for their Shares. In addition,
such dissenting stockholders would be entitled to receive payment of interest
(at the average auction rate paid on United States treasury bills with a
maturity of six (6) months (or the closest maturity thereto) as of the auction
date for such treasury bills closest to the date of the consummation of the
Merger) from the date of the consummation of the Merger on the amount determined
to be the fair value of their Shares. Therefore, the value so determined in any
appraisal proceeding could be the same, more or less than the purchase price per
Share in the Offer or the Merger Consideration.
Under the Tennessee Law, any minority shareholder is entitled to dissent and
to receive the fair value of his or her shares under the circumstances specified
under Tennessee Law. Under Tennessee Law, stockholders are entitled to dissent
from, and obtain payment of the fair value of their Shares in the event of
certain corporate actions, including the Merger. Under Tennessee Law, within ten
days of any corporate action creating dissenters' rights which was taken without
a vote of stockholders, such as the Merger, the corporation is required to
notify all stockholders entitled to assert dissenters' rights that the action
was taken and to provide the following information in a dissenters' notice (the
"Dissenters' Notice") sent to all stockholders: (i) where the payment demand
must be sent and where and when certificates for certified shares must be
deposited; (ii) the extent to which the transfer of the uncertificated shares
will be restricted after the payment demand is received; (iii) a form for
demanding payment; (iv) a set date (no later than one nor more than two months
from delivery of the Dissenters' Notice) by which the corporation must receive
the payment demand after the Dissenters' Notice; and (v) a copy of Section 23 of
the Tennessee Law. Unless the stockholder complies with this statutory
procedure, his dissenters' rights will be forfeited.
In order properly to effect his dissenters' rights, a stockholder who
receives a Dissenters' Notice must demand payment and deposit his certificates
in accordance with the Dissenters' Notice. A demand for payment may only be
withdrawn with the consent of the corporation. Except as provided below, as soon
as the corporate action creating dissenters' rights is effectuated, or upon
receipt of a payment demand, whichever is later, the corporation shall pay each
dissenter the amount the corporation estimates to be the fair value of his
shares, plus accrued interest. The payment must be accompanied by, among other
things, certain financial information regarding the corporation, a statement of
the corporation's estimate of the fair value of shares, an explanation of how
the interest was calculated and a statement of the dissenter's right to demand
payment if the stockholder is dissatisfied with the payment offer. A dissenter
may notify the corporation in writing of his own estimate of the fair value of
his shares, plus accrued interest, and demand payment of his estimate, or reject
the corporation's offer and demand payment of the fair value of his shares and
interest due, if (i) the dissenter believes that the amount paid or offered by
the corporation is less than the fair value of his shares or that the interest
due is incorrectly calculated, (ii) the corporation fails to make payment within
two months after the date set for demanding payment, or (iii) the corporation,
having failed to effectuate the proposed action, does not return the deposited
certificates or release the transfer restrictions imposed
16
<PAGE>
on uncertificated shares within two months after the date set for demanding
payment. If a demand for payment remains unsettled, the corporation shall
commence a proceeding within two months after receiving the payment demand and
petition the court to determine the fair value of the shares and accrued
interest. If the corporation does not commence the proceeding within the
two-month period, it shall pay each dissenter whose demand remains unsettled the
amount demanded. Each dissenter made a party to the proceeding is entitled to
judgment for the amount, if any, by which the court finds the fair value of his
shares, plus accrued interest, exceeds the amount paid by the corporation. A
dissenter waives his right to demand payment unless he notifies the corporation
of his demand in writing within one month after the corporation made or offered
payment for his shares.
In 1983, in the case Blasingame v. American Materials, the Tennessee Supreme
Court adopted the Delaware block valuation method for determining the fair value
of corporate shares. Under the Delaware block method, the value of the
dissenters' shares are calculated using the following three separate measures of
stock value: investment or earnings value, asset value, and market value. The
investment or earnings value "relates to the earning capacity of the corporation
and involves an attempt to predict its future income based primarily on its
previous earnings record." The asset value "looks to the net assets of the
corporation valued as a 'going concern,' each share having a pro rata value of
the net assets." The market value is "the value of the share on the basis of the
price for which a share is selling or could be sold to a willing buyer." The
Tennessee Supreme Court noted that once the three values are determined, an
appropriate weight is assigned to each, taking into consideration "the type of
business, the objectives of the corporation, and other relevant factors." The
sum of the three weighted values equals the fair value of the shares.
However, the Delaware block method of valuation was rejected by the Delaware
Supreme Court in Weinberger v. UOP, Inc., in favor of "a more liberal approach
[which] must include proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court." Subsequent Tennessee cases suggest that the Delaware block
method as applied by Tennessee courts is not a rigid valuation method but in
practice offers a more liberal construction of fair value than the historical
Delaware block method. In 1994, the Tennessee Court of Appeals in American
Network Group, Inc. v. Kostyk, stated that "while the formulaic Delaware rule is
prescribed by Blasingame, our Supreme Court made it clear that other methodology
might be more justiciable in differing circumstances." See Schedule II attached
hereto which contains a copy of the text of Chapter 23 of the Tennessee Business
Corporation Act.
INTERESTS OF CERTAIN PERSONS IN THE OFFER AND THE MERGER
In considering the recommendation of the Board with respect to the Offer and
the Merger and the fairness of the consideration to be paid under the Offer and
in the Merger, stockholders of the Company should be aware that certain officers
and directors of the Company have interests in the Offer and the Merger,
including those referred to below that present them with potential conflicts of
interest. The Special Committee and the Board were aware of these potential
conflicts prior to the execution of the Merger Agreement.
Under the Stock Purchase Agreements, so long as COBE owns a majority of the
Shares, COBE may designate a majority of the members of the Board. See "THE
TENDER OFFER -- Section 7. Certain Information Concerning Purchaser, COBE,
Gambro and Incentive". Accordingly, as a result of COBE's ownership of
approximately 53% of the Shares, COBE has designated three members of the Board,
namely, Jan Gustavsson, Herbert S. Lawson and Mats Wahlstrom. At present, the
Company's Board consists of six members.
Mr. Gustavsson was elected to the Board in April 1993. Since March 1993, Mr.
Gustavsson has served as Chief Financial Officer of Gambro. Since November,
1993, Mr. Gustavsson has been a member of the Board of Directors of COBE.
Mr. Lawson was elected to the Board in October 1992. Since July 1992, Mr.
Lawson has served as Vice President and Treasurer of COBE.
Mr. Wahlstrom was elected to the Board in May 1991 and currently serves as
Chairman of the Board. Between 1985 and 1993, Mr. Wahlstrom served as the Chief
Financial Officer of Gambro and since March 1993 has served as Executive Vice
President of Gambro. Since June 1990, Mr. Wahlstrom has been a member of the
17
<PAGE>
Board of Directors of COBE and has served as Executive Vice President of COBE.
Since May 1991, Mr. Wahlstrom has also served as President of COBE.
Mr. Lawrence J. Centella was elected to the Board in October 1992 and has
served as the President and Chief Executive Officer of the Company since July
1993. From July 1990 to July 1993, Mr. Centella was the President of COBE Renal
Care, Inc., a subsidiary of COBE, and from April 1989 to June, 1990, Mr.
Centella was the President of Gambro-Hospital, Inc., a subsidiary of Gambro.
Pursuant to the Employment Agreement dated as of July 14, 1993 between Mr.
Centella and the Company, the Company agreed to employ Mr. Centella as its
President and Chief Executive Officer from the date thereof until December 31,
1996. Furthermore, the Company has the option of extending the term of the
agreement for an additional three years. The Company shall (i) pay Mr. Centella
a base salary of $250,000 per year, (ii) enter into a qualified deferred
compensation agreement, effective from January 1, 1994, to defer $9,000 of the
base salary for 1994 for 10 years, and (iii) commencing with the Company's 1994
fiscal year, pay Mr. Centella certain performance related bonuses. The Company
also agreed to grant Mr. Centella Options to purchase up to 200,000 Shares in
certain circumstances.
Compensation of Directors; Consultation Agreement; Special Committee Fee. As
Chairman of the Board, Mr. Wahlstrom receives annual compensation of $40,000 per
year. All other directors of the Company currently receive $20,000 per annum for
serving as a member of the Board. In addition, each member of the Board receives
$2,500 for each meeting of the Board attended in person and $1,000 for each
committee meeting attended in person. The committees of the Board consist of an
Audit Committee, composed of Messrs. Lawson and Gustavsson and Drs. Jacobs and
Kokko; a Compensation Committee, composed of Mr. Lawson and Drs. Jacobs and
Kokko; and an Executive Committee, composed of Dr. Kokko and Messrs. Centella,
Lawson and Wahlstrom. Directors are entitled to participate in the Company's
Stock Option Plan. See "SPECIAL FACTORS -- Interests of Certain Persons in the
Offer and the Merger--Beneficial Ownership of Common Stock" setting forth the
beneficial ownership of Common Stock by directors of the Company.
Dr. Kokko was elected to the Board in July 1993 and is a member of the
Special Committee. Pursuant to a letter dated as of September 14, 1992
(approximately three years prior to the date Dr. Kokko was appointed to serve on
the Special Committee), from the Company to Dr. Kokko, Dr. Kokko was retained by
the Company as a consultant and, in accordance with such letter, currently
receives $4,000 per month from the Company for services rendered to the Company
as a consultant.
Each member of the Special Committee, Drs. Kokko and Jacobs, will be paid a
fee of $30,000 by the Company for their services as members of the Special
Committee. In addition, each member of the Special Committee will be reimbursed
by the Company for any expenses attributable to service in the capacity as a
member of the Special Committee in addition to their regular compensation for
serving as a director of the Company.
Beneficial Ownership of Common Stock. The following table sets forth certain
information, as of September 13, 1995, regarding the ownership of Common Stock
by each person known by the Company to be the beneficial owner of more than five
percent of the outstanding Common Stock, each director of the Company, the Chief
Executive Officer of the Company, and the four most highly compensated officers
of the Company, and all executive officers and directors of the Company as a
group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
REN Acquisition Corp.(1)................................. 10,036,221 53.0%
1185 Oak Street
Lakewood, CO 80215
Lawrence J. Centella(2).................................. 207,138 *
Jan Gustavsson(3)........................................ 10,036,221 53.0%
Magistratsvagen 16 Box 10101
S-220 10 Lund, Sweden
M. Stephen Harrison(4)................................... 39,507 *
J. Kenneth Jacobs, M.D.(5)............................... 91,100 *
Juha P. Kokko, M.D., Ph.D.(6)............................ 15,000 *
Herbert S. Lawson(7)..................................... 10,037,721 53.1%
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP PERCENT OF CLASS
- --------------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
Ralph Z. Levy, Jr.(8).................................... 10,105,727 *
Lowell F. Martin(9)...................................... 21,705 *
Mats Wahlstrom(7)........................................ 10,038,721 53.1%
1185 Oak Street
Lakewood, CO 80215
Bradley S. Wear(11)...................................... 95,459 *
All Officers and Directors as a Group (13 Persons)....... 10,135,416 53.6%
</TABLE>
- ------------
* Less than one percent.
(1) REN Acquisition Corp. is a direct wholly owned subsidiary of COBE. COBE is
a direct wholly owned subsidiary of Gambro GmbH, a German corporation,
which is a direct wholly owned subsidiary of Gambro AB, a Swedish
corporation. Shares representing approximately 58.5% of the total voting
power of Gambro AB are held by Incentive AB, a Swedish corporation.
(2) Includes 200,000 options to purchase Shares and 356 Options granted
pursuant to the ESPP.
(3) Includes 10,036,221 Shares owned by REN Acquisition Corp. Mr. Gustavsson is
an employee of Gambro AB. Mr. Gustavsson disclaims any beneficial ownership
of such Shares.
(4) Includes 37,500 Options to purchase common stock of the Company.
(5) Includes 15,000 Options to purchase common stock of the Company.
(6) Includes 15,000 Options to purchase common stock of the Company.
(7) Includes 10,036,221 Shares owned by REN Acquisition Corp., of which Messrs.
Lawson and Wahlstrom, who are directors of the Company, are directors.
Messrs. Lawson and Wahlstrom disclaim any beneficial ownership of such
shares.
(8) Includes 10,036,221 Shares owned by REN Acquisition Corp., of which Mr.
Levy is a director. Mr. Levy disclaims any beneficial ownership of such
Shares. Includes 67,500 options to purchase common stock of the Company and
227 Options to purchase common stock of the Company granted pursuant to the
ESPP.
(9) Includes 20,000 Options to purchase common stock of the Company and 199
Options to purchase common stock of the Company granted pursuant to the
ESPP.
(10) Includes 95,000 Options to purchase common stock of the Company.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is filed
as an Exhibit to the Schedule 14D-1 and the Schedule 13E-3 filed by Purchaser,
COBE, Gambro and Incentive with the Commission in connection with the Offer.
Such summary is qualified in its entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the initial public announcement of Purchaser's intention to commence
the Offer. The obligation of Purchaser to accept for payment and pay for Shares
tendered pursuant to the Offer is subject to the satisfaction of the conditions
that are described in "THE TENDER OFFER -- Section 10. Certain Conditions of the
Offer" hereof. Purchaser and COBE have agreed that no change in the Offer may be
made which decreases the price per Share payable in the Offer or which reduces
the maximum number of Shares to be purchased in the Offer or which imposes
conditions to the Offer in addition to those set forth in "THE TENDER
OFFER -- Section 10. Certain Conditions of the Offer" hereof.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with Tennessee Law, at the Effective
Time, Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Purchaser will cease and the Company
will continue as the Surviving Corporation and will become a wholly owned
subsidiary of COBE after the Merger. Upon consummation of the Merger, each
issued and then outstanding Share (other than any Shares held by the Company, or
owned by Purchaser, COBE or any direct or indirect wholly owned subsidiary of
COBE or of the Company and any Shares
19
<PAGE>
which are held by stockholders who have not voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly an appraisal
for such stockholders' Shares in accordance with Tennessee Law) shall be
cancelled and converted automatically into the right to receive the Merger
Consideration.
Pursuant to the Merger Agreement, each share of common stock, par value $.01
per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one share of Common
Stock of the Surviving Corporation.
The Merger Agreement provides that the directors of the Company immediately
prior to the Effective Time will be the directors of the Surviving Corporation
immediately following the Merger and that the officers of the Company
immediately prior to the Effective Time will be the officers of the Surviving
Corporation immediately following the Merger. The Merger Agreement provides
that, at the Effective Time, the Charter of the Company, as in effect
immediately prior to the Effective Time, will be the Charter of the Surviving
Corporation. The Merger Agreement also provides that the By-laws of the Company,
as in effect immediately prior to the Effective Time, will be the By-laws of the
Surviving Corporation.
The Merger Agreement also provides that each holder of an Option to purchase
shares of Company Common Stock under the Company's Stock Option Plan which
Option is outstanding immediately prior to the Effective Time (whether or not
then exercisable) shall, pursuant to the Cancellation of Options Agreements,
entered into by the Company with each holder of Options, be entitled to receive,
and shall receive, in settlement and cancellation thereof, an amount in cash
equal to the product of (i) the excess, if any, of the amount of the Per Share
Amount over the exercise price of each such Option and (ii) the number of shares
of Company Common Stock covered by such Option. All payments by the Company in
respect of Options, other than Options granted within six months prior to the
Effective Time, shall be made promptly following the Effective Time. Payments in
respect of Options granted within six months prior to the Effective Time shall
be made six months and one day after the date of grant of such Options. The
Company shall cause the Stock Option Plan to terminate as of the Effective Time
and certificates evidencing Options shall be deemed to be cancelled as of the
Effective Time, and thereafter the only rights of participants therein shall be
the right to receive the consideration described above. Under the Merger
Agreement, the Company has agreed that prior to the Effective Time, the Company
shall use its reasonable best efforts to cause each holder of an outstanding
Option to acknowledge in writing the cancellation of such Option and to release
the Company from any obligation in respect thereof in consideration for the
payment provided herein and shall take such other action as may be necessary to
carry out the foregoing terms.
The Merger Agreement also provides that each holder of a Warrant to purchase
shares of Company Common Stock, which Warrant is outstanding immediately prior
to the Effective Time (whether or not then presently exercisable), shall,
pursuant to the Cancellation of Warrant Agreements entered into by the Company
with each of the Warrant holders, be entitled to receive, and shall receive, in
settlement and cancellation thereof, an amount in cash equal to the product of
(i) the excess, if any, of the Per Share Amount over the exercise price of each
such Warrant and (ii) the number of shares of Company Common Stock covered by
such Warrant. The Company shall cause each such Warrants to which it is a party
to terminate as of the Effective Time, and thereafter the only rights of the
holders of the Warrants shall be the right to receive the consideration
described above. Under the Merger Agreement, the Company has agreed that prior
to the Effective Time, the Company shall use its reasonable best efforts to
cause each holder of an outstanding Warrant to acknowledge in writing the
termination of such Warrants and to release the Company from any obligation in
respect thereof in consideration for the payment provided herein and shall take
such other action as may be necessary to carry out the foregoing terms.
The Merger Agreement also provides that the Company shall terminate the ESPP
effective September 30, 1995 (the "Termination Date") pursuant to which (i) all
further payroll deductions from each Participant (as defined in the ESPP) shall
cease, (ii) the amount (the "Plan Amount") credited to the account of each
Participant as of the Termination Date shall at the election of each Participant
either (A) be paid by the Company to such Participant (without interest) as soon
as administratively practicable or (B) be applied as of the Termination Date to
the purchase of Shares in an aggregate amount equal to each Participant's Plan
Amount at a price per Share equal to 85% of the lower of the Fair Market Value
(as defined in the ESPP) per share of Common Stock on July 1, 1995 or on the
Termination Date (rounded up to the next whole dime), in accordance with the
terms of the current phase under the ESPP, and (iii) for purposes of the current
phase, the Termination Date shall be treated for all purposes of
20
<PAGE>
the ESPP as the last day of such phase. Under the Merger Agreement, in the event
that a Participant makes no election under clause (ii) above, such Participant
shall be deemed to have elected as of the Termination Date to apply such
Participant's Plan Amount to the purchase of Shares in accordance with the
provisions of clause (ii)(B) above.
Agreements of COBE, Purchaser and the Company. Pursuant to the Merger
Agreement, if required by applicable law in order to consummate the Merger, the
Company, acting through the Board acting upon the unanimous recommendation of
the Special Committee, shall, in accordance with applicable law and the
Company's Charter and By-laws, (i) duly call, give notice of, convene and hold
an annual or special meeting of its stockholders as soon as practicable
following consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby (the
"Stockholders' Meeting"). Purchaser presently owns 10,036,221 Shares
constituting approximately 53% of the Shares. If all of the outstanding Options
and Warrants were to be exercised, Purchaser will have sufficient voting power
to approve and adopt the Merger and the Merger Agreement without the approval of
any other holder of Shares.
The Merger Agreement provides that the Company shall, if required by
applicable law, as promptly as practicable following consummation of the Offer,
file with the Commission under the Exchange Act, and use its reasonable best
efforts to have cleared by the Commission, a proxy statement and related proxy
materials (the "Proxy Statement") with respect to the Stockholders' Meeting. The
Company has agreed, unless in breach of its fiduciary duties under applicable
law as advised by outside counsel, to include in the Proxy Statement the
unanimous recommendation of the Board, acting upon the unanimous recommendation
of the Special Committee, that the stockholders of the Company approve and adopt
the Merger Agreement and the transactions contemplated thereby and to use its
reasonable best efforts to obtain such approval and adoption. At such
Stockholders' Meeting, Gambro, COBE and Purchaser have agreed to cause all
Shares then owned by them and their subsidiaries to be voted in favor of
approval and adoption of the Merger Agreement and the transactions contemplated
thereby.
The Merger Agreement further provides that COBE shall cause the Surviving
Corporation to keep in effect the provisions in its Charter and By-laws
containing the provisions with respect to exculpation of director and officer
liability and indemnification set forth in the Charter and By-laws of the
Company on the date of this Agreement to the fullest extent permitted under
applicable law, which provisions shall not be amended, repealed or otherwise
modified except as required by applicable law or except to make changes
permitted by applicable law that would enlarge the exculpation or rights of
indemnification thereunder. Under the Merger Agreement, from and after the
Effective Time, Gambro and COBE each agree, jointly and severally, to guarantee
and to cause the Surviving Corporation to perform all of its obligations under
the Charter and By-laws of the Company with respect to indemnification. The
Merger Agreement provides that to the extent that the foregoing or the
provisions of the Charter or By-laws of the Surviving Corporation shall not
serve to indemnify and hold harmless each present and former director and
officer or the Company (the "Indemnified Parties"), after the Effective Time,
Gambro and COBE shall, subject to the terms set forth in the Merger Agreement,
indemnify and hold harmless, to the fullest extent permitted under applicable
law (and shall also advance expenses as incurred to the fullest extent permitted
under applicable law provided the person to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that such
person is to entitled to indemnification), each Indemnified Party against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and amounts and paid in settlement in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to the transactions contemplated by the Merger Agreement for a period of six
years after the date of the Merger Agreement; provided, that in the event any
claim or claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims.
The Merger Agreement provides that COBE shall cause the Surviving
Corporation to use its best efforts to maintain in effect for six years from the
Effective Time, if available, the coverage provided by 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.
21
<PAGE>
The Merger Agreement provides that, subject to its terms and conditions,
each of the parties thereto shall use its reasonable best efforts to take, or
cause to be taken, all appropriate 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 the Merger
Agreement, including, without limitation, using its reasonable best efforts to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts
with the Company and its subsidiaries as are necessary for the consummation of
the transactions contemplated by the Merger Agreement and to fulfill the
conditions to the Offer and the Merger.
The Merger Agreement provides that in case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
the Merger Agreement, the proper officers and directors of each party to the
Merger Agreement are required to use their reasonable best efforts to take all
such action.
The Merger Agreement provides that Gambro guarantees the performance by COBE
and Purchaser of their agreements and obligations under the Merger Agreement.
Representations and Warranties. The Merger Agreement contains certain
customary representations and warranties of the parties thereto.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions: (a) the Merger
Agreement and the transactions contemplated thereby shall have been approved and
adopted by the affirmative vote of the stockholders of the Company to the extent
required by Tennessee Law and the Company's Charter; (b) the parties to the
Merger Agreement shall have performed or complied in all material respects with
all agreements and covenants required by the Merger Agreement to be performed or
complied with by them on or prior to the Effective Time; (c) no governmental
authority or other agency or commission or court of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is then in effect and has the effect
of making the acquisition of Shares by Gambro, COBE or Purchaser or any
affiliate of either of them illegal or otherwise restricting, preventing or
prohibiting consummation of the transactions contemplated by the Merger
Agreement; and (d) Purchaser or its permitted assignee shall have purchased all
Shares validly tendered and not withdrawn pursuant to the Offer; provided,
however, that this conditions shall not be applicable to the obligations of
Gambro, COBE or Purchaser if, in breach of the Merger Agreement or the terms of
the Offer, Purchaser fails to purchase Shares validly tendered and not withdrawn
pursuant to the Offer.
Termination; Fees and Expenses. The Merger Agreement provides that it may be
terminated and the Merger and the other transactions contemplated by the Merger
Agreement may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of the Merger Agreement and
the transactions contemplated by the Merger Agreement by the stockholders of the
Company: (a) by mutual written consent of Gambro, COBE, Purchaser and the
Special Committee; (b) by either COBE, Purchaser or the Special Committee if (i)
the Effective Time shall not have occurred on or before March 31, 1996;
provided, however, that the right to terminate the Merger Agreement shall not be
available to any party whose failure to fulfill any obligation under the Merger
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date or (ii) any court of competent jurisdiction
or other governmental authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have become final
and nonappealable; (c) by COBE if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in "THE TENDER
OFFER -- Section 10. Certain Conditions of the Offer" hereof, Purchaser shall
have (A) failed to commence the Offer within 60 days following the date of the
Merger Agreement, (B) terminated the Offer without having accepted any Shares
for payment thereunder, or (C) failed to pay for Shares pursuant to the Offer
within 90 days following the commencement of the Offer, unless such failure to
pay for Shares shall have been caused by or resulted from the failure of Gambro,
COBE or Purchaser to perform in any material respect any material covenant or
agreement of either of them contained in the Merger Agreement or the material
breach by Gambro, COBE or Purchaser of any material representation or warranty
of either of them contained in the Merger Agreement or (ii) prior to the
purchase of Shares pursuant to the Offer, the Special Committee, acting on
behalf of the Company, shall have withdrawn or modified in a manner adverse to
Purchaser or COBE its approval or recommendation of the Offer, the
22
<PAGE>
Merger Agreement, the Merger or any other transaction contemplated by the Merger
Agreement or shall have recommended another merger, consolidation, business
combination with, or acquisition of, the Company or its assets or another tender
offer for Shares, or shall have resolved to do any of the foregoing; (d) by the
Special Committe acting on behalf of the Company, Purchaser shall have (A)
failed to commence the Offer within 60 days following the date of the Merger
Agreement, (B) terminated the Offer without having accepted any Shares for
payment thereunder or (C) failed to pay for Shares pursuant to the Offer within
90 days following the commencement of the Offer, unless such failure to pay for
Shares shall have been caused by or resulted from the failure of the Company to
perform in any material respect any material covenant or agreement of it
contained in the Merger Agreement or the material breach by the Company of any
material representation or warranty of it contained in the Merger Agreement; (e)
prior to the purchase of Shares pursuant to the Offer, by the Special Committee,
acting on behalf of the Company, (i) if any representation or warranty of
Gambro, Parent or Purchaser was untrue or incorrect in any material respect when
made and on and as of the expiration of the Offer, except for changes
contemplated by the Merger Agreement, with the same force and effect as if made
on and as of the date of such expiration, or in the case of a representation or
warranty made or given as of a specified time, if such representation or
warranty was untrue or incorrect in any material respect as of such time, or
(ii) if Parent, Purchaser or Gambro has failed to perform or comply with, in any
material respect, any of their covenants and agreements in the Merger Agreement;
or (f) by either Parent, Purchaser or the Special Committee, acting on behalf of
the Company, if the conditions to the Merger are not reasonably capable of being
satisfied on or before March 31, 1996.
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it shall forthwith become void and there shall be no
liability thereunder on the part of any party thereto except under the
provisions of the Merger Agreement related to fees and expenses described below
and under certain other provisions of the Merger Agreement which survive
termination.
All fees, costs and expenses incurred in connection with the Merger
Agreement and the Transactions shall be paid by the party incurring such
expenses, whether or not any such transaction is consummated; provided, however,
that the Purchaser and the Company shall each pay for one-half of all fees,
costs and expenses incurred in connection with the Merger Agreement and the
transactions contemplated thereby which are payable to the Commission and to any
financial or other printer.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer, in the Merger or
pursuant to the exercise of dissenters' appraisal rights will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign or other tax laws. In
general, a stockholder will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received in exchange
for the Shares sold and such stockholder's adjusted tax basis in such Shares.
Assuming the Shares constitute capital assets in the hands of the stockholder,
such gain or loss will be capital gain or loss. The gain or loss will be
long-term capital gain or loss, if, as of the date of the exchange, the holder
has held such shares for more than one year. There are limitations on the
deductibility of capital losses.
In recent months, various legislative proposals have been introduced in
Congress, which would reduce the rate of federal income taxation of certain
capital gains. Such legislation, if enacted, might apply only to gain realized
on sales occurring after a date specified in the legislation. It cannot be
predicted whether any such legislation ultimately will be enacted and, if
enacted, what its effective date will be.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, SUCH AS FINANCIAL INSTITUTIONS, BROKER-DEALERS, STOCKHOLDERS WHO
ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE
AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES, FOREIGN CORPORATIONS AND PERSONS WHO RECEIVED PAYMENTS IN RESPECT OF
OPTIONS OR WARRANTS TO ACQUIRE SHARES.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE
23
<PAGE>
SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE
APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND
FOREIGN TAX LAWS.
CERTAIN LITIGATION RELATING TO THE OFFER AND THE MERGER
On August 4, 1995, a minority shareholder of the Company filed a securities
class action entitled Harbor Finance Partners v. COBE Laboratories, et al. in
the Circuit Court for Davidson County, Tennessee against Gambro, COBE, Purchaser
and a number of individual defendants. The action sought damages and/or
injunctive relief relating to the Proposed Transaction. The complaint alleged
that Gambro and COBE breached their fiduciary duties to minority stockholders in
failing to provide adequate procedural safeguards to protect minority
stockholders in the independent committee which will consider the Offer and in
offering inadequate consideration for the minority shareholdings of $18.00 per
Share.
Following meetings among the Special Committee and its financial advisor,
Alex. Brown, and COBE and its financial advisor, UBS, at which the Special
Committee unanimously agreed to recommend the Offer and Merger at the increased
Per Share Amount of $20.00 per Share, and following meetings among attorneys and
financial advisors for the parties to the action, the parties to the action have
reached an agreement in principle to settle all such actions with prejudice,
based on the terms of the Merger. The settlement is subject to negotiation of a
stipulation of settlement and approval by the Court following notice to the
Company's stockholders. In connection with the proposed settlement, the
plaintiffs intend to apply for an award of attorneys' fees and litigation
expenses in the amount of $300,000. The defendants have agreed not to oppose
this application.
The defendants have denied, and continue to deny, that they have committed
or have threatened to commit any violation of law or breaches of duty to the
plaintiffs or the purported class. The defendants have agreed to the proposed
settlement because, among other reasons, such settlement would eliminate the
burden and expense of further litigation and would facilitate the consummation
of a transaction that they believe to be in the best interests of the Company
and its stockholders.
FEES AND EXPENSES
The following is an estimate of fees and expenses to be incurred in
connection with the Offer and the Merger including the fees and expenses of UBS
(see "THE TENDER OFFER -- Section 11. Fees and Expenses") and the fees and
expenses of Alex. Brown (see "SPECIAL FACTORS -- Presentation and Opinion of
Financial Advisors to the Special Committee"). The Merger Agreement provides
that all fees, costs and expenses incurred in connection with the Merger
Agreement and the transactions contemplated thereby shall be paid by the party
incurring such fees, costs and expenses, whether or not the transactions
contemplated by the Merger Agreement are consummated, provided, however, that
Purchaser and the Company shall each pay for one-half of all fees, costs and
expenses incurred in connection with the Merger Agreement and the transactions
contemplated thereby which are payable to the Commission and to any financial or
other printer. The Company is responsible for paying the legal fees of counsel
to the Special Committee estimated at $200,000, all fees and expenses payable to
the Special Committee and approximately $25,000 of miscellaneous fees and
expenses. Purchaser is responsible for paying its own legal fees, advertising,
depositary fees, information agent fees and approximately $25,000 of
miscellaneous fees and expenses.
<TABLE>
<S> <C>
Estimate of Fees and Expenses
Legal Fees................................................................... 550,000
Investment Banker Fees....................................................... 2,400,000
Special Committee Fees and Expenses.......................................... 75,000
Printing and Mailing......................................................... 100,000
Advertising.................................................................. 20,000
Filing Fees.................................................................. 40,000
Depositary Fees.............................................................. 10,000
Information Agent Fees....................................................... 10,000
Miscellaneous................................................................ 50,000
---------
Total................................................................ 3,255,000
</TABLE>
24
<PAGE>
THE TENDER OFFER
1. Terms of the Offer; Expiration Date. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered prior to the Expiration Date (as
hereinafter defined) and not withdrawn as permitted by "THE TENDER
OFFER -- Section 4. Withdrawal Rights". The term "Expiration Date" means 12:00
midnight, New York City time, on Tuesday, October 17, 1995, unless and until
Purchaser, in its sole discretion (but subject to the terms and conditions of
the Merger Agreement), shall have extended the period 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 Purchaser, shall expire. The Offer is
subject to the Minimum Condition and to certain other conditions. See "THE
TENDER OFFER -- Section 10. Certain Conditions of the Offer".
Purchaser expressly reserves the right, in its sole discretion (but subject
to the terms and conditions of the Merger Agreement), at any time and from time
to time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any of the conditions specified in "THE TENDER
OFFER -- Section 10. Certain Conditions of the Offer", by giving oral or written
notice of such extension to the Depositary. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering stockholder to withdraw his Shares. See
"THE TENDER OFFER -- Section 4. Withdrawal Rights".
Subject to the applicable regulations of the Commission, Purchaser also
expressly reserves the right, in its sole discretion (but subject to the terms
and conditions of the Merger Agreement), at any time and from time to time, (i)
to delay acceptance for payment of, or, regardless of whether such Shares were
theretofore accepted for payment, payment for, any Shares pending receipt of any
regulatory approval specified in "THE TENDER OFFER -- Section 13. Certain Legal
Matters and Regulatory Approvals", (ii) to terminate the Offer and not accept
for payment any Shares upon the occurrence of any of the conditions specified in
"THE TENDER OFFER -- Section 10. Certain Conditions of the Offer" and (iii) to
waive any condition or otherwise amend the Offer in any respect, by giving oral
or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. The Merger Agreement
provides that the Minimum Condition may not be waived except with the prior
written consent of the Special Committee. The Merger Agreement provides that
Purchaser will not (i) decrease the price per Share payable pursuant to the
Offer, (ii) reduce the maximum number of Shares to be purchased in the Offer or
(iii) impose conditions to the Offer in addition to those set forth in "THE
TENDER OFFER -- Section 10. Certain Conditions of the Offer". Purchaser
acknowledges that (i) Rule 14e-1(c) under the Exchange Act requires Purchaser to
pay the consideration offered or to return the Shares tendered promptly after
the termination or withdrawal of the Offer and (ii) Purchaser may not delay
acceptance for payment of, or payment for (except as provided in clause (i) of
the first sentence of this paragraph), any Shares upon the occurrence of any of
the conditions specified in "THE TENDER OFFER -- Section 10. Certain Conditions
of the Offer" without extending the period of time during which the Offer is
open.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City time,
on the next business day after the previously scheduled Expiration Date. Subject
to applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that material changes be promptly disseminated to stockholders in
a manner reasonably designed to inform them of such changes) and without
limiting the manner in which Purchaser may choose to make any public
announcement, Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a press
release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules l4d-4(c)
and l4d-6(d) under the Exchange Act.
Subject to the terms of the Merger Agreement, if, prior to the Expiration
Date, Purchaser should decide to increase the consideration being offered in the
Offer, such increase in the consideration being offered will be applicable to
all stockholders whose Shares are accepted for payment pursuant to the Offer
and, if at the time notice
25
<PAGE>
of such increase in the consideration being offered is first published, sent or
given to holders of such Shares, the Offer is scheduled to expire at any time
earlier than the period ending on the tenth business day from and including the
date that such notice is first so published, sent or given, the Offer will be
extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
The Company has provided 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 and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished, for subsequent transmittal to beneficial
owners of Shares, to brokers, dealers, commercial banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing.
2. Acceptance for Payment and Payment for Shares. 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), Purchaser will
accept for payment, and will pay for, all Shares validly tendered prior to the
Expiration Date and not properly withdrawn promptly after the later to occur of
the Expiration Date and the satisfaction or waiver of the conditions to the
Offer set forth in "THE TENDER OFFER -- Section 10. Certain Conditions of the
Offer". Subject to applicable rules of the Commission, Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
pending receipt of any regulatory approvals specified in "THE TENDER
OFFER -- Section 13. Certain Legal Matters and Regulatory Approvals" or in order
to comply in whole or in part with any other applicable law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company, the
Midwest Securities Trust Company or the Philadelphia Depository Trust Company
(each, a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry
Transfer Facilities") pursuant to the procedures set forth in "THE TENDER
OFFER -- Section 3. Procedures for Accepting the Offer and Tendering Shares",
(ii) the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees and (iii) any other
documents required under the Letter of Transmittal.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, 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 payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in "THE TENDER OFFER -- Section 3. Procedures for Accepting the Offer
and Tendering Shares", such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
26
<PAGE>
3. Procedures for Accepting the Offer and Tendering Shares. In order for a
holder of Shares validly to tender Shares pursuant to the Offer, the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
together with any required signature guarantees and any other documents required
by the Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and either (i)
the Share Certificates evidencing tendered Shares must be received by the
Depositary at such address or such Shares must be tendered pursuant to the
procedure for book-entry transfer described below and a Book-Entry Confirmation
must be received by the Depositary, in each case prior to the Expiration Date,
or (ii) the tendering stockholder must comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. 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.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at 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 the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility 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 at a Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees and any other required
documents, must, in any case, be 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. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or by a
commercial bank or trust company having an office or correspondent in the United
States (each of the foregoing being referred to as an "Eligible Institution"),
except in cases where Shares are tendered (i) by a registered holder of Shares
who has not completed either the box entitled "Special Payment Instructions" or
the box entitled "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. If a Share Certificate is
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made, or a Share Certificate not accepted
for payment or not tendered is to be returned, to a person other than the
registered holder(s), then the Share Certificate must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificate, with the signature(s) on
such Share Certificate or stock powers guaranteed by an Eligible Institution.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is received
prior to the Expiration Date by the Depositary as provided below; and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together with
the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, with any required signature guarantees, and any other
documents required by the Letter of
27
<PAGE>
Transmittal are received by the Depositary within three NASDAQ trading days
after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram, telex or facsimile transmission to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in the
form of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
and any other documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity, in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of Purchaser, COBE, Gambro, Incentive, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after September
12, 1995). 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, Purchaser accepts such Shares for payment. Upon such acceptance for
payment, all prior proxies given by such stockholder with respect to such Shares
(and such other Shares and securities) will be revoked without further action,
and no subsequent proxies may be given nor any subsequent written consent
executed by such stockholder (and, if given or executed, will not be deemed to
be effective) with respect thereto. The designees of Purchaser will, with
respect to the Shares for which the appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's payment for such Shares, Purchaser must be able to exercise full
voting rights with respect to such Shares.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO
CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE
OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH STOCKHOLDER'S
CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH STOCKHOLDER IS NOT
SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE
FORM W-9 IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF
TRANSMITTAL.
4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by
28
<PAGE>
Purchaser pursuant to the Offer, may also be withdrawn at any time after
November 17, 1995. If Purchaser extends the Offer, is delayed in its acceptance
for payment of Shares or is unable to accept Shares for payment pursuant to the
Offer for any reason, then, without prejudice to Purchaser's rights under the
Offer, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay will be by an extension of the Offer to the extent required by
law.
For a withdrawal to be effective, a written, telegraphic, telex or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover page of this Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be submitted to the Depositary and the signature(s)
on the notice of withdrawal must be guaranteed by an Eligible Institution,
unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in "THE TENDER OFFER -- Section 3. Procedures
for Accepting the Offer and Tendering Shares", any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, COBE, the
Dealer Manager, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in "THE TENDER OFFER -- Section 3. Procedures for Accepting
the Offer and Tendering Shares".
5. Price Range of Shares. The Shares are listed and principally traded on
NASDAQ under the symbol RENL. The following table sets forth, for the quarters
indicated, the high and low sales prices per Share on NASDAQ as reported by the
Dow Jones News Service.
<TABLE>
<CAPTION>
HIGH LOW
---------------- ----------------
<S> <C> <C>
1993:
First Quarter............................................................. $ 14 1/2 $ 9 1/4
Second Quarter............................................................ 12 1/4 9 1/2
Third Quarter............................................................. 12 9
Fourth Quarter............................................................ 11 7 1/4
1994:
First Quarter............................................................. $ 11 $ 7 1/2
Second Quarter............................................................ 10 1/4 8 1/2
Third Quarter............................................................. 10 5/8 8 1/4
Fourth Quarter............................................................ 14 1/2 10
1995:
First Quarter............................................................. $ 16 3/8 $ 13
Second Quarter............................................................ 16 3/4 12 1/4
Third Quarter (through September 18, 1995)................................ 20 15 3/4
</TABLE>
On July 13, 1995, the last trading day prior to the announcement of the
Proposed Transaction, the closing price per Share as reported on NASDAQ was
$15.75. On September 12, 1995, the last full trading day prior to the
announcement of the execution of the Merger Agreement and of Purchaser's
intention to commence the Offer, the
29
<PAGE>
closing price per Share as reported on NASDAQ was $19 25/32. On September 18,
1995, the last full trading day prior to the commencement of the Offer, the
closing price per Share as reported on NASDAQ was $19.75. As of September 18,
1995, no cash dividends have been paid by the Company on the Shares or declared
as payable on a future date.
Since June 30, 1994, the market prices for the Shares and an index comprised
of the Selected Companies weighted by market capitalization have both
outperformed the Standard & Poor's 500 Index. In addition, since June 30, 1994,
the market prices for the Shares have outperformed such index of the Selected
Companies. See "SPECIAL FACTORS--Report of Financial Advisor to COBE" for a
discussion of the review by UBS of the historical stock market performance of
the Shares and the shares of the Selected Companies.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
6. Certain Information Concerning the Company. Except as otherwise set forth
herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. None of Purchaser, COBE,
Gambro or Incentive assumes any responsibility for the accuracy or completeness
of the information concerning the Company furnished by the Company or contained
in such documents and records or for any failure by the Company to disclose
events which may have occurred or may affect the significance or accuracy of any
such information but which are unknown to Purchaser, COBE, Gambro or Incentive.
General. The Company is a Tennessee corporation with its principal executive
offices located at 6820 Charlotte Pike, Nashville, TN. According to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994
(the "Company's 10-K"), the Company is engaged primarily in providing renal
dialysis and related services to patients suffering from chronic kidney failure.
As of September 13, 1995, the Company provided dialysis services at 68
freestanding outpatient REN Centers located in 18 states and the District of
Columbia. The Company also provides outpatient dialysis services to patients in
their homes and inpatient dialysis services through contracts with hospitals. In
addition, the Company performs laboratory testing services for its REN Centers
as well as for independent dialysis facilities and industry at its clinical
laboratory. The Company was founded in 1986.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's Annual Report on the Company's 10-K and the unaudited financial
statements contained in the Company's Quarterly Report on Form 10-Q, as amended,
for the quarter ended June 30, 1995 (the "Company's 10-Q"). Copies of the
financial statements and related information set forth in the Company's 10-K and
the Company's 10-Q are set forth in Schedule III. More comprehensive financial
information is included in the Company's 10-K, the Company's 10-Q and other
documents filed by the Company with the Commission. The financial information
that follows is qualified in its entirety by reference to such reports and other
documents, including the financial statements and related notes contained
therein. Such reports and other documents may be examined and copies may be
obtained from the offices of the Commission in the manner set forth below.
30
<PAGE>
REN CORPORATION--USA
Selected Consolidated Financial Information
(United States dollars in thousands, except per share data)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER SIX MONTHS ENDED
31, JUNE 30,
----------------------------- -----------------
1994 1993 1992 1995 1994
-------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue.......................................... $131,815 $105,188 $80,814 $81,532 $61,925
Income (Loss) from Operations.................... 14,922 (5,439) 10,082 11,086 5,540
Income (Loss) Before Income Tax Expense and
Minority Interest.............................. 14,081 (5,989) 8,296 10,673 5,153
Net Income (Loss)................................ 8,511 (3,758) 5,355 6,057 3,123
Weighted Average, Common Shares and Common Shares
Equivalents Outstanding.......................... 18,899 18,777 14,472 19,022 18,889
Net Income (Loss) Per Common Share and Common
Share Equivalent................................. $0.45 $(0.20) $0.38 $0.32 $0.17
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1994 1993 AT JUNE 30, 1995
-------- -------- ----------------
(UNAUDITED)
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current Assets.......................................... $ 31,776 $ 32,296 $ 30,506
Total Assets............................................ 134,314 126,140 150,487
Current Liabilities..................................... 14,839 9,738 18,313
Long-Term Liabilities................................... 4,732 11,910 10,991
Shareholders' Equity.................................... 114,696 104,421 121,159
</TABLE>
Ratio of Earnings to Fixed Charges; Book Value per Share. The Company's
ratio of earnings to fixed charges for the fiscal year ended December 31, 1994
was 14.5. The ratio of earnings to fixed charges for the fiscal year ended
December 31, 1993 was 6.7. The ratio of earnings to fixed charges for the fiscal
half-year ended June 30, 1995 was 17.6. For purposes of this paragraph,
"earnings" is the Company's pre-tax income from continuing operations adjusted
for the profit/loss input of items considered in fixed costs and "fixed costs"
is the Company's (i) interest (whether expensed or capitalized), (ii)
amortization of debt expense, discounts, or premiums, (iii) such portion of rent
expense representative of interest and (iv) preferred stock dividends due
majority owned interests.
The book value per share and common share equivalent was $6.07 per Share for
the year ended December 31, 1994 and $6.37 per Share for the quarter ended June
30, 1995.
Certain Forecasts and Other Information. The Company does not, as a matter
of course, make public its business plans or its forecasts as to future earnings
or financial performance. However, as a result of having representatives on the
Company's Board, COBE has received, among other things, the Company's financial
forecasts for the remainder of the Company's 1995 fiscal year and the Company's
1996, 1997 and 1998 fiscal years (the "Company Forecasts"). Certain excerpts
from, and the significant assumptions used in developing, the Company Forecasts
are set forth in the table below.
31
<PAGE>
CERTAIN INFORMATION DERIVED FROM
COMPANY FORECASTS (1)
(United States dollars in thousands)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------
1995 1996 1997 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue............................................ $167,271 $199,928 $239,368 $287,648
Income from Operations............................. 24,092 32,424 40,739 49,293
Net Income......................................... 13,034 19,186 25,154 31,222
Free Cash Flow (2)................................. 5,173 15,713 14,291 17,039
</TABLE>
- ------------
(1) The Company Forecasts do not take into account any of the transactions
contemplated by the Merger Agreement.
(2) Free cash flow represents net income plus depreciation and amortization less
capital expenditures less working capital requirements.
The Company Forecasts assume that revenue grows 26.9% in 1995, 19.5% in
1996, 19.7% in 1997 and 20.2% in 1998, primarily due to assumed additions of new
patients at existing dialysis centers and assumed acquisitions of new dialysis
centers. Also, the Company Forecasts assume that the income from operations
margin is 14.4% in 1995, and increases to 16.2% in 1996, 17.0% in 1997 and 17.1%
in 1998. The increase in such margin is due primarily to certain assumed cost
reductions and the distribution of certain fixed costs over a larger base of
revenue.
The Company Forecasts do not give effect to the Offer or the Merger and
should be read together with the information contained in the financial
statements of the Company and its consolidated subsidiaries set forth in
Schedule III hereto.
THE COMPANY FORECASTS ARE BASED UPON NUMEROUS ESTIMATES AND ASSUMPTIONS
ABOUT COMPLEX ECONOMIC AND OPERATING FACTORS WITH RESPECT TO INDUSTRY
PERFORMANCE, GENERAL BUSINESS AND ECONOMIC CONDITIONS, TAXES AND OTHER MATTERS
THAT CANNOT BE PREDICTED ACCURATELY AND THAT ARE SUBJECT TO CONTINGENCIES OVER
WHICH NEITHER THE COMPANY, COBE, GAMBRO, INCENTIVE NOR PURCHASER HAVE CONTROL.
ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE PROJECTED RESULTS ARE INDICATIVE
OF FUTURE PERFORMANCE OR THAT ACTUAL RESULTS WILL NOT BE MATERIALLY HIGHER OR
LOWER THAN THOSE FORECAST. IN ADDITION, THE COMPANY FORECASTS WERE NOT PREPARED
WITH A VIEW TO PUBLIC DISCLOSURE OR IN COMPLIANCE WITH THE PUBLISHED GUIDELINES
OF THE COMMISSION OR THE GUIDELINES ESTABLISHED BY THE AMERICAN INSTITUTE OF
CERTIFIED PUBLIC ACCOUNTANTS REGARDING FORECASTS OR PROJECTIONS. THE COMPANY
FORECASTS ARE ONLY BEING PROVIDED BECAUSE SUCH INFORMATION WAS PROVIDED TO COBE.
ERNST & YOUNG LLP, INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY, HAS
NEITHER EXAMINED, REVIEWED NOR COMPILED THE COMPANY FORECASTS AND, CONSEQUENTLY,
DOES NOT EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO.
GAMBRO, COBE, PURCHASER AND THE COMPANY BELIEVE THAT HOLDERS OF SHARES SHOULD
NOT RELY ON THE COMPANY FORECASTS.
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements 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 granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection at the
Commission's regional offices located at 75 Park Place, 14th Floor, New York,
New York 10007 and the Klucyzinski Federal Building, 230 South Dearborn Street,
Room 3190, Chicago, Illinois 60604. Copies of such materials may also be
obtained by mail, upon payment of the Commission's customary fees, by writing to
its principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549.
32
<PAGE>
7. Certain Information Concerning Purchaser, COBE, Gambro and
Incentive. Purchaser is a newly incorporated Tennessee corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. The principal offices of
Purchaser are located at 1185 Oak Street, Lakewood, CO 80215. Purchaser is a
wholly owned subsidiary of COBE and an indirect wholly owned subsidiary of
Gambro. Purchaser owns 10,036,221 Shares, representing approximately 53% of the
18,951,834 Shares outstanding, all of which were contributed by COBE to the
capital of Purchaser on September 12, 1995.
Until immediately prior to the time that Purchaser purchases Shares pursuant
to the Offer, it is not anticipated that Purchaser will have any significant
assets or liabilities or engage in activities other than those incident to its
formation and capitalization and the transactions contemplated by the Offer and
the Merger. Because Purchaser is newly formed and has minimal assets and
capitalization, no meaningful financial information regarding Purchaser is
available.
The name, citizenship, business address, principal occupation or employment,
and five-year employment history for each of the directors and executive
officers of Purchaser, COBE, Gambro and Incentive and certain other information
are set forth in Schedule I hereto.
Financial Information Concerning Gambro. Set forth below are certain
selected consolidated financial data relating to Gambro and its subsidiaries for
Gambro's last three fiscal years, which have been excerpted or derived from the
audited financial statements contained in Gambro's Annual Report on Form 20-F
(the "Gambro Form 20-F") for the fiscal year ended December 31, 1994 filed by
Gambro with the Commission. More comprehensive financial information is included
in such reports and other documents filed by Gambro with the Commission, and the
following financial data is qualified in its entirety by reference to such
reports and other documents, including the financial information and related
notes contained therein. Such reports and other documents may be inspected and
copies may be obtained from the offices of the Commission in the same manner as
set forth with respect to information about the Company in "THE TENDER
OFFER -- Section 6. Certain Information Concerning the Company".
The Gambro Form 20-F has been prepared in conformity with generally accepted
accounting principles applicable in Sweden ("Swedish GAAP"), which practices are
described in the notes to the financial statements included in such Form 20-F.
Swedish GAAP differs in certain significant respects from generally accepted
accounting principles applicable in the United States ("US GAAP"). A summary of
the principal differences between US GAAP and Swedish GAAP and the necessary
adjustments to reconcile Swedish GAAP net income and shareholders' equity to US
GAAP net income and shareholders' equity is also set forth below.
33
<PAGE>
GAMBRO AB1
SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
(Swedish kronor in millions ("SEK"), except
where otherwise indicated in United States
dollars in millions ("$"), and
except per share data)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1994 1994 1993 1992
-------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.................................. $ 1,270 SEK 9,807 SEK 9,046 SEK 6,312
Operating Income....................... 183 1,412 1,320 972
Income Before Income Taxes............. 150 1,155 976 753
Minority Interest...................... (4) (28) 2 (1)
Net Income............................. 89 690 600 454
Average Shares Outstanding (in
thousands)........................... 117,985 117,985 113,580 109,472
Earnings Per Share..................... 0.76 5.85 5.21 4.04
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------
1994 1994 1993
------ --------- ---------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Current Assets............................................ $ 676 SEK 5,043 SEK 6,002
Total Assets.............................................. 1,195 8,917 9,942
Current Liabilities....................................... 400 2,985 3,986
Long-Term Liabilities..................................... 223 1,668 2,205
Shareholders' Equity...................................... 518 3,861 3,347
</TABLE>
- ------------
1 In this summary of consolidated financial data, Swedish kronor ("SEK") are
translated into U.S. dollars solely for the convenience of the reader. Unless
otherwise stated, such translations of income statement information of Gambro
have been made using an average exchange rate for the year equal to 7.72
kronor per dollar. Translations of balance sheet information have been made
using a closing rate on December 31, 1994 of 7.46 kronor per dollar.
Principal Differences Between Swedish and United States Generally Accepted
Accounting Principles. The financial information provided above was prepared in
accordance with Swedish GAAP, which differs in certain significant respects from
US GAAP. A description of those accounting policies under Swedish GAAP which
differ significantly in certain respects from US GAAP is as follows:
(i) Income taxes. The tax effects of differences between the accounting
and income tax base of assets and liabilities (temporary differences) are
considered in determining net income in accordance with US GAAP. Under US
GAAP the taxes to be incurred upon repatriation of earnings by foreign
subsidiaries should be accounted for in the same period that such earning
are included in the consolidated statement of income, unless such earnings
are considered to be permanently invested in such foreign country. In Sweden
there is no tax on dividends received from foreign subsidiaries and the
withholding tax incurred at the local subsidiary level is recorded in the
period the dividend is paid. Tax effects of basis differences from
acquisitions have been netted against related assets in Gambro's balance
sheet. The effect of adopting Statement No. 190 of the Financial Accounting
Standards Board as of January 1, 1993 is to gross up property, plant and
equipment and intangible assets by approximately SEK 258 million and to
record a deferred tax liability for an equal amount. The effect on net
income is not material.
(ii) Accounting for acquisitions. The acquisition by Gambro of Hospal AG
in 1987 has been accounted for under the Swedish pooling of interests method
for Swedish GAAP purposes as described in Note 2 of the Notes to the
Financial Statements of the Gambro Form 20-F. Under US GAAP, the acquisition
would be accounted for using the purchase method. Accordingly, the purchase
price would be allocated to the fair value of assets acquired less
liabilities assumed with the excess accounted for as goodwill which would be
amortized
34
<PAGE>
over its economical life of 40 years. The goodwill arising from the
acquisition of Gambro by COBE has been written off directly against
shareholders' equity. Under US GAAP goodwill would be capitalized and
amortized over its economical life of 40 years.
The application of the above US GAAP together with other differences of
minor significance would have had the following approximate effect on
consolidated net income, net income per share and shareholders' equity:
<TABLE>
<CAPTION>
JANUARY 1-DECEMBER 31,
----------------------------------
1992 1993 1994 1994
----- ----- ----- ----
(SEK) (SEK) (SEK) ($)
(IN MILLIONS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C>
Net income*.................................................... 454 600 690 89
Increase/decrease for:
Accounting for business combinations........................... (37 ) (37 ) (37 ) (5)
Taxes on anticipated dividends from foreign subsidiaries....... (5 ) (10 ) -- --
Other.......................................................... -- -- -- --
----- ----- ----- ----
Approximate net income in accordance with US GAAP.............. 412 573 653 84
----- ----- ----- ----
----- ----- ----- ----
Approximate income per share in accordance with US GAAP........ 3.67 4.98 5.53 0.72
----- ----- ----- ----
----- ----- ----- ----
</TABLE>
- ------------
* as reported in the consolidated statement of income
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1993 1994 1994
----- ----- ----
(SEK) (SEK) ($)
(IN MILLIONS)
<S> <C> <C> <C>
Shareholders' equity**.................................................. 3,347 3,861 518
Increase/decrease for:
Accounting for business combinations, intangible assets................. 1,293 1,256 168
Deferred income taxes................................................... (76) (76) (10 )
----- ----- ----
Approximate shareholders' equity in accordance with US GAAP............. 4,564 5,041 676
----- ----- ----
----- ----- ----
</TABLE>
- ------------
** as reported in the consolidated balance sheet
Other than the increase in property, plant and equipment, intangible assets
and deferred income taxes, as noted above, no other balance sheet captions would
be materially changed at December 31, 1993 and 1994.
The consolidated statement of changes in financial position is substantially
the same as the statement of cash flows pursuant to US GAAP except for certain
subtotals which are not contemplated by Statement No. 95 of Financial Accounting
Standards Board and the non-cash conversion of debentures into shares, SEK 23
million in 1993 and SEK 22 million in 1994.
If the currency translation requirements of the Swedish Financial Accounting
Standards Council No. 95 were followed the following adjustments would be made
to the consolidated statement of changes in financial position:
<TABLE>
<CAPTION>
1993 1994
----- -----
<S> <C> <C>
(SEK) (SEK)
<CAPTION>
(IN MILLIONS)
<S> <C> <C>
Net cash flow from operations.................................................. 243 (301)
Net cash flow from investing activities........................................ (13) (1)
Foreign currency translation adjustment........................................ 193 (173)
Net cash flow from financing activities........................................ (451) 403
----- -----
Effect of exchange rates on cash and cash equivalents.......................... 100 (10)
----- -----
Supplements disclosure of cash flow information:
Interest cost paid............................................................. (296) (246)
Income tax payments............................................................ (330) (329)
----- -----
----- -----
</TABLE>
35
<PAGE>
Set forth below are certain unaudited selected consolidated financial data
prepared in conformity with Swedish GAAP relating to Gambro and its subsidiaries
as of June 30, 1995.
GAMBRO AB
SUMMARY SELECTED CONSOLIDATED FINANCIAL DATA
(Swedish kronor in millions ("SEK"), except per share data)
<TABLE>
<CAPTION>
JAN. 1--JUNE JAN. 1--JUNE
30, 1995 30, 1994
--------------- ---------------
<S> <C> <C>
INCOME STATEMENT DATA:
Sales....................................................... SEK 5,135 SEK 4,889
Operating Income............................................ 776 723
Income Before Income Taxes.................................. 662 582
Net Income.................................................. 387 349
Average Shares Outstanding (in thousands)................... 118,056 117,913
Earnings Per Share, full tax................................ 3.28 2.96
</TABLE>
Except as described in this Offer, (i) none of Purchaser, COBE, Gambro,
Incentive nor, to the best knowledge of Purchaser and COBE, any of the persons
listed in Schedule I to this Offer or any associate or majority-owned subsidiary
of Purchaser, COBE, Gambro, Incentive or any of the persons so listed
beneficially owns or has any right to acquire, directly or indirectly, any
Shares and (ii) none of Purchaser, COBE, Gambro, Incentive nor, to the best
knowledge of Purchaser, COBE, Gambro and Incentive, any of the persons or
entities referred to above nor any director, executive officer or subsidiary of
any of the foregoing has effected any transaction in the Shares during the past
60 days.
Except as provided in the Merger Agreement, the Disclosure Schedules thereto
and as otherwise described in this Offer, none of Purchaser, COBE, Gambro,
Incentive nor, to the best knowledge of Purchaser, COBE, Gambro and Incentive,
any of the persons listed in Schedule I to this Offer, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer, since January 1, 1992, neither
Purchaser, COBE, Gambro, Incentive nor, to the best knowledge of Purchaser,
COBE, Gambro and Incentive and any of the persons listed on Schedule I hereto,
has had any business relationship or transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer, since January 1, 1992, there have been no
contacts, negotiations or transactions between any of Purchaser, COBE, Gambro,
Incentive or any of their respective subsidiaries or, to the best knowledge of
Purchaser, COBE, Gambro and Incentive, any of the persons listed in Schedule I
to this Offer, on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
The Stock Purchase Agreements. COBE and the Company are parties to the Stock
Purchase Agreements pursuant to which COBE purchased from the Company, and the
Company issued Shares to COBE. Copies of the Stock Purchase Agreements are filed
as an Exhibit to the Schedule 13E-3. See "SPECIAL FACTORS -- Background of the
Offer and the Merger" for a description of the purchase of Shares by COBE under
the Stock Purchase Agreements. Under the Stock Purchase Agreements, so long as
COBE owns a majority of the issued and outstanding Common Stock, COBE may
designate a majority of the members of the Board. Under the Stock Purchase
Agreements, COBE agreed that for five years after May 24, 1991, the closing date
of the purchase of Shares by COBE pursuant to one of the Stock Purchase
Agreements which was dated as of May 11, 1991, COBE would not directly or
indirectly, unless specifically requested to do so in writing in advance by the
Board, (i) acquire or agree, offer, seek or propose to acquire, or cause to be
acquired, beneficial ownership of any securities of the Company, any debt claims
of the Company, any securities convertible or exchangeable into or exercisable
into or exercisable for any securities or assets of the Company, or any rights
or options to acquire such ownership, except pursuant to COBE's preemptive
rights (described below); (ii) propose to enter into any merger or business
36
<PAGE>
combination involving the Company, except and unless the Company enters into a
definitive agreement with a third party contemplating a merger, consolidation or
similar transaction in which all or a majority of the Company's equity
securities or substantially all of its assets are to be acquired by such third
party, in which case COBE may make a Financially Superior Offer (as defined in
such Stock Purchase Agreement); (iii) make, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the Exchange Act) to vote
any securities of the Company; (iv) form, join or participate in a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
securities of the Company; (v) otherwise act, alone or in concert with others,
to seek to control or exercise (other than through its representation on the
Board) a controlling influence over the management, Board or the business of the
Company; (vi) call a meeting of the Company's stockholders; and (vii) enter into
any discussions, negotiations, arrangements or understandings with any third
party with respect to any of the foregoing.
The Stock Purchase Agreements provide that so long as COBE owns more than
15% of the then outstanding Shares, COBE shall, in the event the Company issues
Shares or any other voting securities, have the option to purchase from the
Company sufficient Shares or other voting securities to permit COBE to maintain
its percentage ownership of Shares or of the total voting power it had
immediately prior to such issuance. Furthermore, the Company is required to
notify COBE within 15 days of the end of each calendar quarter of the number of
Shares and the number of voting securities outstanding as of such date. In
general terms, at the end of each calendar quarter COBE has the option to
purchase from the Company additional Shares to the extent necessary to permit
COBE to maintain 50.1% of the Company's total voting power. The per Share
purchase price for such Shares shall be the average of the closing bid and asked
prices of the Shares on each day during such calendar quarter.
The Stock Purchase Agreements set forth a supply arrangement under which the
Company and its subsidiaries agreed to purchase a minimum of 75% of their
requirements for renal dialysis machines and all bloodlines used therewith from
COBE on overall terms and conditions no less favorable than those offered by
COBE to independent third parties. However, the 75% minimum specified above
shall be reduced to the extent that medical directors in charge of facilities
which have generated more than 25% of the Company's aggregate purchases of renal
dialysis machines have delivered written objections to the use of such machines.
Under the Stock Purchase Agreements, the foregoing supply arrangement terminates
on the earlier of (i) May 24, 1997, being the sixth anniversary of the closing
date of one of the Stock Purchase Agreements which was dated as of May 11, 1991
or (ii) at such time that COBE owns less than 20% of the Shares for a period of
45 consecutive days after any calendar quarter. During 1994, 1993 and 1992, the
Company paid $7,845,189, $6,801,258 and $3,071,739, respectively, for equipment
and supplies received from COBE. The Stock Purchase Agreements also provide that
during the time that COBE owns 15% or more of the Shares and for one year
thereafter (i) COBE shall not, without the Company's consent, engage in
providing, or invest in any entity that provides, renal dialysis services and
related laboratory services in North America within a 75 mile radius of the
Company's existing facilities ("Existing Regions") or in locations identified by
the Company ("Identified Regions") as a location of likely expansion, (ii) COBE
shall disclose to the Company all acquisition opportunities of renal dialysis
services centers in North America outside the Existing Regions and Identified
Regions and shall engage in good faith discussions with the Company regarding
strategic business ventures concerning such acquisition opportunities, provided,
however, that the Company shall not acquire such acquisition opportunities
without COBE's written consent, which consent shall be given if COBE is no
longer actively pursuing such acquisition opportunity, and (iii) COBE, the
Company and their respective affiliates shall not solicit or entice away any of
their respective employees or employ any such employee until one year after such
employee leaves the employ of such company or affiliate.
Under the Stock Purchase Agreements, COBE received two "demand" registration
rights and certain "piggyback" registration rights in respect of Shares, subject
to customary "cutbacks". Under the Stock Purchase Agreements, so long as
directors designated by COBE constitute a majority of the Board, no amendment to
any of the Stock Purchase Agreements will be effective unless it is approved by
a majority of the Company's directors who were not designated by COBE.
8. Financing of the Offer and the Merger. The total amount of funds required
by Purchaser to consummate the Offer and the Merger and to pay related fees and
expenses is estimated to be approximately $190 million. Purchaser will obtain
all of such funds from Gambro and COBE. Gambro will provide to Purchaser to
finance the Offer and the Merger (i) $75 million from the Revolving Credit
Facility, dated as of May 11, 1993 (the "1993 Credit Facility") among Gambro,
BNP Capital Markets Limited (as Arranger), certain banks named in the 1993
37
<PAGE>
Credit Facility and Banque Nationale de Paris (as Agent) and (ii) $75 million
from the Revolving Credit and Term Facility, dated as of November 30, 1994 (the
"1994 Credit Facility") among Gambro, BNP Capital Markets Limited (as Arranger),
certain banks named in the 1994 Credit Facility and Banque Nationale de Paris
(as Agent). COBE will provide to Purchaser to finance the Offer and the Merger
(i) $10 million from the Uncommitted Line of Credit Agreement, dated as of
January 14, 1991, as amended through September 25, 1992 (the "1991 Line of
Credit"), between COBE and Union Bank of Switzerland, New York Branch ("UBSNY"),
(ii) $5 million from the Revolving Credit Facility (the "1995 Credit Facility")
and $5 million from the Line of Credit Facility (the "1995 Line of Credit"),
each dated as of April 28, 1995, between COBE and Commerzbank, Los Angeles
Branch ("Commerzbank"), (iii) $10 million from the Uncommitted Revolving Credit
Facility (the "1991 Uncommitted Credit Facility") dated as of January 7, 1991,
as amended through March 29, 1994, between COBE and Societe Generale, New York
Branch and (iv) $6.5 million from the Committed Revolving Credit Facility (the
"1995 Committed Credit Facility") and $3.5 million from the Discretionary Line
of Credit (the "1995 Discretionary Line"), each dated as of July 29, 1995
between COBE and The First National Bank of Boston. Copies of the 1993 Credit
Facility, the 1994 Credit Facility, the 1991 Line of Credit, the 1995 Credit
Facility, the 1995 Line of Credit, the 1991 Uncommitted Credit Facility, the
1995 Committed Credit Facility, and the 1995 Discretionary Line are set forth in
exhibits to the Schedule 13E-3.
Purchaser, COBE and Gambro anticipate that any indebtedness incurred through
borrowings under the foregoing credit facilities will be repaid from a variety
of sources, which may include, but may not be limited to, funds generated
internally by COBE, Gambro and their affiliates (including, following the
Merger, funds generated by the Surviving Corporation), bank refinancing, and the
public or private sale of debt or equity securities. No decision has been made
concerning the method COBE and Gambro will employ to repay such indebtedness.
Such decision will be made based on a review from time to time of the
advisability of particular actions, as well as on prevailing interest rates and
financial and other economic conditions and such factors as COBE and Gambro may
deem appropriate.
The 1993 Credit Facility. In general terms, under the 1993 Credit Facility,
Gambro and its designated subsidiaries may borrow up to a total of $75 million
from the banks who are signatories thereto. The total commitments of the banks
shall however be automatically reduced by $25 million on each of on May 11, 1996
and May 11, 1997. All loans under the 1993 Credit Facility must be repaid in
full by May 11, 1998, but may also be voluntarily prepaid (with applicable
interest) in whole or in part. The undrawn amount of the total commitments may
also be cancelled in whole or in part. The annual rate of interest on loans made
under the 1993 Credit Facility is the aggregate of the following: (i) 0.50% per
annum, (ii) LIBOR (as defined in the 1993 Credit Facility) in the case of loans
not denominated in Sterling or EIBOR (as defined in the 1993 Credit Facility) in
the case of loans denominated in Sterling, and (iii) Reserve Asset Costs (as
defined in the 1993 Credit Facility) when applicable to such loan. Loan
obligations under the 1993 Credit Facility rank at least pari passu with all the
obligor's other present and future unsecured and unsubordinated obligations,
except for obligations which are mandatorily preferred by law. Subject to
certain exceptions, an obligor under the 1993 Credit Facility shall not create
or permit to subsist any security interest on any of its assets.
The 1994 Credit Facility. In general terms, under the 1994 Credit Facility,
Gambro and its designated subsidiaries may borrow up to a total of $100 million
in Facility A Loans and $100 million in Facility B Loans (as such terms are
defined in the 1994 Credit Facility) from the banks who are signatories thereto.
All loans under the 1994 Credit Facility must be repaid in full by November 30,
2001 but may also be voluntarily prepaid (with applicable interest) in whole or
in part. The undrawn amount of the Total A Commitments (as defined in the 1994
Credit Facility) may also be cancelled in whole or in part. Any amount of
Facility A Loans prepaid may subsequently be reborrowed. No amount of Facility B
Loans prepaid may subsequently be reborrowed. Total A Commitments cancelled
under the 1994 Credit Facility may subsequently be reinstated. The annual rate
of interest on loans made under the 1994 Credit Facility is the aggregate of the
following: (i) 0.30% per annum from November 30, 1994 until November 30, 1999,
and 0.35% per annum thereafter, (ii) LIBOR (as defined in the 1994 Credit
Facility) in the case of loans not denominated in Sterling or EIBOR (as defined
in the 1994 Credit Facility) in the case of loans denominated in Sterling, and
(iii) MLA Costs (as defined in the 1994 Credit Facility) when applicable to such
loan. Loan obligations under the 1994 Credit Facility rank at least pari passu
with all the obligor's other present and future unsecured and unsubordinated
obligations, except for obligations which are
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mandatorily preferred by law. Subject to certain exceptions, an obligor under
the 1994 Credit Facility shall not create or permit to subsist any security
interest on any of its assets.
The 1995 Credit Facility and the 1995 Line of Credit. Under the 1995 Credit
Facility, Commerzbank has made available to COBE a committed revolving credit
facility of $5 million, the availability of which is subject to Gambro
delivering a letter of comfort in favor of Commerzbank in form and substance
satisfactory to Commerzbank. Under the 1995 Credit Facility, (i) Eurodollar Rate
Loans shall be repaid on the last day of the interest period applicable therefor
with accrued interest, and are at an annual interest rate of the Eurodollar Rate
plus 1/4 of 1% per annum, and (ii) Prime Rate Loans may be for an agreed-upon
period or without a fixed maturity date as the parties may agree, and are at an
annual interest rate equal to the Commerzbank fluctuating Prime Rate (in each
case, as such terms are defined in the 1995 Credit Facility). Each advance under
the 1995 Credit Facility may be prepaid with accrued interest to the date of
prepayment, and all advances must be repaid by April 26, 1996. COBE has agreed
to pay Commerzbank a facility fee of 1/8 of 1% per annum on the total amount of
the line of credit under the 1995 Credit Facility. So long as any credit is
outstanding under the 1995 Credit Facility, COBE will ensure that its
obligations thereunder constitute its unconditional general obligations ranking
at least pari passu with all its other obligations for money borrowed or
contingent obligations in respect thereto.
Under the 1995 Line of Credit, Commerzbank holds available to COBE a line of
credit not exceeding $5 million until further notice. The 1995 Line of Credit is
not a commitment to lend, but rather sets forth options for loans and other
credit which Commerzbank may make available to COBE. The availability of any
credit under the 1995 Line of Credit is subject to Gambro delivering a letter of
comfort in favor of Commerzbank in form and substance satisfactory to
Commerzbank. Under the 1995 Line of Credit, (i) Eurodollar Rate Loans shall be
repaid on the last day of the interest period applicable therefor or, if
earlier, upon demand by Commerzbank, in each case with accrued interest, and the
annual interest rate for each Eurodollar Rate Loan will be negotiated, and (ii)
Prime Rate Loans may be for an agreed-upon period or without a fixed maturity
date as the parties may agree at an annual interest rate equal to the
Commerzbank fluctuating Prime Rate (in each case, as such terms are defined in
the 1995 Line of Credit). Each advance under the 1995 Line of Credit may be
prepaid with accrued interest to the date of prepayment.
The 1991 Line of Credit. Under the 1991 Line of Credit, UBSNY established an
uncommitted line of credit in favor of COBE pursuant to which UBSNY is prepared
to consider making loans, in its discretion, to COBE upon the following terms in
an amount up to $15 million. COBE may utilize the 1991 Line of Credit by making
either (i) domestic dollar loans, payable on demand, bearing an interest rate
per annum of the higher of (A) UBSNY's floating prime lending rate as announced
from time to time or (B) 0.375% in excess of the cost to UBSNY of maintaining
such loans, or (ii) Eurodollar loans, with maturities of 1, 2, 3, 6, 9 or 12
months, bearing an interest rate per annum as agreed between COBE and UBSNY at
the time of making such loans (in each case as such terms are defined in the
1991 Line of Credit). COBE may prepay any loans under the 1991 Line of Credit
with accrued interest to the date of prepayment and any sum required to
compensate UBSNY for any loss incurred in connection therewith. Subject to
certain exceptions, COBE shall not create, incur, assume or suffer to exist any
mortgage, pledge, lien or other encumbrance upon any security interest in any of
its assets.
The 1991 Uncommitted Credit Facility. Under the 1991 Uncommitted Credit
Facility, an uncommitted revolving credit facility of $10 million was made
available to COBE. Under this facility, COBE may make Eurodollar borrowings for
periods of, at COBE's option, overnight or up to 6 months at an interest rate
equal to a rate per annum that is the interbank Eurodollar market rate quoted to
Societe Generale for deposits of a corresponding amount and duration, plus a
margin acceptable to Societe Generale at such time. If accepted by COBE, such
interest rate shall be in effect for the duration of the borrowing, which period
shall be determined by COBE. With limited exceptions, prepayments of principal
are not permitted prior to the end of such period. COBE shall have the option of
repaying the Eurodollar borrowing at the end of the period or continuing such
borrowing for a further duration to be set by COBE.
The 1995 Committed Credit Facility and the 1995 Discretionary Line. Under
the 1995 Committed Credit Facility, The First National Bank of Boston (the "Bank
of Boston") made available to COBE a $10 million unsecured line of credit for
general corporate purposes, commencing on July 31, 1995 and expiring on July 30,
1996, unless extended by mutual agreement. COBE may elect in its request for a
loan to have interest thereon accrue at any of the following rates: (i) a per
annum rate (the "Base Rate") equal to the greater of (A) the rate of
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interest announced from time to time by the Bank of Boston and (B) the weighted
average of the published rates on overnight Federal Funds transactions with
members of the Federal Reserve System, plus 1/2%; (ii) the prevailing rate (the
"Eurodollar Rate") per annum at which U.S. dollar deposits are offered to the
Bank of Boston by first class banks in the interbank Eurodollar market two
business days before the date of the requested loan in an amount and for an
interest period approximately equal to that of the requested loan, adjusted for
reserves, if any, plus 1/2% per annum; or (iii) a rate (the "Money Market Rate")
quoted by the Bank of Boston in its sole discretion as the fixed rate of
interest at which it is willing to make a "Money Market" advance in the amount
and for the period of the requested loan. Base Rate loans and Eurodollar Rate
loans are payable on demand. COBE may prepay Base Rate Loans, in whole or in
part, at any time and without prepayment penalties, but no prepayments of
Eurodollar Rate loans or Money Market Rate loans are permitted. COBE shall pay a
facility fee of 1/4% per annum on the unused amount of the line of credit. Under
the 1995 Discretionary Line, the Bank of Boston has made available to COBE a $5
million demand, discretionary line of credit for general corporate purposes,
commencing on July 31, 1995 and expiring on July 30, 1996, unless extended by
mutual agreement. The terms of the 1995 Discretionary Line are substantially the
same as those of the 1995 Committed Credit Facility described above, except that
the 1995 Discretionary Line does not provide for Money Market Rate loans and no
facility fee is payable.
9. Dividends and Distributions. As of the date hereof, the Company has not,
and does not intend to, declare or pay any dividends or make any distributions.
10. Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer, Purchaser shall not be required to accept for payment or pay for any
Shares tendered pursuant to the Offer, and may terminate or amend the Offer and
may postpone the acceptance for payment of and payment for Shares tendered, if
the Minimum Condition shall not have been satisfied or at any time on or after
September 12, 1995, and prior to the acceptance for payment of Shares, any of
the following conditions shall exist:
(a) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to COBE, the Company or any subsidiary or affiliate of Gambro,
COBE or the Company restraining or prohibiting the consummation of the Offer
or the Merger and that has a Material Adverse Effect. When used in
connection with the Company, Gambro, COBE or Purchaser or any of their
subsidiaries, the term "Material Adverse Effect" means any change or effect
that is or is reasonably likely to be materially adverse to the business,
operations, properties or financial condition of the Company, Gambro, COBE
or Purchaser or any of their subsidiaries taken as a whole;
(b) (i) the Board, with the consent of the Special Committee, shall have
withdrawn or modified in a manner adverse to Gambro, COBE or Purchaser the
approval or recommendation of the Offer, the Merger, the Merger Agreement,
or approved or recommended any takeover proposal or any other acquisition of
Shares other than the Offer or the Merger or (ii) the Board, with the
consent of the Special Committee, shall have resolved to do any of the
foregoing;
(c) any representation or warranty of the Company in the Merger
Agreement which is qualified as to materiality shall not be true and correct
or any such representation or warranty that is not so qualified shall not be
true and correct in any material respect, in each case either when made or
on and as of the Expiration Date, except for changes contemplated by the
Merger Agreement, with the same force and effect as if made on and as of the
Expiration Date, or in the case of a representation or warranty made on or
given as of a specified time, if such representation or warranty was untrue
or incorrect as of such time;
(d) 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;
(e) the Merger Agreement shall have been terminated in accordance with
its terms; or
(f) Purchaser and the Company shall, with the consent of the Special
Committee, have agreed that Purchaser shall terminate the Offer or postpone
the acceptance for payment of or payment for Shares thereunder;
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which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by COBE or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and COBE and
may be asserted by Purchaser or COBE regardless of the circumstances giving rise
to any such condition or may be waived by Purchaser or COBE in whole or in part
at any time and from time to time in their sole discretion; provided however,
that the Minimum Condition may not be waived except with the prior written
consent of the Special Committee. The failure by Gambro, COBE or Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
any such right; the waiver of any such right with respect to particular facts
and other 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.
11. Fees and Expenses. Except as set forth below, Purchaser will not pay any
fees or commissions to any broker, dealer or other person for soliciting tenders
of Shares pursuant to the Offer.
UBS is acting as Dealer Manager in connection with the Offer and has
provided certain financial advisory services in connection with the acquisition
of the Shares pursuant to the Offer, the Merger and the Merger Agreement. COBE
has agreed to pay UBS a retainer fee of $100,000 and a transaction fee (against
which the foregoing retainer fee will be credited) of $1,500,000, which will
become payable at the closing of the Merger. COBE has also agreed to reimburse
UBS for all out-of-pocket expenses incurred by UBS, including the fees of its
counsel, and to indemnify UBS against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the federal
securities laws.
Purchaser and COBE have retained Georgeson & Company Inc., as the
Information Agent, and Bank of New York, as the Depositary, in connection with
the Offer. The Information Agent may contact holders of Shares by mail,
telephone, telex, telecopy, telegraph and personal interview and may request
banks, brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners.
As compensation for acting as Information Agent in connection with the
Offer, Georgeson & Company Inc. will be paid a fee of $10,000 and will also be
reimbursed for certain out-of-pocket expenses and may be indemnified against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. Purchaser will pay the Depositary
reasonable and customary compensation for its services in connection with the
Offer, plus reimbursement for out-of-pocket expenses, and will indemnify the
Depositary against certain liabilities and expenses in connection therewith,
including under federal securities laws. Brokers, dealers, commercial banks and
trust companies will be reimbursed by Purchaser for customary handling and
mailing expenses incurred by them in forwarding material to their customers.
12. Effect of the Offer on the Market for the Shares, Exchange Listing and
Exchange Act Registration. The purchase of Shares pursuant to the Offer will
reduce the number of such Shares that might otherwise trade publicly and the
number of holders of such Shares and could adversely affect the liquidity and
market value of the remaining Shares held by the public.
According to the Company's 10-K, the Company estimates that as of March 15,
1995, there were approximately 500 beneficial owners of Shares. The Company has
represented in the Merger Agreement that as of September 12, 1995, there were
18,951,834 Shares issued and outstanding, 542,225 Shares subject to Options
granted pursuant to the Stock Option Plan, 9,344 Shares granted pursuant to the
ESPP and Warrants to acquire 74,000 Shares.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the standards for continued inclusion in NASDAQ.
According to the NASDAQ published guidelines, the Shares would not be eligible
to be included for listing if, among other things, the number of Shares falls
below 200,000 publicly held Shares, the number of holders of Shares falls below
400 or the aggregate market value of such publicly held Shares does not exceed
$1,000,000. If these standards are not met, quotations might continue to be
published in the over-the-counter "additional list" or in one of the "local
lists", but if the number of holders of the Shares falls below 300, or if the
number of publicly held Shares falls below 100,000, or there is not at least one
market maker for the Shares, National Association of Securities Dealers rules
provide that the securities would no longer be
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"authorized" for NASDAQ reporting, and NASDAQ would cease to provide any
quotations. 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 will
ordinarily not be considered as being publicly held for this purpose. The extent
of the public market for the Shares and the availability of continuing
quotations for the Shares through NASDAQ would depend upon the number of holders
remaining after the Offer, the interest in maintaining a market in the 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.
If as a result of the purchase of Shares pursuant to the Offer or otherwise
the Shares no longer meet the requirements of NASDAQ for continued quotation and
the quotation of the Shares is discontinued, the market for the Shares could be
adversely affected. Purchaser cannot predict whether or to what extent the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for or marketability of the
Shares or whether it would cause future prices to be greater or less than the
Merger Consideration.
The Shares are currently "margin securities", as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing brokers
to extend credit on the collateral of the Shares. Depending upon factors similar
to those described above with respect to listing and market quotations,
following the Offer it is possible that 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.
The Shares are currently registered under the Exchange Act. Such
registration may be terminated upon application by the Company to the Commission
if the Shares are not listed on a national securities exchange and there are
fewer than 300 record holders. The termination of the registration of the Shares
under the Exchange Act would substantially reduce the information required to be
furnished by the Company to holders of Shares and to the Commission and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with stockholders' meetings and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). If registration of
the Shares under the Exchange Act were terminated, the Shares would no longer be
"margin securities" or be eligible for NASDAQ reporting. Purchaser currently
intends to seek to cause the Company to terminate the registration of the Shares
under the Exchange Act as soon after consummation of the Offer as the
requirements for termination of registration are met.
13. Certain Legal Matters and Regulatory Approvals.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to the Merger and other such "going private" transactions in
which a purchaser seeks to acquire the remaining shares not held by it. Rule
13e-3 requires, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction, be filed with the Commission and disclosed to stockholders
prior to consummation of the transaction.
General. Neither Purchaser nor COBE is aware of any license or other
regulatory permit that appears to be material to the business of the Company and
the Subsidiaries, taken as a whole, which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer or, except as set forth
below, of any approval or other action by any domestic (federal or state) or
foreign governmental, administrative or regulatory authority or agency which
would be required prior to the acquisition of Shares by Purchaser pursuant to
the Offer. Should any such approval or other action be required, it is
Purchaser's present intention to seek such approval or action. Purchaser does
not currently intend, however, to delay the purchase of Shares tendered pursuant
to the Offer pending the outcome of any such action or the receipt of any such
approval (subject to Purchaser's right to decline to purchase Shares if any of
the conditions in "THE TENDER OFFER -- Section 10. Certain Conditions of the
Offer" shall have occurred). There can be no assurance that any such approval or
other action, if needed, would be obtained without substantial conditions, or
that adverse consequences might not result to the business of the
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Company, Purchaser, COBE, Gambro or Incentive or other substantial conditions
complied with in order to obtain such approval or other action or in the event
that such approval was not obtained or such other action was not taken.
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions, including conditions relating to the legal
matters discussed in this Section 13. See "THE TENDER OFFER -- Section 10.
Certain Conditions of the Offer".
State Takeover Laws. The Company is incorporated under the laws of the State
of Tennessee. There are certain statutory provisions under the Tennessee Law
applicable to Tennessee corporations that may be deemed "anti-takeover"
statutes, including, the Tennessee Business Combination Act, the Tennessee
Control Share Acquisition Act and the Tennessee Investor Protection Act. In
general, the Tennessee Business Combination Act prevents an "interested
shareholder" (generally a person who owns or has the right to acquire 10% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Tennessee corporation for a period of
five years following the date such person became an interested stockholder
unless, among other things, prior to such date the board of directors of the
corporation approved either the business combination or the transaction in which
the interested stockholder became an interested stockholder. On May 23, 1991,
the Board, by unanimous vote of all directors present at a meeting held on such
date, approved the sale and issuance by the Company to COBE of Shares and
certain preferred stock pursuant to the Stock Purchase Agreements, which
resulted in COBE becoming an "interested shareholder" for purposes of the
Tennessee Business Combination Act. Accordingly, the Tennessee Business
Combination Act is inapplicable to the Offer and the Merger.
In general, the Tennessee Control Share Acquisition Act provides that unless
the acquisition of certain threshold percentages of voting control of a
publicly-held Tennessee corporation is approved by a majority of the
disinterested shareholders of the corporation, the shares acquired above that
threshold will not be entitled to voting rights. Pursuant to the Stock Purchase
Agreements, COBE's acquisition of Shares in excess of the highest threshold set
forth in the Tennessee Control Share Acquisition Act, namely, a 50% threshold,
was approved by the Company's shareholders on September 15, 1992 in accordance
with the provisions of the Tennessee Control Share Acquisition Act. Accordingly,
the Tennessee Control Share Acquisition Act is inapplicable to the Offer and the
Merger.
In general, the Tennessee Investor Protection Act applies only to "takeover
offers" and provides that, in connection with such a "takeover offer", a
registration statement must be filed with the offeree company and the
commissioner of commerce and insurance of Tennessee, containing such information
as the commissioner may by rule prescribe. However, the Tennessee Investor
Protection Act provides that "takeover offer" does not include an offer to
acquire any equity security of an offeree company pursuant to an offer made on
substantially equal terms to all stockholders and as to which the offeree
company, acting through its board of directors, has recommended acceptance to
such stockholders. Because the Offer is made on substantially equal terms to all
stockholders of the Company and because the Board has recommended acceptance of
the Offer to such stockholders, the Tennessee Investor Protection Act does not
apply to Purchaser's acquisition of Shares pursuant to the Offer.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements more difficult. However, in 1987 in
CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of
Indiana may, as a matter of corporate law and, in particular, with respect to
those aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there.
The Company, directly or through subsidiaries, conducts business in a number
of states throughout the United States, some of which have enacted takeover
laws. Purchaser does not know whether any of these laws will, by their terms,
apply to the Offer or the Merger and has not complied with any such laws. Should
any person seek to apply any state takeover law, Purchaser will take such action
as then appears desirable, which may include challenging the validity or
applicability of any such statute in appropriate court proceedings. In the event
it is
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asserted that one or more state takeover laws 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, Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities. In
addition, if enjoined, Purchaser might be unable to accept for payment any
Shares tendered pursuant to the Offer, or be delayed in continuing or
consummating the Offer, and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See "THE TENDER
OFFER -- Section 10. Certain Conditions of the Offer".
14. Miscellaneous. Purchaser is not aware of any jurisdiction where the
making of the Offer is prohibited by any administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer or the acceptance of Shares
pursuant thereto, Purchaser will make a good faith effort to comply with any
such state statute. If, after such good faith effort, Purchaser cannot comply
with any such state statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by the Dealer Manager or 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 MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR THE COMPANY NOT CONTAINED IN THIS OFFER
TO PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, COBE and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer; COBE, Purchaser and Company have filed with the Commission
the Schedule 13E-3, together with exhibits, with respect to the Offer; and the
Company has filed with the Commission the Solicitation/Recommendation Statement
on Schedule 14D-9, together with exhibits, with respect to the Offer. The
Company's recommendation with respect to the Offer and other information
required to be disseminated to shareholders of the Company pursuant to Rule
14d-9 is contained in this Offer to Purchase. Such statements, including
exhibits and any amendments thereto, which furnish certain additional
information with respect to the Offer, may be examined and copies may be
obtained at the same places and in the same manner set forth in "THE TENDER
OFFER -- Section 6. Certain Information Concerning the Company" (except that
they will not be available at regional offices of the Commission). The Schedule
14D-1 and any amendments thereto and the Schedule 13E-3 and any amendments
thereto, including exhibits, may be inspected at, and copies may be obtained
from, the same places and in the same manner as set forth in "THE TENDER
OFFER -- Section 6. Certain Information Concerning the Company" (except that
they will not be available at the regional offices of the Commission).
REN ACQUISITION CORP.
September 19, 1995
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PURCHASER, COBE, GAMBRO AND INCENTIVE
1. Directors and Executive Officers of Purchaser. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Purchaser. Unless otherwise indicated, the
current business address of each person is 1185 Oak Street, Lakewood, Colorado
80215. Unless otherwise indicated, each such person is a citizen of the United
States of America and has held the positions as set forth below for the past
five years. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with Purchaser.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
Directors and Executive Officers of Purchaser
<S> <C>
Mats Wahlstrom (Sweden) Chairman of the Board, President, Assistant
Treasurer and Assistant Secretary since
September 1995; Director of REN
Corporation-USA, 6820 Charlotte Pike,
Nashville, TN 37209, since July 1993. See
Directors and Executive Officers of Gambro
and COBE.
Herbert S. Lawson Director, Treasurer, Vice President and
Assistant Secretary since September 1995;
Director of REN Corporation-USA, 6820
Charlotte Pike, Nashville, TN 37209, since
October 1992. See Directors and Executive
Officers of COBE.
Ralph Z. Levy, Jr. Director, Vice President, Secretary and
Assistant Treasurer since September 1995;
Executive Vice President, General Counsel and
Secretary of REN Corporation-USA, 6820
Charlotte Pike, Nashville, TN 37209 since
November 1992; Partner, Wyatt, Tarrant &
Combs, Suite 1500, 511 Union Street,
Nashville, TN 37219 prior to November 1992.
</TABLE>
2. Directors and Executive Officers of COBE. The following table sets forth
the name, current business address, citizenship and present principal occupation
or employment, and material occupations, positions, offices or employments and
business addresses thereof for the past five years of each director and
executive officer of COBE. Unless otherwise indicated, the current business
address of each person is 1185 Oak Street, Lakewood, Colorado 80215. Unless
otherwise indicated, each such person is a citizen of the United States of
America and has held his or her present position as set forth below for the past
five years. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with COBE.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
]NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
Directors and Executive Officers of COBE
<S> <C>
Randall F. Bellows Director since 1966, Retired Executive Vice
President; Private Investor.
Robert M. Collins Director since 1966, Retired President;
Private Investor.
Edward J. Giachetti Director since March 1991, Vice President
since prior to 1990. See Directors and
Executive Officers of Gambro.
Alain Granger (France) Director since July 1990; President of Hospal
AG, Hospal S.A., 188 Av. Jean-Jaures,
F-69007, Lyon, France.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
<S> <C>
Ugo Grondelli (Italy) Director since July 1990; President of Gambro
SpA., Via Aldo Moro I/A, I-43035, Felino
(PR), Italy. See Directors and Executive
Officers of Gambro.
Berthold Lindqvist (Sweden) Director since July 1990. See Directors and
Executive Officers of Gambro.
Ingmar Magnusson (Sweden) Director since July 1990. See Directors and
Executive Officers of Gambro.
Mats Wahlstrom (Sweden) Director since June 1990, President since May
1991, Executive Vice President from June 1990
to May 1991; Director of REN Corporation-USA,
6820 Charlotte Pike, Nashville, TN 37209
since July 1993. See Directors and Executive
Officers of Purchaser and Gambro.
Edward C. Wood, Jr. Director since March 1991; President of COBE
BCT, Inc., 1201 Oak Street, Lakewood, CO
80215-4498 since October 1990. See Directors
and Executive Officers of Gambro.
Teresa Blandford Vice President since July 1994, Director of
Human Resources prior to July 1994.
Wendell J. Gardner Senior Vice President since July 1994,
Director of COBE prior to July 1994.
Herbert S. Lawson Chief Financial Officer, Vice President, and
Treasurer since July 1992, Director of Taxes
prior to July 1992; Director of REN
Corporation-USA, 6820 Charlotte Pike,
Nashville, TN 37209 since October 1992. See
Directors and Executive Officers of
Purchaser.
Curtin L. Wagner Vice President since July 1992, Director of
Logistics prior to July 1992.
</TABLE>
3. Directors and Executive Officers of Gambro. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Gambro. Unless otherwise indicated, the
current business address of each person is P.O. Box 10101, Magistratsvagen 16,
S-220 10 Lund, Sweden. Unless otherwise indicated, each such person is a citizen
of Sweden and has held his or her present position as set forth below for the
past five years. Unless otherwise indicated, each occupation set forth opposite
an individual's name refers to employment with Gambro.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
Directors and Executive Officers of Gambro
<S> <C>
Mikael Lilius Chairman since 1994. See Directors and
Executive Officers of Incentive.
Lennart Nilsson Director since 1984, Chairman from 1984 until
1994; President and Chief Executive Officer
of Cardo AB, Box 486, S-20124, Malmo, Sweden
since 1986; Director of Frigoscandia, Box
912, S-251 09 Helsingborg, Sweden until 1991;
Chairman of Bilspedition AB, S-412 97
Goteborg, Sweden, since before 1991; Chairman
of Skane Gripen AB, Box 4028, S-201 11 Malmo,
Sweden, since before 1990; Director of
Trelleborg AB, S-231 81, Trelleborg, Sweden,
since before 1990.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
<S> <C>
Tore Daun Director since 1987, President of Molnlycke
AB, Molndal, S-405 03 Goteborg, Sweden until
1987; Director of Skandinaviska Enskilda
Banken, S-103 90 Stockholm, Sweden since
before 1992; Director of BASF Svenska AB, Box
53008, S-400 14 Goteborg, Sweden, since 1991;
Director of Molnlycke AB since before 1990.
Margareta Nilsson Vice Chairman since 1985; Chairman of
Crafoord Foundation, Box 137, S-220 10 Lund,
Sweden since before 1990.
Berthold Lindqvist Director and Member of Management Board since
1984, President and Chief Executive Officer
since 1984; Director of Besam AB, Box 131,
S-261 22 Landskrona, Sweden since 1990;
Director of PLM AB, Box 836, S-201 80 Malmo,
Sweden since 1991; Director of Volvo
Lastvagnar AB, S-405 08 Goteborg, Sweden
since 1994; Director of Pharmacia AB, A-171
97 Stockholm, Sweden since 1994; Director of
Securitas AB, Box 12307, S-102 28 Stockholm,
Sweden, since 1994. See Directors and
Executive Officers of COBE.
Anitha Svensson-Grane Employee Representative on Board since 1995,
Payroll Clerk, Gambro Lundia AB, Box 10101,
S-220 10 Lund, Sweden, since 1975.
Gosta Gahrton Director since 1994; Professor of Medicine,
Karolinska Institute, S-171 77 Stockholm,
Sweden since before 1990; Senior Physician
and Chief of Department of Medicine, S-141 86
Huddinge, Sweden.
Karl Olof Tell Employee Representative on Board since 1993,
Engineering Worker, Gambro Lundia AB, Box
10101, S-220 10 Lund, Sweden since 1968.
Soren Mellstig Director since 1995; see Directors and
Executive Officers of Incentive.
Claes Wilhelmsson Director of Gambro Board since 1995;
Executive Vice President Research &
Development, Astra AB, Astra AB, S-151 85
Sodertalje, Sweden from 1991 to 1995;
Managing Director, Astra Draco, Box 34, S-221
00 Lund, Sweden prior to 1991.
Jan Gustavsson Member of Management Board and Chief
Financial Officer since 1993; Chief Financial
Officer of Getinge Industrier AB, S-310 44,
Getinge, Sweden prior to 1993; Director of
REN Corporation-USA, 6820 Charlotte Pike,
Nashville, TN 37209 since 1993.
Ugo Grondelli (Italy) Member of Management Board since 1984, Senior
Executive Vice President and Deputy Managing
Director since 1988, Deputy Director since
1988; Chairman of Hospal AG and Sopamed AG,
Dornacherstrasse 8, CH-4008 Basel,
Switzerland since 1987; President of Gambro
SpA, Via Aldo Moro 1/A, I-43035 Felino (PR)
Italy since 1972. See Directors and Executive
Officers of COBE.
Leif Smeby Member of the Management Board and Research
Director of Gambro since 1986.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
<S> <C>
Alain Granger (France) Member of Management Board since prior to
1990; President of Hospal AB,
Dornacherstrasse 8, CH-4008 Basel,
Switzerland since before 1990; President of
Hogamed SA, Hogamed 188 SA, Jean-Jaures,
F-69007 Lyon, France since 1990.
Mats Wahlstrom Member of Management Board since 1984
Executive Vice President since March 1993,
Chief Financial Officer prior to March 1993;
Director of REN Corporation-USA, 6820
Charlotte Pike, Nashville, TN 37209 since
July 1993. See Directors and Executive
Officers of Purchaser and COBE.
Jan-Olof Olsson Member of Management Board since 1986,
President of Gambro Lundia AB, Box 10101,
S-220 10 Lund, Sweden since 1986; President
of Gambro Dialysatoren GmbH Co. KG,
Holger-Crafoord-Strasse 26, D-73279
Hechingen, Germany since 1990.
Edward C. Wood, Jr. (USA) Member of Board of Management since 1994,
President of COBE BCT Inc., 1201 Oak Street,
Lakewood, CO 80215-4498 since October 1990.
See Directors and Executive Officers of COBE.
Edward J. Gianchetti (USA) Member of Board of Management since 1994. See
Directors and Executive Officers of COBE.
Lawrence J. Centella (USA) Member of Board of Management since 1994;
Director, President and Chief Financial
Officer of the Company since July 1993;
President of COBE Renal Care, Inc. prior to
July 1993.
</TABLE>
4. Directors and Executive Officers of Incentive. The following table sets
forth the name, current business address, citizenship and present principal
occupation or employment, and material occupations, positions, offices or
employments and business addresses thereof for the past five years of each
director and executive officer of Incentive. Unless otherwise indicated, the
current business address of each person is Hamngatan 2, P.O. Box 7373, S-10391,
Stockholm, Sweden. Unless otherwise indicated, each such person is a citizen of
Sweden and has held his or her present position as set forth below for the past
five years. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with Incentive.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
Directors and Executive Officers of Incentive
<S> <C>
Anders Scharp Chairman since 1992; Chairman of the Boards
of: Electrolux, S-105 45, Stockholm, Sweden
since 1992; Saab-Scania AB, S-581-88
Linkoping, Sweden from 1990 to 1995; Saab AB,
S-581-88 Linkoping, Sweden since 1995; Scania
AB, S-151 87 Sodertalje and SKF, S-145 00
Goteborg, Sweden since 1992; Vice Chairman of
the Boards of Investor, S-103 32 Stockholm,
Sweden since 1988 and Atlas Copco S-105 23
Stockholm, Sweden since 1992; Director of
Email Ltd (Australia), Waterloo, NSW 2017,
Australia since 1987; Director of Swedish
Employers' Confederation, S.
Blasieholmshamnen 4A, S-103 30 Stockholm,
Sweden since 1987; Director of Federation of
Swedish Industries, Storgatan 19, S-114 85
Stockholm, Sweden since 1992.
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
<S> <C>
Claes Dahlback Director since 1991; President of Investor
S-103 32 Stockholm, Sweden since 1978;
Chairman of the Board of Vin & Spirit AB,
P.O. Box 47319, S-100 74 Stockholm, Sweden
since 1994; Vice Chairman of the Board of
ASEA, P.O. Box 7373, S-103 91, Stockholm,
Sweden since prior to 1990; Director of AAB,
S-151 85 Sodertalje, Sweden since prior to
1990; Director of Astra, S-581 88 Linkoping,
Sweden since prior to 1990; Director of
Electrolux, S-105 45 Stockholm, Sweden since
prior to 1990; Director of Ericsson 126 25
Stockholm, Sweden since prior to 1990;
Director of Saab-Scania, S-581 88 Linkoping,
Sweden since prior to 1990; Director of SKF,
S-415 50 Goteborg, Sweden since prior to
1990; Director of STORA, S-791 80 Falun,
Sweden since prior to 1990.
Casimir Ehrnrooth (Finnish) Director since 1991; Chairman of Kymmene
Corporation, P.O. Box 1079, SF-00101
Helsinki, Finland since 1991; Director of
Nokia Group, P.O. Box 226, SF-00101 Helsinki,
Finland since 1992. Director of Unitas Oy,
P.O. Box 84, SF-00101 Helsinki, Finland since
1992; Director of Continental AG, Post Fach
169, D-3001 Hannover, Germany since 1995.
Lennart Hagelin Director since 1992; Chairman of Svenska
Dagbladot, S-105 17 Stockholm, Sweden since
1992; Chairman of Grand Hotel Holdings, S 103
27 Stockholm, Sweden since 1993; Director of
Skandia, S-103 50 Stockholm, Sweden since
prior to 1990; Director of Axel Johnson AB,
P.O. Box 26008, S-100 41 Stockholm, Sweden
since prior to 1990.
Lief Johansson Director since 1992; President and Chief
Executive Officer of Electrolux, S-105 45
Stockholm, Sweden since 1991.
Mikael Lilius (Finnish) Director since 1991, President and Chief
Executive Officer since 1991; Chairman of
Garphyttan Industrier P.O. Box 7200, S-103 88
Stockholm, Sweden since 1992; Director of
Huhtamaki Oy, Etelaranta 8, SF-00130
Helsinki, Finland since prior to 1990. See
Directors and Executive Officers of Gambro.
Karl-Erik Sahlberg Director since 1995; Chairman of Perstorp AB,
S-284 80 Perstorp, Sweden since 1991;
Chairman of Investment AB Cardo, P.O. Box
486, S-201 24 Malmo, Sweden since 1986;
Chairman of Vattenfall AB, S-162 87
Stockholm, Sweden since 1992; Vice Chairman
of Skandinaviska Ensklida Banken, S-106 40
Stockholm, Sweden since prior to 1990;
Director of Tetra Laval Group,
Landerigranden, S-221 86 Lund, Sweden since
1993; Chairman of Skoogs AB, S-205 70 Malmo,
Sweden since prior to 1990.
</TABLE>
I-5
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
<S> <C>
Sven Soderberg Director since 1991; Chairman of Skandia,
S-103 50 Stockholm, Sweden since prior to
1990; Chairman of Ratos, P.O. Box 1661, S-111
96 Stockholm, Sweden since 1994; Director of
ASEA, P.O. Box 7373, S-103 91 Stockholm,
Sweden since prior to 1990; Director of
STORA, S-791 80 Falun, Sweden since prior to
1990; General Counsel of Norway since prior
to 1990.
Marcus Wallenberg Director since 1994; Executive Vice President
of Investor, S-103 32 Stockholm, Sweden since
1993; Vice Chairman of Astra, S-151 85
Sodertalje, Sweden since 1993; Vice Chairman
of Saab AB, S-581 88 Linkoping, Sweden since
1993; Vice Chairman of the Knut and Alice
Wallenberg Foundation, S-104 60 Stockholm,
Sweden since prior to 1990; Deputy Director
of SKF, S-415 00 Goteborg, Sweden since 1993.
Tore Burstrom Employee Representative on Board since 1991
(Swedish Federation of Salaried Employees in
Industry and Services); Employee of Skega AB,
S-934 81 Ersmark, since prior to 1990.
Ake Jacobsson Employee Representative on Board since 1991
(the Swedish Confederation of Trade Unions);
Member of the Board of the Electricians'
Local Union; Employee of Yngeredsfors Kraft
AB, P.O. Box 10250, S-434 23 Kungsbacka,
since prior to 1990.
Bengt-Ola Nygren Employee Representative on Board since 1991
(the Swedish Confederation of Trade Unions);
Employee of Munters Component AB, P.O. Box
29, S-740 61 Tobo, since prior to 1990.
Hakan Lindh Employee Representative on Board since 1991
(Swedish Federation of Salaried Employees in
Industry and Services); Employee of
Yngeredsfors Kraft AB, P.O. Box 10250, S-434
23 Kungsbacka, since prior to 1990.
Jan Marklund Employee Representative on Board since 1993
(the Swedish Confederation of Trade Unions);
Employee of Skega B, S-934 81 Ersmark, since
prior to 1990.
Dan Nilsson Employee Representative on Board since 1991
(Swedish Federation of Salaried Employees in
Industry and Service), Employee of Hagglunds
Vehicle AB, S-891 81 Ornskoldsvik, since
prior to 1990.
Lars Fahlen Senior Vice President, Personnel since 1992;
Director of Personnel, ITT Flygt AB, P.O. Box
1309, S-171 25 Solna, from 1985 to 1992, from
1985 to 1992.
Anders Fraggstedt Executive Vice President since 1991;
President of ABB Relays AB, S-721 83
Vaster deg.as, since prior to 1991.
Anders Jagraeus Executive Vice President since 1995;
President of STORA AB S-791 80 Falun, Sweden
from 1988-1991; President of AB Carl Munters
P.O. Box 430, S-191 24 Sollentuna, Sweden
from 1991-1995; Director of Garphyttan AB
P.O. Box 7200, S-103 88 Stockholm, Sweden
since 1995.
Sverker Lundkvist Senior Vice President, Finance, since 1993;
Executive Vice President, Skandia
International, S-103 50 Stockholm, Sweden
from prior to 1991.
</TABLE>
I-6
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS AND
NAME BUSINESS ADDRESSES THEREOF
- --------------------------------------------- ---------------------------------------------
<S> <C>
Soren Mellstig Senior Vice President, Corporate Control
since 1994; Senior Vice President Nobel
Industries (Chemicals), P.O. Box 11500, S-100
61 Stockholm, Sweden from 1993 to 1994;
Senior Vice President EKA Nobel (chemicals),
S-445 80 Bohus prior to 1993; Director of
Akzo Nobel AB P.O. Box 11500, S-100 60
Stockholm, Sweden from prior to 1993. See
Directors and Executive Officers of Gambro.
Bengt Modeer Senior Vice President, Corporate
Communications since 1987.
Kjell Spangbeg Senior Vice President, Business Development
and M&A since 1992; Consultant since prior to
1992.
</TABLE>
I-7
<PAGE>
SCHEDULE II
TEXT OF TITLE 48, CHAPTER 23 OF THE TENNESSEE BUSINESS CORPORATION ACT
CHAPTER 23. BUSINESS CORPORATIONS -- DISSENTERS' RIGHTS.
PART 1 -- RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
48-23-101 DEFINITIONS.
(1) "Beneficial shareholder" means the person who is a beneficial owner of
shares held by a nominee as the record shareholder;
(2) "Corporation" means the issuer of the shares held by a dissenter before
the corporate action, or the surviving or acquiring corporation by merger or
share exchange of that issuer;
(3) "Dissenter" means a shareholder who is entitled to dissent from
corporate action under Sec.48-23-102 and who exercises that right when and in
the manner required by Sec.Sec.48-23-201 -- 48-23-209;
(4) "Fair value", with respect to a dissenter's shares, means the value of
the shares immediately before the effectuation of the corporate action to which
the dissenter objects, excluding any appreciation or depreciation in
anticipation of the corporate action;
(5) "Interest" means interest from the effective date of the corporate
action that gave rise to the shareholder's right to dissent until the date of
payment, at the average auction rate paid on United States treasury bills with a
maturity of six (6) months (or the closest maturity thereto) as of the auction
date for such treasury bills closest to such effective date;
(6) "Record shareholder" means the person in whose name shares are
registered in the records of a corporation or the beneficial owner of shares to
the extent of the rights granted by a nominee certificate on file with a
corporation; and
(7) "Shareholder" means the record shareholder or the beneficial
shareholder.
48-23-102 RIGHT TO DISSENT.
(a) A shareholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of, any of the following corporate
actions:
(1) Consummation of a plan of merger to which the corporation is a
party:
(A) If shareholder approval is required or the merger by
Sec.48-21-103 or the charter and the shareholder is entitled to vote on
the merger; or
(B) If the corporation is a subsidiary that is merged with its parent
under Sec.48-21-104;
(2) Consummation of a plan of share exchange to which the corporation is
a party as the corporation whose shares will be acquired, if the shareholder
is entitled to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of
the property of the corporation other than in the usual and regular course
of business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one (1) year after the date of sale;
(4) An amendment of the charter that materially and adversely affects
rights in respect of a dissenter's shares because it:
(A) Alters or abolishes a preferential right of the shares;
<PAGE>
(B) Creates, alters, or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares;
(C) Alters or abolishes a preemptive right of the holder of the
shares to acquire shares or other securities;
(D) Excludes or limits the right of the shares to vote on any matter,
or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or
(E) Reduces the number of shares owned by the shareholder to a
fraction of a share if the fractional share is to be acquired for cash
under Sec.48-16-104; or
(5) Any corporate action taken pursuant to a shareholder vote to the
extent the charter, bylaws, or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares.
(b) A shareholder entitled to dissent and obtain payment for his shares
under this chapter may not challenge the corporate action creating his
entitlement unless the action is unlawful or fraudulent; with respect to the
shareholder or the corporation.
(c) Notwithstanding the provisions of subsection (a), no shareholder may
dissent as to any shares of a security which, as of the date of the effectuation
of the transaction which would otherwise give rise to dissenters' rights, is
listed on an exchange registered under Sec.6 of the Securities Exchange Act of
1934, as amended, or is a "national market system security," as defined in rules
promulgated pursuant to the Securities Exchange Act of 1934, as amended.
48-23-103 DISSENT BY NOMINEES AND BENEFICIAL OWNERS.
(a) A record shareholder may assert dissenters' rights as to fewer than all
the shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one (1) person and notifies the corporation in writing
of the name and address of each person on whose behalf he asserts dissenters'
rights. The rights of a partial dissenter under this subsection are determined
as if the shares as to which he dissents and his other shares were registered in
the names of different shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares of
any one (1) or more classes held on his behalf only if:
(1) He submits to the corporation the record shareholder's written
consent to the dissent not more later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) He does so with respect to all shares of the same class of which he
is the beneficial shareholder or over which he has power to direct the vote.
PART 2 -- PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
48-23-201 NOTICE OF DISSENTERS' RIGHTS.
(a) If proposed corporate action creating dissenters' rights under
Sec.48-23-102 is submitted to a vote at a shareholders' meeting, the meeting
notice must state that shareholders are or may be entitled to assert dissenters'
rights under this chapter and be accompanied by a copy of this chapter.
(b) If corporate action creating dissenters' rights under Sec.48-23-102 is
taken without a vote of shareholders, the corporation shall notify in writing
all shareholders entitled to assert dissenters' rights that the action was taken
and send them the dissenters' notice described in Sec.48-23-203.
(c) A corporation's failure to give notice pursuant to this section will not
invalidate the corporate action.
II-2
<PAGE>
48-23-202 NOTICE OF INTENT TO DEMAND PAYMENT.
(a) If proposed corporate action creating dissenters' rights under
Sec.48-23-102 is submitted to a vote at a shareholders' meeting, a shareholder
who wishes to assert dissenters' rights:
(1) Must deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action
is effectuated; and
(2) Must not vote his shares in favor of the proposed action. No such
written notice of intent to demand payment is required of any shareholder to
whom the corporation failed to provide the notice required by Sec.48-23-201.
(b) A shareholder who does not satisfy the requirements of subsection (a) is
not entitled to payment for his shares under this chapter.
48-23-203 DISSENTERS' NOTICE.
(a) If proposed corporate action creating dissenters' rights under
Sec.48-23-102 is authorized at a shareholders' meeting, the corporation shall
deliver a written dissenters' notice to all shareholders who satisfied the
requirements of Sec.48-23-202.
(b) The dissenters' notice must be sent no later than ten (10) days after
the corporate action was authorized by the shareholders or effectuated,
whichever is the first to occur, and must:
(1) State where the payment demand must be sent and where and when
certificates for certificated shares must be deposited;
(2) Inform holders of uncertificated shares to what extent transfer of
the shares will be restricted after the payment demand is received;
(3) Supply a form for demanding payment that includes the date of the
first announcement to news media or to shareholders of the principal terms
of the proposed corporate action and requires that the person asserting
dissenters' rights certify whether or not he acquired beneficial ownership
of the shares before that date;
(4) Set a date by which the corporation must receive the payment demand,
which date may not be fewer than one (1) nor more than two (2) months after
the date the subsection (a) notice is delivered; and
(5) Be accompanied by a copy of this chapter if the corporation has not
previously sent a copy of this chapter to the shareholder pursuant to
Sec.48-23-201.
48-23-204 DUTY TO DEMAND PAYMENT.
(a) A shareholder sent a dissenters' notice described in Sec.48-22-203 must
demand payment, certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenters' notice pursuant to
Sec.48-23-203(b)(3), and deposit his certificates in accordance with the terms
of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) retains all other rights of a shareholder until these
rights are cancelled or modified by the effectuation of the proposed corporate
action.
(c) A shareholder who does not demand payment or deposit his share
certificates where required, each by the date set in the dissenter's notice, is
not entitled to payment for his shares under this chapter.
(d) A demand for payment filed by a shareholder may not be withdrawn unless
the corporation with which it was filed, or the surviving corporation, consents
thereto.
II-3
<PAGE>
48-23-205 SHARE RESTRICTIONS.
(a) The corporation may restrict the transfer of uncertificated shares from
the date the demand for their payment is received until the proposed corporate
action is effectuated or the restrictions released under Sec.48-23-207.
(b) The person for whom dissenters' rights are asserted as to uncertificated
shares retains all other rights of a shareholder until these rights are
cancelled or modified by the effectuation of the proposed corporate action.
48-23-206 PAYMENT.
(a) Except as provided in Sec.48-23-208, as soon as the proposed corporate
action is effectuated, or upon receipt of a payment demand, whichever is later,
the corporation shall pay each dissenter who complied with Sec.48-23-204 the
amount the corporation estimates to be the fair value of his shares, plus
accrued interest.
(b) The payment must be accompanied by:
(1) The corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen (16) months before the date of payment, an
income statement for that year, a statement of changes in shareholders'
equity for that year, and the latest available interim financial statements,
if any;
(2) A statement of the corporation's estimate of the fair value of the
shares;
(3) An explanation of how the interest was calculated;
(4) A statement of the dissenter's right to demand payment under
Sec.48-23-209; and
(5) A copy of this chapter if the corporation has not previously sent a
copy of this chapter to the shareholder pursuant to Sec.Sec.48-23-201 or
48-23-203.
48-23-207 FAILURE TO TAKE ACTION.
(a) If the corporation does not effectuate the proposed action that gave
rise to the dissenters' rights within two (2) months after the date set for
demanding payment and depositing share certificates, the corporation shall
return the deposited certificates and release the transfer restrictions imposed
on uncertificated shares.
(b) If after returning deposited certificates and releasing transfer
restrictions, the corporation effectuates the proposed action, it must send a
new dissenters' notice under Sec.48-23-203 and repeat the payment demand
procedure.
48-23-208 AFTER-ACQUIRED SHARES.
(a) A corporation may elect to withhold payment required by Sec.48-23-206
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenters' notice as the date of the first announcement
to news media or to shareholders of the principal terms of the proposed
corporate action.
(b) To the extent the corporation elects to withhold payment under
subsection (a), after effectuating the proposed corporate action, it shall
estimate the fair value of the shares, plus accrued interest, and shall pay this
amount to each dissenter who agrees to accept it in full satisfaction of his
demand. The corporation shall send with its offer a statement of its estimate of
the fair value of the shares, an explanation of how the interest was calculated,
and a statement of the dissenter's right to demand payment under Sec.48-23-209.
48-23-209 PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER.
(a) A dissenter may notify the corporation in writing of his own estimate of
the fair value of his shares and amount of interest due, and demand payment of
his estimate (less any payment under Sec.48-23-206), or reject the corporation's
offer under Sec.48-23-208 and demand payment of the fair value of his shares and
interest due, if:
II-4
<PAGE>
(1) The dissenter believes that the amount paid under Sec.48-23-206 or
offered under Sec.48-23-208 is less than the fair value of his shares or
that the interest due is incorrectly calculated;
(2) The corporation fails to make payment under Sec.48-23-206 within two
(2) months after the date set for demanding payment; or
(3) The corporation, having failed to effectuate the proposed action,
does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within two (2) months after
the date set for demanding payment.
(b) A dissenter waives his right to demand payment under this section unless
he notifies the corporation of his demand in writing under subsection (a) within
one (1) month after the corporation made or offered payment for his shares.
PART 3 -- JUDICIAL APPRAISAL OF SHARES
48-23-301 COURT ACTION.
(a) If a demand for payment under Sec.48-23-209 remains unsettled, the
corporation shall commence a proceeding within two (2) months after receiving
the payment demand and petition the court to determine the fair value of the
shares and accrued interest. If the corporation does not commence the proceeding
within the two-month period, it shall pay each dissenter whose demand remains
unsettled the amount demanded.
(b) The corporation shall commence the proceeding in a court of record
having equity jurisdiction in the county where the corporation's principal
office (or, if none in this state, its registered office) is located. If the
corporation is a foreign corporation without a registered office in this state,
it shall commence the proceeding in the county in this state where the
registered office of the domestic corporation merged with or whose shares were
acquired by the foreign corporation was located.
(c) The corporation shall make all dissenters (whether or not residents of
this state) whose demands remain unsettled parties to the proceedings as in an
action against their shares and all parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) is plenary and exclusive. The court may appoint one (1) or more
persons as appraisers to receive evidence and recommend decision on the question
of fair value. The appraisers have the powers described in the order appointing
them, or in any amendment to it. The dissenters are entitled to the same
discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment:
(1) For the amount, if any, by which the court finds the fair value of
his shares, plus accrued interest, exceeds the amount paid by the
corporation; or
(2) For the fair value, plus accrued interest, of his after-acquired
shares for which the corporation elected to withhold payment under
Sec.48-23-208.
48-23-302 COURT COSTS AND COUNSEL FEES.
(a) The court in an appraisal proceeding commenced under Sec.48-23-301 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court. The court shall assess the costs
against the corporation, except that the court may assess costs against all or
some of the dissenters, in amounts the court finds equitable, to the extent the
court finds the dissenters acted arbitrarily, vexatiously, or not in good faith
in demanding payment under Sec.48-23-209.
(b) The court may also assess the fees expenses of counsel and experts for
the respective parties, in amounts the court finds equitable:
II-5
<PAGE>
(1) Against the corporation and in favor of any or all dissenters if the
court finds the corporation did not substantially comply with the
requirements of Sec.Sec.48-23-201 -- 48-23-209; or
(2) Against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted arbitrarily, vexatiously, or not in good faith with
respect to the rights provided by this chapter.
(c) If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded to
the dissenters who were benefited.
II-6
<PAGE>
SCHEDULE III
INDEPENDENT AUDITORS'S REPORT
To the Board of Directors and Shareholders of
REN Corporation-USA:
We have audited the consolidated balance sheet of REN Corporation-USA and
subsidiaries as of December 31, 1993, and the related consolidated statements of
operations, changes in shareholders' equity, and cash flows for each of the
years in the two-year period ended December 31, 1993. In connection with our
audits of these consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index appearing under
Item 14(a)(2), as of December 31, 1993 and for each of the years in the two-year
period ended December 31, 1993. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of REN
Corporation-USA and subsidiaries as of December 31, 1993, and the results of
their operations and their cash flows for each of the years in the two-year
period ended December 31, 1993, in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole presents fairly, in all material respects, the information set forth
therein.
KPMG PEAT MARWICK LLP
Nashville, Tennessee
January 25, 1994
<PAGE>
REN CORPORATION-USA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1993
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 644,231 654,845
Accounts receivalble less allowances for uncollectibles and
contractual adjustments of $12,885,262 and $12,863,514 at
December 31, 1994 and 1993, respectively.................... 22,251,792 20,676,857
Estimated third-party settlements, net........................ 59,653 530,075
Inventory..................................................... 3,382,071 2,683,106
Income taxes receivable....................................... -- 1,887,716
Prepaid expense............................................... 974,242 1,482,405
Current deferred taxes, net................................... 3,078,875 1,957,196
Other current assets.......................................... 1,385,107 2,423,635
------------ ------------
Total current assets........................................ 31,775,971 32,295,835
Property, plant and equipment, net.............................. 51,915,880 41,198,497
Intangible assets, net.......................................... 47,459,639 50,523,650
Notes receivable................................................ 1,794,792 574,149
Other assets.................................................... 1,367,659 1,548,231
------------ ------------
Total assets................................................ $134,313,941 126,140,362
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilites:
Current maturities of long-term debt and capital lease
obligations................................................. $ 87,308 441,593
Accounts payable (including related party payables of $743,874
and $244,594 at December 31, 1994 and 1993, respectively)... 6,541,241 3,220,597
Accrued expenses.............................................. 2,938,799 3,496,244
Accrued wages and benefits.................................... 3,750,532 2,579,733
Income taxes payable.......................................... 1,520,918 --
------------ ------------
Total current liabilities................................... 14,838,798 9,738,167
------------ ------------
Long-term debt and capital lease obligations, less current
maturities...................................................... 342,364 10,704,079
Deferred taxes,net.............................................. 4,300,587 1,179,846
Other liabilities............................................... 88,730 26,325
------------ ------------
Total long-term liabilities................................. 4,731,681 11,910,250
------------ ------------
Redeemable common stock; 12,000 and 18,000 shares issued and
outstanding at December 31, 1994 and 1993, respectively......... 47,000 70,500
------------ ------------
Commitments and contingencies (notes 11,12,13,and 15)
Shareholders' equity:
Common stock; no par value, authorized 60,000,000 shares;
18,898,546 and 18,753,095 shares issued and outstanding at
December 31, 1994 and 1993, respectively.................... 101,840,512 100,897,680
Additional paid-in capital.................................... 4,224,488 4,224,488
Retained earnings............................................. 8,649,560 138,656
Less unearned stock grant compensation........................ (18,098) (839,379)
------------ ------------
Total shareholders' equity.................................. 114,696,462 104,421,445
------------ ------------
Total liabilities and shareholders' equity.................. $134,313,941 126,140,362
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements
III-2
<PAGE>
REN CORPORATION--USA
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------ ----------- ----------
<S> <C> <C> <C>
Revenue:
Dialysis services.................................. $120,428,465 93,866,393 70,345,357
Laboratory services................................ 11,386,250 11,321,502 10,468,987
------------ ----------- ----------
131,814,715 105,187,895 80,814,344
------------ ----------- ----------
Direct operating expense:
Dialysis services (including related party
transactions of $7,996,855, $6,895,998 and
$3,071,739, respectively)............................ 85,861,893 70,502,931 45,170,081
Laboratory services (including related party
transactions of $22,479, $0 and $80,500,
respectively)........................................ 5,579,207 6,551,743 8,823,066
------------ ----------- ----------
91,441,100 77,054,674 53,993,147
------------ ----------- ----------
Gross operating profit:
Dialysis services.................................. 34,566,572 23,363,462 25,175,276
Laboratory services................................ 5,807,043 4,769,759 1,645,921
------------ ----------- ----------
40,373,615 28,133,221 26,821,197
Indirect operating expense:
General, administrative and operations support
(including related party transactions of
$619,607, $176,613 and $387,231, respectively)... 11,360,801 13,011,061 8,184,995
Employee severance................................... -- 1,722,747
Stock-based compensation............................. -- 4,224,488
Writeoff of organization and development cost........ -- 968,000 122,889
Provision to carry assets at estimated fair value.... -- 800,000 --
Depreciation and amortization........................ 10,878,728 9,880,123 7,003,445
Bad debt expense..................................... 2,823,015 2,042,328 1,151,353
Equity in loss of investee........................... 270,000 323,000 --
Loss on disposal of assets........................... 119,376 600,000 276,123
------------ ----------- ----------
Income (loss) from operations........................ 14,921,695 (5,438,526) 10,082,392
Non-operating (income) expense:
Interest income.................................... (203,072) (226,701) (1,037,469)
Interest expense................................... 1,043,863 776,780 2,653,241
Writeoff of costs of suspended financing........... -- 170,207
------------ ----------- ----------
Income (loss) before income tax expense.............. 14,080,904 (5,988,605) 8,296,413
Income tax expense (benefit)......................... 5,570,000 (2,230,122) 2,941,624
------------ ----------- ----------
Net income (loss).................................... $ 8,510,904 (3,758,483 5,354,789
------------ ----------- ----------
------------ ----------- ----------
Net income (loss) per common share and common share
equivalent........................................... $ 0.45 (0.20) 0.38
------------ ----------- ----------
------------ ----------- ----------
Weighted average common shares and common share
equivalents outstanding.............................. 18,898,831 18,777,322 14,472,227
------------ ----------- ----------
------------ ----------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
III-3
<PAGE>
REN CORPORATION-USA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<CAPTION>
RETAINED
COMMON ADDITIONAL EARNINGS UNEARNED
------------------------- PAID-IN (ACCUMULATED STOCK GRANT
SHARES AMOUNT CAPITAL DEFICIT) COMPENSATION TOTAL
---------- ------------ ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1991............ 11,293,434 $ 30,551,315 -- (1,446,671) (1,520,211) 27,584,433
Net income................... -- -- -- 5,354,789 -- 5,354,789
Issuance of common stock for:
Cash........................ 6,670,732 63,371,992 -- -- -- 63,371,992
Other assets................ 36,043 405,000 -- -- -- 405,000
Conversion of debt.......... 82,352 700,000 -- -- -- 700,000
Exercise of stock options.... 35,350 158,888 -- -- -- 158,888
Exercise of warrants......... 67,700 203,100 -- -- -- 203,100
Redemption of common stock... (120,000) (850,000) -- -- -- (850,000)
Amortization of unearned
stock grant compensation.... -- -- -- -- 350,680 350,680
Accretion of redeemable
common stock................ -- -- -- (10,979) -- (10,979)
---------- ------------ ---------- ------------ ------------ -----------
December 31, 1992............ 18,065,611 94,540,295 -- 3,897,139 (1,169,531) 97,267,903
Net loss..................... -- -- -- (3,758,483) -- (3,758,483)
Issuance of common stock for
conversion of debt........... 249,484 2,120,615 -- -- -- 2,120,615
Exercise of stock options,
including $504,271 tax
benefit of stock options
exercised.................... 251,000 2,794,770 -- -- -- 2,794,770
Amortization of unearned
stock grant compensation.... -- -- -- -- 330,152 330,152
Other contributed capital.... -- -- 4,224,488 -- -- 4,224,488
Expiration of redeemable
common stock................ 187,000 1,442,000 -- -- -- 1,442,000
---------- ------------ ---------- ------------ ------------ -----------
December 31, 1993............ 18,753,095 100,897,680 4,224,488 138,656 (839,379) 104,421,445
Net income................... -- -- -- 8,510,904 -- 8,510,904
Cancellation of common
stock........................ (12,000) (159,000) -- -- -- (159,000)
Issuance of common stock for
stock purchase plan......... 25,539 191,543 -- -- -- 191,543
Exercise of stock options
including $193,260 tax
benefit of stock options
exercised 125,912 886,789 -- -- -- 886,789
Expiration of redeemable
common stock................ 6,000 23,500 -- -- -- 23,500
Amortization of unearned
stock grant compensation.... -- -- -- -- 222,673 222,673
Reclassification of unearned
stock grant compensation to
intangibles.................. -- -- -- -- 598,608 598,608
---------- ------------ ---------- ------------ ------------ -----------
December 31, 1994............ 18,898,546 $101,840,512 4,224,488 8,649,560 (18,098) 114,696,462
---------- ------------ ---------- ------------ ------------ -----------
---------- ------------ ---------- ------------ ------------ -----------
</TABLE>
See accompanying notes to consolidated financial statements.
III-4
<PAGE>
REN CORPORATION--USA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
<TABLE>
<CAPTION>
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss).................................. $ 8,510,904 (3,758,483) 5,354,789
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization expense............ 10,878,728 9,880,123 7,003,445
Amortization of unearned stock grant
compensation......................................... 222,673 330,152 350,680
Writeoff of costs of suspended financings........ -- -- 170,207
Stock based compensation......................... -- 4,224,488 --
Provision to carry equipment at estimated fair
value................................................ -- 800,000 --
Loss on asset disposals.......................... 119,376 600,000 276,123
Equity in loss of investee....................... 270,000 323,000 --
Writeoff of organization and development cost.... -- 968,000 122,889
Deferred income taxes............................ 1,999,062 (1,770,552) 338,896
Effect on cash of change in operating assets and
liabilities, net of effects from acquisitions:
Accounts receivable and estimated third party
settlements.......................................... (1,104,513) (582,710) (8,845,431)
Inventory........................................ (698,965) (70,143) (783,912)
Income taxes receivable.......................... 1,887,716 (1,887,716) --
Prepaid expenses and other current assets........ 1,546,691 (1,785,953) 409,181
Notes receivable and other assets................ 189,929 (1,608,916) (664,525)
Accounts payable................................. 3,320,644 (2,209,117) 1,242,130
Accrued payroll expenses and income taxes........ 2,196,676 (1,391,397) (3,768,953)
Other, net....................................... -- (5,326) 28,101)
------------ ----------- -----------
Net cash provided by operating activities...... 29,338,921 2,055,450 1,177,418
------------ ----------- -----------
Cash flows from investing activities:
Proceeds from sale of short-term investments....... -- -- 90,123,421
Purchase of short-term investments................. -- -- (39,833,929)
Purchases of property, plant and equipment......... (19,634,675) (14,573,757) (11,830,675)
Acquisitions, net of cash acquired................. -- (1,850,000) (30,775,000)
Intangible assets acquired......................... (1,272,440) (6,763,175) (3,773,587)
Net book value of assets sold...................... 2,854,247 -- 125,000
------------ ----------- -----------
Net cash provided by (used in) investing
activities........................................... (18,052,868) (23,186,932) 4,035,230
------------ ----------- -----------
Cash flows from financing activities
Repayment of repurchase agreement.................. -- -- (90,123,421)
Proceeds from repurchase agreement................. -- -- 39,833,929
Proceeds from issuance of long-term debt........... 34,882,660 16,675,000 34,025,000
Principal payments on long-term debt and capital
lease obligations................................ (45,598,660) (6,280,019) (39,772,021)
Issuance of note receivable........................ (1,500,000) -- --
Repayment of notes payable......................... -- (7,025,000) (142,892)
Net proceeds from issuance of common stock......... 191,543 -- 63,371,992
Proceeds from common stock options and warrants
exercised............................................ 886,790 2,794,770 361,988
Redemption of redeemable common stock.............. -- -- (195,755)
Redemption of common stock......................... (159,000) -- (850,000)
------------ ----------- -----------
Net cash provided by (used in) financing
activities........................................... (11,296,667) 6,164,751 6,508,820
------------ ----------- -----------
Net increase (decrease) in cash and cash
equivalents.......................................... (10,614) (14,966,731) 11,721,468
Cash and cash equivalents at beginning of year....... 654,845 15,621,576 3,900,108
------------ ----------- -----------
Cash and cash equivalents at end of year............. $ 644,231 654,845 15,621,576
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
III-5
<PAGE>
REN CORPORATION--USA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993, AND 1992
Supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------------
1994 1993 1992
---------- --------- ---------
<S> <C> <C> <C>
Cash paid during the period for:
Interest................................................ $ 748,431 569,453 2,752,081
Income taxes............................................ $1,840,800 1,805,934 3,005,132
</TABLE>
Supplemental schedule of noncash investing and financing activities:
During the year ended December 31, 1993, the Company acquired certain
assets, principally goodwill and agreements not to compete, of North County
Dialysis Inc. and West Coast Medical Specialties for an aggregate purchase price
of $1,850,000. During the year ended December 31, 1992, the Company acquired
certain assets, principally goodwill and equipment of the Institute for
Laboratory Medicine, Inc (ILM), Southwest Kidney Institute, Inc. (SKI) Orlando
Dialysis, Inc. (ODI), and West Orange Dialysis, Inc. (WODI) for an aggregate
puchase price of $24,775,000 plus the assumption of certain specified
liabilities. The Company also purchased, during 1992, certain assets of a
Memphis hospital dialysis clinic for total cash consideration of $6,000,000. In
connection with these acquisitions, the following liabilities were assumed:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------------------------
1994 1993 1992
------- ---------- -----------
<S> <C> <C> <C>
Fair market value of assets acquired...................... $ -- 1,850,000 35,249,444
Issuance of notes......................................... -- (175,000) (7,025,000)
Cash paid................................................. -- (1,675,000) (23,750,000)
------- ---------- -----------
Liabilities assumed..................................... $ -- -- 4,474,444
------- ---------- -----------
------- ---------- -----------
</TABLE>
During 1994, redemption rights on 6,000 shares of common stock for $23,500
expired.
During 1994, common stock was increased by $193,260 for the estimated tax
benefit of stock options exercised.
During 1994, unearned stock grant compensation was decreased by $598,608
related to an agreement with one of the facility medical directors which was
reclassified to intangibles.
During 1993, in conjunction with severance agreements with former officers
of the Company, additional paid-in capital of $4,224,488 was recorded on the
books of the Corporation. This amount represents the excess paid over market
value of the Company's common shares held by former officers. These shares were
purchased by the Company's majority shareholder. No Company funds were used in
the purchase.
During 1993, pursuant to the provisions of certain Convertible Promissory
Notes, $2,120,615 of long term debt was converted to shareholders' equity
through the issuance of 249,484 shares of common stock at $8.50 per share.
During 1992, pursuant to the provisions of a Convertible Promissory Note,
$700,000 of long-term debt was converted to shareholders' equity through the
issuance of 82,352 shares of common stock at $8.50 per share.
During 1993, redemption rights on 187,000 shares of common stock for
$1,442,000 expired.
During 1992, the Company issued 20,000 shares of common stock with a market
value of $255,000 pursuant to an agreement regarding dialysis services with a
university medical school.
During 1992 the Company issued 16,043 shares of common stock with a market
value of $150,000 pursuant to non-compete agreements with medical directors.
During 1992 the Company redeemed 15,598 shares of redeemable common stock at
a redemption price of $195,755.
III-6
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
REN Corporation-USA (the Company) was organized in 1987 to operate kidney
dialysis clinics and provide related medical services. The Company also operates
a clinical testing laboratory.
CONSOLIDATION POLICY
The accompanying consolidated financial statements include the accounts of
the Company and its subsidiaries. All significant intercompany transactions have
been eliminated. The Company's minority ownership interest in two entities is
insignificant in relation to the consolidated financial statements. The
Company's investment in one center, in which the Company owns more than 20%, but
less than 50%, is accounted for by the equity method.
REVENUE
During 1994, 1993 and 1992, the Company received approximately 72%, 66%, and
75%, respectively, of its dialysis revenue from Medicare and Medicaid
reimbursement programs. The Company received approximately 88%, 83%, and 83% of
its laboratory revenue from Medicare and Medicaid during 1994, 1993 and 1992,
respectively. The remaining balance of 1994, 1993 and 1992 revenue was from
insurance, private and other third party payors. The Medicare and Medicaid
programs reimburse the Company at amounts different from the Company's
established rates. Contractual adjustments under these programs represent the
difference between the amounts billed for these services and the amounts allowed
by third-party payors. A summary of the basis for reimbursement with these
payors follows:
Medicare
The Company is paid by the Medicare program on a prospective payment system
for dialysis services. Each facility receives a composite rate that is adjusted
to account for geographic differences in the cost of labor. The prospectively
determined composite rates are not subject to retroactive adjustments. The
Company is paid for its laboratory services based on a fee schedule.
Medicaid
Medicaid is a state administered program; therefore, reimbursement rates
vary between states. The programs administered by Alabama, Georgia, Kentucky,
Missouri, North Carolina, Oklahoma, Texas and Virginia reimburse the Company for
dialysis services based on prospective payment rates. The Tennessee Medicaid
program reimburses the Company at tentative reimbursement rates. Final
reimbursement rates for Tennessee are determined after submission of annual cost
reports by the Company. Medicaid reimburses the Company for laboratory services
based on a fee schedule. In Arizona, the Company receives reimbursement from the
Arizona Health Care Cost Containment System (AHCCCS).
The Company does not believe that there are any significant credit risks
associated with receivables from the Medicare and Medicaid programs. The
allowance for uncollectibles and contractual adjustments consists of
management's estimate of amounts that may prove uncollectible as a result of
contractual adjustments arising from established rates of reimbursement set by
Medicare, Medicaid and other third-party payors and uncollectible receivables.
Provisions for contractual allowances are recorded as a reduction of revenue
while bad debts are reported separately.
III-7
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, cash on deposit at banks and
investments which mature within seven days from the date of purchase. The
carrying amount reflected on the balance sheet at December 31, 1994 and 1993,
respectively, approximates fair value.
INVENTORIES
Inventories of supplies are stated at the lower of cost or market, with cost
being determined on a first-in, first-out basis.
PROPERTY, PLANT AND EQUIPMENT
Property, plant, and equipment are reported at cost or estimated fair value
when acquired as part of a business combination and include improvements that
significantly add to productive capacities or extend useful lives.
Property, plant, and equipment are depreciated by the straight-line method
over their estimated useful lives. The general range of useful lives is fifteen
to thirty years for buildings and leasehold improvements (limited to the term of
the lease) and five to seven years for other plant and equipment. Interest
expense incurred in connection with the construction of dialysis centers is
capitalized as part of the building until the center is operational, at which
time depreciation begins using the straight line method over the estimated
useful life of the building.
INTANGIBLE ASSETS
Acquisition related intangible assets arose from acquisitions by the
Company. The Company has adopted the following useful lives and methods to
amortize acquisition related intangibles: goodwill--twenty-five years on a
straight-line basis; dialysis center patient lists--three to four years on a
straight-line basis; laboratory customer lists--twenty-seven years on an
accelerated method; and covenants not to compete--over the life of the agreement
on a straight-line basis.
Organization and development costs represent direct expenditures for legal,
market research, marketing to prospective medical directors, licensing and
pre-opening costs (training, hiring, etc.) associated with new dialysis centers
and laboratories. If efforts to establish a new center or laboratory are
abandoned, the related costs are charged to operations. When a new center or
laboratory is opened, the related organization and development costs are
amortized on a straight-line basis over five years.
Software costs are amortized by the straight-line method over five years.
The carrying value of goodwill (excess of purchase price over net assets
acquired) is reviewed if the facts and circumstances suggest that it may be
impaired. If this review indicates that goodwill will not be recoverable, as
determined based on the undiscounted cash flows of the entity acquired over the
remaining amortization period, the Company's carrying value of goodwill is
reduced by the estimated shortfall of cash flows.
INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards (SFAS) No. 109, Accounting for Income Taxes. Under the
asset and liability method of SFAS No. 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are
III-8
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under SFAS No. 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the
enactment date.
ESTIMATED MALPRACTICE COSTS
It is the Company's policy that provision for estimated malpractice costs be
made based upon the Company's experience. Provision for such malpractice claims
includes estimates of the ultimate costs for both reported claims and claims
incurred but not reported. Professional liability insurance coverage is
maintained to hedge against the risk of significant losses.
EARNINGS PER SHARE
Earnings per share has been computed by dividing net income (loss) after
adjustment for the tax-effected interest expense related to convertible
promissory notes by the weighted average number of common shares and common
share equivalents outstanding during the year.
Common share equivalents included in determining earnings per share include
shares issuable upon assumed exercise of warrants, stock options issued to
employees, medical directors and members of the Board of Directors (note 8),
common stock redeemable at the option of the shareholder (note 7), and shares
issuable upon the conversion of certain promissory notes.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1993 and 1992 consolidated
financial statements to conform to current year presentation.
(2) BUSINESS COMBINATIONS
1993 ACQUISITIONS
On May 31, 1993, the Company purchased certain assets, principally goodwill
and agreements not to compete, of North County Dialysis Center, Inc. for
$1,500,000. North County Dialysis Center, Inc. operated a dialysis center in
Escondido, California.
On June 4, 1993, the Company purchased certain assets, primarily agreements
not to compete, of West Coast Medical Specialties for $350,000. West Coast
Medical Specialties was a provider of acute services for seven hospitals in
Southern California.
The following pro forma summary financial information has been prepared as
though the 1993 acquisitions discussed above had occurred at the beginning of
1992. This financial information is not necessarily indicative of the actual
results that would have occurred had the purchases been made at the beginning of
the year.
III-9
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(2) BUSINESS COMBINATIONS--(CONTINUED)
UNAUDITED PRO FORMA FINANCIAL DATA
YEAR ENDED DECEMBER 31,
--------------------------
1993 1992
------------ ----------
Total revenues....................... $107,241,000 84,039,000
Operating profit..................... 28,953,000 29,060,000
Income (loss) before income tax
expense.............................. (5,797,000) 8,707,000
Net income (loss).................... (3,644,000) 5,601,000
Earnings (loss) per share............ (0.19) .39
Weighted average shares.............. 18,777,322 14,472,227
1992 ACQUISITIONS
On January 2, 1992, the Company acquired certain assets, principally
goodwill and equipment, of the Institute for Laboratory Medicine, Inc. (ILM) for
$6,000,000. In addition, the Company assumed certain specified liabilities,
principally consisting of existing employment arrangements and lease agreements,
in connection with the purchase which approximated $3,073,000. ILM operated a
general reference medical laboratory in Florida with branch offices in eight
separate locations throughout the State.
On April 29, 1992, the Company purchased substantially all of the operating
assets of Southwest Kidney Institute, Inc. (SKI) for $11,500,000 in cash and
assumed liabilities of approximately $520,000 for total consideration of
$12,020,000. SKI operated four dialysis centers in and around Tucson, Arizona.
On July 31, 1992, the Company purchased certain assets of a Memphis hospital
dialysis clinic for cash consideration of $6,000,000.
On December 31, 1992, the Company purchased substantially all of the
operating assets of Orlando Dialysis, Inc. (ODI) and West Orange Dialysis, Inc.
(WODI) for $250,000 in cash and $7,025,000 in promissory notes. The notes were
repaid in January 1993. In addition, the Company assumed certain specified
liabilities consisting of bank notes and accounts payable in connection with the
purchase which approximated $900,000. Prior to the purchase, the Company managed
both dialysis clinics.
The above acquisitions were accounted for as purchase transactions with the
purchase price being allocated to each asset and liability based on respective
estimated fair values at the date of acquisition. The excess of the purchase
price over net assets or goodwill acquired in 1993 and 1992 was $1,400,000 and
$26,328,000, respectively. The goodwill is included in intangible assets and is
being amortized over twenty-five years on a straight-line basis.
III-10
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(3) PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment and related accumulated
depreciation at December 31 is as follows:
1994 1993
----------- ----------
Land.................................. $ 4,048,874 2,593,900
Buildings............................. 12,418,649 8,041,989
Leasehold improvements................ 15,013,442 11,863,402
Equipment............................. 36,422,583 29,964,821
Furniture and fixtures................ 3,052,369 2,597,248
Transportation equipment.............. 122,399 265,674
----------- ----------
71,078,316 55,327,034
Less accumulated depreciation..... 19,162,436 14,128,537
----------- ----------
Total property, plant & equipment,
net................................... $51,915,880 41,198,497
----------- ----------
----------- ----------
Depreciation expense for the years ended December 31, 1994, 1993, and 1992,
was $6,088,825, $5,141,838, and $3,591,138, respectively.
(4) INTANGIBLE ASSETS
Intangible assets consists of goodwill and other identifiable intangibles. A
summary of intangible assets and related accumulated amortization at December 31
is as follows:
1994 1993
----------- ----------
Acquisition related intangibles:
Goodwill............................ $32,227,056 31,912,700
Patient and customer lists.......... 8,330,827 8,280,837
Covenants not to compete............ 15,305,180 14,706,573
Other............................... 40,589 268,579
----------- ----------
55,903,652 55,168,689
Less accumulated amortization....... 12,357,227 9,430,882
----------- ----------
43,546,425 45,737,807
----------- ----------
----------- ----------
Organization and development costs:
Operating facilities................ 5,083,525 4,709,415
Less accumulated amortization....... 3,462,185 2,535,553
----------- ----------
1,612,340 2,173,862
Facilities under development........ 313,185 141,586
----------- ----------
1,934,525 2,315,448
----------- ----------
Software costs........................ 3,346,034 3,126,169
Less accumulated amortization....... 1,367,345 655,774
----------- ----------
1,978,689 2,470,395
----------- ----------
Total intangibles, net................ $47,459,639 50,523,650
----------- ----------
----------- ----------
III-11
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(4) INTANGIBLE ASSETS--(CONTINUED)
Acquisition related intangible assets arose from the acquisitions referred
to in note 2. Amortization expense for acquisition related intangibles for the
years ended December 31, 1994, 1993, and 1992, amounted to $2,906,265,
$3,085,940, and $2,484,780, respectively.
Amortization expense for organization and development costs for the years
ended December 31, 1994, 1993 and 1992, amounted to $1,058,662, $989,741, and
$777,143, respectively. Additional organization and development costs charged to
operations during 1993 and 1992 relating to abandoned dialysis or laboratory
facilities amounted to $968,000, and $122,889, respectively.
Amortization expense for software costs for the years ended December 31,
1994, 1993, and 1992 was $711,571, $496,218 and $150,384, respectively.
(5) NOTES RECEIVABLE
Notes receivable at December 31 consist of the following:
1994 1993
---------- --------
Notes related to sale of laboratory
assets................................... $ 169,466 $340,228
Notes related to sale of Corp. office
bldg. ................................... 1,500,000 --
Other.................................. 125,326 233,921
---------- --------
$1,794,792 $574,149
---------- --------
---------- --------
(6) LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
Long-term debt and capital lease obligations at December 31 consist of the
following:
1994 1993
---------- ----------
Acquisition and project development
loan with bank....................... $ -- 10,500,000
Other.................................. -- 175,000
---------- ----------
-- 10,675,000
Capital lease obligations (note 10).... 429,672 470,672
---------- ----------
429,672 11,145,672
Less current maturities................ 87,308 441,593
---------- ----------
$ 342,364 10,704,079
---------- ----------
---------- ----------
The aggregate annual maturities of long-term debt and capital lease
obligations at December 31, 1994, are as follows:
YEAR ENDING
DECEMBER 31,
- -------------
1995......... $ 87,308
1996......... 101,565
1997......... 90,973
1998......... 90,896
1999......... 58,930
-----------
$ 429,672
-----------
III-12
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(6) LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS--(CONTINUED)
BANK CREDIT FACILITY
On May 4, 1993, the Company replaced its existing credit agreement with a
new agreement with a consortium of banks. Terms of the credit agreement provide
the Company with a six year reducing revolving credit facility in the amount of
$60,000,000. The revolving facility is available in full until August 30, 1995,
when the availability begins to reduce by $3,750,000 each quarter until fully
reduced on May 31, 1999. Borrowings under the facility will bear interest at
either the bank prime rate or, at the Company's option, at a LIBOR rate plus an
increment of 75 basis points to 125 basis points, depending on the ratio of debt
to equity in accordance with a predetermined schedule.
At December 31, 1994, there were no funds drawn under the credit facility.
The Company's borrowing rate at December 31, 1994 was 8.5%. The weighted average
interest rate for 1994 was 5.6%.
The Agreement is subject to numerous restrictive covenants, including the
payment of dividends, additional indebtedness, and the maintenance of various
financial ratios. Both the Term Loan and the Revolving Credit Note are subject
to certain borrowing base limitations. At December 31, 1994, the Company had
waivers for or was in compliance with all loan covenants.
(7) REDEEMABLE COMMON STOCK
During January 1991, the Company entered into an agreement with a university
renal division which requires, for a period of five years, the renal division to
provide medical director services for one of the Company's dialysis facilities.
As partial payment for this arrangement, the Company issued to the university
30,000 shares of the Company's redeemable common stock at a value of $3.75 per
share and $20,000. Shares issued in connection with this agreement are
redeemable at the option of the holder ratably over a five-year period at $3.50
per share. During 1994, redemption rights on 6,000 shares for $23,500 expired.
At December 31, 1994, the redemption privilege remained for 12,000 of these
shares.
(8) SHAREHOLDERS' EQUITY
Common Stock
Pursuant to compensation agreements, the Company issued an aggregate of
36,043 and 55,000 shares of common stock to five of the Company's medical
directors for the years ended December 31, 1992 and 1991, respectively. Forty
thousand of the shares issued in 1991 were issued in connection with
compensation arrangements for services to be performed for varying periods
through 1994. Shares issued under such agreements are to vest ratably over the
period services are to be performed. The market value of shares awarded has been
recorded as unearned stock grant compensation and is shown as a separate
component of shareholders' equity. The unearned compensation is being charged to
operations over the period services are to be performed. If the agreements are
terminated any unvested shares will be forfeited. At December 31, 1994, an
unamortized balance of $598,608 was transferred to intangibles, as one of the
agreements was deemed to be an agreement not to compete.
On March 17, 1992, pursuant to the provisions of a Stock Purchase Agreement,
the Company completed the sale of 1,170,732 shares of Common Stock to COBE
Laboratories, Inc. (COBE), at a price of $10.25 per share or an aggregate
purchase price of $12,000,003. As a result of this sale, together with shares
acquired during 1991, COBE increased its ownership to approximately 30% of the
Company's outstanding voting stock.
On October 1, 1992, the Company completed the sale of 5,500,000 shares of
the Company's common stock to COBE at a price of $9.75 per share, pursuant to
the Stock Purchase Agreement, dated July 2, 1992, between the
III-13
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(8) SHAREHOLDERS' EQUITY--(CONTINUED)
Company and COBE. Net proceeds from the sale totaling $51,371,989 were credited
to common stock. As a result of the sale, COBE owned an aggregate of 9,342,921
shares of Common Stock, representing beneficial ownership of 51.1% of the Common
Stock of the Company.
During July 1993, COBE purchased an additional 693,300 shares of the
Company's common stock from the Company's former Chairman, President and Chief
Executive Officer and the former Senior Vice President of Administration and
Reimbursement. In connection with this purchase of common stock by COBE, the
Company recognized as additional paid-in capital and as compensation expense,
$4,224,488, representing the difference paid by COBE and the market value of the
stock purchased by COBE from the Company's former Chairman, President and Chief
Executive Officer and the Company's former Senior Vice President of
Administration and Reimbursement, coincident to their resignations. With this
purchase, COBE increased its ownership of common shares to 53.5%.
The Company has granted to COBE an option to purchase sufficient shares of
the Company's Common Stock as may be necessary to prevent dilution of its
percentage ownership of outstanding Common Stock of the Company and voting power
below 50.1% in the event the Company proposes to issue additional voting
securities. Among other things, the Stock Purchase Agreement provides that, in
the event the Company proposes to issue any voting securities, COBE has the
option to purchase any shares necessary to prevent dilution of its equity and
voting rights. The agreement further provides that the Company and COBE enter
into a six-year supply agreement pursuant to which, subject to certain
restrictions, the Company will purchase 75% of its requirements for renal
dialysis machines and 100% of the associated blood lines from COBE on terms no
less favorable than COBE offers to third parties.
During 1992, 67,700 previously issued warrants were exercised at $3.00 per
share.
During 1993, redemption rights totaling $1,442,000 on 187,000 shares expired
without exercise. Common stock was increased and redeemable common stock was
decreased as a result.
During 1994, the Board of Directors approved an employee stock purchase plan
(the "Plan"). Under the Plan all employees who work at least 20 hours per week
and with at least one year of service may be granted the opportunity to purchase
common stock at 85% of market value on the first or last business day of the six
month payment period, whichever is lower. There were 25,539 shares issued at a
price of $7.50 per share during the year ended December 31, 1994. Common shares
reserved for future employee purchases were 374,461 shares at December 31, 1994.
There have been no charges to income in connection with the Plan other than
incidental expenses related to the issuance of the shares.
During 1994, 12,000 shares of stock previously owned by a medical director
were canceled for payment of a $159,000 promissory note executed between the
medical director and the Company.
During 1994, 25,000 previously issued warrants were exercised at $3.50 per
share.
The Board of Directors approved a stock option plan in December 1988 for
500,000 shares of common stock to be granted to key employees and directors.
During 1992, an additional 250,000 shares were approved by the Company's
shareholders for issuance under the Company's stock option plan. In accordance
with the terms of agreements made under the stock option plan, one-quarter of
the total shares covered by the agreements shall become exercisable during each
twelve month period following the anniversary of granting and shall accumulate
if not exercised in that year. The term of each option is ten years.
III-14
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(8) SHAREHOLDERS' EQUITY--(CONTINUED)
A summary of the option transactions is:
<TABLE>
<CAPTION>
OPTION ACTIVITY PRICE RANGE
--------------- ---------------
<S> <C> <C>
Options Outstanding, December 31, 1991........................ 275,525 $3.00 to $ 8.81
Options granted............................................. 378,500 $8.13 to $15.00
Less options exercised...................................... 35,350 $3.00 to $ 6.50
Less options canceled....................................... 5,050
-------
Options outstanding, December 31, 1992........................ 613,625 $3.00 to $15.00
Options granted............................................. 235,000 $7.94 to $13.56
Less options exercised...................................... 251,000 $3.00 to $13.69
Less options canceled....................................... 17,900
-------
Options outstanding, December 31, 1993........................ 579,725 $3.00 to $15.00
Options granted............................................... 97,500 $8.75 to $20.00
Less options exercised........................................ 96,912 $3.00 to $13.69
Less options canceled......................................... 64,088
-------
Options outstanding, December 31, 1994........................ 516,225 $3.00 to $20.00
-------
-------
</TABLE>
Options exercisable at December 31, 1994, 1993 and 1992, are 170,613,
164,275 and 91,350 shares, respectively.
In January 1992, the Board of Directors approved the issuance of a stock
warrant to a former employee of the Corporation in recognition of services
rendered. The warrant, issued on January 30, 1992 is for 4,000 shares of common
stock, is exercisable upon issuance at $9.97 per share and expires January 30,
1997. The Board of Directors approved the issuance of a stock warrant to an
independent contractor of the Corporation in recognition of services rendered.
The warrant, issued October 14, 1992, is for 20,000 shares of common stock, is
exercisable upon issuance at $11.75 per share and expires October 13, 2002.
(9) INCOME TAXES
Components of federal and state income tax expense (benefit) from operations
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1994 1993 1992
---------- ---------- ---------
<S> <C> <C> <C>
Current provision:
Federal................................................. $3,187,392 (907,243) 2,000,845
State................................................... 383,546 34,820 601,883
---------- ---------- ---------
3,570,938 (872,423) 2.602,728
---------- ---------- ---------
Deferred provision:
Federal................................................. 1,412,429 (1,278,755) 377,990
State................................................... 586,633 (78,944) (39,094)
---------- ---------- ---------
1,999,062 (1,357,699) 338,896
---------- ---------- ---------
$5,570,000 (2,230,122) 2,941,624
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
III-15
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(9) INCOME TAXES--(CONTINUED)
Actual income tax expense (benefit) differs from the "expected" income tax
expense (benefit) (computed by applying the federal corporate rate of 34%) as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
---------- ---------- ---------
<S> <C> <C> <C>
Computed expected Federal income tax expense (benefit).... $4,787,507 (2,036,119) 2,820,780
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal benefit.............. 640,318 (29,122) 371,440
Alternative minimum tax utilized........................ (499,100)
Goodwill amortization................................... 72,754 (167,573) 245,515
Other................................................... 69,421 2,692 2,989
---------- ---------- ---------
Provision for income taxes................................ $5,570,000 (2,230,122) 2,941,624
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1994 and
1993 are as follows:
<TABLE>
<CAPTION>
1994 1993
----------- ----------
<S> <C> <C>
Deferred tax assets:
Accounts receivable. principally due to allowance for doubtful
accounts............................................................ $ 1,607,243 637,124
Compensation obligations, principally due to accrual for financial
reporting purposes.............................................. 431,391 482,623
Self-Insurance claim reserve principally due to accrual for
financial reporting purposes.................................... 520,910 301,967
Financial statement accrued expenses not deductible for tax
purposes............................................................ 519,759 576,847
State net operating loss carryforwards............................ 410,190 460,859
Assets under lease principally due to capital lease obligations... 27,699 188,158
Alternative minimum tax credit.................................... -- 373,839
Federal net operating loss carryforward........................... -- 1,801,928
Accumulated loss of foreign operations............................ 234,532 --
Other............................................................. 19,056 48,621
----------- ----------
Total gross deferred tax assets............................... 3,770,780 4,871,966
Less valuation allowance...................................... (410,190) (431,326)
----------- ----------
Net deferred tax assets....................................... 3,360,590 4,440,640
----------- ----------
Deferred tax liabilities:
Property, plant and equipment and intangible assets, principally
due to differences in depreciation and amortization............. (4,340,769) (3,521,366)
Installment sale, principally due to accrual for financial
reporting purposes.................................................. (41,604) (70,701)
Other............................................................. (199,929) (71,223)
----------- ----------
Total gross deferred tax liabilities.......................... (4,582,302) (3,663,290)
----------- ----------
Net deferred tax asset (liability)............................ $(1,221,712) 777,350
----------- ----------
----------- ----------
</TABLE>
The valuation allowance relates to state tax net operating loss
carryforwards of certain of the Company's subsidiaries. The net change in the
total valuation allowance for the year ended December 31, 1994, was a decrease
of $21,136. The Company believes that more likely than not, the deferred tax
assets, net of the valuation allowance, will be realized.
III-16
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(9) INCOME TAXES--(CONTINUED)
At December 31, 1994, the Company had net operating loss carryforwards for
state income tax purposes of approximately $5,000,000, which are available to
offset future taxable income in certain state jurisdictions through 2008.
(10) CAPITALIZED LEASES
The Company has entered into various equipment lease arrangements that have
been recorded as capital leases as follows:
DECEMBER 31,
---------------------
1994 1993
-------- ---------
Cost of equipment..................................... $763,763 1,303,121
Less accumulated depreciation......................... 143,162 824,566
-------- ---------
$620,601 478,555
-------- ---------
-------- ---------
Interest rates on capital lease obligations range from 10.75% to 13.48%. The
assets are being depreciated on a straight-line basis over their estimated
useful lives not to exceed the related lease term, and depreciation expense for
the years ended December 31, 1994, 1993 and 1992, was $88,362, $265,099, and
$274,950, respectively.
Future minimum annual lease payments are as follows:
YEAR ENDING
DECEMBER 31,
- -----------------------------------------------------------------
1995............................................................. $137,855
1996............................................................. 140,786
1997............................................................. 117,337
1998............................................................. 105,612
1999............................................................. 61,607
--------
563,197
Less amounts representing interest............................... (133,525)
--------
Present value of minimum lease payments.......................... $429,672
--------
--------
The Company leases certain dialysis equipment from a medical director. The
lease and related liability were capitalized at the estimated fair market value
of the underlying equipment of $172,510. Lease payments in excess of fair market
value rental of $2,931 per month are charged to lease expense as paid. The
Company paid an aggregate of $52,412 under this agreement during each of the
years ended December 31, 1994, 1993, and 1992. The lease terminates in 1997.
(11) OPERATING LEASES
Leases from Nonrelated Parties
The Company leases real estate under noncancelable operating leases expiring
in various years through 2017. Certain operating leases provide for renewal
options over various periods at the fair rental value at the time of renewal. In
the normal course of business, operating leases are generally renewed or
replaced by other leases. In addition, the Company leases personal property
under operating leases expiring in 1996.
III-17
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(11) OPERATING LEASES--(CONTINUED)
Leases from Related Parties
The Company leases certain real estate under noncancelable operating leases
from related parties. Such operating leases provide for renewal options over
various periods at the fair rental value at the time of renewal. Rental expense
for the years ended December 31, 1994, 1993, and 1992, under related party
operating leases was $0, $94,740, and $255,878, respectively.
Future Minimum Rental Payments
Future minimum rental payments under noncancelable operating leases for each
of the next five years and thereafter in the aggregate are:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- -------------------------------------------------------------------------------
<S> <C>
1995........................................................................... $ 4,226,946
1996........................................................................... 3,236,966
1997........................................................................... 2,718,424
1998........................................................................... 2,476,507
1999........................................................................... 2,309,672
Thereafter..................................................................... 7,502,377
-----------
$22,470,892
-----------
-----------
</TABLE>
Rental expense for the years ended December 31, 1994, 1993, and 1992, under
all operating leases amounted to $4,506,117, $4,505,321, and $3,404,104,
respectively.
(12) RELATED PARTY TRANSACTIONS
On August 31, 1992, the Company sold substantially all of the operational
assets of its drug testing laboratory to a shareholder and former director of
the Company for $125,000 cash and a note for $125,000 at bank prime plus 1%.
Under the terms of the note, principal payments of $50,000 and $25,000 were paid
on January 1, 1994, and 1993, respectively, and the remaining principal of
$50,000 is due on January 1, 1995. A loss on the sale of $276,123 was recognized
on the transaction in 1992.
In 1991, the Company entered into a six-year supply agreement with COBE,
pursuant to which, subject to certain restrictions, the Company will purchase
75% of its requirements for renal dialysis machines and 100% of the associated
blood line supplies on terms no less favorable than are offered to third
parties. During 1994, 1993 and 1992, the Company incurred $7,845,189,
$6,801,258, and $3,071,739, respectively, for equipment and supplies to COBE who
owns 53.5% of the Company's outstanding voting stock (see note 8) and who
appoints five of the members to the Board of Directors. In addition, during
1994, 1993 and 1992 the Company incurred $161,809, $86,877, and $114,560,
respectively, for director fees and other expense reimbursements to COBE.
Included in accounts payable and accrued expenses at December 31, 1994 is
$743,874 payable to COBE.
During 1994, 1993 and 1992, the Company incurred $631,943, $26,502, and
$176,875, respectively, for travel expense arranged through an agency in which a
partner is the spouse of a director of the Company.
III-18
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(13) SAVINGS AND PROFIT SHARING PLAN
REN Corporation-USA Savings and Profit Sharing Plan (the "401K Plan"),
amended and restated effective July 1, 1994, covers all employees over 21 years
of age with a minimum of 1,000 hours of compensated service in the 12 month
period preceding either of the 401K Plan entrance dates (January 1 or July 1).
The 401K Plan allows participants to contribute before tax earnings up to limits
established by the IRS ($9,240 for 1994). The 401K Plan earnings and gains
accumulate tax deferred as long as the employee remains a participant.
All participant contributions are fully vested to each individuals account.
All employer contributions (matching deposits and discretionary contributions)
also fully vest when granted.
Employer contributions are discretionary. The Company will determine
annually the amount of matching contributions for the following plan year and
this amount will be allocated based on participation. In addition, the Company
may decide to make further discretionary contributions. Employer discretionary
contributions may be made for all eligible employees based on compensation.
For the years ending December 31, 1994, 1993, and 1992, contributions
expense was $197,800, $0, and $125,000, receptively.
(14) QUARTERLY OPERATING RESULTS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations
for the years ended December 31 (in thousands, except per share data):
<TABLE>
<CAPTION>
1ST 2ND 3RD 4TH
1994 QUARTER QUARTER QUARTER QUARTER
- ---------------------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue................................................... $30,287 31,638 34,123 35,767
Gross operating profit.................................... 8,586 9,150 10,955 11,683
Income from operations.................................... 2,251 3,288 4,665 4,717
Income before income taxes................................ 2,062 3,091 4,416 4,512
Net income................................................ 1,238 1,885 2,666 2,722
Net income per common and common equivalent share......... $ 0.07 0.10 0.14 0.14
</TABLE>
<TABLE>
<CAPTION>
1TH 2ND 3RD 4TH
1993 QUARTER QUARTER QUARTER QUARTER
- --------------------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue.................................................. $25,475 26,296 23,229 30, 188
Gross operating profit................................... 8,464 8,378 2,881 8,410
Income (loss) from operations............................ 2,818 (4,683) (5,545) 1,971
Income (loss) before income taxes........................ 2,818 (4,797) (5,785) 1,775
Net income (loss)........................................ 1,631 (3,002) (3,435) 1,048
Net income per common and common equivalent share........ $ 0.09 (0.16) (0.19) 0.06
</TABLE>
(15) COMMITMENTS AND CONTINGENCIES
Final determination of amounts earned under prospective payment and
cost-reimbursement activities is subject to review by appropriate governmental
authorities or their agents. In the opinion of management, adequate provision
has been made for any adjustments that may result from such reviews.
III-19
<PAGE>
REN CORPORATION--USA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1994
(15) COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Company has been named a defendant in various legal actions arising from
its normal business activities. In the opinion of management, any liability that
may arise from such actions will not have a material adverse effect on the
Company's financial position or results of operations.
The Company has negotiated an agreement with an unrelated vendor to provide
supplies at a specified cost for a period of five years. At December 31, 1994,
the Company's commitment under the terms of this agreement amounts to
approximately $1,400,000.
HCFA has indicated the possibility of revisions to the Omnibus Budget
Reconciliation Act (OBRA) of 1993. The proposed revision provides that when a
Medicare entitlement based on age or disability occurs prior to Medicare
eligibility based on end-stage renal disease (ESRD) criteria, and the plan has
permissibly taken into account Medicare entitlement based on age or disability,
the Medicare Secondary Payor (MSP) statute as amended by OBRA 1993, would not
require a benefit coordination reversal. Based on written documentation from
Medicare entitlement, REN has required a benefit coordination reversal since
September 1993.
(16) SUBSEQUENT EVENTS
During January 1995, the Company acquired majority interest in Greater
Milwaukee Dialysis Center (GMDC), a Wisconsin general partnership, for
approximately $3,870,000 and the assumption of liabilities totaling
approximately $130,000. The partnership operates three outpatient hemodialysis
clinics and one training center for continuous ambulatory peritoneal dialysis.
The four clinics treat approximately 350 patients in the metropolitan area.
Simultaneously with the acquisition of GMDC, the Company purchased all of
the assets, rights, and contracts of the acute dialysis program operated by GMDC
for approximately $744,000.
During January 1995, the Company agreed to acquire the chronic and acute
dialysis programs operated by George Washington University for approximately
$5,000,000. The programs currently treat approximately 160 patients in the
Washington, D.C. area.
During January 1995, the Company sold its interest in a foreign entity
engaged in providing dialysis services, to Hospital Medica Sur for total
consideration of approximately $914,000. A loss on the sale of $100,000 has been
included in the Company's 1994 financial results.
III-20
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
REN Corporation -- USA
We have audited the consolidated financial statements of REN
Corporation -- USA and subsidiaries as of December 31, 1994, and for the year
then ended, and have issued our report thereon dated January 23, 1995 (included
elsewhere in this Annual Report on Form 10-K). Our audit also included the
financial statement schedule listed in Item 14(a) of this Annual Report on Form
10-K. This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audit. The schedule of REN
Corporation -- USA for the years ended December 31, 1993 and 1992, was audited
by other auditors whose report dated January 25, 1994, expressed an unqualified
opinion on that schedule.
In our opinion, the 1994 financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
ERNST & YOUNG LLP
Nashville, Tennessee
January 23, 1995
III-21
<PAGE>
REN CORPORATION--USA
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
----------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents......................................... $ 92 $ 644
Accounts receivable less allowance for uncollectibles and
contractual adjustments of $15,022 and $12,885 at June 30, 1995
and December 31, 1994, respectively............................. 20,488 22,252
Estimated third-party settlements, net............................ 431 60
Inventory......................................................... 3,922 3,382
Prepaid expense................................................... 1,622 974
Current deferred taxes, net....................................... 3,729 3,079
Other current assets.............................................. 222 1,385
----------- ------------
Total current assets.......................................... 30,506 31,776
Property, plant and equipment, net............................ 55,163 51,916
Intangible assets, net........................................ 56,448 47,460
Notes receivable.............................................. 32,667 31,795
Other assets.................................................. 5,703 1,368
----------- ------------
Total assets.................................................. $ 150,487 $134,315
----------- ------------
----------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank notes payable................................................ $ 875 $ --
Current maturities of long-term debt and capital lease
obligations......................................................... 92 87
Accounts payable.................................................. 8,722 6,541
Accrued expenses.................................................. 4,383 2,939
Accrued wages and benefits........................................ 3,842 3,751
Income taxes payable.............................................. 399 1,521
----------- ------------
Total current liabilities..................................... 18,313 14,839
Long-term debt and capital lease obligations, less current
maturities.......................................................... 5,394 342
Deferred taxes, net................................................. 4,974 4,301
Minority interest in consolidated subsidiaries...................... 623 89
----------- ------------
Total long-term liabilities................................... 10,991 4,732
Redeemable common stock; 6,000 and 12,000 shares issued and
outstanding at June 30, 1995 and December 31, 1994,
respectively........................................................ 24 47
Commitments and contingencies
Shareholders' equity:
Common stock; no par value, authorized 60,000,000 shares;
18,936,659 and 18,898,546 shares issued and outstanding at June
30, 1995 and December 31, 1994, respectively.................... 102,229 101,841
Additional paid-in capital........................................ 4,224 4,224
Retained earnings................................................. 14,706 8,650
Less unearned stock grant compensation............................ -- $ (18)
----------- ------------
Total shareholders' equity.................................... 121,159 114,697
----------- ------------
Total liabilities and shareholders' equity.................... $ 150,487 $134,315
----------- ------------
----------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
III-22
<PAGE>
REN CORPORATION--USA
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- ---------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Dialysis services...................... $ 38,714 $ 28,872 $ 73,793 $ 56,309
Laboratory services.................... 4,204 2,766 7,739 5,616
------------ ------------ ------------ ------------
42,918 31,638 81,532 61,925
------------ ------------ ------------ ------------
Direct operating expense:
Dialysis services...................... 28,783 21,027 54,437 41,289
Laboratory services.................... 1,318 1,461 2,802 2,901
------------ ------------ ------------ ------------
30,101 22,488 57,239 44,190
------------ ------------ ------------ ------------
Gross operating profit:
Dialysis services...................... 9,931 7,845 19,356 15,020
Laboratory services.................... 2,886 1,305 4,937 2,715
------------ ------------ ------------ ------------
12,817 9,150 24,293 17,735
Indirect operating expense:
Corporate office general,
administrative and operations
support.................................. 2,818 2,499 5,534 5,629
Depreciation and amortization.......... 3,207 2,675 6,069 5,269
Bad debt expense....................... 1,018 687 1,542 1,202
Loss of unconsolidated subsidiary...... 17 0 62 95
------------ ------------ ------------ ------------
Income from operations........... 5,757 3,289 11,086 5,540
Non-operating (income) expense:
Interest income........................ (141) (39) (229) (106)
Interest expense....................... 349 237 642 493
------------ ------------ ------------ ------------
Income before income taxes....... 5,549 3,091 10,673 5,153
Income tax expense....................... 2,274 1,206 4,375 2,030
Minority interest in income of
consolidated subsidiary, net of income
tax expense of $62 and $167 for the
quarter and six months ended June 30,
1995..................................... 91 -- 241 --
------------ ------------ ------------ ------------
Net income............................. $ 3,184 $ 1,885 $ 6,057 $ 3,123
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Net income per common share and comon
share equivalent......................... $ 0.17 $ 0.10 $ 0.32 $ 0.17
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
<CAPTION>
Weighted average common shares and common
share equivalents outstanding............ 19,027,576 18,886,187 19,021,789 18,868,932
</TABLE>
See accompanying notes to consolidated financial statements.
III-23
<PAGE>
REN CORPORATION--USA
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
COMMON ADDITIONAL UNEARNED
--------------------- PAID-IN RETAINED STOCK GRANT
SHARES AMOUNT CAPITAL EARNINGS COMPENSATION TOTAL
---------- -------- ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
December 31, 1994................. 18,898,546 $101,841 $4,224 $ 8,650 $ (18) $114,696
Net income........................ -- -- -- 6,057 -- 6,057
Issuance of common stock for
employee stock purchase plan.... 20,038 224 -- -- -- 224
Exercise of stock options......... 12,075 140 -- -- -- 140
Amortization of unearned stock
grant compensation.............. -- -- -- -- 18 18
Expiration of redeemable common
stock............................. 6,000 24 -- -- -- 24
---------- -------- ---------- -------- ------ --------
June 30, 1995..................... 18,936,659 $102,229 $4,224 $ 14,707 $-- $121,159
---------- -------- ---------- -------- ------ --------
---------- -------- ---------- -------- ------ --------
</TABLE>
See accompanying notes to consolidated financial statements.
III-24
<PAGE>
REN CORPORATION--USA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
1995 1994
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income............................................................ $ 6,057 $ 3,123
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization expense............................... 6,069 5,269
Amortization of unearned stock grant compensation................... 18 122
Deferred income taxes............................................... 23 --
Effect on cash of change in operating assets and liabilities, net of
effects from acquisitions:
Accounts receivable and estimated third party settlements........... 1,392 1,600
Inventory........................................................... (540) (621)
Income taxes receivable............................................. -- --
Prepaid expenses and other current assets........................... 515 3,508
Notes receivable and other assets................................... (5,207) 1
Accounts payable.................................................... 2,181 4,059
Accrued expenses and income taxes................................... 948 1,391
-------- --------
Net cash provided by operating activities....................... 11,456 18,452
-------- --------
Cash flows from investing activities:
Acquisitions, net of cash acquired.................................... (10,837) --
Purchase of property, plant and equipment............................. (6,334) (11,229)
Intangible assets acquired............................................ (1,136) (235)
Net book value of assets sold......................................... 2 --
-------- --------
Net cash used in investing activities........................... (18,305) (11,464)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt.............................. 44,100 4,000
Principal payments on long-term debt and capital lease obligations.... (38,168) (11,062)
Proceeds from common stock options and warrants exercised............. 365 506
Redemption of common stock............................................ -- (159)
-------- --------
Net cash provided by (used in) financing activities 6,297 (6,715)
-------- --------
Net increase (decrease) in cash and cash equivalents.................... (552) 273
Cash and cash equivalents at beginning of period........................ $ 644 $ 655
-------- --------
Cash and cash equivalents at end of period.............................. $ 92 $ 928
-------- --------
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements.
III-25
<PAGE>
REN CORPORATION--USA
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
--------------
1995 1994
------ ----
(IN THOUSANDS)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest................................................................... $ 530 $373
Income taxes............................................................... 5,310 1
</TABLE>
Supplemental schedule of noncash investing and financing activities:
During the six months ended June 30, 1995 the Company acquired certain
assets, principally goodwill and agreements not to compete, of two dialysis
clinics operated by The George Washington University, a 51% ownership in certain
assets, principally goodwill and equipment, of Greater Milwaukee Dialysis
Corporation, and a 53.3% ownership interest in certain assets, principally
goodwill and equipment of Rocky Mountain Kidney Center for an aggregate purchase
price of approximately $12 million.
During January of both 1995, and 1994, redemption rights on 6,000 shares of
common stock for $23,500 expired.
III-26
<PAGE>
REN CORPORATION--USA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying interim financial statements have been prepared in
conformity with generally accepted accouting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10.01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of Management, the interim consolidated financial
statements include all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the results of the interim periods. The
interim financial statements should be read in conjunction with the 1994 audited
consolidated financial statements and related notes. The results of operations
for the interim periods may not be indicative of the operating results for the
year ending December 31, 1995.
(2) INCOME TAXES
Actual income tax expense for the six months ended June 30, 1995, differs
from the "expected" income tax expense (computed by applying the federal
corporate rate of 35%) as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Computed expected federal income tax expense..................................... $3,736
Increase in income tax resulting from:
State income tax expense, net of federal benefit............................... 486
Other.......................................................................... 153
------
Income Tax Expense........................................................... $4,375
------
------
</TABLE>
(3) BANK CREDIT FACILITY
During 1993, the Company replaced its existing credit agreement with a new
agreement with a consortium of banks. Terms of the credit agreement provide the
Company with a six-year reducing revolving credit facility in the amount of $60
million. The revolving facility is available in full until August 30, 1995 when
the availability begins to reduce by $3.75 million each quarter until fully
reduced on May 31, 1999. Borrowings under the facility will bear interest at
either the bank prime rate or, at the Company's option, at a LIBOR rate plus an
increment of 75 basis points to 125 basis points depending on the ratio of debt
to equity in accordance with a predetermined schedule. At June 30, 1995, the
Company had waivers for or was in compliance with all loan covenants. The
Company had $4 million outstanding under the Credit Agreement at June 30, 1995.
(4) COMMITMENTS AND CONTIGENCIES
The Company has been named a defendant in various legal actions arising from
its normal business activites. In the opinion of management after consultation
with counsel, any liability that may arise from such actions will not have a
material adverse effect on the Company.
On April 24, 1995, the U.S. Health Care Financing Administration (HCFA)
advised Associate Regional Adminstrators for Medicare of a contemplated change
in the government's interpretation of the amendment to the Medicare Secondary
Payor (MSP) End Stage Rental Disease (ESRD) provision of the Social Security Act
contained in the Omnibus Budget Reconciliation Act of 1993 (OBRA 93). An
upcoming Program Instruction will officially advise Medicare Intermediaries that
prior guidance by HCFA was erroneous and direct the Intermediaries to apply the
reinterpretation of the Law retractively and prospective to all ESRD claims
after August 10, 1993.
The effect of this reinterpretation of the Law is to make Medicare the
primary payor in cases where a Medicare beneficiary is entitled to Medicare
benefits on the bases of either age or disability and ESRD and where the
entitlement other than ESRD precedes the ESRD diagnosis. According to previous
memorandum issued by
III-27
<PAGE>
REN CORPORATION--USA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(4) COMMITMENTS AND CONTIGENCIES--(CONTINUED)
Medicare Intermediaries, the MSP provisions would apply irrespective of whether
the ESRD diagnosis was before or after the Medicare entitlement other than ESRD.
Because commercial rates are normally in excess of the Medicare allowable
rates, the change in the application of the MSP provisions may result in a
reduction of dialysis revenue going forward for those patients whose Medicare
entitlement other than ESRD preceded their ESRD diagnosis.
Because the reinterpretation of the MSP provisions to OBRA 93 is retroactive
to August 10, 1993, the Company may be required to refund amount paid by
commercial payors and bill Medicare as the primary payor for patients whose
Medicare eligibility preceded their eligibility due to ESRD. It is not possible
to predict at this time the financial consequences of such refund requests, net
of any available reserves.
III-28
<PAGE>
SCHEDULE IV
[ALEX. BROWN & SONS LETTERHEAD]
September 12, 1995
Special Committee of the
Board of Directors
REN Corporation--USA
6820 Charlotte Pike
Nashville, TN 37209
Dear Sirs:
REN Corporation--USA ("REN"), Gambro AB ("Gambro"), COBE Laboratories, Inc.,
a Colorado corporation and indirect wholly owned subsidiary of Gambro
("Parent"), and REN Acquisition Corp., a wholly owned subsidiary of Parent
("Purchaser"), have entered into an Agreement and Plan of Merger dated as of
September 12, 1995 (the "Agreement") pursuant to which Purchaser shall make a
tender offer (the "Offer") to purchase all the issued and outstanding shares of
common stock, no par value, of REN (the "Common Stock") at a price of $20.00 per
share, net to the seller in cash. The Agreement also provides that, following
the Offer, Purchaser shall be merged with and into REN (the "Merger"), and that
each then outstanding share of Common Stock, other than shares held by Parent,
Purchaser and their affiliates, will be converted into the right to receive
$20.00 in cash. You have requested our opinion regarding the fairness, from a
financial point of view, of the cash consideration to be received by the
stockholders of REN, other than Gambro, Parent, Purchaser and their affiliates,
pursuant to the Agreement.
Alex. Brown & Sons Incorporated, as a customary part of its investment
banking business, is engaged in the valuation of businesses and their securities
in connection with mergers and acquisitions, negotiated underwritings, secondary
distributions of securities, private placements, and valuations for corporate
and other purposes. We have served as financial advisor to the Special Committee
of the Board of Directors of REN in connection with the transaction contemplated
by the Agreement and will receive a fee for our services. We regularly publish
research reports regarding the health care industry and the businesses and
securities of publicly owned companies in that industry.
In connection with this opinion, we have reviewed the Agreement and certain
publicly available financial information concerning REN. We have reviewed
certain internal financial analyses of REN made available to us by the
management of REN and have held discussions with members of the senior
management of REN regarding the business and prospects of REN. In addition, we
have (i) reviewed the reported price and trading activity for the Common Stock
of REN, (ii) compared certain financial and stock market information for REN
with similar information for certain other companies whose securities are
publicly traded, (iii) reviewed the financial terms of certain recent business
combinations, and (iv) performed such other studies and analyses and took into
account such other matters as we deemed necessary.
We have assumed and relied upon, without independent verification, the
accuracy and completeness of the information reviewed by us for purposes of this
opinion. With respect to the financial projections used in our analyses, we have
assumed that they have been reasonably prepared on bases reflecting the best
currently available estimates and judgments of the REN senior management as to
the likely future performance of REN. In addition, we have not made an
independent valuation or appraisal of the assets of REN, nor have we been
furnished with any such valuation or appraisal. We have relied, with your
permission, on the statement made by Parent that Parent would not consent to the
sale of REN and we were not requested or authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of the Common
Stock, REN or any of its constituent businesses. Our opinion is based on market,
economic, financial and other conditions as they exist and can be evaluated as
of the date of this letter.
IV-1
<PAGE>
It is understood that this letter is for the benefit and use of the Special
Committee of the Board of Directors of REN only and may not be used for any
other purpose without our prior written consent, provided, however, that we
hereby consent to the inclusion of this opinion in any offer to purchase,
Schedule 14D-9, Schedule 13E-3 or proxy statement used in conjunction with the
Offer or the Merger.
Based on the analysis described above and subject to the foregoing
limitations and qualifications, it is our opinion that the cash consideration to
be received by the stockholders of REN other than Gambro, Parent, Purchaser and
their affiliates pursuant to the Agreement is fair from a financial point of
view to such stockholders as of the date of delivery of this letter.
Very truly yours,
ALEX. BROWN & SONS INCORPORATED
IV-2
<PAGE>
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his 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:
BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Courier:
Tender & Exchange (212) 815-6213 Tender & Exchange
Department Department
P.O. Box 11248 Confirm by Telephone: 101 Barclay Street
Church Street Station (800) 507-9357 Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A stockholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
[LOGO]
Toll Free: 1-800-223-2064
United States: Europe:
Wall Street Plaza Georgeson and Company
New York, New York 10005 10th Floor
Banks and Brokers call collect Moor House
(212) 440-9800 119 London Wall
London EC2Y 5ET
Telephone 171-454-7100
or Call Collect:
The Dealer Manager for the Offer is:
UBS SECURITIES INC.
299 Park Avenue, 35th Floor
New York, New York 10171-0026
(212) 821-4000 (Collect)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
REN CORPORATION-USA
PURSUANT TO THE OFFER TO PURCHASE
DATED SEPTEMBER 19, 1995
OF
REN ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GAMBRO AB
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 17, 1995, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
IN THE UNITED STATES:
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
The Bank of New York The Bank of New York The Bank of New York
Tender and Exchange Department Tender and Exchange Department Tender and Exchange Department
P.O. Box 11248 101 Barclay Street 101 Barclay Street
Church Street Station Receive & Deliver Window- Receive & Deliver Window-
New York, NY 10286-1248 Street Level Street Level
New York, NY 10286 New York, NY 10286
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirm By Telephone:
(212) 815-6213 (800) 507-9357
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OR TELEX OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE>
THIS LETTER OF TRANSMITTAL IS TO BE COMPLETED BY STOCKHOLDERS EITHER IF
CERTIFICATES EVIDENCING SHARES (AS DEFINED BELOW) ARE TO BE FORWARDED HEREWITH
OR IF DELIVERY OF SHARES IS TO BE MADE BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE DEPOSITORY TRUST COMPANY ("DTC"), THE MIDWEST
SECURITIES TRUST COMPANY ("MSTC") OR THE PHILADELPHIA DEPOSITORY TRUST COMPANY
("PDTC") (EACH A "BOOK-ENTRY TRANSFER FACILITY" AND COLLECTIVELY, THE
"BOOK-ENTRY TRANSFER FACILITIES") PURSUANT TO THE BOOK-ENTRY TRANSFER PROCEDURE
DESCRIBED IN "THE TENDER OFFER -- SECTION 3. PROCEDURES FOR ACCEPTING THE OFFER
AND TENDERING SHARES" IN THE OFFER TO PURCHASE (AS DEFINED BELOW). DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in "THE TENDER OFFER -- Section 1. Terms of the Offer; Expiration
Date" in the Offer to Purchase) or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis and who wish to tender their
Shares must do so pursuant to the guaranteed delivery procedure described in
"THE TENDER OFFER -- Section 3. Procedures for Accepting the Offer and Tendering
Shares" in the Offer to Purchase. See Instruction 2.
/ / CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK ENTRY TO THE DEPOSITARY'S
ACCOUNT AT ONE OF THE BOOK-ENTRY FACILITIES AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
---------------------------------------------
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE)
/ / DTC / / MSTC / / PDTC
Account Number
-----------------------------------------------------------
Transaction Code Number
---------------------------------------------------
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
-------------------------------------------
Window Ticket No. (if any)
------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
------------------------
Name of Institution which Guaranteed Delivery
-----------------------------
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL
IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON SHARE SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
CERTIFICATE(S)) (ATTACH ADDITIONAL LIST, IF NECESSARY)
TOTAL NUMBER OF
SHARE SHARES EVIDENCED BY NUMBER OF
CERTIFICATE SHARE SHARES
NUMBER(S)* CERTIFICATE(S)- TENDERED**
<S> <C> <C> <C>
TOTAL SHARES
* Need not be completed by stockholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to
the Depositary are being tendered hereby. See Instruction 4.
</TABLE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH
IN THIS LETTER OF TRANSMITTAL CAREFULLY.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to REN Acquisition Corp., a Tennessee
corporation ("Purchaser") and an indirect wholly owned subsidiary of Gambro AB,
a Swedish corporation, the above-described shares of common stock, no par value
(the "Common Stock"), of REN Corporation-USA, a Tennessee corporation (the
"Company") (all shares of such Common Stock from time to time outstanding being,
collectively, the "Shares") pursuant to Purchaser's offer to purchase all
Shares, at $20.00 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated September
19, 1995 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and
in this Letter of Transmittal (which together constitute the "Offer"). The
undersigned understands that Purchaser reserves the right to transfer or assign,
in whole or from time to time in part, to one or more of its affiliates, the
right to purchase all or any portion of the Shares tendered pursuant to the
Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, Purchaser all right, title and interest in and to all the Shares that
are being tendered hereby and all dividends, distributions (including, without
limitation, distributions of additional Shares) and rights declared, paid or
distributed in respect of such Shares on or after September 12, 1995
(collectively, "Distributions") and irrevocably appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares and all Distributions, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver Share Certificates evidencing such Shares and all Distributions, or
transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of,
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Mats Wahlstrom and Herbert S.
Lawson and each of them, as the attorneys and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his substitute shall, in his sole discretion, deem proper and
otherwise act (by written consent or otherwise) with respect to all the Shares
tendered hereby which have been accepted for payment by Purchaser prior to the
time of such vote or other action and all Shares and other securities issued in
Distributions in respect of such Shares, which the undersigned is entitled to
vote at any meeting of stockholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) or consent in lieu of any
such meeting or otherwise. This proxy and power of attorney is coupled with an
interest in the Shares tendered hereby, is irrevocable and is granted in
consideration of, and is effective upon, the acceptance for payment of such
Shares by Purchaser in accordance with other terms of the Offer. Such acceptance
for payment shall revoke all other proxies and powers of attorney granted by the
undersigned at any time with respect to such Shares (and all Shares and other
securities issued in Distributions in respect of such Shares), and no subsequent
proxy or power of attorney shall be given or written consent executed (and if
given or executed, shall not be effective) by the undersigned with respect
thereto. The undersigned understands that, in order for Shares to be deemed
validly tendered, immediately upon Purchaser's acceptance of such Shares for
payment, Purchaser must be able to exercise full voting and other rights with
respect to such Shares, including, without limitation, voting at any meeting of
the Company's stockholders then scheduled.
<PAGE>
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, that when such Shares are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase
price, the amount or value of such Distribution as determined by Purchaser in
its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described under "THE TENDER OFFER -- Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions", please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions", please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. Unless otherwise indicated herein in the box entitled
"Special Payment Instructions", please credit any Shares tendered hereby and
delivered by book-entry transfer, but which are not purchased by crediting the
account at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered holder(s)
thereof if Purchaser does not purchase any of the Shares tendered hereby.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares Purchased or
Share Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned, or if Shares tendered
hereby and delivered by book-entry transfer which are not purchased are to be
returned by credit to an account at one of the Book-Entry Transfer Facilities
other than that designated above.
Issue / / check / / Share Certificate(s) to:
Name _______________________________________
(Please Print)
Address ____________________________________
____________________________________________
(Zip Code)
____________________________________________
TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER (SEE SUBSTITUTE FORM W-9 ON
REVERSE SIDE)
/ / Credit Shares delivered by book-entry transfer and not purchased to the
account set forth below:
Check appropriate box:
/ / DTC / / MSTC / / PDTC
Account Number: _________________________
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares purchased
or Share Certificates evidencing Shares not tendered or not purchased are to
be mailed to someone other than the undersigned, or to the undersigned at an
address other than that shown under "Description of Shares Tendered".
Mail / / check / / Share Certificate(s) to:
Name _______________________________________
(Please Print)
Address ____________________________________
____________________________________________
(Zip Code)
____________________________________________
<PAGE>
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
_______________________________________________________________________________
_______________________________________________________________________________
Signature(s) of Holder(s)
Dated: __________, 199_
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
Certificates or on a security position listing by a person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information and see
Instruction 5).
NAME(S): ______________________________________________________________________
Please Print
______________________________________________________________________
CAPACITY (full title) _________________________________________________________
ADDRESS: ______________________________________________________________________
______________________________________________________________________
Include Zip Code
AREA CODE AND TELEPHONE NO: ___________________________________________________
Taxpayer Identification or
Social Security No.: __________________________________________________________
(See Substitute Form W-9 on reverse side)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION
GUARANTEE IN SPACE BELOW.
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., or by a commercial bank or trust company having an office or
correspondent in the United States, or by any other "eligible guarantor
institution," as such term is defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (each of the foregoing being referred to as an
"Eligible Institution") unless (i) this Letter of Transmittal is signed by the
registered holder(s) of the Shares (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) tendered hereby
and such holder(s) has (have) completed neither the box entitled "Special
Payment Instructions" nor the box entitled "Special Delivery Instructions" on
the reverse hereof or (ii) such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Share Certificates. This Letter of
Transmittal is to be used either if Share Certificates are to be forwarded
herewith or if Shares are to be delivered by book-entry transfer pursuant to the
procedure set forth in "THE TENDER OFFER -- Section 3. Procedures for Accepting
the Offer and Tendering Shares" in the Offer to Purchase. Share Certificates
evidencing all physically tendered Shares, or a confirmation of a book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility of all
Shares delivered by book-entry transfer as well as a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the reverse hereof prior to the Expiration
Date (as defined in "THE TENDER OFFER -- Section 1. Terms of the Offer;
Expiration Date" in the Offer to Purchase). If Share Certificates are forwarded
to the Depositary in multiple deliveries, a properly completed and duly executed
Letter of Transmittal must accompany each such delivery. Stockholders whose
Share Certificates are not immediately available, who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis may tender their Shares pursuant to the guaranteed
delivery procedure described in "THE TENDER OFFER -- Section 3. Procedures for
Accepting the Offer and Tendering Shares" in the Offer to Purchase. Pursuant to
such procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, must be
received by the Depositary prior to the Expiration Date; and (iii) the Share
Certificates evidencing all physically delivered Shares in proper form for
transfer by delivery, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, in each case together with a Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three National
Association of Securities Dealers Automated Quotation -- National Market System
trading days after the date of execution of such Notice of Guaranteed Delivery,
all as described in "THE TENDER OFFER -- Section 3. Procedures for Accepting the
Offer and Tendering Shares" in the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. Partial Tenders (not applicable to stockholders who tender by book-entry
transfer). If fewer than all the Shares evidenced by any Share Certificate
delivered to the Depositary herewith are to be tendered hereby, fill in the
number of Shares which are to be tendered in the box entitled "Number of Shares
Tendered." In such cases, new Share Certificate(s) evidencing the remainder of
the Shares that were evidenced by the Share Certificates delivered to the
Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
<PAGE>
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and 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 the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6,
Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser 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 Share Certificates
evidencing the Shares tendered hereby.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
Stockholders delivering Shares tendered hereby by book-entry transfer may
request that Shares not purchased be credited to such account maintained at a
Book-Entry Transfer Facility as such stockholder may designate in the box
entitled "Special Payment Instructions" on the reverse hereof. If no such
instructions are given, all such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated on the
reverse hereof as the account from which such Shares were delivered.
8. Questions and Requests for Assistance or Additional Copies. Questions and
requests for assistance may be directed to the Information Agent or the Dealer
Manager at their respective addresses or telephone numbers set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal and the
Notice of Guaranteed Delivery may be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
9. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31% federal income tax withholding on the payment of the purchase price of all
Shares purchased from such stockholder. If the tendering stockholder has not
been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND
SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS
DEFINED UNDER "THE TENDER OFFER -- SECTION 1. TERMS OF THE OFFER; EXPIRATION
DATE" IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding. Failure to
comply truthfully with the backup withholding requirements may also result in
the imposition of severe criminal and/or civil fines or penalties.
<PAGE>
Certain 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, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
(i) such stockholder has not been notified by the Internal Revenue Service that
he is subject to backup withholding as a result of a failure to report all
interest or dividends or (ii) the Internal Revenue Service has notified such
stockholder that such stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE>
<TABLE>
<C> <S> <C>
PAYER'S NAME: BANK OF NEW YORK
SUBSTITUTE FORM W-9 PART I -- For all accounts, ----------------------------
enter your TIN in the box at Social Security Number
right. (For most individuals, OR
this is your social security Employer Identification
number. If you do not have a Number
TIN, see How to Obtain a TIN in (If awaiting TIN write
the enclosed Guidelines.) "Applied For")
Certify by signing and dating
below. Note: If the account is
in more than one name, see the
chart in the enclosed Guidelines
to determine which number to
give the payer.
PAYER'S REQUEST FOR TAXPAYER PART II -- For Payees Exempt From Backup for Taxpayer
IDENTIFICATION NUMBER (TIN) Withholding, see the enclosed Guidelines and complete as
instructed therein.
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for
a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from backup withholding,
(b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS
that you are subject to backup withholding because of underreporting interest or dividends on your
tax return. However, if after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see instructions in the enclosed Guidelines.)
SIGNATURE DATE , 199
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
<PAGE>
The Information Agent for the Offer is:
[GEORGESON & COMPANY INC. LOGO]
Wall Street Plaza
New York, New York 10005
Banks and Brokers Call Collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
UBS SECURITIES INC.
299 Park Avenue, 35th Floor
New York, New York 10171-0026
(212) 821-4000 (Collect)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
REN CORPORATION-USA
This Notice of Guaranteed Delivery, or one substantially in the form hereof,
must be used to accept the Offer (as defined below) (i) if certificates ("Share
Certificates") evidencing shares of common stock, no par value (the "Shares"),
of REN Corporation-USA, a Tennessee corporation (the "Company"), are not
immediately available, (ii) if Share Certificates and all other required
documents cannot be delivered to The Bank of New York, as Depositary (the
"Depositary") prior to the Expiration Date (as defined in "THE TENDER
OFFER -- Section 1. Terms of the Offer; Expiration Date" in the Offer to
Purchase (as defined below)) or (iii) if the procedure for delivery by
book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile transmission to the Depositary. See "THE TENDER OFFER -- Section 3.
Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
IN THE UNITED STATES:
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
The Bank of New York The Bank of New York The Bank of New York
Tender and Exchange Department Tender and Exchange Department Tender and Exchange Department
P.O. Box 11248 101 Barclay Street 101 Barclay Street
Church Street Station Receive & Deliver Window- Receive & Deliver Window-
New York, NY 10286-1248 Street Level Street Level
New York, NY 10286 New York, NY 10286
</TABLE>
<TABLE>
<S> <C>
By Facsimile Transmission: Confirm By Telephone:
(212) 815-6213 (800) 507-9357
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to REN Acquisition Corp., a Tennessee
corporation and an indirect wholly owned subsidiary of Gambro AB, a Swedish
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated September 19, 1995 (the "Offer to Purchase"), and the related
Letter of Transmittal (which together constitute the "Offer"), receipt of each
of which is hereby acknowledged, the number of Shares specified below pursuant
to the guaranteed delivery procedure described in "THE TENDER OFFER -- Section
3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase.
Number of Shares:
------------------------ -----------------------------------
-----------------------------------
Signature(s) of Holder(s)
Certificate Nos. (If Available): Dated: , 1995
----------------------
Name(s) of Holders:
- ------------------------------------------
-----------------------------------
-----------------------------------
Please Type or Print
Check one box if Shares will be -----------------------------------
delivered by book-entry transfer: Address
/ / The Depository Trust Company
-----------------------------------
Zip Code
/ / Midwest Securities Trust Company
-----------------------------------
Area Code and Telephone No.
/ / Philadelphia Depository Trust Company
Account No.
------------------------------
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or correspondent
in the United States, guarantees to deliver to the Depositary, at one of its
addresses set forth above, Share Certificates evidencing the Shares tendered
hereby, in proper form for transfer, or confirmation of book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company, the
Midwest Securities Trust Company or the Philadelphia Depository Trust Company,
in each case with delivery of a Letter of Transmittal (or facsimile thereof)
properly completed and duly executed, and any other required documents, all
within three National Association of Securities Dealers Automated
Quotation--National Market System trading days of the date hereof.
- ------------------------------------------ -----------------------------------
Name of Firm Authorized Signature
- ------------------------------------------ -----------------------------------
Address Title
Name:
- ------------------------------------------ -----------------------------
Zip Code Please Type or Print
Dated: , 199
- ------------------------------------------ ----------------------- -
Area Code and Telephone No.
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
Exhibit (a)(4)
[Letterhead of UBS Securities Inc.]
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
REN CORPORATION-USA
AT
$20.00 NET PER SHARE
BY
REN ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GAMBRO AB
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 17, 1995 UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
September 19, 1995
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by REN Acquisition Corp., a Tennessee corporation
("Purchaser") and an indirect wholly owned subsidiary of Gambro AB ("Gambro"), a
Swedish corporation, to act as Dealer Manager in connection with Purchaser's
offer to purchase all outstanding shares of common stock, no par value (the
"Shares"), of REN Corporation-USA, a Tennessee corporation (the "Company"), at a
price of $20.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in Purchaser's Offer to Purchase, dated September
19, 1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") enclosed herewith. Please furnish copies of the
enclosed materials to those of your clients for whose accounts you hold Shares
registered in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY AND
NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST A MAJORITY OF THE
THEN OUTSTANDING SHARES, OTHER THAN SHARES OWNED BENEFICIALLY BY OR OF RECORD BY
GAMBRO OR ANY OF ITS AFFILIATES. THE OFFER IS SUBJECT TO OTHER CERTAIN
CONDITIONS SET FORTH IN THE OFFER TO PURCHASE.
Enclosed for your information and use are copies of the following documents:
1. Offer to Purchase, dated September 19, 1995;
2. Letter of Transmittal to be used by holders of Shares in accepting the
Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or cannot
be delivered to The Bank of New York (the "Depositary") by the Expiration Date
(as defined in the Offer to Purchase) or if the procedure for book-entry
transfer cannot be completed by the Expiration Date;
<PAGE>
4. A letter to stockholders of the Company from Lawrence J. Centella,
President and Chief Executive Officer of the Company, together with a
Solicitation/Recommendation Statement on Schedule 14D-9 filed with the
Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominee, with space
provided for obtaining such clients' instructions with regard to the Offer;
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 AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON TUESDAY, OCTOBER 17, 1995, UNLESS THE OFFER IS EXTENDED.
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
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), a Letter of Transmittal (or
facsimile thereof) properly completed and duly executed and any other required
documents.
If holders of Shares wish to tender, but cannot deliver such holder's
certificates, or cannot comply with the procedure for book-entry transfer, prior
to the expiration of the Offer, a tender of Shares may be effected by following
the guaranteed delivery procedure described under "THE TENDER OFFER -- Section
3. Procedures for Accepting the Offer and Tendering Shares" in the Offer to
Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and the Information
Agent as described in the Offer) in connection with the solicitation of tenders
of Shares pursuant to the Offer. However, Purchaser will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or cause to be paid any
stock transfer taxes payable with respect to the transfer of Shares to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
UBS Securities Inc. (in such capacity, the "Dealer Manager") or Georgeson &
Company Inc. (the "Information Agent") at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, at the addresses and telephone numbers set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
UBS SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF GAMBRO, PURCHASER, COBE, THE COMPANY, THE
DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF ANY AFFILIATE OF
ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE
ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
2
Exhibit (a)(5)
OFFER TO PURCHASE FOR CASH
ALL SHARES OF COMMON STOCK
OF
REN CORPORATION-USA
AT
$20.00 NET PER SHARE
BY
REN ACQUISITION CORP.
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
GAMBRO AB
- --------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 17, 1995, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated September
19, 1995 (the "Offer to Purchase"), and a related Letter of Transmittal (which
together constitute the "Offer") in connection with the offer by REN Acquisition
Corp., a Tennessee corporation ("Purchaser") and an indirect wholly owned
subsidiary of Gambro AB, a Swedish corporation ("Gambro"), to purchase all
outstanding shares of common stock, no par value (the "Shares"), of REN
Corporation-USA, a Tennessee corporation (the "Company"), at a price of $20.00
per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer.
We are (or our nominee is) the holder of record of Shares held by us for
your account. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $20.00 per Share, net to the seller in cash.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company, acting upon the unanimous
recommendation of a special committee of independent directors of the Company,
unanimously has determined that each of the Offer and the Merger and the
transactions contemplated by the Merger Agreement (as defined in the Offer to
Purchase) is fair to, and in the best interests of, the stockholders of the
Company other than Gambro and its affiliates, and recommends that stockholders
accept the Offer and tender their Shares pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on Tuesday, October 17, 1995, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer at least a
majority of the then outstanding Shares, other than Shares owned beneficially by
or of record by Gambro or any of its affiliates. The Offer is subject to certain
other conditions described in the Offer to Purchase.
<PAGE>
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the acceptance
of Shares pursuant thereto, Purchaser will make a good faith effort to comply
with such state statute. If, after such good faith effort, Purchaser cannot
comply with such state statute, the Offer will not be made to (nor will tenders
be accepted from or on behalf of) the holders of Shares in such state. In any
jurisdiction where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by UBS Securities Inc. or one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
-------------------
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING
SHARES OF COMMON STOCK OF REN CORPORATION-USA BY REN
ACQUISITION CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated September 19, 1995, and the related Letter of Transmittal
(which together constitute the "Offer") in connection with the offer by REN
Acquisition Corp., a Tennessee corporation ("Purchaser") and an indirect wholly
owned subsidiary of Gambro AB, a Swedish corporation ("Gambro"), to purchase all
outstanding shares of common stock, no par value (the "Shares"), of REN
Corporation-USA, a Tennessee corporation (the "Company").
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
- --------------------------------------
NUMBER OF SHARES TO BE TENDERED: SIGN HERE
__________ SHARES*
- -------------------------------------- ---------------------------------
---------------------------------
Dated: _______________________, 1995 Signature(s)
---------------------------------
---------------------------------
Please type or print name(s)
---------------------------------
---------------------------------
Please type or print name(s)
---------------------------------
Area Code and Telephone Number
---------------------------------
Taxpayer Identification or Social
Security Number
- -------------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
2
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
IRS INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE.)
PURPOSE OF FORM. -- A person who is required to file an information return
with the Internal Revenue Service (the IRS) must obtain your correct taxpayer
identification number (TIN) to report income paid to you, real estate
transactions, mortgage interest you paid, the acquisition or abandonment of
secured property, or contributions you made to an individual retirement account
(IRA). Use Form W-9 to furnish your correct TIN to the requester (the person
asking you to furnish your TIN), and, when applicable, (1) to certify that the
TIN you are furnishing is correct (or that you are waiting for a number to be
issued), (2) to certify that you are not subject to backup withholding, and (3)
to claim exemption from backup withholding if you are an exempt payee.
Furnishing your correct TIN and making the appropriate certifications will
prevent certain payments from being subject to backup withholding.
NOTE: IF A REQUESTER GIVES YOU A FORM OTHER THAN A W-9 TO REQUEST YOUR TIN,
YOU MUST USE THE REQUESTER'S FORM.
HOW TO OBTAIN A TIN. -- If you do not have a TIN, apply for one immediately.
To apply, get FORM SS-5, Application for a Social Security Card (SSN) (for
individuals), from your local office of the Social Security Administration, or
FORM SS-4, Application for Employer Identification Number (EIN) (for businesses
and all other entities), from your local IRS office.
To complete Form W-9, if you do not have a TIN, and have applied for one or
intend to apply for one in the near future, write "Applied For" in the space
provided in Part I of the Substitute W-9, sign and date the form, and give it to
the requester. Generally, you will then have 60 days to obtain a TIN and furnish
it to the requester. If the requester does not receive your TIN within 60 days,
backup withholding, if applicable, will begin and continue until you furnish
your TIN to the requester. For reportable interest or dividend payments, the
payer must exercise one of the following options concerning backup withholding
during this 60-day period. Under option (1), a payer must backup withhold on any
withdrawals you make from your account after 7 business days after the requester
receives this form back from you. Under option (2), the payer must backup
withhold on any reportable interest or dividend payments made to your account,
regardless of whether you make any withdrawals. The backup withholding under
option (2) must begin no later than 7 business days after the requester receives
this form back. Under option (2), the payer is required to refund the amounts
withheld if your certified TIN is received within the 60-day period and you were
not subject to backup withholding during the period.
As soon as you receive your TIN, complete another Form W-9, include your TIN,
sign and date this form, and give it to the requester.
WHAT IS BACKUP WITHHOLDING? -- Persons making certain payments to you after
1992 are required to withhold and pay to the IRS 31% of such payments under
certain conditions. This is called "backup withholding." Payments that could be
subject to backup withholding include interest, dividends, broker and barter
exchange transactions, rents, royalties, nonemployee compensation, and certain
payments from fishing boat operators, but do not include real estate
transactions.
If you give the requester your correct TIN, make the appropriate
certifications, and report all your taxable interest and dividends on your tax
return, your payments will not be subject to backup withholding. Payments you
receive will be subject to backup withholding if:
(1) You do not furnish your TIN to the requester, or
(2) The IRS notifies the requester that you furnished an incorrect TIN, or
(3) You are notified by the IRS that you are subject to backup withholding
because you failed to report all your interest and dividends on your tax return
(for reportable interest and dividends only), or
(4) You fail to certify to the requester that you are not subject to backup
withholding under (3) above (for reportable interest and dividend accounts
opened after 1983 only), or
(5) You fail to certify your TIN. This applies only to reportable interest,
dividend, broker or barter exchange accounts opened after 1983, or broker
accounts considered inactive in 1983.
Except as explained in (5) above, other reportable payments are subject to
backup withholding only if (1) or (2) above applies. Certain payees and payments
are exempt from backup withholding and information reporting. See PAYEES AND
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING, below, and EXEMPT PAYEES AND PAYMENTS
under SPECIFIC INSTRUCTIONS, on page 2, if you are an exempt payee.
<PAGE>
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING. -- The following is a
list of payees exempt from backup withholding and for which no information
reporting is required. For interest and dividends, all listed payees are exempt
except item (9). For broker transactions, payees listed in (1) through (13) and
a person registered under the Investment Advisers Act of 1940 who regularly acts
as a broker are exempt. Payments subject to reporting under sections 6041 and
6041A are generally exempt from backup withholding only if made to payees
described in items (1) through (7), except that a corporation that provides
medical and health care services or bills and collects payments for such
services is not exempt from backup withholding or information reporting. Only
payees described in items (2) through (6) are exempt from backup withholding for
barter exchange transactions, patronage dividends, and payments by certain
fishing boat operators.
(1) A corporation.
(2) An organization exempt from tax under section 501(a), or an IRA, or a
custodial account under section 403(b)(7).
(3) The United States or any of its agencies or instrumentalities.
(4) A state, the District of Columbia, a possession of the United States, or
any of their political subdivisions or instrumentalities.
(5) A foreign government or any of its political subdivisions, agencies or
instrumentalities.
(6) An international organization or any of its agencies or
instrumentalities.
(7) A foreign central bank of issue.
(8) A dealer in securities or commodities required to register in the U.S. or
a possession of the U.S.
(9) A futures commission merchant registered with the Commodity Futures
Trading Commission.
(10) A real estate investment trust.
(11) An entity registered at all times during the tax year under the
Investment Company Act of 1940.
(12) A common trust fund operated by a bank under section 584(a).
(13) A financial institution.
(14) A middleman known in the investment community as a nominee or listed in
the most recent publication of the American Society of Corporation Secretaries,
Inc., Nominee List.
(15) A trust exempt from tax under section 664 or described in section 4947.
Payments of dividends and patronage dividends generally not subject to backup
withholding also include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in trade or business in the U.S. and
that have at least one nonresident partner.
. Payments of patronage dividends not paid in money.
. Payments made by certain foreign organizations.
Payments of interest generally not subject to backup withholding include the
following:
. Payments of interest on obligations issued by individuals.
NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR
MORE AND IS PAID IN THE COURSE OF THE PAYER'S TRADE OR BUSINESS AND YOU HAVE
NOT PROVIDED YOUR CORRECT TIN TO THE PAYER.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Mortgage interest paid by you.
Payments that are not subject to information reporting are also not subject
to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044,
6045, 6049, 6050A, and 6050N, and their regulations.
<PAGE>
PENALTIES
FAILURE TO FURNISH TIN. -- If you fail to furnish your correct TIN to a
requester, 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.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
MISUSE OF TINS. -- If the requester discloses or uses TINs in violation of
Federal law, the requester may be subject to civil and criminal penalties.
SPECIFIC INSTRUCTIONS
NAME. -- If you are an individual, you must generally provide the name shown
on your social security card. However, if you have changed your last name, for
instance, due to marriage, without informing the Social Security Administration
of the name change, please enter your first name, the last name shown on your
social security card and your new last name.
If you are a sole proprietor, you must furnish your individual name and
either your SSN or EIN. You may also enter your business name. Enter your
name(s) as shown on your social security card and/or as it was used to apply for
your EIN on Form SS-4.
SIGNING THE CERTIFICATION
(1) INTEREST, DIVIDEND, AND BARTER EXCHANGE ACCOUNTS OPENED BEFORE 1984 AND
BROKER ACCOUNTS CONSIDERED ACTIVE DURING 1983. -- You are required to furnish
your correct TIN, but you are not required to sign the certification.
(2) INTEREST, DIVIDEND, BROKER AND BARTER EXCHANGE ACCOUNTS OPENED AFTER 1983
AND BROKER ACCOUNTS CONSIDERED INACTIVE DURING 1983. -- You must sign the
certification or backup withholding will apply. If you are subject to backup
withholding and you are merely providing your correct TIN to the requester, you
must cross out item (2) in the certification before signing the form.
(3) REAL ESTATE TRANSACTIONS. -- You must sign the certification. You may
cross out item (2) of the certification.
(4) OTHER PAYMENTS. -- You are required to furnish your correct TIN, but you
are not required to sign the certification unless you have been notified of an
incorrect TIN. Other payments include payments made in the course of the
requester's trade or business for rents, royalties, goods (other than bills for
merchandise), medical and health care services, payments to a nonemployee for
services (including attorney and accounting fees), and payments to certain
fishing boat crew members.
(5) MORTGAGE INTEREST PAID BY YOU, ACQUISITION OR ABANDONMENT OF SECURED
PROPERTY, OR IRA CONTRIBUTIONS. -- You are requested to furnish your correct
TIN, but you are not required to sign the certification.
(6) EXEMPT PAYEES AND PAYMENTS. -- If you are exempt from backup withholding,
you should complete this form to avoid possible erroneous backup withholding.
Enter your correct TIN in Part 1, write "EXEMPT" in the space in Part II, and
sign and date the form. If you are a nonresident alien or foreign entity not
subject to backup withholding, give the requester a completed Form W-8,
Certificate of Foreign Status.
(7) "AWAITING TIN". -- Follow the instructions under HOW TO OBTAIN A TIN, on
page 1, write "Applied For" in the space provided for the TIN in Part I of the
Substitute Form W-9 and sign and date the form.
SIGNATURE. -- For a joint account, only the person whose TIN is shown in Part
1 should sign the form.
PRIVACY ACT NOTICE. -- Section 6109 requires you to furnish your correct TIN
to persons who must file information returns with the IRS to report interest,
dividends, and certain other income paid to you, mortgage interest you paid, the
acquisition or abandonment of secured property, cancellation of debt or
contributions you made to an IRA. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. You must provide
your TIN whether or not you are required to file a tax return. Payers must
generally withhold 31% of taxable interest, dividends, and certain other
payments to a payee who does not furnish a TIN to a payer. Certain penalties may
also apply.
<PAGE>
WHAT NAME AND NUMBER TO GIVE THE REQUESTER
<TABLE>
<CAPTION>
- -------------------------------------------- --------------------------------------------
GIVE THE NAME AND GIVE THE NAME AND
FOR THIS TYPE OF SOCIAL SECURITY EMPLOYER
ACCOUNT: NUMBER OF: FOR THIS TYPE OF IDENTIFICATION
ACCOUNT: NUMBER OF:
- -------------------------------------------- --------------------------------------------
<S> <C> <C> <C>
1. Individual The individual 7. A valid trust,
estate or pension
The acutal owner of trust Legal entity4
the account or, if
2. Two or more combined funds, the 8. Corporation The corporation
individuals (joint first individual on
account) the account1 9. Association, club,
reliqious,
3. Custodian account charitable,
of a minor educational, or
(Uniform Gift to other tax-exempt
Minors Act) The minor2 organization The organization
4. a. The usual 10. Partnership The partnership
revocable
savings trust 11. A broker or
(grantor is registered
also trustee) The grantor-trustee1 nominee The broker or nominee
b. So-called trust 12. Account with the
account that is Department of
not a legal or Agriculture in
valid trust under the name of a
state law The actual owner1 public entity
(such as a state
5. Sole or local
proprietorship The owner3 government,
school district,
6. Sole or prison) that
proprietorship The owner3 receives
agricultural
program payments The public entity
- ----------------------------------------------------------------------------------------------
</TABLE>
1 List first and circle the name of the person whose number you furnish.
2 Circle the minor's name and furnish the minor's social security number.
3 Show the individual's name. You may also enter your business name. You may use
your SSN or EIN.
4 List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the TIN of the personal representative or trustee unless the
legal entity itself is not designated in the account title.)
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.
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
September 19, 1995 (the "Offer to Purchase") and the related Letter of
Transmittal, and is being made available to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to (nor will tenders be accepted from or on behalf of) the holders of
Shares in such state. In any jurisdiction where the securities, blue sky or
other laws require the Offer to be made by a licensed broker or dealer, the
Offer shall be deemed to be made on behalf of Purchaser by UBS Securities Inc.
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
REN Corporation-USA
at
$20.00 Net Per Share
by
REN Acquisition Corp.
an indirect wholly owned subsidiary of
Gambro AB
REN Acquisition Corp., a Tennessee corporation ("Purchaser") and an indirect
wholly owned subsidiary of Gambro AB ("Gambro"), a Swedish corporation, is
offering to purchase all outstanding shares of Common Stock, no par value (the
"Shares"), of REN Corporation-USA, a Tennessee corporation (the "Company"), at a
price of $20.00 per Share, net to the seller in cash, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated September 19, 1995
and in the related Letter of Transmittal (which, together with the Offer to
Purchase, constitute the "Offer"). Following the Offer, Purchaser intends to
effect the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON TUESDAY, OCTOBER 17, 1995, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, there being validly tendered
and not withdrawn prior to the expiration of the Offer at least a majority of
the then outstanding Shares, other than Shares owned beneficially by or of
record by Gambro or any of its affiliates. The Offer is subject to certain other
conditions described in the Offer to Purchase.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as of
September 12, 1995 (the "Merger Agreement") among Gambro, COBE Laboratories,
Inc., a Colorado corporation and an indirect wholly owned subsidiary of Gambro
("COBE"), Purchaser and the Company. The Merger Agreement provides that, among
other things, as soon as practicable after the purchase of Shares pursuant to
the Offer and the satisfaction of the other conditions set forth in the Merger
Agreement and in accordance with relevant provisions of the Tennessee Business
Corporation Act ("Tennessee Law"), Purchaser will be merged into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation (the "Surviving Corporation") and will become a
wholly owned subsidiary of COBE. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held by the Company, or owned by Purchaser,
COBE or any direct or indi-
<PAGE>
rect wholly owned subsidiary of COBE or of the Company, and other than Shares
held by stockholders who shall have demanded and perfected appraisal rights
under Tennessee Law) will be cancelled and converted automatically into the
right to receive $20.00 in cash, or any higher price that may be paid per Share
in the Offer, without interest.
The Board of Directors of the Company, acting on the unanimous recommendation of
a special committee of independent directors, unanimously has determined that
each of the Offer and the Merger and the transactions contemplated thereby is
fair to, and in the best interests of, the stockholders of the Company, and
recommends that the stockholders accept the Offer and tender their Shares
pursuant to the Offer.
For purposes of the Offer, Purchaser will be deemed to have accepted for payment
(and thereby purchased) Shares validly tendered and not withdrawn as, if and
when Purchaser gives oral or written notice to The Bank of New York (the
"Depositary") of Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, 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 payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase price
for Shares be paid, regardless of any delay in making such payment. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at one of the Book-Entry Transfer Facilities (as defined in "THE TENDER
OFFER -- Section 2. Acceptance for Payment and Payment for Shares" of the Offer
to Purchase) pursuant to the procedure set forth in "THE TENDER OFFER -- Section
3. Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees and (iii)
any other documents required under the Letter of Transmittal.
Purchaser expressly reserves the right, in its sole discretion (but subject to
the terms and conditions of the Merger Agreement), at any time and from time to
time, to extend for any reason the period of time during which the Offer is
open, including the occurrence of any condition specified in "THE TENDER
OFFER -- Section 10. Certain Conditions of the Offer" of the Offer to Purchase,
by giving oral or written notice of such extension to the Depositary. Any such
extension will be followed as promptly as practicable by public announcement
thereof, such announcement to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled expiration date
of the Offer. During any such extension, all Shares previously tendered and
not withdrawn will remain subject to the Offer, subject to the rights of
tendering stockholders to withdraw their Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that such
Shares may be withdrawn at any time prior to 12:00 Midnight, New York City time,
on Tuesday, October 17, 1995 (or the latest time and date at which the Offer, if
extended by Purchaser, shall expire) and, unless theretofore accepted for
payment by Purchaser pursuant to the Offer, may also be withdrawn at any time
after November 17, 1995. For the withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
page of the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares to be withdrawn, the number of Shares
to be withdrawn and the name of the registered holder of such Shares, if
different from that of the person who tendered such Shares. If Share
Certificates evidencing Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such Share
Certificates, the serial numbers shown on such Share Certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible
<PAGE>
Institution (as defined in "THE TENDER OFFER -- Section 3. Procedures for
Accepting the Offer and Tendering Shares" of the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in "THE TENDER OFFER -- Section 3. Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase, any notice of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares. All questions as to the form and
validity (including the time of receipt) of any notice of withdrawal will be
determined by Purchaser, in its sole discretion, whose determination will be
final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal will be
mailed to record holders of Shares whose names appear on the Company's
stockholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal contain important
information which should be read before any decision is made with respect to the
Offer.
Questions and requests for assistance or for additional copies of the Offer to
Purchase and the related Letter of Transmittal and other tender offer materials
may be directed to the Information Agent or the Dealer Manager as set forth
below, and copies will be furnished promptly at Purchaser's expense. No fees or
commissions will be paid to brokers, dealers or other persons (other than the
Information Agent and the Dealer Manager) for soliciting tenders of Shares
pursuant to the Offer.
The Information Agent for the Offer is:
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
Call Toll Free: 1-800-223-2064
The Dealer Manager for the Offer is:
UBS Securities Inc.
299 Park Avenue, 35th Floor
New York, New York 10171-0026
(212) 821-4000 (Collect)
September 19, 1995
18921 Taylor & Ives Jay J. Cohen
Farrington & Favia (212) 475-7600
Taylor & Ives (212) 921-9300
September95/TaylorIves/18921-D-01
9/15/95 et/jn Proof 5 4 3
Check proof before releasing for publication
18921-D-01 9/15/95 PROOF 3
[REN CORPORATION-USA PRESS RELEASE]
FOR IMMEDIATE RELEASE
REN CORPORATION-USA ANNOUNCES SIGNING OF
DEFINITIVE MERGER AGREEMENT
NASHVILLE, Tenn., September 13, 1995 - REN Corporation-USA, a
Tennessee corporation (NASDAQ: RENL), today announced that it has signed a
definitive merger agreement with Gambro AB (NASDAQ: GAMBY) and COBE
Laboratories, Inc., the Lakewood, Colorado-based wholly owned subsidiary of
Gambro ("COBE"), providing for the acquisition of REN's publicly held
shares at a price of $20 per share, net to the seller in cash. Pursuant to
the merger agreement, a newly formed wholly owned subsidiary of COBE
("Purchaser") will commence a tender offer for all of the issued and
outstanding shares of common stock of REN not currently owned by COBE.
Purchaser will commence the tender offer no later than September 19, 1995.
Following the tender offer, Purchaser will be merged into REN, and all REN
shares not purchased pursuant to the tender offer will be converted into a
right to receive $20 per share in cash in a second-step merger to be
consummated as soon as practicable after the tender offer. Upon
consummation of the merger, REN will become a wholly owned subsidiary of
COBE and an indirect wholly owned subsidiary of Gambro.
The tender offer will be conditioned upon, among other things, at
least a majority of the REN shares, other than the REN shares owned by COBE
or its affiliates, being validly tendered and not withdrawn prior to the
expiration of the tender offer. COBE and its affiliates presently own
approximately 53% of the outstanding REN shares.
The merger agreement has been unanimously approved by a special
committee of independent directors of REN and, based on the recommendation
of the special committee, the Board of Directors of REN has unanimously
approved the merger agreement and recommended that holders tender their REN
shares pursuant to the tender offer.
UBS Securities Inc. is acting as financial advisor to COBE in
connection with the transaction and is acting as sole Dealer Manager in
connection with the tender offer.
Alex. Brown & Sons Incorporated is acting as financial advisor to
the special committee and has rendered an opinion that the consideration to
be received by the public shareholders of REN pursuant to the merger
agreement is fair from a financial point of view.
REN is the nation's fourth largest provider of kidney dialysis
services. REN owns and operates 68 dialysis centers, located across 18 states
and the District of Columbia. Several of these centers are associated with
prominent academic institutions. Overall, the company has over 1,150 treatment
stations servicing approximately 5,700 patients. In 1994, REN performed more
than 646,000 dialysis treatments. REN also performs blood and urine testing
services for its centers and others.
REVOLVING CREDIT FACILITY
DATED 11TH MAY, 1993
BETWEEN
GAMBRO AB
as the Parent
ARRANGED BY
BNP CAPITAL MARKETS LIMITED
as Arranger
BANQUE NATIONALE DE PARIS
as Agent
Allen & Overy
London
E21751001
<PAGE>
INDEX
-----
Clause Page No.
- ------ --------
1. Interpretation........................... 1
2. Commitments and Nature of Obligations.... 12
3. Purpose.................................. 13
4. Conditions precedent..................... 14
5. Drawdown................................. 14
6. Repayment ............................... 15
7. Prepayment and cancellation.............. 16
8. Interest Periods......................... 17
9. Interest ................................ 18
10. Selection of Optional Currencies......... 19
11. Amount of Optional Currencies............ 20
12. Payments ................................ 21
13. Taxes.................................... 23
14. Market disruption........................ 26
15. Increased costs.......................... 27
16. Illegality............................... 29
17. Mitigation............................... 29
18. Guarantee................................ 30
19. Representations and warranties........... 32
20. Undertakings ............................ 35
21. Default ................................. 40
22. The Agent and the Arranger............... 44
23. Fees .................................... 49
24. Expenses ................................ 50
25. Stamp duties ............................ 50
26. Indemnities ............................. 50
27. Evidence and calculations................ 52
28. Amendments and waivers .................. 52
29. Changes to the Parties .................. 53
30. Disclosure of information................ 56
31. Set-off.................................. 56
32. Pro rat sharing.......................... 56
33. Severability............................. 58
34. Counterparts............................. 58
35. Notices.................................. 58
36. Language................................. 59
37. Jurisdiction............................. 59
38. Governing law............................ 60
<PAGE>
Schedule
- --------
1. Banks and Commitments................... 61
2. Conditions Precedent Documents.......... 62
3. Calculation of the MLA Cost............. 64
4. Form of Request ........................ 66
5. Form of Novation Certificate............ 67
6. Form of Deed of Accession .............. 68
7. Approved Additional Borrowers........... 70
Signatories............................................. 71
<PAGE>
THIS FACILITY AGREEMENT is dated 11th May, 1993 between:-
(1) GAMBRO AB (the "Parent");
------
(2) BNP CAPITAL MARKETS LIMITED as Arranger (the "Arranger");
(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the
"Banks"); and
-----
(4) BANQUE NATIONALE DE PARIS as agent (the "Agent").
-----
IT IS AGREED as follows:-
1. INTERPRETATION
--------------
1.1 Definitions
-----------
In this Agreement:-
"Additional Borrower"
-------------------
means any entity that becomes an additional borrower by virtue of
Clauses 2.5 and 2.6.
"Affiliate"
---------
means a subsidiary or a holding company (in each case, as defined in
Section 736 of the Companies Act 1985 of England and Wales) of a
Bank or any other subsidiary of that holding company.
"Agent's Spot Rate of Exchange"
-----------------------------
means the Agent's spot rate of exchange for the purchase of the
relevant Optional Currency in the London foreign exchange market
with U.S. Dollars at or about 11.00 a.m. on a particular day.
"Agreed Optional Currencies"
--------------------------
means Deutschmarks, Dutch Guilders, French Francs, Swiss Francs,
Sterling and Yen.
"Borrowers"
---------
means the Parent and/or any Additional Borrower and, in relation to
any Loan, the Borrower to whom that Loan is, or is to be, made (each
a "Borrower").
"Borrowers' Agent"
----------------
means the Parent or such other person from time to time nominated by
the Borrowers to act on behalf of the Borrowers in relation hereto
<PAGE>
2
and approved for such purpose by the Agent (whose approval shall not
be unreasonably withheld).
"Business Day"
------------
means a day (other than a Saturday or a Sunday) on which banks are
open for business in:-
(a) London and Paris;
(b) (in relation to a transaction involving any payment in Dollars) New
York; and
(c) (in relation to a transaction involving any payment in an Optional
Currency) the principal financial center of the country of that
Optional Currency.
"COBE"
----
means COBE Laboratories, Inc.
"Commitment"
----------
means:-
(a) in relation to a Bank which is a Bank on the date of this Agreement,
the amount in Dollars set opposite its name in Schedule 1;
(b) in relation to a Bank which becomes a Bank after the date of this
Agreement, the amount of a Commitment acquired by it under Clause 29
(Changes to the Parties),
to the extent not canceled, reduced or transferred under this
Agreement (collectively, the "Total Commitments").
"Commitment Period"
-----------------
means the period from the date of this Agreement until the Term
Date.
"Consolidated Total Assets"
-------------------------
means the total tangible assets of the Group (excluding recorded
goodwill but including all intellectual property rights) as shown in
its latest audited consolidated accounts with such adjustments, if
any, as the Parent's auditors may, at the request of the Parent or the
Agent, certify to the Parent and the Agent to be appropriate to take
account of events that have occurred since the date as at which such
accounts were prepared.
<PAGE>
3
"Default"
-------
means an Event of Default or an event which, with the giving of notice,
lapse of time, determination of materiality or fulfillment of any other
applicable condition (or any combination of the foregoing), would
constitute an Event of Default.
"Deutschmarks"
------------
means the lawful currency for the time being of the Federal Republic
of Germany.
"Disclosure Letter"
-----------------
means a letter delivered by the Parent to the Agent prior to the date
hereof relating to Clause 19 (Representations and warranties).
"Dollars" or "$"
--------------
means the lawful currency for the time being of the United States of
America.
"Drawdown Date"
-------------
means the date of the advance of a Loan.
"Dutch Guilders"
--------------
means the lawful currency for the time being of The Netherlands.
"EIBOR"
-----
means, in relation to a Loan denominated in Sterling:-
(a) the rate per annum of the offered quotation for deposits in
Sterling for a period comparable to the relevant Interest
Period which appears on Telerate Page 3750 at or about
11.00 a.m. on the applicable Rate Fixing Day; or
(b) if no such offered quotation appears on Telerate Page 3750 at
or about such time, the arithmetic mean (rounded upwards, if
necessary, to four decimal places) of the offered quotations
for deposits in Sterling for a period comparable to the
relevant Interest Period which appears on the Reuters Screen
LIBP at or about 11.00 a.m. on the applicable Rate Fixing Day;
or
(c) if no such offered quotation appears on the Telerate Page 3750
and one only or no such offered quotation appears on the LIBP
Page of the Reuters Screen at or about 11.00 a.m. on the
applicable Rate Fixing Day (or if there is no LIBP Page on the
<PAGE>
4
Reuters Screen) or the Agent determines, on the instruction of
a Bank, that the rate determined in accordance with paragraphs
(a) and (b) above is not available for deposits in Sterling
domiciled outside the United Kingdom, the arithmetic mean
(rounded upwards, if necessary, to four decimal places) of the
per annum rates, as supplied to the Agent at its request,
quoted by each Reference Bank to leading banks at or about
11.00 a.m. on the applicable Rate Fixing Day for the offering
of deposits in Sterling domiciled outside the United Kingdom
in an amount comparable to its participation in that Loan and
for a period equal to the relevant Interest Period.
For the purposes of this definition, "Telerate Page 3750" means the display
------------------
designated as "Page 3750", on the Telerate Service (or such other page as may
replace Page 3750 on that service or such other service as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying British Bankers' Association Interest Settlement Rates for Sterling
deposits).
"Event of Default"
----------------
means an event specified as such in Clause 21.1 (Events of Default).
"Facility"
--------
means the revolving credit facility so designated, the terms of which are set
out herein.
"Facility Office"
---------------
means the office(s) notified by a Bank to the Agent:-
(a) on or before the date it becomes a Bank; or
(b) by not less than thirty days' notice (or where Clause 17 (Mitigation)
applies, such other period as the Agent may agree),
as the office(s) through which it will perform all or any of its obligations
under this Agreement.
"Fee Letters"
-----------
means the two letters both dated the date of this Agreement between the Agent
and the Borrower setting out the amount of various fees referred to in Clause 23
(Fees).
"Final Repayment Date"
--------------------
means the fifth anniversary of the date of this Agreement.
<PAGE>
5
"Finance Document"
----------------
means this Agreement, the Fee Letters or any other document designated as such
by the Agent and the Parent.
"Finance Party"
-------------
means the Arranger, a Bank or the Agent.
"Financial Indebtedness"
----------------------
means (without double counting) any indebtedness in respect of:-
(a) moneys borrowed and debit balances at banks and other financial
institutions;
(b) any debenture, bond, note, loan stock or other security;
(c) any acceptance credit;
(d) receivables sold or discounted to the extent that there is recourse to the
seller for non-payment by the relevant debtor;
(e) the acquisition cost of any asset to the extent payable after the time of
acquisition or possession by the party liable where the deferred payment
is arranged primarily as a method of raising finance and the deferral is
for a period in excess of 180 days (and, for the avoidance of doubt, this
paragraph (e) shall not include trade debt);
(f) leases (in relation to real estate, plant and machinery or equipment), if
and to the extent that the lessee is required under standard accounting
practices or principles applicable to it to account for the value of the
lease as an asset and the lease payments as a liability;
(g) currency swap or interest swap, cap or collar arrangements or any
derivative instruments relating to such arrangements; and
(h) any guarantee, indemnity or similar legally binding assurance against
financial loss of any person in each case in respect of any of the types
of obligation referred to in paragraphs (a) - (g) above.
"French Francs"
-------------
means the lawful currency for the time being of France.
"Group"
-----
means the Parent and its Subsidiaries.
<PAGE>
6
"Interest Period"
---------------
means each period determined in accordance with Clause 8 (Interest Periods).
"LIBOR"
-----
means, in relation to a Loan denominated in a currency other than Sterling:-
(a) the rate per annum of the offered quotation for deposits in the currency
of that Loan for a period comparable to the relevant Interest Period which
appears on Telerate Page 3750 or Telerate Page 3740, as the case may be,
at or about 11.00 a.m. on the applicable Rate Fixing Day; or
(b) if no such offered quotation appears on Telerate Page 3750 or Telerate
Page 3740, as the case may be, at or about such time, the arithmetic mean
(rounded upwards, if necessary, to four decimal places) of the offered
quotations for deposits in the currency of that Loan for a period
comparable to the relevant Interest Period which appears on the Reuters
Screen LIBO (in the case of Dollars) or the relevant page (if any) for any
other currency at or about 11.00 a.m. on the applicable Rate Fixing Day;
or
(c) if no such offered quotation appears on the Telerate Page 3750 or Telerate
Page 3740, as the case may be, and one only or no such offered quotation
appears on the relevant Page of the Reuters Screen at or about 11.00 a.m.
on the applicable Rate Fixing Day (or if there is no relevant Page on the
Reuters Screen), the arithmetic mean (rounded upwards, if necessary, to
four decimal places) of the per annum rates, as supplied to the Agent at
its request, quoted by each Reference Bank to leading banks in the London
interbank market at or about 11.00 a.m. on the applicable Rate Fixing Day
for the offering of deposits in the currency of that Loan in an amount
comparable to its participation in that Loan and for a period equal to the
relevant Interest Period.
For the purposes of this definition, "Telerate Page 3750" means the display
------------------
designated as "Page 3750", and "Telerate Page 3740" means the display designated
------------------
as "Page 3740", on the Telerate Service (or such other page as may replace Page
3750 or Page 3740, as the case may be, on that service or such other service as
may be nominated by the British Bankers' Association as the information vendor
for the purpose of displaying British Bankers' Association Interest Settlement
Rates for deposits in the relevant currency).
<PAGE>
7
"Loan"
----
means, subject to Clauses 8 (Interest Periods) and 11 (Amount of Optional
Currencies), the principal amount of each borrowing by the Borrowers under this
Agreement or the principal amount outstanding of that borrowing.
"Majority Banks"
--------------
means, at any time, Banks:-
(a) whose participations in the Loans then outstanding aggregate at least 67
per cent. (or, for the purposes of Clause 21.16 (Acceleration), 51 per
cent.) of all the Loans then outstanding; or
(b) if there are no Loans then outstanding, whose Commitments then aggregate
at least 67 per cent. (or, for the purposes of Clause 21.16
(Acceleration), 51 per cent.) of the Total Commitments; or
(c) if there are no Loans then outstanding and the Total Commitments have been
reduced to nil, whose Commitments aggregated at least 67 per cent. (or,
for the purposes of Clause 21.16 (Acceleration), 51 per cent.) of the
Total Commitments immediately before the reduction.
"Margin"
------
Means 0.50 per cent. per annum.
"Material Subsidiary"
-------------------
means, at any time, a member of the Group:-
(a) whose total assets as shown in its latest audited accounts (consolidated
if it itself has Subsidiaries) exceed three per cent. of Consolidated
Total Assets at that time; and/or
(b) whose turnover as shown in its latest audited accounts (consolidated if it
itself has Subsidiaries) exceeds three per cent. of the turnover of the
Group as shown in the Parent's latest audited consolidated accounts
adjusted to reflect turnover of any company which has since become or
ceased to be a member of the Group.
PROVIDED THAT if, at any time, either
(i) the aggregate of the total assets of all the Material Subsidiaries at that
time is not at least 75 per cent. of Consolidated Total Assets; or
<PAGE>
8
(ii) the aggregate turnover of all the Material Subsidiaries as
shown in their latest audited accounts is not at least 75 per
cent. of the turnover for the Group as shown in the Parent's
latest audited consolidated accounts, adjusted as aforesaid,
then every member of the Group shall be a Material Subsidiary.
"MLA Cost"
-------
means the cost imputed to a Bank whose Facility Office is in the
United Kingdom of compliance with the Mandatory Liquid Assets
requirements of the Bank of England during an Interest Period for a
Loan maintained in Sterling, expressed as a rate per annum and
determined in accordance with Schedule 3.
"Novation Certificate"
--------------------
has the meaning given to it in Clause 29.3 (Procedure for
novations).
"Obligor"
-------
means the Parent or any Borrower.
"Optional Currency"
-----------------
means the Agreed Optional Currencies and any other currency with the
exception of Dollars.
"Original Dollar Amount"
----------------------
in relation to a Loan, means:-
(a) if that Loan is denominated in Dollars, the amount of that
Loan; or
(b) if that Loan is denominated in an Optional Currency, the
equivalent in Dollars of the amount of that Loan if it had
first been drawn down and had remained denominated in Dollars.
"Original Group Accounts"
-----------------------
means the audited consolidated accounts of the Group for the year
ended December, 1991 and the unaudited consolidated income
statements of the Group for the six months ended 30th June, 1992.
"Party"
-----
means a party to this Agreement.
<PAGE>
9
"Rate Fixing Day"
---------------
means the second Business Day before the first day of an Interest
Period for a Loan.
"Reference Banks"
---------------
means, subject to Clause 29.4 (Reference Banks), the principal
London offices of Banque Nationale de Paris, P.L.C., Commerzbank
International S.A. and Union Bank of Switzerland.
"Reg D Cost"
----------
means, in relation to each Bank which is for the time being required
under regulations of the Board of Governors of the Federal Reserve
System of the United States to maintain reserves with respect to
liabilities or assets consisting of Euro Currency Liabilities (as
such term is defined in Regulation D) and in respect of each Loan
which is denominated in Dollars, a rate per annum equal at all times
to the remainder obtained by subtracting (1) LIBOR for the Interest
Period for such Loan from (2) the rate obtained by dividing such
LIBOR by a percentage equal to one hundred per cent. minus the
Eurodollar Rate Reserve Percentage of such Bank for such Interest
Period. Such rate shall be determined by such Bank and notified to
the relevant Borrower by the Agent. The "Eurodollar Rate Reserve
Percentage" of any Bank for any Interest Period for a Loan means the
reserve percentage applicable during such Interest Period (or if
more than one such percentage shall be so applicable, the daily
average of such percentages for those days in such Interest Period
during which any such percentage shall be so applicable) under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System of the United States for determining the
maximum reserve requirement (including any marginal, supplemental or
emergency reserve requirement) for such Bank with respect to
liabilities or assets consisting of Eurocurrency Liabilities having
a term equal to such Interest Period.
"Request"
-------
means a request made by a Borrower for a Loan, substantially in the
form of Schedule 4.
"Repayment Date"
--------------
means each date on which the Total Commitments are to be reduced in
accordance with Clause 6.2 (Reduction in Total Commitments).
<PAGE>
10
"Reserve Asset Costs"
-------------------
means:
(a) in relation to a Loan denominated in Sterling for any Interest
Period, the MLA Cost calculated for that Interest Period in
respect of that Loan; and
(b) in relation to a Loan denominated in Dollars for any Interest
Period the Reg D Cost calculated for that Interest Period in
respect of that Loan.
"Security Interest"
-----------------
means any mortgage, pledge, lien, charge, assignment by way of
security, hypothecation or security interest or any other agreement
or arrangement having the effect of conferring security.
"Sterling"
--------
means the lawful currency for the time being of the United Kingdom.
"Subsidiary"
----------
means a subsidiary within the meaning of the Swedish Companies Act
(1975:1385).
"Swiss Francs"
------------
means the lawful currency for the time being of Switzerland.
"Tax on Overall Net Income"
-------------------------
of a Bank shall be construed as a reference to tax (other than tax
deducted or withheld from any amounts paid or payable hereunder)
imposed on that Bank by the jurisdiction under the laws of which it
has been incorporated or in which its Facility Office is located on
(1) the net income, profits or gains of that Bank worldwide or
(2) such of the net income, profits or gains of that Bank as are
considered to arise in or to relate to or are taxable in that
jurisdiction.
"Term Date"
---------
means the date falling one month prior to the Final Repayment Date.
"Total Commitments"
-----------------
means the aggregate of the Commitments of all the Banks to the
extent not reduced in accordance with Clause 6.2 (Reduction in Total
Commitments) or otherwise cancelled hereunder.
<PAGE>
11
"Total Outstandings"
------------------
means, at any time, the aggregate Original Dollar Amount of all
Loans then outstanding.
"Yen"
---
means the lawful currency for the time being of Japan.
1.2 Construction
------------
(a) In this Agreement, unless the contrary intention appears, a
reference to:-
(i) "assets" includes properties, revenues and rights of every
------
description;
an "authorisation" includes an authorisation, consent,
-------------
approval, resolution, licence, exemption, filing and
registration;
a "month" or a period of "months" is a reference to a period
-----
starting on one day in a calendar month and ending on the
numerically corresponding day in the relevant later calendar
month, except that if there is no numerically corresponding
day in that later month, that period shall end on the last
Business Day in that calendar month;
a "regulation" includes any regulation, rule, official
----------
directive, request or guideline (whether or not having the
force of law but, if not, being of a kind with which it is
customary for companies within the relevant industry to
comply) of any governmental body, agency, department or
regulatory, self-regulatory or other authority or
organisation;
(ii) a provision of law is a reference to that provision as amended
or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement;
(iv) a person includes its successors, transferees and assigns;
(v) a Finance Document or another document is a reference to that
Finance Document or other document as amended, novated or
supplemented; and
(vi) a time of day is a reference to London time.
<PAGE>
12
(b) Unless the contrary intention appears, a term used in any other
Finance Document or in any notice given under or in connection with
any Finance Document has the same meaning in that Finance Document
or notice as in this Agreement.
(c) The index to and the headings in this Agreement are for convenience
only and are to be ignored in construing this Agreement.
(d) Words importing the singular shall include the plural and vice
versa.
2. COMMITMENTS AND NATURE OF OBLIGATIONS
-------------------------------------
2.1 Statement of Commitments
------------------------
Subject to the terms of this Agreement, each Bank agrees to make
Loans in Dollars or an Optional Currency up to an aggregate Original
Dollar Amount not exceeding its Commitment.
2.2 Maximum Amounts
---------------
Notwithstanding any other provision of this Agreement, save as
provided in Clause 11.2(c), the Total Outstandings may not, at any
time, exceed the Total Commitments at that time.
2.3 Obligations several
-------------------
The obligations of each Bank under this Agreement are several.
Failure of a Bank to carry out its obligations hereunder shall not
relieve any other party hereto of any of its obligations hereunder.
No Bank shall be responsible for the obligations of any other Bank
hereunder.
2.4 Rights several
--------------
The obligations of each Borrower towards the Agent and the Banks
hereunder are given to each of them as separate and independent
rights. Each Bank may, except as otherwise stated in this
Agreement, separately enforce its rights hereunder.
2.5 Additional Borrowers
--------------------
The Borrowers' Agent may, with the prior written consent of the
Majority Banks, at any time during the term of this Agreement,
notify the Agent that one of the Parent's Subsidiaries incorporated
in Sweden or the United States of America (or elsewhere, with the
consent of all the Banks) is to be designated as an Additional
Borrower, guaranteed by the Parent. Such notice shall be in writing
and signed on behalf of the Borrowers' Agent and on behalf of the
Subsidiary concerned and shall take effect in accordance with its
terms provided that:
<PAGE>
13
(a) the Additional Borrower enters into a Deed of Accession with
the Agent on behalf of the Banks in the form of Schedule 6
together with such amendments as the Agent, acting in
accordance with the directions of the Majority Banks, may
reasonably require; and
(b) the Additional Borrower, before entering into such a Deed of
Accession, has fulfilled all appropriate conditions precedent
as notified to the Borrowers' Agent in the Banks' written
consent to the satisfaction of the Agent or as otherwise
agreed by the Banks.
2.6 Approved Additional Borrowers
-----------------------------
The Subsidiaries listed in Schedule 7 shall (subject to
sub-paragraphs (a) and (b) of Clause 2.5 (Additional Borrowers)) be
deemed to be approved by all the Banks as Additional Borrowers.
2.7 Borrowers' Agent
----------------
Each Borrower by its execution of this Agreement or, as the case may
be, of a Deed of Accession irrevocably authorises the Borrowers'
Agent to give all notices and instructions and make such agreements
expressed to be capable of being given or made by the Borrowers
herein notwithstanding that they may affect such Borrower without
further reference to or the consent of such Borrower and such
Borrower shall, as regards the Agent and each Bank, be bound thereby
as though such Borrower itself had agreed such change or given such
notice or made such agreement.
2.8 Choice of Facility Office
-------------------------
Each Bank agrees (but without accepting any legal liability) that,
when selecting the Facility Office(s) through which it will perform
all or any of its obligations under this Agreement relating to an
Additional Borrower, it shall use reasonable efforts to minimise the
taxation and other costs (other than Reserve Asset Costs) for the
Additional Borrower arising from such selection PROVIDED THAT such
Bank shall not be required to select a particular Facility Office or
to take any other steps if, in its bona fide opinion, such selection
or such steps would or might have an adverse effect upon its
business, operations or financial condition.
3. PURPOSE
-------
The Borrower shall apply each Loan towards its general corporate
purposes including the refinancing of existing debt. Without
affecting the obligations of the Borrower in any way, no Finance
Party is bound to monitor or verify the application of any Loan.
<PAGE>
14
4. CONDITIONS PRECEDENT
--------------------
4.1 Documentary conditions precedent
--------------------------------
The obligations of each Finance Party to any Obligor under this
Agreement are subject to the condition precedent that the Agent has
notified the Parent and the Banks that it has received all of the
documents set out in Schedule 2 in form and substance satisfactory
to the Agent. The Agent will give the Borrower such notification
promptly upon receipt of such documents.
4.2 Further conditions precedent
----------------------------
The obligations of each Bank to advance any amount under Clause 5.3
(Participations) or 11 (Amount of Optional Currencies) are (unless
all of the Banks otherwise agree in any particular case) subject to
the further conditions precedent that on both the date of the
Request (if applicable) and the date on which the relevant amount is
to be advanced:
(a) the representations and warranties in Clause 19
(Representations and warranties) to be repeated on those dates
are correct and will be correct immediately after the advance;
and
(b) no Default is outstanding or would result from the advance.
5. DRAWDOWN
--------
5.1 Commitment
----------
Subject to the terms of this Agreement, Loans will be made to each
Borrower at any time when requested by the Borrower.
5.2 Requests
--------
(a) Whenever a Borrower desires a Loan to be made available to it, it
shall give a Request in writing to the Agent, appropriately
completed, to be received not later than 10.00 a.m. (London time) on
the fourth (in the case of a Loan to be denominated in Dollars or an
Agreed Optional Currency during the first Interest Period) or the
fifth (in the case of a Loan to be denominated in a currency other
than Dollars or an Agreed Optional Currency during the first
Interest Period) Business Day prior to the proposed Drawdown Date of
such Loan (or such other time as the Borrower may agree with the
Banks), specifying in respect of such Loan:
(i) the proposed Drawdown Date (being a Business Day during the
Commitment Period);
(ii) the Original Dollar Amount of such Loan which shall be a
minimum of $5,000,000 and an integral multiple of $1,000,000;
<PAGE>
15
(iii) the currency in which such Loan is to be denominated for the
first Interest Period determined in accordance with Clause 10
(Selection of Optional Currencies);
(iv) the first Interest Period for such Loan determined in
accordance with Clause 8 (Interest Periods);
(v) the payment instructions in compliance with Clause 12
(Payments).
(b) Subject to the terms of this Agreement, each Request shall be
irrevocable and the Borrower shall be bound to accept the Loan in
accordance with the Request. The Agent shall promptly notify each
Bank of each Request and, if the Loan is to be denominated in an
Agreed Optional Currency, the Optional Currency amounts (and the
applicable Agent's Spot Rate of Exchange) in accordance with Clause
11.1 (Drawdowns). No Borrower may serve a Request until the Agent
has confirmed to the Parent and the Banks that the conditions
precedent set out in Clause 4.1 (Conditions Precedent) have been
satisfied. Loans may not be in more than five currencies at any one
time. Each Request must specify one Loan only, but the Borrower
may, subject to the other terms of this Agreement, deliver more than
one Request on any one day.
5.3 Participations
--------------
Subject to the terms of this Agreement, each Bank shall on the
proposed Drawdown Date make available to the Agent the amount of its
participation in the Loan concerned in the proportion its Commitment
bears to the Total Commitments.
6. REPAYMENT
---------
6.1 Repayment
---------
Subject to Clauses 6.2 (Reduction in Total Commitments) and 7
(Prepayment and Cancellation), the Borrower shall repay each Loan in
the currency in which it is denominated in full on the Final
Repayment Date.
6.2 Reduction in Total Commitments
------------------------------
On each date set out below, the Total Commitments shall be
automatically and irrevocably reduced by the amount set out opposite
that date (such reduction to be applied pro rata to each Bank's
Commitment):
Date Amount of reduction in
---- ----------------------
Total Commitments
-----------------
11th May, 1996 $25,000,000
11th May, 1997 $25,000,000
<PAGE>
16
7. PREPAYMENT AND CANCELLATION
---------------------------
7.1 Voluntary Prepayment
--------------------
The Borrower may at any time, by giving not less than five Business
Days' prior written notice to the Agent, prepay (without premium or
penalty) any Loan on the last day of an Interest Period for that
Loan in whole or in part (but, if in part, in an integral multiple
of an Original Dollar Amount of $5,000,000).
7.2 Voluntary Cancellation
----------------------
The Borrower may, by giving not less than 30 days' prior written
notice to the Agent, cancel in whole or in part the undrawn amount
of the Total Commitments (but, if in part, in an integral multiple
of an Original Dollar Amount of $5,000,000).
7.3 Additional right of prepayment and cancellation
-----------------------------------------------
If:-
(a) a Borrower is required to pay to a Bank any additional amounts
under Clause 13 (Taxes); or
(b) a Borrower is required to pay to a Bank any amount under
Clause 15 (Increased costs); or
(c) interest on a Bank's participation in a Loan is being
calculated in accordance with Clause 14.4(c) (Alternative
basis for outstanding Loans),
then, without prejudice to the obligations of the Borrower under
those Clauses, the Borrower's Agent may, whilst the circumstances
continue or within thirty days after receipt of notice from that
Bank or the Agent of the relevant event within paragraph (a), (b) or
(c) above (whichever is the later), serve a notice of prepayment and
cancellation on that Bank through the Agent. On the date falling
five Business Days after the date of service of the notice:-
(i) the Borrowers shall prepay that Bank's participation in all
the Loans; and
(ii) that Bank's undrawn Commitment shall be cancelled.
7.4 Miscellaneous provisions
------------------------
(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable. The Agent shall notify the Banks promptly of receipt
of any such notice.
<PAGE>
17
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid.
(c) No prepayment or cancellation is permitted except in accordance with
the express terms of this Agreement.
(d) Any amount of any Loan prepaid under this Agreement may subsequently
be re-borrowed. No amount of the Total Commitments cancelled under
this Agreement may subsequently be reinstated.
8. INTEREST PERIODS
----------------
8.1 Selection
---------
(a) The Borrower may select an Interest Period for a Loan in either the
relevant Request or, if the Loan has been borrowed, a notice
received by the Agent not later than 10.00 a.m. on the fourth
Business Day before the commencement of that Interest Period. Each
Interest Period for a Loan will commence on its Drawdown Date or the
expiry of its preceding Interest Period.
(b) Subject to the following provisions of this Clause 8 (Interest
Periods), each Interest Period will be one, three or six months.
(c) If the Borrower fails to select an Interest Period for an
outstanding Loan in accordance with paragraph (a) above, that
Interest Period will, subject to the other provisions of this Clause
8 (Interest Periods), be three months.
(d) No more than six Interest Periods of one month's duration may be
selected in any calendar year.
8.2 Non-Business Days
-----------------
If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall instead end on the next
Business Day in that calendar month (if there is one) or the
preceding Business Day (if there is not).
8.3 Consolidation and splitting
---------------------------
(a) The number of Interest Periods current hereunder at any time with
different expiry dates shall not exceed 10.
(b) If the number of Interest Periods current hereunder with different
expiry dates reaches 10, the first Interest Period for any
additional Loan must end on the same day as an existing Interest
Period for another Loan for the same Borrower and both such Loans
shall thereafter (if in the same currency and subject to paragraph
(c) below) be consolidated.
<PAGE>
18
(c) Subject to paragraph (a) above, the Borrower may, in any Request or
any notice given pursuant to Clause 8.1(a) above, split any Loan
(including any consolidated Loan) into two or more Loans (provided
that the Original Dollar Amount of each resulting Loan is a minimum
of $5,000,000).
8.4 No overrunning
--------------
If an Interest Period in respect of a Loan would otherwise overrun
the Final Repayment Date, it shall be shortened so that it ends on
the Final Repayment Date. The Agent may also shorten any Interest
Period for any Loan (and may redesignate any Loan as two Loans) to
ensure that the aggregate principal amount of Loans with an Interest
Period ending on a Repayment Date is at least equal to the amount to
be repaid on that Repayment Date.
8.5 Other adjustments
-----------------
The Agent and the Borrowers' Agent may, with the consent of the
Majority Banks, enter into such other arrangements as they may agree
for the adjustment of Interest Periods and the consolidation and/or
splitting of Loans.
8.6 Notification
------------
The Agent shall notify the Borrower, the Borrowers' Agent and the
Banks of the duration of each Interest Period promptly after
ascertaining its duration.
9. INTEREST
--------
9.1 Interest rate
-------------
The rate of interest on each Loan for each of its Interest Periods
is the rate per annum determined by the Agent to be the aggregate
of:-
(a) Margin;
(b) (i) in the case of all Loans other than a Sterling Loan,
LIBOR; or
(ii) in the case of a Sterling Loan, EIBOR; and
(c) Reserve Asset Costs when applicable to such Loan.
9.2 Due dates
---------
Except as otherwise provided in this Agreement, accrued interest on
each Loan is payable by the Borrower on the last day of each
Interest Period for that Loan.
<PAGE>
19
9.3 Default interest
----------------
(a) If an Obligor fails to pay any amount payable by it under this
Agreement, it shall forthwith on demand by the Agent pay interest on
the overdue amount from the due date up to the date of actual
payment, as well after as before judgment, at a rate (the "default
-------
rate") determined by the Agent to be one per cent. per annum above:-
----
(i) if the overdue amount is of principal and an Interest Period
relative thereto is still current, the rate applicable to such
overdue amount under Clause 9.1 (Interest rate) during such
Interest Period; and
(ii) in any other case, the rate which would have been payable if
the overdue amount had, during the period of non-payment,
constituted a Loan in the currency of the overdue amount for
such successive Interest Periods of such duration as the Agent
may determine (each a "Designated Interest Period").
--------------------------
(b) The default rate will be determined by the Agent on each Business
Day or two Business Days before the first day of the relevant
Designated Interest Period, as appropriate.
(c) If the Agent determines that deposits in the currency of the overdue
amount are not at the relevant time being made available by the
Reference Banks to leading banks in the relevant interbank market,
the default rate will be determined by reference to the weighted
average of the cost of funds to the Banks from whatever sources they
may select.
(d) Default interest will be compounded at the end of each Designated
Interest Period.
9.4 Notification
------------
The Agent shall promptly notify the Borrower, the Borrowers' Agent
and each Bank of the determinstion of a rate of interest under this
Agreement.
10. SELECTION OF OPTIONAL CURRENCIES
--------------------------------
10.1 Availability
------------
A Borrower may not request that a Loan be denominated in an Optional
Currency (other than an Agreed Optional Currency) unless the Agent
has confirmed to the Borrower that the Optional Currency is readily
available and freely transferable in the London foreign exchange
market.
<PAGE>
20
10.2 Selection
---------
(a) The Borrower may select the currency of a Loan for an Interest
Period in the relevant Request. Each Loan shall be denominated in
only one currency.
(b) The Borrower may not choose a currency if as a result the Loans
would be denominated at any one time in more than five currencies.
10.3 Revocation of currency
----------------------
Notwithstanding Clause 10.1 (Availability), if before 10.00 a.m. on
the fourth Business Day before the commencement of an Interest
Period, the Agent receives notice from a Bank that:-
(a) it is impracticable for the Bank to fund or make its
participation in the Loan in the relevant Optional Currency
(other than an Agreed Optional Currency) during that Interest
Period for reasons affecting the London interbank market
generally; or
(b) the use of the proposed Optional Currency (other than an
Agreed Optional Currency) might contravene any law or
regulation,
the Agent shall give notice to the Borrower, the Borrowers' Agent
and to the Banks to that effect before 11.00 a.m. on that day and,
unless the Borrower, the Borrowers' Agent and the Banks agree
otherwise, the Loan shall be denominated in Dollars during that
Interest Period.
11. AMOUNT OF OPTIONAL CURRENCIES
-----------------------------
11.1 Drawdowns
---------
If a Loan is to be drawn down in an Optional Currency, the amount of
each Bank's participation in that Loan will be determined by
converting into that Optional Currency the Bank's participation in
the Original Dollar Amount of that Loan on the basis of the Agent's
Spot Rate of Exchange four Business Days before its Drawdown Date.
11.2 Calculation for each Interest Period
------------------------------------
(a) If a Loan is denominated in an Optional Currency, prior to the end
of each of its Interest Periods, there shall be calculated the
difference between the amount of such Loan (in that Optional
Currency) for the current Interest Period and for the next Interest
Period. The amount of such Loan for the next Interest Period will
be determined by notionally converting into that Optional Currency
the Original Dollar Amount of such Loan on the basis of the Agent's
Spot Rate of Exchange four Business Days before the commencement of
that Interest Period.
<PAGE>
21
(b) At the end of the current Interest Period (but subject always to
paragraph (c) below):-
(i) if the amount of such Loan for the next Interest Period is
less than for the preceding Interest Period, the Borrower
shall repay the difference; or
(ii) if the amount of such Loan for the next Interest Period is
greater, each Bank shall forthwith make available to the Agent
for the Borrower its participation in the difference.
(c) If the Agent's Spot Rate of Exchange for the next Interest Period
shows an appreciation or depreciation of the Optional Currency
against Dollars of less than five per cent. when compared with the
Original Exchange Rate, no amounts are payable in respect of the
difference. In this Clause 11 (Amount of Optional Currencies)
"Original Exchange Rate" means the Agent's Spot Rate of Exchange
used for determining the amount of the Optional Currency for the
Interest Period which is the later of the following:-
(i) the Interest Period during which such Loan was first
denominated in that Optional Currency if such Loan has since
then remained denominated in that Optional Currency; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 11.2.
11.3 Prepayments and Repayments
--------------------------
If a Loan is to be repaid or prepaid by reference to an Original
Dollar Amount, the amount actually to be repaid or prepaid in the
relevant Optional Currency shall be determined by applying to the
relevant part of the Original Dollar Amount to be repaid or prepaid
the Agent's Spot Rate of Exchange last used for determining the
Optional Currency amount of that Loan under this Clause 11 (Amount
of Optional Currencies) or, if applicable, the Original Exchange
Rate.
11.4 Notification
------------
Except for Optional Currency amounts for a Loan to be drawn down in
an Agreed Optional Currency of which the Agent shall notify the
Banks in accordance with Clause 5.2 (Requests), the Agent shall
notify the Banks, the Borrower and the Borrowers' Agent of Optional
Currency amounts (and the applicable Agent's Spot Rate of Exchange)
promptly after they are ascertained.
12. PAYMENTS
--------
12.1 Place
-----
All payments by an Obligor or a Bank under this Agreement shall be
made to the Agent to its account at such office or bank as it may,
<PAGE>
22
at least three Business Days prior to the due date of such payment,
notify to that Obligor or Bank for this purpose.
12.2 Funds
-----
Payments under this Agreement to the Agent shall be made for value
on the due date at such times and in such funds as are customary at
the time for the settlement of transactions in the relevant currency
in the place for payment.
12.3 Distribution
------------
(a) Each payment received by the Agent under this Agreement for another
Party shall, subject to paragraphs (b) and (c) below, be made
available by the Agent to that Party by payment (on the date and in
the currency and funds of receipt) to its account with such office
or bank in the principal financial centre of the country of the
relevant currency as it may notify to the Agent for this purpose by
not less than five Business Days' prior notice.
(b) The Agent may apply any amount received by it for a Borrower in or
towards payment (on the date and in the currency and funds of
receipt) of any amount due from such Borrower under this Agreement
or in or towards the purchase of any amount of any currency to be so
applied.
(c) Where a sum is to be paid to the Agent under this Agreement for
another Party, the Agent is not obliged to pay that sum to that
Party until it has established that it has actually received that
sum. The Agent may, however, assume that the sum has been paid to
it in accordance with this Agreement, and, in reliance on that
assumption, make available to that Party a corresponding amount. If
the sum has not been made available but the Agent has paid a
corresponding amount to another Party, that Party shall forthwith on
demand by the Agent refund the corresponding amount together with
interest on that amount from the date of payment to the date of
receipt, calculated at a rate determined by the Agent to reflect its
cost of funds.
12.4 Currency
--------
(a) A repayment or prepayment of a Loan or any part of a Loan is payable
in the currency in which the Loan is denominated.
(b) Interest is payable in the currency in which the relevant amount in
respect of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses and taxes and the like
are payable in the currency in which they are incurred.
(d) Any other amount payable under this Agreement is, except as
otherwise provided in this Agreement, payable in Dollars.
<PAGE>
23
12.5 Set-off and counterclaim
------------------------
All payments made by an Obligor under this Agreement shall be made
without set-off or counterclaim;
12.6 Non-Business Days
-----------------
(a) If a payment under this Agreement is due on a day which is not a
Business Day, the due date for that payment shall instead be the
next Business Day in the same calendar month (if there is one) or
the preceding Business Day (if there is not).
(b) During any extension of the due date for payment of any principal
under this Agreement interest is payable on that principal at the
rate payable on the original due date.
12.7 Partial payments
----------------
(a) If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Obligors under this Agreement,
the Agent shall apply that payment towards the obligations of the
Obligors under this Agreement in the following order:-
(i) first, in or towards payment pro rata of any unpaid costs and
-----
expenses of the Agent under this Agreement;
(ii) secondly, in or towards payment pro rata of any accrued
--------
interest due but unpaid under this Agreement;
(iii) thirdly, in or towards payment pro rata of any principal due
-------
but unpaid under this Agreement; and
(iv) fourthly, in or towards payment pro rata of any other sum due
--------
but unpaid under this Agreement.
(b) The Agent shall, if so directed by all the Banks, vary the order set
out in sub-paragraphs (a)(ii) to (iv) above.
(c) Paragraphs (a) and (b) above shall override any appropriation made
by an Obligor.
13. TAXES
-----
13.1 Gross-up
--------
All payments by an Obligor under the Finance Documents shall be made
without any deduction and free and clear of and without deduction
for or on account of any taxes (other than Taxes on Overall Net
Income), except to the extent that the Obligor is required by law to
make payment subject to any taxes. If any tax or amounts in respect
of tax must be deducted, or any other deductions for or on account
of any taxes must be made, from any amounts payable or paid by an
<PAGE>
24
Obligor, or paid or payable by the Agent to a Bank, under the
Finance Documents, the Obligor shall (subject to Clause 13.2(c)) pay
such additional amounts as may be necessary to ensure that the
relevant Bank receives a net amount equal to the full amount which
it would have received had payment not been made subject to tax.
13.2 Forms
-----
(a) To the extent that at that time any Bank is entitled to complete or
partial, as the case may be, exemption from deduction or withholding
for or on account of any taxes with respect to all payments to be
made by any Obligor under the Finance Documents merely by completing
certain forms, that Bank agrees, upon request by such Obligor, to
execute and deliver to such Obligor, such forms, if they are
required by law or are such as the Obligor may reasonably request.
Further, if COBE becomes an Additional Borrower, each Bank which is
organised under the laws of a jurisdiction outside the United States
of America hereby agrees (insofar as it can lawfully do so):
(i) within 10 days after the date on which COBE becomes an
Additional Borrower to deliver to COBE and the Agent:-
(aa) for the office, if any, identified with such Bank's
signature which is located in the United States of
America, two accurate and complete, original signed
copies of Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"); or
(bb) for the office, if any, identified with such Bank's
signature below which is located outside the United
States of America, two accurate and complete, original
signed copies of Internal Revenue Service Form 1001 or
any successor thereto ("Form 1001"),
in each case indicating that such Bank is on the date hereof
entitled to receive all payments under this Agreement through
such office free from withholding of US federal income tax;
and
(ii)
before or promptly after the occurrence of any event
(including the passage of time or the designation of an
Additional Borrower) requiring the delivery of an additional
or replacement Form 4224 or 1001 to deliver to COBE and the
Parent, upon the request of COBE, the Parent or the Agent, (if
delivery of the same be lawful under then applicable law), two
accurate and original signed copies of Form 4224 or 1001 in
addition to or replacement for the forms previously delivered
by such Bank claiming an exemption from withholding tax or the
greatest reduction of withholding tax available under then
applicable law.
<PAGE>
25
(b) Each Bank agrees that, to the extent any form claiming or otherwise
establishing complete or partial exemption from withholding and
deduction of taxes delivered under this Agreement is incomplete or
incorrect in any material respect when delivered or thereafter, such
Bank shall execute and deliver complete and correct replacement
forms.
(c) If a Bank fails to comply with paragraph (a) above, such Obligor
shall not be obliged to pay additional amounts under Clause 13.1
(Gross-up) in respect of any deduction for or on account of taxes
that would not have been made had such Bank complied.
13.3 Tax receipts
------------
All taxes required by law to be deducted or withheld by an Obligor
from any amounts paid or payable under the Finance Documents shall
be paid by the relevant Obligor when due and the Obligor shall, as
soon as reasonably practicable after the payment is made, deliver to
the Agent for the relevant Bank evidence satisfactory to that Bank
(including all relevant tax receipts (or similar evidence) or copies
thereof) that the payment has been duly remitted to the appropriate
authority.
13.4 Tax credits
-----------
(a) If, following the payment by any Obligor of any additional amounts
under Clause 13.1 (Gross-up), the Agent or any Bank shall determine
that it has received or been granted a credit against or remission
for any taxes payable by it, the Agent or such Bank shall reimburse
such Obligor with such amount as the Agent or such Bank shall in its
absolute discretion certify to be the proportion of such credit or
remission (if any) as will leave the Agent or such Bank (after such
reimbursement) in no worse position than it would have been in had
the relevant deduction or withholding not been made. Such
reimbursement shall be made promptly upon the Agent or such Bank
making any such determination.
(b) Nothing in paragraph (a) above shall:
(i) require the Agent or any Bank to disclose to any Obligor any
details of its tax affairs;
(ii) interfere with the right of the Agent or any Bank to arrange
its tax affairs in whatever manner it thinks fit; and
(iii) neither the Agent nor any Bank shall be under any obligation
to claim relief in respect of any payment under Clause 13.1 in
priority to any other reliefs, claims or credits available to
it.
<PAGE>
26
14. MARKET DISRUPTION
-----------------
14.1 Absence of quotations
---------------------
If the Agent requests a quotation from the Reference Banks and a
Reference Bank does not supply an offered rate by 1.00 p.m. on a
Rate Fixing Day, the applicable LIBOR or EIBOR (as the case may be)
shall, subject to Clause 14.2 (Market disruption), be determined on
the basis of the quotation of the other Reference Banks.
14.2 Market disruption
-----------------
If, on or prior to a Rate Fixing Day:-
(a) the Agent requests a quotation from the relevant Reference
Banks and two of those Reference Banks do not supply an
offered rate by 1.00 p.m. on a Rate Fixing Day; or
(b) the Agent determines that adequate and fair means do not exist
for ascertaining LIBOR or EIBOR (as the case may be); or
(c) the Agent receives notification from Banks whose
participations in a Loan exceed 50 per cent. of that Loan
that, in their opinion:-
(i) matching deposits are not available to them in the
relevant interbank market in the ordinary course of
business to fund their participations in that Loan for
the relevant Interest Period; or
(ii) the cost to them of obtaining matching deposits in the
relevant interbank market would be in excess of LIBOR or
EIBOR (as the case may be) for the relevant Interest
Period,
the Agent shall promptly notify the Borrower, the Borrowers' Agent
and the Banks of the fact and that this Clause 14 (Market
Disruption) is in operation.
For the purposes of this Clause, "relevant interbank market" means:
(1) in the case of all Loans other than a Sterling Loan, London;
and
(2) in the case of a Sterling Loan, such interbank market outside
the United Kingdom as a Bank may reasonably select for the
purposes of funding its participation.
14.3 Suspension of drawdowns
-----------------------
If a notification under Clause 14.2 (Market disruption) applies to a
Loan which has not been made, the Borrowers' Agent may (by notice to
<PAGE>
27
the Agent) elect that the Loan shall not be made. If the Borrowers'
Agent does not so elect and such Loan is made, Clause 14.4 shall
apply thereto. If the Borrowers' Agent does so elect, the
Borrowers' Agent and the Agent shall, within five Business Days of
the relevant Rate Fixing Day, enter into negotiations for a period
of not more than 30 days with a view to agreeing an alternative
basis for the borrowing of that and any future Loan made while such
circumstances continue. Any alternative basis agreed shall be, with
the prior consent of all the Banks, binding on all the Parties.
14.4 Alternative basis for outstanding Loans
---------------------------------------
If a notification under Clause 14.2 (Market disruption) applies to a
Loan which is (or, by virtue of the Borrowers' Agent not making an
election under Clause 14.3 (Suspension of drawdowns), which has
become) outstanding, then, notwithstanding any other provision of
this Agreement:-
(a) within five Business Days of receipt of the notification, the
Borrowers' Agent and the Agent shall enter into negotiations
for a period of not more than 30 days with a view to agreeing
an alternative basis for determining the rate of interest
and/or funding applicable to that Loan and/or any other Loans
denominated or to be denominated in the currency of that Loan;
(b) any alternative basis agreed under paragraph (a) above shall
be, with the prior consent of all the Banks, binding on all
the Parties;
(c) if no alternative basis is agreed, each Bank shall (through
the Agent) certify on or before the last day of the Interest
Period to which the notification relates an alternative basis
for maintaining its participation in that Loan;
(d) any such alternative basis may include an alternative method
of fixing the interest rate, alternative Interest Periods or
alternative currencies but it must reflect the cost to the
Bank of funding its participation in the Loan from whatever
sources it may reasonably select plus the Margin plus any
applicable Reserve Asset Costs; and
(e) each alternative basis so certified shall be binding on the
Borrower, the Borrowers' Agent and the certifying Bank and
treated as part of this Agreement.
15. INCREASED COSTS
---------------
15.1 Increased costs
---------------
(a) Subject to Clause 15.2 (Exceptions), the relevant Borrower, or,
where the increased cost cannot be attributed to a particular Loan,
the Borrowers' Agent, shall, forthwith on demand by a Finance Party
<PAGE>
28
to the Borrowers' Agent, pay to that Finance Party the amount of any
increased cost incurred by it as a result of:-
(i) any change after the date of this Agreement in, or in the
interpretation or application of, any law or regulation; or
(ii) compliance with any regulation made after the date of this
Agreement,
(including any law or regulation relating to reserve asset, special deposit,
cash ratio, liquidity or capital adequacy requirements or any other form of
banking or monetary control).
(b) In this Agreement "increased cost" means:-
--------------
(i) an additional cost incurred by a Finance Party as a result of
it having entered into, or performing, maintaining or funding
its obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance Party
in making, funding or maintaining all or any advances
comprised in a class of advances formed by or including its
participations in the Loans made or to be made under this
Agreement as is attributable to it making, funding or
maintaining those participations; or
(iii) a reduction in any amount payable to a Finance Party or the
effective return to a Finance Party under this Agreement on
its capital; or
(iv) the amount of any payment made by a Finance Party, or the
amount of any interest or other return foregone by a Finance
Party, on or in relation to any amount received or receivable
by that Finance Party from the Agent or an Obligor under this
Agreement.
(c) A Finance Party intending to make a claim under paragraph (a) above
shall, promptly upon its Facility Office becoming aware of an event
by reason of which it is entitled to do so and the possible results
thereof, notify the Agent, and the Agent shall promptly notify the
Borrower and the Borrowers' Agent, of such event.
15.2 Exceptions
----------
Clause 15.1 (Increased costs) does not apply to any increased cost:-
(a) compensated for by the payment of any Reserve Asset Costs;
(b) provided for by the operation of Clause 13 (Taxes); or
<PAGE>
29
(c) attributable to any change in the rate of Tax on Overall Net
Income of a Bank (or tax on the overall net income of a
division or branch of the Bank).
16. ILLEGALITY
----------
If it becomes unlawful in any jurisdiction for a Bank to give effect
to any of its obligations as contemplated by this Agreement or to
fund or maintain its participation in any Loan, then:-
(a) that Bank may notify the Borrowers' Agent through the Agent
accordingly; and
(b) (i) if so requested by that Bank through the Agent, the
Borrowers shall forthwith prepay that Bank's
participation in all Loans together with all other
amounts payable by the Borrowers to that Bank under this
Agreement; and
(ii) the Bank's undrawn Commitment shall forthwith be cancelled.
17. MITIGATION
----------
If, in respect of any Finance Party, circumstances arise which would
or would upon the giving of notice result in:
(i) the prepayment of its share of any outstanding Loans and the
cancellation of its Commitment pursuant to Clause 16
(Illegality); or
(ii) the payment of additional amounts for its account pursuant to
Clause 13.1 (Gross-up); or
(iii) a claim for payment pursuant to Clause 15.1 (Increased Costs),
or if payments are being made to a Finance Party pursuant to Clauses
13.1 (Gross-up) and 15.1 (Increased Costs), then, without in any way
limiting, reducing or otherwise qualifying the Obligors' obligations
hereunder (and, in particular, under any of the Clauses referred to
in sub-paragraphs (i), (ii), and (iii) above), such Finance Party
shall take such steps as such Finance Party in its bona fide opinion
considers appropriate to mitigate the effects of such circumstances
including (if such Bank considers it so appropriate) the transfer of
its Facility Office to another jurisdiction or the transfer of its
rights and obligations hereunder to another financial institution
willing to participate herein PROVIDED THAT such Finance Party shall
be under no obligation to take any such steps if, in its bona fide
opinion, such steps would have an adverse effect upon its business,
operations or financial condition.
<PAGE>
30
18. GUARANTEE
---------
18.1 Guarantee
---------
The Parent irrevocably and unconditionally:-
(a) as principal obligor guarantees to each Finance Party prompt
payment by each Borrower (other than the Parent) of all
amounts payable by the Borrower under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower
(other than the Parent) does not pay any amount when due under
or in connection with any Finance Document, the Parent shall
forthwith on demand by the Agent pay that amount as if the
Parent instead of the relevant Borrower were expressed to be
the principal obligor; and
(c) agrees to indemnify each Finance Party on demand against any
loss or liability suffered by it if any obligation guaranteed
by the Parent is or becomes unenforceable, invalid or illegal.
18.2 Continuing guarantee
--------------------
This guarantee is a continuing guarantee and will extend to the
ultimate balance of all sums payable by the Borrowers (other than
the Parent) under the Finance Documents, regardless of any
intermediate payment or discharge in whole or in part.
18.3 Reinstatement
-------------
(a) Where any discharge (whether in respect of the obligations of any
Borrower or any security for those obligations or otherwise) is made
in whole or in part or any arrangement is made on the faith of any
payment, security or other disposition which is avoided or must be
restored on insolvency, liquidation or otherwise without limitation,
the liability of the Parent under this Clause 18 (Guarantee) shall
continue as if the discharge or arrangement had not occurred.
(b) Each Finance Party may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance or
restoration.
18.4 Waiver of defences
------------------
The obligations of the Parent under this Clause 18 (Guarantee) will
not be affected by any act, omission, matter or thing which, but for
this provision, would reduce, release or prejudice any of its
obligations under this Clause 18 (Guarantee) or prejudice or
diminish those obligations in whole or in part, including (whether
or not known to it or any Finance Party):-
<PAGE>
31
(a) any time or waiver granted to, or composition with, any
Borrower (other than the Parent) or other person;
(b) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any
Borrower (other than the Parent) or other person or any
non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to
realize the full value of any security;
(c) any incapacity or lack of powers, authority or legal
personality of or dissolution or change in the members or
status of a Borrower or any other person;
(d) any variation (however fundamental) or replacement of a
Finance Document or any other document or security so that
references to that Finance Document in this Clause 18
(Guarantee) shall include each variation or replacement;
(e) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document or any
other document or security, to the intent that the Parent's
obligations under this Clause 18 (Guarantee) shall remain in
full force and its guarantee be construed accordingly, as if
there were no unenforceability, illegality or invalidity; or
(f) any postponement, discharge, reduction, non-provability or
other similar circumstance affecting any obligation of any
Borrower (other than the Parent) under a Finance Document
resulting from any insolvency, liquidation or dissolution
proceedings or from any law, regulation or order so that each
such obligation shall for the purposes of the Parent's
obligations under this Clause 18 (Guarantee) be construed as
if there were no such circumstance.
18.5 Immediate recourse
------------------
The Parent waives any right it may have of first requiring any
Finance Party (or any trustee or agent on its behalf) to proceed
against or enforce any other rights or security or claim payment
from any person before claiming from the Parent under this Clause 18
(Guarantee).
18.6 Appropriations
--------------
Until all amounts which may be or become payable by the Borrowers
under or in connection with the Finance Documents have been
irrevocably paid in full, each Finance Party (or any trustee or
agent on its behalf) may:-
<PAGE>
32
(a) refrain from applying or enforcing any other moneys, security
or rights held or received by that Finance Party (or any
trustee or agent on its behalf) in respect of those amounts,
or apply and enforce the same in such manner and order as it
sees fit (whether against those amounts or otherwise) and
neither the Parent nor any Borrower shall be entitled to the
benefit of the same; and
(b) hold in a suspense account any moneys received from the Parent
or on account of the Parent's liability under this Clause 18
(Guarantee), which shall bear interest at such Finance Party's
best rate for comparable commercial deposits.
18.7 Non-competition
---------------
Until all amounts which may be or become payable by the Borrowers
under or in connection with the Finance Documents have been
irrevocably paid in full, the Parent shall not, after a claim has
been made or by virtue of any payment or performance by it under
this Clause 18 (Guarantee):-
(a) be subrogated to any rights, security or moneys held, received
or receivable by any Finance Party (or any trustee or agent on
its behalf) or be entitled to any right of contribution or
indemnity in respect of any payment made or moneys received on
account of the Parent's liability under this Clause 18
(Guarantee);
(b) claim, rank, prove or vote as a creditor of any Borrower
(other than the Parent) or its estate in competition with any
Finance Party (or any trustee or agent on its behalf); or
(c) receive, claim or have the benefit of any payment,
distribution or security from or on account of any Borrower
(other than the Parent), or exercise any right of set-off as
against any such Borrower.
The Parent shall hold in trust for and forthwith pay or transfer to
the Agent for the Finance Parties any payment or distribution or
benefit of security received by it contrary to this Clause 18.7.
18.8 Additional security
-------------------
This guarantee is in addition to and is not in any way prejudiced by
any other security now or subsequently held by any Finance Party.
19. REPRESENTATIONS AND WARRANTIES
------------------------------
19.1 Representations and warranties
------------------------------
Each Obligor makes the representations and warranties set out in
this Clause 19 (Representations and warranties) to each Finance
<PAGE>
33
Party (subject in each case, however, to any qualifications as to
matters of law set out in any legal opinion delivered pursuant to
this Agreement).
19.2 Status
------
(a) It is a limited liability company, duly incorporated and validly
existing under the laws of the jurisdiction of its incorporation; and
(b) It has the power to own its assets and carry on its business as it
is being conducted.
19.3 Powers and authority
--------------------
It has the power to enter into and perform, and has taken all
necessary action to authorize the entry into, performance and
delivery of, the Finance Documents to which it is or will be a party
and the transactions contemplated by those Finance Documents.
19.4 Legal validity
--------------
Each Finance Document to which it is or will be a party constitutes,
or when executed in accordance with its terms will constitute, its
legal, valid and binding obligation enforceable in accordance with
its terms subject, however, to any limitations due to bankruptcy,
insolvency, liquidation, re-organization, limitation and other laws
of general application regarding or affecting the rights of
creditors and to general equitable principles.
19.5 Non-conflict
------------
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not and will not:-
(a) conflict with any law or regulation or judicial or official
order; or
(b) conflict with its Articles of Association; or
(c) conflict with any document which is binding upon it or any of
its assets.
19.6 No default
----------
(a) No Default is outstanding or would result from the making of any
Loan; and
(b) no other event is outstanding which constitutes (or with the giving
of notice, lapse of time, determination of materiality or the
fulfilment of any other applicable condition or any combination of
the foregoing, might constitute) a default under any document which
<PAGE>
34
is binding on it or any of its assets to an extent or in a manner
which would be likely to have a material adverse effect on its
ability to perform its obligations under this Agreement or on the
business or financial condition of the Group as a whole.
19.7 Authorisations
--------------
All authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been obtained or
effected (as appropriate) and are in full force and effect.
19.8 Accounts
--------
In the case of the Parent, the audited consolidated accounts of the
Group and the unaudited consolidated income statement of the Group
most recently delivered to the Agent (which, at the date of this
Agreement, are the Original Group Accounts):-
(i) have been prepared in accordance with accounting principles
and practices generally accepted in Sweden consistently
applied and, in the case of the audited consolidated accounts,
audited by an internationally recognized firm of accountants
or by Swedish public authorized accountants; and
(ii) fairly represent the consolidated financial condition of the
Group as at the date to which they were drawn up,
and there has been no material adverse change in the consolidated
financial condition of the Group, taken as a whole, since the date
to which those accounts were drawn up.
19.9 Litigation
----------
Except as set out in the Disclosure Letter, no litigation,
arbitration or administrative proceedings are current or, to its
knowledge, pending or threatened, which would, if adversely
determined, have a material adverse effect on the ability of any
Obligor to perform its obligations under this Agreement or the
business or financial condition of the Group as a whole.
19.10 Times for making representations and warranties
-----------------------------------------------
The representations and warranties set out in this Clause 19
(Representations and warranties) are made by each Obligor or the
Parent, as the case may be, on the date of this Agreement and (with
the exception of Clauses 19.6 (No default), 19.8 (Accounts) and 19.9
(Litigation)) are deemed to be repeated by each Obligor, on the date
of each Request, each Drawdown Date and on the first day of each
Interest Period, and by each Additional Borrower, on the date on
which its enters into a Deed of Accession, with reference to the
facts and circumstances then existing.
<PAGE>
35
20. UNDERTAKINGS
------------
20.1 Duration
--------
The undertakings in this Clause 20 (Undertakings) remain in force
from the date of this Agreement for so long as any amount is or may
be outstanding under this Agreement or any Commitment is in force.
20.2 Financial Information
---------------------
The Parent shall supply to the Agent in sufficient copies for all
the Banks:-
(a) as soon as the same are available (and in any event within 180
days of the end of each of its financial years), the audited
consolidated accounts of the Group for that financial year:
and
(b) as soon as the same are available (and in any event within
120 days of the end of the first half-year of each of its
financial years), the unaudited consolidated income statement
of the Group for that half-year; and
(c) together with the accounts specified in paragraphs (a) and (b)
above, a certificate signed by two of its senior officers on
its behalf setting out in reasonable detail computations
establishing compliance with Clause 20.12 (Financial
covenants) as at the date to which those accounts were
drawn-up.
20.3 Information - Miscellaneous
---------------------------
The Parent shall (save to the extent that it considers that to do so
would be in violation of the applicable rules or requirements of the
Stockholm Stock Exchange or any other exchange on which its equity
or debt securities are listed) supply to the Agent:-
(a) all documents dispatched by it to its shareholders or creditors
generally at the same time as they are dispatched;
(b) promptly upon becoming aware of them, reasonable details of any
litigation, arbitration or administrative proceedings which are current,
threatened or pending, and which would, if adversely determined, have a
material adverse effect on the ability of any Obligor to perform its
obligations under this Agreement or on the business or financial
condition of the Group as a whole; and
(c) promptly, such further information in the possession or
control of the Parent regarding its financial condition and
operations (or the financial condition and operations of any
<PAGE>
36
member of the Group) as the Agent, or any Bank through the
Agent, may reasonably request, in sufficient copies for all
of the Banks, if the Agent so requests.
20.4 Notification of Default
-----------------------
Each Obligor shall notify the Agent of any Default (and the steps,
if any, being taken to remedy it) promptly upon its becoming aware
of the same.
20.5 Compliance certificates
-----------------------
The Parent shall supply to the Agent:-
(a) together with the accounts specified in Clause 20.2(a) (Financial
information); and
(b) promptly at any other time, if the Agent so reasonably requests,
a certificate signed by two of its senior officers on its behalf
certifying that no Default is outstanding or, if a Default is
outstanding, specifying the Default and the steps, if any, being
taken to remedy it.
20.6 Authorisations
--------------
Each Obligor shall promptly obtain, maintain and comply with the
terms of any authorisation required under any law or regulation to
enable it to perform its obligations under, or for the validity or
enforceability of, any Finance Document.
20.7 Pari passu ranking
------------------
Each Obligor shall procure that its obligations under the Finance
Documents do and will rank at least pari passu with all its other
present and future unsecured and unsubordinated obligations, except
for obligations which are mandatorily preferred by law.
20.8 Negative pledge
---------------
(a) No Obligor shall, and the Parent shall procure that no other member
of the Group will, create or permit to subsist any Security Interest
on any of its assets.
(b) Paragraph (a) does not apply to:-
(i) any lien arising by operation of law in the ordinary course
of business and securing amounts not more than 30 days overdue;
<PAGE>
37
(ii) any Security Interest created in connection with any loan or
credit granted, or guaranteed wholly or partially, by the
Swedish Export Credit Corporation or the Swedish Export
Credit Board or any other export credit or similar public
institution;
(iii) any Security Interest created in connection with any loan,
debt or other obligation (including an obligation under a
guarantee) of a member of the Group in respect of borrowed
money where the borrowed money is by its terms repayable not
more than 12 months after the date on which the member of
the Group assumes liability in respect thereof and the
purpose of the borrowed money is to meet the funding
requirements of that company in the ordinary course of
business;
(iv) any Security Interest over an asset acquired after the date
hereof which was not created in contemplation of such
acquisition and so long as the outstanding principal amount
secured thereby is not increased on or after the date of
that acquisition;
(v) any Security Interest created prior to the date of its
acquisition by a company which becomes a member of the Group
after the date hereof provided that such Security Interest
only secures Financial Indebtedness up to a stated maximum
principal amount and was not created in contemplation of
such acquisition and so long as the principal committed
amount (whether drawn or not) is not increased on or after
the date of that acquisition;
(vi) any Security Interest created in favour of persons providing
tender, performance, bid or similar bonds or guarantees
relating to or arising out of contracts undertaken in the
normal course of business by any members of the Group to
secure amounts which may become payable by those persons
pursuant to those bonds or guarantees (but not where those
bonds or guarantees are issued to facilitate the incurrence
of any Financial Indebtedness);
(vii) any Security Interest created in connection with any loan,
debt or other obligation (including an obligation under a
guarantee but in each case not having a maturity of longer
than twelve months from the date of its creation) of a
member of the Group in order to take advantage of interest
arbitrage and hedging opportunities where the assets secured
comprise cash or debt securities;
(viii) any Security Interest disclosed to the Agent prior to the
date hereof so long as the maximum principal amount that
could be secured thereby was approved by the Agent and is
not increased after the date hereof;
<PAGE>
38
(ix) any Security Interest consented to by the Majority Banks; and
(x) any Security Interest over an asset which does not fall
within sub-paragraphs (i) - (ix) above PROVIDED THAT the
aggregate amount of all claims in respect of indebtedness
for a principal sum which are, at any time, outstanding and
secured by Security Interests created or existing in
reliance on sub-paragraphs (iii) or (x) does not exceed ten
per cent. of the Consolidated Total Assets at that time.
AND PROVIDED FURTHER that the aggregate amount of all claims
in respect of indebtedness for a principal sum which are, at
any time, outstanding and secured by any Security Interest
(other than a Security Interest created or existing in
reliance on sub-paragraphs (i) or (vii) above) do not exceed
twenty-five per cent. of the Consolidated Total Assets at
that time.
For the avoidance of doubt, any transaction which is
permitted under this Clause 20.8 shall be deemed not to be
prohibited under Clause 20.9 or 20.10.
20.9 Transactions similar to security
--------------------------------
No Obligor shall, and the Parent shall procure that no other member
of the Group will, except with the prior written consent of the
Majority Banks, sell, transfer or otherwise dispose of any of its
assets on terms whereby it is or may be leased to or re-acquired or
acquired by a member of the Group or any of its related entities
(save that this Clause 20.9 shall not prevent any such sales,
transfers or disposals being effected in relation to assets normally
sold in the course of the trade of the disposing entity (including
the sale with recourse of accounts receivable arising out of the
sale of such assets) nor to any transaction which is not entered
into primarily as a method of raising finance nor in relation to
assets with an aggregate market value of up to five per cent. of the
Consolidated Total Assets).
For the avoidance of doubt, any transaction which is permitted under
this Clause 20.9 shall be deemed not to be prohibited under Clause
20.8 or 20.10.
20.10 Disposals
---------
(a) No Obligor shall, and the Parent shall procure that no other member
of the Group will, except with the prior written consent of the
Majority Banks, either in a single transaction or in a series of
transactions, whether related or not and whether voluntarily or
involuntarily, sell, transfer, grant or lease or otherwise dispose
of all or any substantial part of its assets.
<PAGE>
39
(b) Paragraph (a) does not apply to:-
(i) any disposal made by any Obligor in the ordinary course of trading;
(ii) any disposal of obsolete plant or equipment;
(iii) any disposal to another Obligor or another Subsidiary of an Obligor;
and
(iv) any other disposal not within sub-paragraphs (i)-(iii) above
where the value of the asset disposed of (when aggregated with
the value of all other assets disposed of in the same
financial year (not within sub-paragraphs (i)-(iii) above))
does not exceed 10 per cent. of Consolidated Total Assets.
For the avoidance of doubt, for the purposes of this
paragraph (iv), the value of an asset shall be equal to its
book value net of depreciation and other similar allowances.
For the avoidance of doubt, any transaction which is permitted
under this Clause 20.10 shall be deemed not to be prohibited
under Clause 20.8 or 20.9.
20.11 Change of business
------------------
The Parent shall procure that no substantial change is made to the
general nature or scope of the business of the Parent or the Group
taken as a whole from that carried on at the date of this Agreement.
20.12 Financial covenants
--------------------
(a) In this Clause 20.12:-
"Net Interest Expense"
----------------------
means, in relation to any twelve month period, consolidated interest
expense less consolidated interest income during that period.
"Operating Income"
------------------
means, in relation to any twelve month period, consolidated income
before taxes, plus any extraordinary or exceptional losses, less any
extraordinary or exceptional gains, plus minority expense less
minority income, plus interest expense less interest income, plus
foreign exchange losses less foreign exchange gains, plus any other
financial costs less any other financial income during that period.
(b) (i) All the terms used in paragraph (a) above are to be calculated
in accordance with the accounting principles applied in
connection with the Original Group Accounts.
<PAGE>
40
(ii) If there is a dispute as to any interpretation of or
computation for paragraph (a) above, the interpretation or
computation of the Parent's auditors prevails.
(c) The Parent shall procure that the ratio of Operating Income to Net
Interest Expense is not, at the end of each half-year of each
financial year of the Group, less than 2.2 to 1.
20.13 Insurance
---------
Provided that such insurance is available in the market and can be
purchased on reasonable terms and conditions, each Obligor shall
maintain with financially sound and reputable insurance companies,
funds or underwriters adequate insurance of the kinds, covering such
risks and in such amounts and with such deductibles (including
captive or similar self-insuring arrangements) and exclusions as are
consistent with prudent business practice for an entity engaged in
businesses similar to those of the Obligors.
21. DEFAULT
-------
21.1 Events of Default
-----------------
Each of the events set out in Clauses 21.2 (Non-payment) to 21.16
(Material adverse change) (inclusive) is an Event of Default
(whether or not caused by any reason whatsoever outside the control
of any Obligor or any other person).
21.2 Non-payment
-----------
Any Obligor does not pay any amount of principal payable by it under
the Finance Documents on the due date or any other amount payable by
it under the Finance Documents within three (or, if the reason
therefor is technical or administrative error, five) Business Days
after the due date, in each case at the place at and in the currency
in which it is expressed to be payable.
21.3 Breach of other obligations
---------------------------
Any Obligor does not comply with any of its obligations under the
Finance Documents (other than those referred to in Clause 21.2
(Non-Payment)) and (save in the case of non-compliance under Clause
21.13) such non-compliance, if capable of remedy, continues
unremedied for 30 days after such Obligor and the Borrowers' Agent
received notice thereof from the Agent (or, if earlier, such Obligor
obtained actual knowledge thereof).
21.4 Misrepresentation
-----------------
A representation, warranty or statement made or repeated in or in
connection with any Finance Document or in any document delivered by
or on behalf of any Obligor under or in connection with any Finance
<PAGE>
41
Document is incorrect in any material respect when made or deemed to
be made or repeated.
21.5 Cross-default
-------------
(a) Any Financial Indebtedness of an Obligor or a Material Subsidiary is
not paid when due or after the expiry of any applicable grace period
(but this paragraph (a) shall not apply to non-payment by a member
of the Group under any performance or bid bond (or similar
instrument) issued by it where there is a bona fide dispute as to
its liability); or
(b) an event of default howsoever described (or any event which with the
giving of notice, lapse of time, determination of materiality or
fulfillment of any other applicable condition or any combination of
the foregoing would constitute such an event of default) occurs
under any document relating to Financial Indebtedness of a member of
the Group in excess of $2,000,000 (or its equivalent) and
discussions with the relevant creditors are arranged with a view to
rescheduling or otherwise varying the terms of the Financial
Indebtedness in question or considering other remedial action; or
(c) any Financial Indebtedness of a member of the Group becomes
prematurely due and payable or is placed on demand as a result of an
event of default (howsoever described) under the document relating
to that Financial Indebtedness; or
(d) any commitment for, or underwriting of, any Financial Indebtedness
of a member of the Group is cancelled or suspended as a result of an
event of default (howsoever described) under the document relating
to that Financial Indebtedness; or
(e) steps are taken to enforce any Security Interest securing Financial
Indebtedness over any asset of a member of the Group.
PROVIDED that there shall not be an Event of Default under
paragraphs (a), (c), (d) or (e) above unless the aggregate of all
amounts at any one time unpaid or in default as a result of events
referred to in paragraphs (a), (c), (d) and (e) above exceeds
$1,000,000 (or its equivalent).
21.6 Insolvency
----------
Any Obligor or Material Subsidiary is, or is deemed for the purposes
of any law to be, unable to pay its debts as they fall due or to be
insolvent, or admits inability to pay its debts as they fall due
(unless, in the case of a Material Subsidiary, the Parent gives a
support letter satisfactory to the auditors so that no qualification
is required to be made in relation to the accounts of the Material
Subsidiary concerned); or
<PAGE>
42
(b) any Obligor or Material Subsidiary suspends making payments on all
or any class of its debts or announces an intention to do so, or a
moratorium is declared in respect of any of its indebtedness; or
(c) any Obligor, by reason of financial difficulties, begins
negotiations with its creditors generally with a view to the
readjustment or rescheduling of any of its indebtedness.
21.7 Insolvency proceedings
----------------------
(a) Any step (including petition, proposal or convening a meeting) is
taken by any Obligor or Material Subsidiary with a view to a
composition, assignment or arrangement with any of its creditors; or
(b) a meeting of any Obligor or Material Subsidiary is convened for the
purpose of considering any resolution for (or to petition for) its
winding-up or its administration or any such resolution is passed
(save where such meeting is called on frivolous or vexatious
grounds); or
(c) any person presents a petition (other than a frivolous or vexatious
petition) for the bankruptcy, winding-up or for the administration
of any Obligor or Material Subsidiary unless the same is discharged
within 45 days; or
(d) any order for the bankruptcy, winding-up or administration of any
Obligor or Material Subsidiary is made; or
(e) any other step (including petition, proposal or convening a meeting
but excluding steps taken on frivolous or vexatious grounds) is
taken with a view to the rehabilitation, administration,
custodianship, bankruptcy, liquidation, winding-up or dissolution of
any Obligor or Material Subsidiary or any other insolvency
proceedings involving any Obligor or Material Subsidiary,
PROVIDED that the solvent winding-up of a Material Subsidiary on
terms approved by the Majority Banks (whose approval shall not be
unreasonably withheld) shall not be an Event of Default under this
or any other Clause.
21.8 Appointment of receivers and managers
-------------------------------------
(a) Any liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver, administrator
or the like is appointed in respect of any Obligor or Material
Subsidiary or any substantial part of its assets; or
(b) the directors of any Obligor or Material Subsidiary request the
appointment of a liquidator, trustee in bankruptcy, judicial
custodian, compulsory manager, receiver, administrative receiver,
administrator or the like; or
<PAGE>
43
(c) any other steps are taken to enforce any Security Interest over any
part of the assets of any Obligor or Material Subsidiary and are
followed by legal proceedings which are initiated and not discharged
within 45 days.
21.9 Creditors' process
------------------
Any attachment, sequestration, distress or execution affects any
asset of any Obligor or Material Subsidiary and is not discharged
within 28 days.
21.10 Analogous proceedings
---------------------
There occurs, in relation to any Obligor or Material Subsidiary, any
event in any relevant jurisdiction which is analogous to any of
those mentioned in Clauses 21.6 to 21.9 (inclusive).
21.11 Cessation of business
---------------------
Any Obligor or Material Subsidiary ceases, or threatens to cease, to
carry on all or a substantial part of its business where this would
have a material adverse effect on the business or financial
condition of the Group as a whole or on the ability of any Obligor
to perform its obligations under this Agreement.
21.12 Unlawfulness
------------
It is or becomes unlawful for any Obligor to perform any of its
material obligations under the Finance Documents.
21.13 Guarantee
---------
The guarantee of the Parent is not effective or is alleged by it to
be ineffective for any reason.
21.14 Ownership of the Borrowers
--------------------------
Any Borrower (other than the Parent) is not or ceases to be a
Subsidiary of the Parent, unless the Majority Banks consent to the
sale of such Borrower.
21.15 Material adverse change
-----------------------
Any event or series of events occurs which would be likely to have a
material and adverse effect on the business or financial condition
of the Group taken as a whole or on the ability of any Obligor to
comply with its obligations under the Finance Documents.
21.16 Acceleration
-------------
On and at any time after the occurrence of an Event of Default (for
so long as such Event of Default is continuing) the Agent shall if,
<PAGE>
44
and only if, so directed by the Majority Banks, by notice to the Parent:-
(a) cancel the Total Commitments; and/or
(b) demand that all or part of the Loans, together with accrued
interest, and all other amounts accrued under this Agreement be
immediately due and payable, whereupon they shall become
immediately due and payable; and/or
(c) demand that all or part of the Loans be payable on demand, whereupon
they shall immediately become payable on demand.
22. THE AGENT AND THE ARRANGER
--------------------------
22.1 Appointment and duties of the Agent
-----------------------------------
Each Finance Party (other than the Agent) irrevocably appoints the
Agent to act as its agent under and in connection with the Finance
Documents, and irrevocably authorizes the Agent on its behalf to
perform the duties and to exercise the rights, powers and
discretions that are specifically delegated to it under or in
connection with the Finance Documents, together with any other
incidental rights, powers and discretions. The Agent has only those
duties which are expressly specified in this Agreement, and those
duties are solely of a mechanical and administrative nature.
22.2 Role of the Arranger
--------------------
Except as specifically provided in this Agreement, the Arranger has
no obligation of any kind to any other Party under or in connection
with any Finance Document.
22.3 Relationship
------------
The relationship between the Agent and the other Finance Parties is
that of agent and principal only. Nothing in this Agreement
constitutes the Agent as trustee or fiduciary for any other Party or
any other person and the Agent need not hold in trust any moneys
paid to it for a Party or be liable to account for interest on those
moneys.
22.4 Majority Banks' directions
--------------------------
The Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise
of any right, power or discretion or any matter not expressly
provided for in this Agreement. Any such instructions given by the
Majority Banks will be binding on all the Banks. In the absence of
such instructions, the Agent may act as it considers to be in the
best interests of all the Banks.
<PAGE>
45
22.5 Delegation
----------
The Agent may act under the Finance Documents through its personnel
and agents whose acts shall be binding upon it.
22.6 Responsibility for documentation
--------------------------------
Neither the Agent nor the Arranger is responsible to any other Party for:-
(a) the execution, genuineness, validity, enforceability or sufficiency of
any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance Document; or
(c) the accuracy of any statements (whether written or oral) made in or in
connection with any Finance Document.
22.7 Default
-------
(a) The Agent is not obliged to monitor or enquire as to whether or not
a Default has occurred. The Agent will not be deemed to have knowledge
of the occurrence of a Default. However, if the Agent receives notice
from a Party referring to this Agreement, describing the Default and
stating that the event is a Default, or if the officers of the Agent
actually engaged in carrying out the agency function under this
Agreement acquire actual knowledge of a Default, it shall promptly
notify the Banks.
(b) The Agent may require the receipt of security satisfactory to it
from any other Finance Party, whether by way of payment in advance
or otherwise, against any liability or loss which it will or may
incur in taking any proceedings or action arising out of or in
connection with any Finance Document before it commences those
proceedings or takes that action.
22.8 Exoneration
-----------
(a) Without limiting paragraph (b) below, the Agent will not be liable
to any other Party for any action taken or not taken by it under or
in connection with any Finance Document, unless directly caused by
its gross negligence or wilful misconduct
(b) No Party may take any proceedings against any officer, employee or
agent of the Agent in respect of any claim it might have against the
Agent or in respect of any act or omission of any kind (including
gross negligence or wilful misconduct) by that officer, employee or
agent in relation to any Finance Document.
<PAGE>
46
22.9 Reliance
--------
The Agent may:-
(a) rely on any notice or document believed by it to be genuine
and correct and to have been signed by, or with the authority
of, the proper person;
(b) rely on any statement made by a director or employee of any
person regarding any matters which may reasonably be assumed
to be within his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional
advisers selected by it (including those in the Agent's
employment and those representing a Party other than the
Agent).
22.10 Credit approval and appraisal
-----------------------------
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance
Document, each Bank confirms that it:-
(a) has made its own independent investigation and assessment of
the financial condition and affairs of each Obligor and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on any information
provided to it by the Agent or the Arranger in connection with
any Finance Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities
while any amount is or may be outstanding under the Finance
Documents or any Commitment is in force.
22.11 Information
-----------
(a) The Agent shall promptly forward to the person concerned the
original or a copy of any document which is delivered to the Agent
by a Party for that person.
(b) The Agent shall promptly supply a Bank with a copy of each document
received by the Agent under Clause 4 (Conditions Precedent) upon the
request and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the
Agent is not obliged to review or check the accuracy or completeness
of any document it forwards to another Party.
<PAGE>
47
(d) Except as provided above, the Agent has no duty:-
(i) either initially or on a continuing basis to provide any Bank
with any credit or other information concerning the financial
condition or affairs of any Obligor or any related entity of
any Obligor whether coming into its possession before, on or
after the date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in accordance
with this Agreement, to request any certificates or other
documents from any Obligor.
22.12 The Agent and the Arranger
--------------------------
(a) If it is also a Bank, each of the Agent and the Arranger has the
same rights and powers under this Agreement as any other Bank and
may exercise those rights and powers as though it were not the Agent
or the Arranger.
(b) Each of the Agent and the Arranger may:-
(i) carry on any business with an Obligor or its related entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, an Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with its
activities under this Agreement or in relation to any of the
foregoing.
22.13 Indemnities
-----------
(a) Without limiting the liability of any Obligor under the Finance
Documents, each Bank shall forthwith on demand indemnify the Agent
for its proportion of any liability or loss incurred by the Agent in
any way relating to or arising out of its acting as the Agent,
except to the extent that the liability or loss arises directly from
the Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability set out in paragraph (a) above
will be the proportion which its participation in the Loans (if any)
bears to all the Loans on the date of the demand. If, however,
there are no Loans outstanding on the date of demand, then the
proportion will be the proportion which its Commitment bears to the
Total Commitments at the date of demand or, if the Total Commitments
have then been cancelled, bore to the Total Commitments immediately
before being cancelled.
<PAGE>
48
22.14 Compliance
----------
(a) The Agent may refrain from doing anything which might, in its
opinion, constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person, and may do anything
which, in its opinion, is necessary or desirable to comply with any
law or regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Agent need not disclose
any information relating to any Obligor or any of its related
entities if the disclosure might, in the opinion of the Agent,
constitute a breach of any law or regulation or any duty of secrecy
or confidentiality or be otherwise actionable at the suit of any
person.
22.15 Resignation of the Agent
------------------------
(a) Notwithstanding its irrevocable appointment, the Agent may resign by
giving notice to the Banks and the Borrowers' Agent, in which case
the Agent may forthwith appoint one of its Affiliates as successor
Agent or, failing that, the Majority Banks may appoint a successor
Agent.
(b) If the appointment of a successor Agent is to be made by the
Majority Banks but they have not, within 30 days after notice of
resignation, appointed a successor Agent which accepts the
appointment, the Agent may appoint a successor Agent.
(c) The resignation of the Agent and the appointment of any successor
Agent will both become effective only upon the successor Agent
notifying all the Parties that it accepts its appointment. On
giving the notification, the successor Agent will succeed to the
position of the Agent and the term "Agent" will mean the successor
Agent.
(d) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such
assistance as the successor Agent may reasonably request for the
purposes of performing its functions as the Agent under this
Agreement.
(e) Upon its resignation becoming effective, this Clause 22 (The Agent
and the Arranger) shall continue to benefit the retiring Agent in
respect of any action taken or not taken by it under or in
connection with the Finance Documents while it was the Agent, and,
subject to paragraph (d) above, it shall have no further obligations
under any Finance Document.
(f) Any successor Agent must be acceptable to the Borrowers' Agent but
the Borrowers' Agent may not unreasonably withhold his acceptance.
(g) If the Majority Banks so direct, the Agent shall resign in
accordance with paragraph (a) above.
<PAGE>
49
22.16 Banks
-----
The Agent may treat each Bank as a Bank, entitled to payments under
this Agreement and as acting through its Facility Office(s).
23. FEES
----
23.1 Management fee
--------------
The Parent shall pay to the Arranger on the earlier of the date
seven days after the date of this Agreement and the first Drawdown
Date a management fee in the amount agreed in the relevant Fee
Letter. The management fee shall be distributed by the Agent among
the Banks in its sole discretion.
23.2 Commitment fee
--------------
(a) The Parent shall pay to the Agent for each Bank a commitment fee
computed at the rate of 0.25 per cent. per annum on the undrawn,
uncancelled amount of that Bank's Commitment during the period from
the date of this Agreement up to and including the Final Repayment
Date. For this purpose, Loans are taken at their Original Dollar
Amount.
(b) Accrued commitment fee is payable quarterly in arrear. Accrued
commitment fee is also payable to the Agent for the relevant Bank(s)
on the cancelled amount of its Commitment at the time the
cancellation takes effect.
23.3 Agent's fee
-----------
The Parent shall pay to the Agent for its own account an agency fee
in the amount agreed in the relevant Fee Letter. The agency fee is
payable annually in advance. The first payment of this fee is
payable on the earlier of the date seven days after the date of this
Agreement and the first Drawdown Date and each subsequent payment is
payable on each anniversary of the date of this Agreement for so
long as any amount is or may be outstanding under this Agreement or
any Commitment is in force.
23.4 VAT
---
Any fee referred to in this Clause 23 (Fees) is exclusive of any
value added tax or any other tax which might be chargeable in
connection with that fee. If any value added tax or other tax is so
chargeable, it shall be paid by the Parent at the same time as it
pays the relevant fee.
<PAGE>
50
24. EXPENSES
--------
24.1 Initial and special costs
-------------------------
The Parent shall forthwith on demand pay the Agent and the Arranger
the amount of all reasonable out-of-pocket costs and expenses
(including legal fees) incurred by either of them in connection
with:-
(a) the negotiation, preparation, printing and execution of:-
(i) this Agreement and any other documents referred to in
this Agreement; and
(ii) any other Finance Document executed after the date of
this Agreement; and
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf
of an Obligor and relating to a Finance Document or a document
referred to in any Finance Document.
24.2 Enforcement costs
-----------------
Following a Default, the Parent shall forthwith on demand pay to
each Finance Party the amount of all costs and expenses (including
legal fees) properly incurred by it in connection with the
enforcement of, or the preservation of any rights under, any Finance
Document.
25. STAMP DUTIES
------------
The Parent shall pay and forthwith on demand indemnify each Finance
Party against any liability it incurs in respect of, any stamp,
registration and similar tax which is or becomes payable in
connection with the entry into, performance or enforcement of any
Finance Document.
26. INDEMNITIES
-----------
26.1 Currency indemnity
------------------
(a) If a Finance Party receives an amount in respect of an Obligor's
liability under the Finance Documents or if that liability is
converted into a claim, proof, judgment or order in a currency other
than the currency (the "contractual currency") in which the amount
--------------------
is expressed to be payable under the relevant Finance Document:-
(i) that Obligor shall indemnify that Finance Party as an
independent obligation against any loss or liability arising
out of or as a result of the conversion;
<PAGE>
51
(ii) if the amount received by that Finance Party, when converted
into the contractual currency at a market rate in the usual
course of its business, is less than the amount owed in the
contractual currency, the Obligor concerned shall forthwith on
demand pay to that Finance Party an amount in the contractual
currency equal to the deficit; and
(iii) the Obligor shall pay to the Finance Party concerned forthwith
on demand any exchange costs and taxes payable in connection
with any such conversion.
(b) Each Obligor waives any right it may have in any jurisdiction to pay
any amount under the Finance Documents in a currency other than that
in which it is expressed to be payable.
26.2 Other indemnities
-----------------
The Parent shall forthwith on receipt of a demand setting out
reasonable details of the relevant loss or liability indemnify each
Finance Party against any loss or liability which that Finance Party
incurs as a consequence of:-
(a) the occurrence of any Default;
(b) the operation of Clause 21.16 (Acceleration);
(c) any payment of principal or an overdue amount being received
from any source otherwise than on the last day of a relevant
Interest Period or Designated Interest Period (as defined in
Clause 9.3 (Default interest)) relative to the amount so
received; or
(d) (other than by reason of negligence or default by a Finance
Party) a Loan not being made after the Borrower has delivered
a Request or a Loan (or part of a Loan) not being prepaid in
accordance with a notice of prepayment.
The Parent's liability in each case includes any loss of margin or
other loss or expense on account of funds borrowed, contracted for
or utilised to fund any amount payable under any Finance Document,
any amount repaid or prepaid or any Loan.
26.3 No restriction on Obligors
--------------------------
Nothing in this Agreement shall prevent any Obligor from enforcing
any rights it may have against any Finance Party which fails to
fulfil its obligations hereunder.
<PAGE>
52
27. EVIDENCE AND CALCULATIONS
-------------------------
27.1 Accounts
--------
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they
relate.
27.2 Certificates and determinations
-------------------------------
Any certification or determination by a Finance Party of a rate or
amount under this Agreement is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
27.3 Calculations
------------
Interest (including any applicable Reserve Asset Costs) and the fee
payable under Clause 23.2 (Commitment fee) accrue from day to day
and are calculated on the basis of the actual number of days elapsed
and a year of 360 days, or, in the case of interest payable on an
amount denominated in Sterling only, 365 days.
28. AMENDMENTS AND WAIVERS
----------------------
28.1 Procedure
---------
(a) Subject to Clause 28.2 (Exceptions), any term of the Finance
Documents may be amended or waived with the agreement of the Parent,
the Majority Banks and the Agent. The Agent may effect, on behalf
of the Majority Banks, an amendment or waiver to which they have
agreed.
(b) The Agent shall promptly notify the other Parties of any amendment
or waiver effected under paragraph (a) above, and any such amendment
or waiver shall be binding on all the Parties.
28.2 Exceptions
----------
An amendment or waiver which relates to:-
(a) the definition of "Majority Banks" in Clause 1.1;
--------------
(b) an extension of the date for, or a decrease in an amount or a
change in the currency of, any payment under the Finance
Documents;
(c) an increase in a Bank's Commitment;
(d) a term of a Finance Document which expressly requires the
consent of each Bank; or
<PAGE>
53
(e) Clause 32 (Pro rata sharing) or this Clause 28 (Amendments and
waivers),
may not be effected without the consent of each Bank.
28.3 Waivers and Remedies Cumulative
-------------------------------
The rights of each Finance Party under the Finance Documents:-
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the
general law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a
waiver of that right.
29. CHANGES TO THE PARTIES
----------------------
29.1 Transfers by Obligors
---------------------
No Obligor may assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Agreement.
29.2 Transfers by Banks
------------------
(a) A Bank (the "Existing Bank") may at any time assign, transfer or
-------------
novate any of its rights and/or obligations under this Agreement to
another bank or financial institution (the "New Bank"). The prior
--------
written consent (such consent not to be unreasonably withheld or
delayed) of the Parent is required for any such assignment, transfer
or novation unless the New Bank is an Affiliate of a Bank.
(b) A transfer of obligations will be effective only if either:-
(i) the obligations are novated in accordance with Clause 29.3
(Procedure for novations); or
(ii) the New Bank confirms to the Agent and the Obligors that it
undertakes to be bound by the terms of this Agreement as a
Bank in form and substance satisfactory to the Agent. On the
transfer becoming effective in this manner the Existing Bank
shall be relieved of its obligations under this Agreement to
the extent that they are transferred to the New Bank.
(c) Nothing in this Agreement restricts the ability of a Bank to
sub-contract an obligation if that Bank remains liable under this
Agreement for that obligation.
<PAGE>
54
(d) On each occasion an Existing Bank assigns, transfers or novates any
of its rights and/or obligations under this Agreement, the New Bank
shall, on the date the assignment, transfer and/or novation takes
effect, pay to the Agent for its own account a fee of $500.
(e) An Existing Bank is not responsible to a New Bank for:-
(i) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance
Document; or
(iii) the accuracy of any statements (whether written or oral) made
in or in connection with any Finance Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance
Parties that it:-
(i) has made its own independent investigation and assessment of
the financial condition and affairs of each Obligor and its
related entities in connection with its participation in this
Agreement and has not relied exclusively on any information
provided to it by the Existing Bank in connection with any
Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities
while any amount is or may be outstanding under this Agreement
or any Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:-
(i) accept a re-transfer from a New Bank of any of the rights
and/or obligations assigned, transferred or novated under this
Clause; or
(ii) support any losses incurred by the New Bank by reason of the
non-performance by the Borrower of its obligations under this
Agreement or otherwise.
(h) Any reference in this Agreement to a Bank includes a New Bank but
excludes a Bank if no amount is or may be owed to or by it under
this Agreement and its Commitment has been cancelled or reduced to
nil.
<PAGE>
55
29.3 Procedure for novations
-----------------------
(a) A novation is effected if:-
(i) the Existing Bank and the New Bank deliver to the Agent a duly
completed certificate, substantially in the form of Part I of
Schedule 5 (a "Novation Certificate"); and
--------------------
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank)
irrevocably authorises the Agent to execute any duly completed
Novation Certificate on its behalf.
(c) To the extent that they are expressed to be the subject of the
novation in the Novation Certificate:-
(i) the Existing Bank and the other Parties (the "existing
--------
Parties") will be released from their obligations to each
-------
other (the "discharged obligations");
----------------------
(ii) the New Bank and the existing Parties will assume obligations
towards each other which (subject to Clause 29.5) differ from
the discharged obligations only insofar as they are owed to or
assumed by the New Bank instead of the Existing Bank;
(iii) the rights of the Existing Bank against the existing Parties
and vice versa (the "discharged rights") will be cancelled;
-----------------
and
(iv) the New Bank and the existing Parties will acquire rights
against each other which (subject to Clause 29.5) differ from
the discharged rights only insofar as they are exercisable by
or against the New Bank instead of the Existing Bank,
all on the date of execution of the Novation Certificate by the
Agent or, if later, the date specified in the Novation Certificate.
29.4 Reference Banks
---------------
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank
of which it is an Affiliate) ceases to be a Bank, the Agent shall
(in consultation with the Parent) appoint another Bank or an
Affiliate of a Bank to replace that Reference Bank.
29.5 No extra cost
-------------
If: -
(a) any assignment or transfer of all or any part of the rights or
obligations of a Bank pursuant to Clause 29; or
<PAGE>
56
(b) any change in a Bank's Facility Office,
results, as a result of laws or regulations in force or the subject
of a formal government proposal at that time, in amounts becoming
due at that time under Clauses 13.1 (Gross-up) or 15 (Increased
Costs), then the assignee, transferee, New Bank or Bank, as the case
may be, shall be entitled to receive those amounts only to the
extent that the assignor, transferor, Existing Bank or Bank, as the
case may be, would have been so entitled had there been no such
assignment, transfer, or change in Facility Office.
30. DISCLOSURE OF INFORMATION
-------------------------
(a) A Bank may disclose to one of its Affiliates or (subject to prior
notification to the Borrowers' Agent of the identity of such person)
any person with whom it is proposing to enter, or has entered into,
any kind of transfer, participation or other agreement in relation
to this Agreement:-
(i) a copy of any Finance Document; and
(ii) any information which that Bank has acquired under or in
connection with any Finance Document.
(b) A Finance Party shall keep confidential any and all information
(except information which is publicly available or in respect of
which disclosure is required by law) relating to the Group or a
member of the Group which is disclosed to the Finance Party for the
purpose of or in connection with any Finance Document.
31. SET-OFF
-------
A Finance Party may set off any amount due and owed by an Obligor
under this Agreement (to the extent beneficially owned by that
Finance Party) against any obligation (whether or not matured) owed
by that Finance Party to that Obligor, regardless of the place of
payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Finance Party may
convert either obligation at a market rate of exchange in its usual
course of business for the purpose of the set-off.
32. PRO RATA SHARING
----------------
32.1 Redistribution
--------------
If any amount owing by an Obligor under this Agreement to a Finance
Party (the "recovering Finance Party") is discharged by payment,
------------------------
set-off or any other manner other than through the Agent in
accordance with Clause 12 (Payments) (a "recovery"), then:-
--------
(a) the recovering Finance Party shall, within three Business
Days, notify details of the recovery to the Agent;
<PAGE>
57
(b) the Agent shall determine whether the recovery is in excess of
the amount which the recovering Finance Party would have
received had the recovery been received by the Agent and
distributed in accordance with Clause 12 (Payments);
(c) subject to Clause 32.3 (Exception), the recovering Finance
Party shall within three Business Days of demand by the Agent
pay to the Agent an amount (the "redistribution") equal to the
--------------
excess;
(d) the Agent shall treat the redistribution as if it were a
payment by the Obligor concerned under Clause 12 (Payments)
and shall pay the redistribution to the Finance Parties (other
than the recovering Finance Party) in accordance with
Clause 12.7 (Partial Payments); and
(e) after payment of the full redistribution, the recovering
Finance Party will be subrogated to the portion of the claims
paid under paragraph (d) above and that Obligor will owe the
recovering Finance Party a debt which is equal to the
redistribution, immediately payable and of the type originally
discharged.
32.2 Reversal of redistribution
--------------------------
If under Clause 32.1 (Redistribution):-
(a) a recovering Finance Party must subsequently return a
recovery, or an amount measured by reference to a recovery, to
an Obligor; and
(b) the recovering Finance Party has paid a redistribution in
relation to that recovery,
each Finance Party shall, within three Business Days of demand by
the recovering Finance Party through the Agent, reimburse the
recovering Finance Party all or the appropriate portion of the
redistribution paid to that Finance Party. Thereupon, the
subrogation in Clause 32.1(e) (Redistribution) will operate in
reverse to the extent of the reimbursement.
32.3 Exception
---------
(a) A recovering Finance Party need not pay a redistribution to the
extent that it would not, after the payment, have a valid claim
against the Obligor concerned in the amount of the redistribution
pursuant to Clause 32.1(e) (Redistribution).
(b) A Finance Party is not entitled to participate in a redistribution
if the redistribution results from the proceeds of a judicial
enforcement order obtained by the recovering Finance Party and the
<PAGE>
58
other Finance Party had adequate notice of and opportunity to
participate in the proceedings concerned but did not do so.
33. SEVERABILITY
------------
If a provision of any Finance Document is or becomes illegal,
invalid or unenforceable in any jurisdiction, that shall not
affect:-
(a) the validity or enforceability in that jurisdiction of any
other provision of the Finance Documents; or
(b) the validity or enforceability in other jurisdictions of that
or any other provision of the Finance Documents.
34. COUNTERPARTS
------------
This Agreement may be executed in any number of counterparts, and
this has the same effect as if the signatures on the counterparts
were on a single copy of this Agreement.
35. NOTICES
-------
35.1 Giving of notices
-----------------
All notices or other communications under or in connection with this
Agreement shall be given in writing or by telex or facsimile. Any
such notice will be deemed to be given as follows:-
(a) if in writing, when delivered;
(b) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and
at the end of the sender's copy of the notice; and
(c) if by facsimile, when received.
However, a notice given in accordance with the above but received on
a non-working day or after business hours in the place of receipt
will only be deemed to be given on the next working day in that
place.
35.2 Addresses for notices
---------------------
(a) The address, telex number and facsimile number of each Party (other
than the Agent) for all notices under or in connection with this
Agreement are:-
(i) those notified by that Party for this purpose to the Agent on
or before the date it becomes a Party; or
<PAGE>
59
(ii) any other notified by that Party for this purpose to the Agent
by not less than five Business Days' notice.
(b) The address, telex number and facsimile number of the Agent are:-
Banque Nationale de Paris
20 Boulevard des Italiens
75009 Paris
Attention: DRI Gestion des Credits Financiers
Telex: 290 181
Facsimile: 40 147785
or such other as the Agent may notify to the other Parties by not
less than five Business Days' notice.
(c) All notices from or to an Obligor shall be sent through the Agent.
(d) The Agent shall, promptly upon request from any Party, give to that
Party the address, telex number or fax number of any other Party
applicable at the time for the purposes of this Clause.
36. LANGUAGE
--------
Any notice given under or in connection with any Finance Document
shall be in English.
(b) All other documents (other than the accounts and the constitutional
documents of each Obligor) provided under or in connection with any
Finance Document shall be:-
(i) in English; or
(ii) if not in English, accompanied by a certified English
translation and, in this case, the English translation shall
prevail unless the document is a statutory or other official
document.
37. JURISDICTION
------------
37.1 Submission
----------
For the benefit of each Finance Party, each Obligor agrees that the
courts of England and the Kingdom of Sweden have jurisdiction to
settle any disputes in connection with any Finance Document and
accordingly submits to the non-exclusive jurisdiction of the English
and Swedish courts.
37.2 Service of process
------------------
Without prejudice to any other mode of service, each Obligor:-
(a) irrevocably appoints:
<PAGE>
60
(i) Gambro Limited of 124 Station Road, Sidcup, Kent DA15
7AS as its agent for service of process relating to any
proceedings before the English courts in connection with
any Finance Document;
(ii) the Parent of Magistratsvagen 16, Box 10101, S-22010
Lund as its agent for service of process relating to any
proceedings before the courts of the Kingdom of Sweden
in connection with any Finance Document,
except where an Obligor is incorporated in the relevant
jurisdiction;
(b) agrees that failure by a process agent to notify the Obligors
of the process will not invalidate the proceedings concerned;
and
(c) consents to the service of process relating to any such
proceedings by prepaid posting of a copy of the process to its
address for the time being applying under Clause 35.2
(Addresses for notices).
37.3 Forum convenience and enforcement abroad
----------------------------------------
Each Obligor:-
(a) waives objection to the English and Swedish courts on grounds
of inconvenient forum or otherwise as regards proceedings in
connection with a Finance Document; and
(b) agrees that a judgment or order, other than an interim
judgment or order, of an English or Swedish Court in
connection with a Finance Document is conclusive and binding
on it and may be enforced against it in the courts of any
other jurisdiction in accordance with the laws and procedures
of that jurisdiction.
37.4 Non-exclusivity
---------------
Nothing in this Clause 37 limits the right of a Finance Party to
bring proceedings against an Obligor in connection with any Finance
Document in any other court of competent jurisdiction.
38. GOVERNING LAW
-------------
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the beginning
of this Agreement.
<PAGE>
61
SCHEDULE 1
----------
BANKS AND COMMITMENTS
---------------------
Banks Commitments
- ----- -----------
$
Banque Nationale de Paris, P.L.C. 15,000,000
The First National Bank of Boston 12,000,000
Commerzbank International S.A. 12,000,000
Credit Suisse (Luxembourg) S.A. 12,000,000
Societe Generale Alsacienne de
Banque, Strasbourg 12,000,000
Union Bank of Switzerland 12,000,000
----------
Total Commitments U.S.$75,000,000
----------
<PAGE>
62
SCHEDULE 2
----------
CONDITIONS PRECEDENT DOCUMENTS
------------------------------
1. All Obligors
------------
A copy of the constitutional documents of each Obligor.
2. Parent
------
(a) A copy of a resolution of the board of directors of the Parent:-
(i) approving the transactions contemplated by this Agreement;
(ii) authorising a specified person or persons to execute this
Agreement and the Fee Letter on its behalf; and
(iii) authorising a specified person or persons, on its behalf,
to sign and/or despatch all other documents and notices to be
signed and/or despatched by it under or in connection with
this Agreement;
(b) a power of attorney executed on behalf of the Parent by a person or
persons authorised by the resolution referred to in paragraph (a)
above;
(c) a specimen of the signature of each person authorised by the
resolution referred to in paragraph (a) above;
(d) a registration certificate not older than four months issued by the
Swedish Patent and Registration Office and certified by an officer
of the Parent to be a true copy; and
(e) a certificate of an authorised signatory of the Parent certifying
that each copy document specified in this Schedule 2 is correct,
complete and in full force and effect as at a date no earlier than
the date of this Agreement.
3. Borrower (other than the Parent)
--------------------------------
(a) A copy of a resolution of the board of directors of each Borrower:-
(i) approving the terms of, and the transactions contemplated by,
this Agreement and resolving that it execute this Agreement;
(ii) authorising a specified person or persons to execute this
Agreement on its behalf; and
(iii) authorising a specified person or persons, on its behalf, to
sign and/or despatch all other documents and notices to be
<PAGE>
63
signed and/or despatched by it under or in connection with
this Agreement;
(b) a power of attorney executed on behalf of the Borrower by a person
or persons authorised by the resolution referred to in paragraph (a)
above; and
(c) a specimen of the signature of each person authorised by the
resolution referred to in paragraph (a) above.
4. Process agents
--------------
Evidence of acceptance by the process agents referred to in
Clause 37.2 of their appointments of that Clause.
5. Other documents
---------------
A copy of any other authorisation or other document, opinion or
assurance which the Agent considers to be necessary or desirable in
connection with the entry into and performance of, and the
transactions contemplated by, any Finance Document or for the
validity and enforceability of any Finance Document.
6. Legal opinion
-------------
(a) A legal opinion of Vinge, legal advisers in Sweden to the Agent,
addressed to the Finance Parties.
(b) A legal opinion of Allen & Overy, legal advisers to the Agent,
addressed to the Finance Parties.
<PAGE>
64
SCHEDULE 3
----------
CALCULATION OF THE MLA COST
---------------------------
(a) The MLA Cost for a Loan maintained in Sterling for each of its
Interest Periods is calculated in accordance with the following
formula:-
BY + L(Y-X) + S(Y-Z) % per annum
--------------------
100-(B + S) = MLA Cost
where on the day of application of the formula:-
B is the percentage of the Agent's eligible liabilities which
the Bank of England requires the Agent to hold on a
non-interest-bearing deposit account in accordance with its
cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the
Agent to leading banks in the London interbank market at or
about 11.00 a.m. on that day for the relevant period;
L is the percentage of eligible liabilities which the Bank of
England requires the Agent to maintain as secured money with
members of the London Discount Market Association and/or as
secured call money with certain money brokers and gilt-edged
primary market makers;
X is the rate at which secured Sterling deposits may be placed
by the Agent with members of the London Discount Market
Association and/or as secured call money with certain money
brokers and gilt-edged primary market makers at or about
11.00 a.m. on that day for the relevant period;
S is the percentage of the Agent's eligible liabilities which
the Bank of England requires the Agent to place as a special
deposit; and
Z is the interest rate per annum allowed by the Bank of England
on special deposits.
(b) For the purposes of this Schedule 3:-
(i) "eligible liabilities" and "special deposits" have the
-------------------- ----------------
meanings given to them at the time of application of the
formula by the Bank of England; and
(ii) "relevant period" in relation to each Interest Period, means:-
---------------
(A) if it is 3 months or less, that Interest Period; or
<PAGE>
65
(B) if it is more than 3 months, each successive period of 3
months and any necessary shorter period comprised in
that Interest Period.
(c) In the application of the formula, B, Y, L, X, S and Z are included
in the formula as figures and not as percentages, e.g. if B = 0.5%
and Y = 15%, BY is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant
period comprised in the relevant Interest Period.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to four decimal places.
(e) If the Agent determines that a change in circumstances has rendered,
or will render, the formula inappropriate, the Agent (after
consultation with the Banks and the Borrowers' Agent) shall notify
the Banks and the Borrowers' Agent of the manner in which the MLA
Cost will subsequently be calculated. The manner of calculation so
notified by the Agent shall, in the absence of manifest error, be
binding on all the Parties.
<PAGE>
66
SCHEDULE 4
----------
FORM OF REQUEST
---------------
To: BANQUE NATIONALE DE PARIS as Agent
From: [BORROWER]
Date: [ ]
GAMBRO AB
---------
U.S.$75,000,000 Facility Agreement dated [DATE]
-----------------------------------------------
1. We wish to borrow a Loan as follows: -
(a) Drawdown Date: [ ]
(b) Original Dollar Amount: [ ]
(c) Currency: [ ]
(d) First Interest Period(s): [ ]*
(e) Payment Instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Request.
By:
[BORROWER]
Authorised Signatory
* The splitting of Loans is dealt with in Clause 8.3.
<PAGE>
67
SCHEDULE 5
----------
FORM OF NOVATION CERTIFICATE
----------------------------
To: BANQUE NATIONALE DE PARIS as Agent
From: [THE EXISTING BANK] and [THE NEW BANK] Date: [ ]
GAMBRO AB
---------
U.S.$75,000,000 Facility Agreement dated [DATE]
-----------------------------------------------
We refer to Clause 29.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New
------------- ---
Bank") agree to the Existing Bank and the New Bank novating all the
----
Existing Bank's rights and obligations referred to in the Schedule
in accordance with Clause 29.3 (Procedure for novations).
2. The specified date for the purposes of Clause 29.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 35.2 (Addresses for notices) are set out in the
Schedule.
4. This Novation Certificate is governed by English law.
THE SCHEDULE
------------
Rights and obligations to be novated
------------------------------------
[Details of the rights and obligations of the Existing Bank to
be novated].
[Existing Bank] [New Bank]
By: By:
Date: Date:
[New Bank]
--------
[Facility Office Address for notices]
BANQUE NATIONALE DE PARIS
By:
Date:
<PAGE>
68
SCHEDULE 6
----------
FORM OF DEED OF ACCESSION
-------------------------
THIS DEED OF ACCESSION dated [ ] and made between:-
(1) [ ] (the "Additional Borrower");
(2) BANQUE NATIONALE DE PARIS as agent (the "Agent") on behalf of itself
and the Banks (as defined in the Facility Agreement referred to
below);
is supplemental to the revolving credit facility agreement dated
[ ] and made between Gambro AB, BNP Capital Markets
Limited, the Banks defined therein and the Agent (the "Facility
Agreement").
NOW THIS DEED WITNESSETH:-
1. Accession
---------
In consideration of the Banks through the Agent agreeing to the
Additional Borrower becoming an additional borrower pursuant to
Clause 2.5 of the Facility Agreement, the Additional Borrower hereby
affirms and ratifies the Facility Agreement and by the execution of
this Deed agrees to observe and be bound by the terms and provisions
of the Facility Agreement insofar as they apply to Borrowers as if
it were an original party to the Facility Agreement.
2. Integration
-----------
This Deed of Accession shall be read as one with the Facility
Agreement so that any reference therein to "this Agreement",
"hereunder" and similar shall include and be deemed to include this
Deed of Accession.
3. Conditions precedent
--------------------
The obligations of the Agent and each Bank hereunder are subject to
the condition that the Agent is satisfied that all appropriate
conditions precedent have been fulfilled by the Additional Borrower
including, without limitation, the delivery of documents equivalent
to those referred to in Schedule 2 to the Facility Agreement but
relating to the Additional Borrower and this Deed of Accession.
4. Notices
-------
The Additional Borrower's address for notices and demands under the
Facility Agreement is [ ] (marked for the attention
of [ ] ) (Telex No. [ ] ) (Facsimile
No. [ ]).
<PAGE>
69
IN WITNESS whereof the parties hereto have caused this Deed of Accession
to be duly executed on the date first written above.
EXECUTED as a deed by )
[The Additional Borrower] )
acting by [NAME OF DIRECTOR] )
and [NAME OF DIRECTOR/SECRETARY] )
............................... ..............................
director director/secretary
BANQUE NATIONALE DE PARIS
for itself and as Agent for the
Banks
By: .............................
<PAGE>
70
SCHEDULE 7
----------
APPROVED ADDITIONAL BORROWERS
-----------------------------
Gambro GmbH
Gambro SpA
Gambro K.K.
Gambro S.A.
Sopamed AG
Hogamed S.A.
Hospal Industrie S.A.
Hospal Dasco SpA
COBE Laboratories, Inc.
<PAGE>
71
SIGNATORIES
-----------
The Parent
- ----------
Gambro AB
By: /s/ /s/
Arranger
- --------
BNP CAPITAL MARKETS LIMITED
By: /s/
Agent
- -----
BANQUE NATIONALE DE PARIS
By: /s/
Banks
- -----
BANQUE NATIONALE DE PARIS, P.L.C.
By: /s/
FIRST NATIONAL BANK OF BOSTON
.
By: /s/ M.E. Roberts, DIRECTOR
COMMERZBANK INTERNATIONAL S.A.
By: /s/ A. Lissay
CREDIT SUISSE (LUXEMBOURG) S.A.
By: /s/ A. Lissay
SOCIETE GENERALE ALSACIENNE DE BANQUE, STRASBOURG
By: /s/ A. Lissay
UNION BANK OF SWITZERLAND
By: /s/ A. Lissay
CONFORMED COPY
REVOLVING CREDIT
AND TERM LOAN FACILITY
DATED 30th November, 1994
BETWEEN
GAMBRO AB
as the Parent
ARRANGED BY
BNP CAPITAL MARKETS LIMITED
as Arranger
and
THE BANKS
and
BANQUE NATIONALE DE PARIS
as Agent
ALLEN & OVERY
London
<PAGE>
INDEX
Clause
Page No.
1. Interpretation .........................................1
2. Commitments and Nature of Obligations .................11
3. Purpose ...............................................13
4. Conditions Precedent ..................................13
5. Drawdown ..............................................13
6. Repayment .............................................14
7. Prepayment and Cancellation ...........................15
8. Interest Periods ......................................16
9. Interest ..............................................18
10. Selection of Optional Currencies ......................19
11. Amount of Optional Currencies .........................20
12. Payments ..............................................21
13. Taxes .................................................23
14. Market Disruption .....................................25
15. Increased Costs .......................................27
16. Illegality ............................................28
17. Mitigation ............................................28
18. Guarantee .............................................29
19. Representations and Warranties ........................31
20. Undertakings ..........................................33
21. Default ...............................................39
22. The Agent and the Arranger ............................42
23. Fees ..................................................47
24. Expenses ..............................................47
25. Stamp Duties ..........................................48
26. Indemnities ...........................................48
27. Evidence And Calculations .............................49
28. Amendments And Waivers ................................49
29. Changes To The Parties ................................50
30. Disclosure of Information .............................53
31. Set-Off. ..............................................53
32. Pro Rata Sharing ......................................53
33. Severability ..........................................54
34. Counterparts ..........................................55
35. Notices ...............................................55
36. Language ..............................................56
37. Jurisdiction ..........................................56
38. Governing Law .........................................57
<PAGE>
Schedules
1. Banks and Commitments ..................................58
2. Conditions Precedent Documents .........................60
3. Calculation of the MLA Cost ............................62
4. Form of Request ........................................64
5. Form of Novation Certificate ...........................65
6. Form of Deed of Accession ..............................67
7. Approved Additional Borrowers ..........................69
<PAGE>
THIS FACILITY AGREEMENT is dated 30th November, 1994 between:-
(1) GAMBRO AB (the "Parent");
(2) BNP CAPITAL MARKETS LIMITED as Arranger (in this capacity the
"Arranger");
(3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 as banks (the
"Banks"); and
(4) BANQUE NATIONALE DE PARIS as agent (in this capacity the "Agent").
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 Definitions
In this Agreement:-
"Additional Borrower"
means any entity that becomes an additional borrower by virtue of
Clauses 2.5 and 2.6.
"Affiliate"
means a subsidiary or a holding company (in each case, as defined in
Section 736 of the Companies Act 1985 of England and Wales) of a Bank
or any other subsidiary of that holding company.
"Agent's Spot Rate of Exchange"
means the Agent's spot rate of exchange for the purchase of the
relevant Optional Currency in the London foreign exchange market with
U.S. Dollars at or about 11.00 a.m. on a particular day.
"Agreed Optional Currencies"
means Deutschmarks, Dutch Guilders, French Francs, Swiss Francs,
Sterling and Yen.
"Applicable Margin"
means 0.30 per cent. per annum from the date hereof to the fifth
anniversary of the date hereof and 0.35 per cent. per annum
thereafter.
"Borrowers"
means the Parent and/or any Additional Borrower and, in relation to
any Loan, means the Borrower to whom that Loan is, or is to be, made
(each a "Borrower").
<PAGE>
2
"Borrowers' Agent"
means the Parent or such other person from time to time nominated by
the Borrowers to act on behalf of the Borrowers in relation hereto and
approved for such purpose by the Agent (whose approval shall not be
unreasonably withheld).
"Business Day"
means a day (other than a Saturday or a Sunday) on which banks are
open for business in:-
(a) London and Paris;
(b) (in relation to a transaction involving any payment in Dollars)
New York; and
(c) (in relation to a transaction involving any payment in an
Optional Currency) the principal financial centre of the country
of that Optional Currency.
"COBE"
means COBE Laboratories, Inc.
"Commitment"
means, in relation to any Bank, its Facility A Commitment and its
Facility B Commitment.
"Commitment Period"
means the period from the date of this Agreement until, in respect of
Facility A, the Final Repayment Date and, in respect of Facility B,
the Term Date.
"Consolidated Total Assets"
means the total tangible assets of the Group (excluding recorded
goodwill but including all intellectual property rights) as shown in
its latest audited consolidated accounts.
"Deed of Accession"
means a Deed of Accession in relation to an Additional Borrower
entered into pursuant to Clause 2.5.
"Default"
means an Event of Default or an event which, with the giving of notice
under this Agreement, lapse of time specified in this Agreement (or in
the case of a grace period contained in any other document which is
referred to herein, specified in that document), determination of
materiality or fulfilment of any other applicable condition (or any
combination of the foregoing), would constitute an Event of Default.
<PAGE>
3
"Deutschmarks"
means the lawful currency for the time being of the Federal Republic
of Germany.
"Disclosure Letter"
means a letter delivered by the Parent to the Agent prior to the date
hereof relating to Clause 19 (Representations and Warranties).
"Dollars" or "$"
means the lawful currency for the time being of the United States of
America.
"Drawdown Date"
means the date of the advance of a Loan.
"Dutch Guilders"
means the lawful currency for the time being of The Netherlands.
"EIBOR"
means, in relation to a Loan denominated in Sterling:-
(a) the rate per annum of the offered quotation for deposits in
Sterling for a period comparable to the relevant Interest Period
which appears on Telerate Page 3750 at or about 11.00 a.m. on the
Rate Fixing Day; or
(b) if no such offered quotation appears on Telerate Page 3750 at or
about such time, the arithmetic mean (rounded upwards, if necessary,
to four decimal places) of the offered quotations for deposits in
Sterling for a period comparable to the relevant Interest Period which
appears on the Reuters Screen LIBP at or about 11.00 a.m. on the Rate
Fixing Day; or
(c) if no such offered quotation appears on the Telerate Page 3750
and one only or no such offered quotation appears on the LIBP Page of
the Reuters Screen at or about 11.00 a.m. on the Rate Fixing Day (or
if there is no LIBP Page on the Reuters Screen) or the Agent
determines, on the instruction of a Bank, that the rate determined in
accordance with paragraphs (a) and (b) above is not available for
deposits in Sterling domiciled outside the United Kingdom, the
arithmetic mean (rounded upwards, if necessary, to four decimal
places) of the per annum rates, as supplied to the Agent at its
request, quoted by each Reference Bank to leading banks at or about
11.00 a.m. on the Rate Fixing Day for the offering of deposits in
Sterling domiciled outside the United Kingdom in an amount comparable
to its participation in that Loan and for a period equal to the
relevant Interest Period.
For the purposes of this definition, "Telerate Page 3750" means the
display designated as "Page 3750", on the Telerate Service (or such
other page as may replace Page 3750 on that service or such other
service as may be nominated by the British Bankers' Association as the
<PAGE>
4
information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for Sterling deposits).
"Event of Default"
means an event specified as such in Clause 21.1 (Events of Default).
"Facilities"
means Facility A and Facility B.
"Facility A"
means the revolving credit facility so designated, the terms of which
are set out herein.
"Facility A Commitment"
means:-
(a) in relation to a Bank which is a Bank on the date of this
Agreement, the amount in Dollars set opposite its name in Part I
of Schedule 1;
(b) in relation to a Bank which becomes a Bank after the date of this
Agreement, the amount of a Facility A Commitment acquired by it
under Clause 29 (Changes to the Parties),
to the extent not cancelled, reduced or transferred under this
Agreement (collectively, the "Total A Commitments").
"Facility A Loan"
means a Loan drawn down or to be drawn down under Facility A.
"Facility A Outstandings"
means, at any time, the aggregate Original Dollar Amount of all Loans
then outstanding under Facility A.
"Facility B"
means the term credit facility so designated, the terms of which are
set out herein.
"Facility B Commitment"
means:-
(a) in relation to a Bank which is a Bank on the date of this
Agreement, the amount in Dollars set opposite its name in Part II
of Schedule 1;
<PAGE>
5
(b) in relation to a Bank which becomes a Bank after the date of this
Agreement, the amount of a Facility B Commitment acquired by it
under Clause 29 (Changes to the Parties),
to the extent not cancelled, reduced or transferred under this
Agreement (collectively, the "Total B Commitments").
"Facility B Loan"
means a Loan drawn down or to be drawn down under Facility B.
"Facility B Outstandings"
means, at any time, the aggregate Original Dollar Amount of all Loans
then outstanding under Facility B.
"Facility Office"
means the office(s) notified by a Bank to the Agent:-
(a) on or before the date it becomes a Bank; or
(b) by not less than five Business Days' notice,
as the office(s) through which it will perform all or any of its
obligations under this Agreement.
"Fee Letters"
means the two letters both dated the date of this Agreement between
the Agent or the Arranger and the Parent setting out the amount of
various fees referred to in Clause 23 (Fees).
"Final Repayment Date"
means the seventh anniversary of the date of this Agreement.
"Finance Document"
means this Agreement, the Fee Letters, any Deed of Accession or any
other document designated as such by the Agent and the Borrower.
"Finance Party"
means the Arranger, a Bank or the Agent.
"Financial Indebtedness"
means (without double counting) any indebtedness in respect of:-
(a) moneys borrowed and debit balances at banks and other financial
institutions;
<PAGE>
6
(b) any debenture, bond, note, loan stock or other security;
(c) any acceptance credit;
(d) receivables sold or discounted to the extent that there is
recourse to the seller for non-payment by the relevant debtor;
(e) the acquisition cost of any asset to the extent payable after the
time of acquisition or possession by the party liable where the
deferred payment is arranged primarily as a method of raising
finance and the deferral is for a period in excess of 180 days
(and, for the avoidance of doubt, this paragraph (e) shall not
include trade debt);
(f) leases (in relation to real estate, plant and machinery or
equipment), if and to the extent that the lessee is required
under standard accounting practices or principles applicable to
it to account for the value of the lease as an asset and the
lease payments as a liability;
(g) currency swap or interest swap, cap or collar arrangements or any
derivative instruments relating to such arrangements so far as it
constitutes the aggregate net debt position in relation thereto;
and
(h) any guarantee, indemnity or similar legally binding assurance
against financial loss of any person in each case in respect of
any of the types of obligation referred to in paragraphs (a) -
(g) above.
"French Francs"
means the lawful currency for the time being of France.
"Group"
means the Parent and its Subsidiaries.
"Interest Period"
means each period determined in accordance with Clause 8 (Interest
Periods).
"LIBOR"
means, in relation to a Loan denominated in a currency other than
Sterling:-
(a) the rate per annum of the offered quotation for deposits in the
currency of that Loan for a period comparable to the relevant
Interest Period which appears on Telerate Page 3750 or Telerate
Page 3740, as the case may be, at or about 11.00 a.m. on the Rate
Fixing Day; or
(b) if no such offered quotation appears on Telerate Page 3750 or
Telerate Page 3740, as the case may be, at or about such time,
the arithmetic mean (rounded upwards, if necessary, to four
decimal places) of the offered quotations for deposits in the
currency of that Loan for a period comparable to the relevant
Interest Period which appears on
<PAGE>
7
the Reuters Screen LIBO (in the case of Dollars) or the relevant
page (if any) for any other currency at or about 11.00 a.m. on
the Rate Fixing Day; or
(c) if no such offered quotation appears on the Telerate Page 3750 or
Telerate Page 3740, as the case may be, or one only or no such
offered quotation appears on the relevant Page of the Reuters
Screen at or about 11.00 a.m. on the Rate Fixing Day (or if there
is no relevant Page on the Reuters Screen), the arithmetic mean
(rounded upwards, if necessary, to four decimal places) of the
per annum rates, as supplied to the Agent at its request, quoted
by each Reference Bank to leading banks in the London interbank
market at or about 11.00 a.m. on the Rate Fixing Day for the
offering of deposits in the currency of that Loan in an amount
comparable to its or its Affiliate's participation in that Loan
and for a period equal to the relevant Interest Period.
For the purposes of this definition, "Telerate Page 3750" means the
display designated as "Page 3750", and "Telerate Page 3740" means the
display designated as "Page 3740", on the Telerate Service (or such
other page as may replace Page 3750 or Page 3740, as the case may be,
on that service or such other service as may be nominated by the
British Bankers' Association as the information vendor for the purpose
of displaying British Bankers' Association Interest Settlement Rates
for deposits in the relevant currency).
"Loan"
means, subject to Clauses 8 (Interest Periods) and 11 (Amount of
Optional Currencies), the principal amount of each borrowing by the
Borrowers under this Agreement or the principal amount outstanding of
that borrowing.
"Majority Banks"
means, at any time, Banks:-
(a) whose participations in the Loans then outstanding aggregate over
50 per cent. of all the Loans then outstanding; or
(b) if there are no Loans then outstanding, whose Commitments then
aggregate over 50 per cent. of the Total Commitments; or
(c) if there are no Loans then outstanding and the Total Commitments
have been reduced to nil, whose Commitments aggregated over 50
per cent. of the Total Commitments immediately before the
reduction.
"Material Subsidiary"
means, at any time:-
(a) a member of the Group (i) whose total assets as shown in its
latest audited accounts (consolidated if it itself has
Subsidiaries) exceed ten per cent. of Consolidated Total Assets
at that time; and/or (ii) whose turnover as shown in its latest
audited accounts (consolidated if it itself has Subsidiaries)
exceeds ten per cent. of the turnover of the Group as shown in
the Parent's latest audited consolidated accounts adjusted to
reflect
<PAGE>
8
the turnover of any company which has since become or ceased to
be a member of the Group; and/or
(b) any other Subsidiary designated as a Material Subsidiary by the
Parent (until such time as the Parent notifies the Agent in
writing that such Subsidiary shall no longer be a Material
Subsidiary).
PROVIDED THAT if, at any time, either
(i) the aggregate of the total assets of all the Material
Subsidiaries at that time is not at least 75 per cent. of
Consolidated Total Assets; or
(ii) the aggregate turnover of all the Material Subsidiaries as shown
in their latest audited accounts is not at least 75 per cent. of
the turnover of the Group
as shown in the Parent's latest audited consolidated accounts adjusted
as aforesaid,
then every member of the Group shall be a Material Subsidiary.
"MLA Cost"
means the cost imputed to a Bank whose Facility Office is in the
United Kingdom of the compliance with the Mandatory Liquid Assets
requirements of the Bank of England during an Interest Period for a
Loan maintained in Sterling, expressed as a rate per annum and
determined in accordance with Schedule 3.
"Novation Certificate"
has the meaning given to it in Clause 29.3 (Procedure for novations).
"Obligor"
means the Parent or any Borrower.
"Optional Currency"
means the Agreed Optional Currencies and any other currency with the
exception of Dollars.
"Original Dollar Amount"
in relation to a Loan, means:-
(a) if that Loan is denominated in Dollars, the amount of that Loan;
or
(b) if that Loan is denominated in an Optional Currency, the
equivalent in Dollars of the amount of that Loan if it had first
been drawn down and had remained denominated in Dollars.
<PAGE>
9
"Original Group Accounts"
means the audited consolidated accounts of the Group for the year
ended December, 1993 and the unaudited consolidated income statements
of the Group for the six months ended 30th June, 1994.
"Party"
means a party to this Agreement.
"Rate Fixing Day"
means the second Business Day before the first day of an Interest
Period for a Loan.
"Reference Banks"
means, subject to Clause 29.4 (Reference Banks), the principal London
offices of Banque Nationale de Paris, Commerzbank Aktiengesellschaft,
Enskilda Corporate, Skandinaviska Enskilda Banken and Union Bank of
Switzerland.
"Request"
means a request made by the Borrower for a Loan, substantially in the
form of Schedule 4.
"Security Interest"
means any mortgage, pledge, lien, charge, assignment by way of
security, hypothecation or security interest or any other agreement or
arrangement having the effect of conferring security.
"Sterling"
means the lawful currency for the time being of the United Kingdom.
"Subsidiary"
means a subsidiary within the meaning of the Swedish Companies Act
(1975:1385).
"Swiss Francs"
means the lawful currency for the time being of Switzerland.
"Tax on Overall Net Income"
of a Bank shall be construed as a reference to tax (other than tax
deducted or withheld from any amounts paid or payable hereunder)
imposed on that Bank by the jurisdiction under the laws of which it
has been incorporated or in which its Facility Office is located on
(1) the net income, profits or gains of that Bank worldwide or (2)
such of the net income, profits or gains of that Bank as are
considered to arise in or to relate to or are taxable in that
jurisdiction.
<PAGE>
10
"Term Date"
means the date falling 45 days after the date of this Agreement.
"Total A Commitments"
means the aggregate of the Facility A Commitments of all the Banks.
"Total B Commitments"
means the aggregate of the Facility B Commitments of all the Banks.
"Total Commitments"
means all the Total A Commitments and all the Total B Commitments.
"Yen"
means the lawful currency for the time being of Japan.
"1990 Agreement"
means the Revolving Credit and Term Loan Facility Agreement dated 21st
December 1990 between the Parent, COBE and the Finance Parties (as
defined therein).
1.2 Construction
(a) In this Agreement, unless the contrary intention appears, a
reference to:-
(i) "assets" includes properties, revenues and rights of every
description;
an "authorisation" includes an authorisation, consent,
approval, resolution, licence, exemption, filing and
registration;
a "month" or a period of "months" is a reference to a period
starting on one day in a calendar month and ending on the
numerically corresponding day in the relevant later calendar
month, except that if there is no numerically corresponding
day in that later month, that period shall end on the last
Business Day in that calendar month;
a "regulation" includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law but, if not, being of a kind with which it is
customary for companies within the relevant industry to
comply) of any governmental body, agency, department or
regulatory, self-regulatory or other authority or
organisation;
(ii) a provision of law is a reference to that provision as
amended or re-enacted;
(iii) a Clause or a Schedule is a reference to a clause of or a
schedule to this Agreement;
<PAGE>
11
(iv) a person includes its successors and permitted transferees
and assigns;
(v) a Finance Document or another document is a reference to
that Finance Document or other document as amended, novated
or supplemented; and
(vi) a time of day is a reference to London time.
(b) Unless the contrary intention appears, a term used in any other
Finance Document or in any notice given under or in connection
with any Finance Document has the same meaning in that Finance
Document or notice as in this Agreement.
(c) The index to and the headings in this Agreement are for
convenience only and are to be ignored in construing this
Agreement.
(d) Words importing the singular shall include the plural and vice
versa.
2. COMMITMENTS AND NATURE OF OBLIGATIONS
2.1 Statement of Commitments
Subject to the terms of this Agreement, each Bank agrees:
(a) to make Facility A Loans in Dollars or an Optional Currency up to
an aggregate Original Dollar Amount not exceeding its Facility A
Commitment; and
(b) to make Facility B Loans in Dollars up to an aggregate Original
Dollar Amount not exceeding its Facility B Commitment.
2.2 Maximum Amounts
Notwithstanding any other provision of this Agreement, save as
provided in Clause 11.3(c):-
(i) the Facility A Outstandings may not, at any time, exceed the
Total A Commitments at that time; and
(ii) the Facility B Outstandings may not, at any time, exceed the
Total B Commitments at that time.
2.3 Obligations several
The obligations of each Bank under this Agreement are several. Failure
of a Bank to carry out its obligations hereunder shall not relieve any
other party hereto of any of its obligations hereunder. No Bank shall
be responsible for the obligations of any other Bank hereunder.
2.4 Rights several
The obligations of the Borrower towards the Agent and the Banks
hereunder are given to each of them as separate and independent
rights. Each Bank may, except as otherwise stated in this Agreement,
separately enforce its rights hereunder.
<PAGE>
12
2.5 Additional Borrowers
The Borrowers' Agent may, with the prior written consent of the
Majority Banks, at any time during the term of this Agreement, notify
the Agent that one of the Parent's Subsidiaries incorporated in Sweden,
the United States of America or Germany (or elsewhere, with the
consent of all the Banks) is to be designated as an Additional
Borrower guaranteed by the Parent. Such notice shall be in writing and
signed on behalf of the Borrowers' Agent and on behalf of the
Subsidiary concerned and shall take effect in accordance with its
terms provided that:
(a) the Additional Borrower enters into a Deed of Accession with the
Agent on behalf of the Banks in the form of Schedule 6 together
with such amendments as the Agent, acting in accordance with the
directions of the Majority Banks, may reasonably require; and
(b) the Additional Borrower, before entering into such a Deed of
Accession, has fulfilled all appropriate conditions precedent as
notified to the Borrowers' Agent in the Banks' written consent to
the satisfaction of the Agent or as otherwise agreed by the
Banks.
2.6 Approved Additional Borrowers
The Subsidiaries listed in Schedule 7 shall (subject to sub-paragraphs
(a) and (b) of Clause 2.5 (Additional Borrowers)) be deemed to be
approved by all the Banks as Additional Borrowers.
2.7 Borrowers' Agent
Each Borrower by its execution of this Agreement or, as the case may
be, of a Deed of Accession irrevocably authorises the Borrowers' Agent
to give all notices and instuctions and make such agreements expressed
to be capable of being given or made by the Borrowers herein
notwithstanding that they may affect such Borrower without further
reference to or the consent of such Borrower and such Borrower shall,
as regards the Agent and each Bank, be bound thereby as though such
Borrower itself had agreed such change or given such notice or made
such agreement.
2.8 Choice of Facility Office
Each Bank agrees (but without accepting any legal liability) that,
when selecting the Facility Office(s) through which it will perform
all or any of its obligations under this Agreement relating to an
Additional Borrower, it shall use reasonable efforts to minimise the
taxation and other costs for the Additional Borrower arising from such
selection PROVIDED THAT such Bank shall not be required to select a
particular Facility Office or to take any other steps if, in its bona
fide opinion, such selection or such steps would or might have an
adverse effect upon its business, operations or financial condition.
2.9 Commitment of Union Bank of Switzerland
Notwithstanding any other provisions of this Agreement, Union Bank of
Switzerland, London Branch and Union de Banques Suisses (Luxembourg)
S.A. shall be considered to be one Bank with a single Facility A
Commitment and a single Facility B Commitment for the purposes of this
Agreement but that Union Bank of Switzerland, London Branch shall be
obliged to make Loans to any Borrower (other than any Additional
Borrower incorporated in the United States
<PAGE>
13
of America) and Union de Banques Suisses (Luxembourg) S.A. shall be
obliged to make Loans to any Additional Borrower incorporated in the
United States of America, in all cases subject to the terms of this
Agreement.
3. PURPOSE
The Borrower shall apply each Loan towards its general corporate
purposes including the refinancing of existing debt (including under
the 1990 Agreement). Without affecting the obligations of the Borrower
in any way, no Finance Party is bound to monitor or verify the
application of any Loan.
4. CONDITIONS PRECEDENT
4.1 Documentary conditions precedent
The obligations of each Finance Party to any Obligor under this
Agreement are subject to the condition precedent that the Agent has
notified the Parent and the Banks that it has received all of the
documents set out in Schedule 2 in form and substance satisfactory to
the Agent. The Agent will give the Parent such notification promptly
upon receipt of such documents.
4.2 Further conditions precedent
The obligations of each Bank to advance any amount under Clause 5.3
(Participations) or 11 (Amount of Optional Currencies) are (unless all
of the Banks otherwise agree in any particular case) subject to the
further conditions precedent that on both the date of the Request (if
applicable) and the date on which the relevant amount is to be
advanced:-
(a) the representations and warranties in Clause 19 (Representations
and warranties) to be repeated on those dates are correct and
will be correct immediately after the advance; and
(b) no Default is outstanding or would result from the advance or, in
the case where outstanding indebtedness of any Borrower under the
1990 Agreement is being refinanced by any Loan to be made
hereunder to that Borrower, no Event of Default has occurred and
is continuing.
5. DRAWDOWN
5.1 Commitment
Subject to the terms of this Agreement, Loans will be made to each
Borrower at any time during the relevant Commitment Period when
requested by the Borrower. Any amount of the Total A Commitments or
the Total B Commitments unborrowed hereunder during the relevant
Commitment Period shall automatically be cancelled at close of
business in London on the last day of that Commitment Period.
5.2 Requests
Whenever a Borrower desires a Loan to be made available to it, it
shall give a Request in writing to the Agent, appropriately completed,
to be received not later than 10.00 a.m. (London time) on the third
(in the case of a Loan to be denominated in Dollars or an Agreed
Optional
<PAGE>
14
Currency during the first Interest Period) or the fifth (in the case
of a Loan to be denominated in a currency other than Dollars or an
Agreed Optional Currency during the first Interest Period) Business
Day prior to the proposed Drawdown Date of such Loan (or such other
time as the Borrower may agree with the Banks), specifying in respect
of such Loan:
(a) the proposed Drawdown Date (being a Business Day during the
relevant Commitment Period);
(b) whether such Loan is to be made under Facility A or Facility B;
(c) the Original Dollar Amount of such Loan which shall be in a
minimum amount of $5,000,000 and integral multiples of
$1,000,000;
(d) the currency in which a Facility A Loan is to be denominated for
the first Interest Period determined in accordance with Clause 10
(Selection of Optional Currencies);
(e) the first Interest Period for such Loan determined in accordance
with Clause 8 (Interest Periods);
(f) the payment instructions in compliance with Clause 12 (Payments).
Subject to the terms of this Agreement, each Request shall be
irrevocable and the Borrower shall be bound to accept the Loan in
accordance with the Request. The Agent shall promptly notify each Bank
of each Request and, if the Loan is to be denominated in an Agreed
Optional Currency, the Optional Currency amounts (and the applicable
Agent's Spot Rate of Exchange) in accordance with Clause 11.1 (Amount
of Optional Currencies - Drawdowns). No Borrower may serve a Request
until the Agent has confirmed to the Borrower and the Banks that the
conditions precedent set out in Clause 4.1 (Conditions Precedent) have
been satisfied. Loans may not be in more than six currencies at any
one time. Each Request must specify one Loan only, but the Borrower
may, subject to the other terms of this Agreement, deliver more than
one Request on any one day.
5.3 Participations
Subject to the terms of this Agreement, each Bank shall on the
proposed Drawdown Date make available to the Agent the amount of its
participation in the Loan concerned in the proportion its Facility A
Commitment bears to the Total A Commitments or its Facility B
Commitment bears to the Total B Commitments as the case may be.
6. REPAYMENT
6.1 Facility A Loans
Subject to Clause 7 (Prepayment and Cancellation), the Borrower shall
repay each Facility A Loan in the currency in which it is denominated
in full on the Final Repayment Date.
6.2 Facility B Loans
Subject to Clause 7 (Prepayment and Cancellation), each Facility B
Loan shall be repaid in Dollars in full on the Final Repayment Date.
<PAGE>
15
7. PREPAYMENT AND CANCELLATION
7.1 Voluntary Prepayment
The Borrower may at any time, by giving not less than five Business
Days' prior written notice to the Agent, prepay any Loan in whole or
in part (but, if in part, in an integral multiple of an Original
Dollar Amount of $5,000,000), such prepayment to be without premium or
penalty if made on the last day of an Interest Period relative thereto
but if made on a day other than the last day of an Interest Period
relative thereto the Parent shall indemnify each Bank pursuant to
Clause 26.2(c).
7.2 Voluntary Cancellation
The Borrower may, by giving not less than thirty days' prior written
notice to the Agent, cancel in whole or in part the undrawn amount of
the Total A Commitments (but, if in part, in an integral multiple of
an Original Dollar Amount of $5,000,000). Any cancellation in part
shall be applied against the Facility A Commitment of each Bank pro
rata.
7.3 Additional right of prepayment and cancellation
If:-
(a) the Borrower is required to pay to a Bank any additional amounts
under Clause 13 (Taxes); or
(b) the Borrower is required to pay to a Bank any amount under Clause
15 (Increased costs); or
(c) interest on a Bank's participation in a Loan is being calculated
in accordance with Clause 14.4(c) (Alternative basis for
outstanding Loans),
then, without prejudice to the obligations of the Borrower under those
Clauses, the Borrower may, whilst the circumstances continue or within
thirty days after receipt of notice from that Bank or the Agent of the
relevant event within paragraph (a), (b) or (c) above (whichever is
the later), serve a notice of prepayment and cancellation on that Bank
through the Agent. On the date falling five Business Days after the
date of service of the notice:-
(i) the Borrower shall prepay that Bank's participation in all the
Loans; and
(ii) that Bank's undrawn Commitment shall be cancelled.
7.4 Miscellaneous provisions
(a) Any notice of prepayment and/or cancellation under this Agreement
is irrevocable. The Agent shall notify the Banks promptly of
receipt of any such notice.
(b) All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid and all other amounts due
and payable under this Agreement (including without limitation
under Clause 26.2(c)).
<PAGE>
16
(c) No prepayment or cancellation is permitted except in accordance
with the express terms of this Agreement.
(d) Any amount of any Facility A Loan prepaid under this Agreement
may subsequently be re-borrowed. No amount of any Facility B Loan
prepaid under this Agreement may subsequently be re-borrowed. No
amount of the Total Commitments cancelled under this Agreement
may subsequently be reinstated.
8. INTEREST PERIODS
8.1 Selection
(a) The Borrower may select an Interest Period for a Loan in either
the relevant Request or, if the Loan has been borrowed, a notice
received by the Agent not later than 10.00 a.m. on the third (in
the case of a Loan to be denominated in Dollars or an Agreed
Optional Currency during that Interest Period) or the fifth (in
the case of a Loan to be denominated in a currency other than
Dollars or an Agreed Optional Currency during that Interest
Period) Business Day before the commencement of that Interest
Period. Each Interest Period for a Loan will commence on its
Drawdown Date or the expiry of its preceding Interest Period.
(b) Subject to the following provisions of this Clause 8 (Interest
Periods), each Interest Period will be either an approved
duration or an optional duration as so selected under paragraph
(a) above.
In this Clause 8 (Interest Periods):-
"approved duration" means one, three or six months; and
"optional duration" means any period other than one, three or six
months agreed by the Banks.
(c) If the Borrower fails to select an Interest Period for an
outstanding Loan in accordance with paragraph (a) above, that
Interest Period will, subject to the other provisions of this
Clause 8 (Interest Periods), be three months.
(d) No more than six Interest Periods of one month's duration may be
selected in any calendar year.
8.2 Selection of an optional duration
(a) If the Borrower selects an Interest Period of an optional
duration, it may also select an Interest Period of an approved
duration to apply if the selection of an optional duration
becomes ineffective in accordance with paragraph (b) below.
(b) If:-
(i) the Borrower requests an Interest Period of an optional
duration; and
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17
(ii) the Agent receives notice from a Bank not later than 3.00
p.m. three Business Days prior to the commencement of the
Interest Period that matching deposits are not available to
it in the ordinary course of business in the relevant
interbank market to fund its participation in the Loan for
that Interest Period,
the Interest Period for that Loan shall be the alternative period
so specified or, in the absence of any alternative selection and
subject to the following provisions of this Clause 8, three
months. In this event, the Agent shall promptly notify the
Borrower and the Banks of the new Interest Period for the Loan.
8.3 Non-Business Days
If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall instead end on the next
Business Day in that calendar month (if there is one) or the preceding
Business Day (if there is not).
8.4 Consolidation and splitting
(a) The number of Interest Periods current hereunder at any time with
different expiry dates shall not exceed 10.
(b) If the number of Interest Periods current hereunder with
different expiry dates reaches 10, the first Interest Period for
any additional Loan must end on the same day as an existing
Interest Period for another Loan for the same Borrower made under
the same Facility and both such Loans shall thereafter (if in the
same currency and subject to paragraph (c) below) be
consolidated.
(c) Subject to paragraph (a) above, the Borrower may, in any Request
or any notice given pursuant to Clause 8.1(a) above, split any
Loan (including any consolidated Loan) into two or more Loans
(provided that the Original Dollar Amount of each resulting Loan
is a minimum of $5,000,000).
8.5 No overrunning
If an Interest Period in respect of a Loan would otherwise overrun the
Final Repayment Date, it shall be shortened so that it ends on the
Final Repayment Date.
8.6 Other adjustments
The Agent and the Borrowers' Agent may, with the consent of the Banks,
enter into such other arrangements as they may agree for the
adjustment of Interest Periods and the consolidation and/or splitting
of Loans.
8.7 Notification
The Agent shall notify the Borrower, the Borrowers' Agent and the
Banks of the duration of each Interest Period promptly after
ascertaining its duration.
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9. INTEREST
9.1 Interest rate
The rate of interest on each Loan for each of its Interest Periods is
the rate per annum determined by the Agent to be the aggregate of:-
(a) Applicable Margin;
(b) (i) in the case of all Loans other than a Sterling Loan,
LIBOR; or
(ii) in the case of a Sterling Loan, EIBOR; and
(c) MLA Costs when applicable to such Loan.
9.2 Due dates
Except as otherwise provided in this Agreement, accrued interest on
each Loan is payable by the Borrower on the last day of each Interest
Period for that Loan and also, if the Interest Period is longer than
six months, at six monthly intervals during that Interest Period.
9.3 Default interest
(a) If an Obligor fails to pay any amount payable by it under this
Agreement, it shall forthwith on demand by the Agent pay interest
on the overdue amount from the due date up to the date of actual
payment, as well after as before judgment, at a rate (the
"default rate") determined by the Agent to be one per cent. per
annum above:-
(i) if the overdue amount is of principal and an Interest Period
relative thereto is still current, the rate applicable to
such overdue amount under Clause 9.1 (Interest rate) during
such Interest Period; and
(ii) in any other case, the rate which would have been payable if
the overdue amount had, during the period of non-payment,
constituted a Loan in the currency of the overdue amount for
such successive Interest Periods not exceeding three months
of such duration as the Agent may determine (each a
"Designated Interest Period").
(b) The default rate will be determined by the Agent on each Business
Day or the first day of, or two Business Days before the first
day of, the relevant Designated Interest Period, as appropriate.
(c) If the Agent determines that deposits in the currency of the
overdue amount are not at the relevant time being made available
by the Reference Banks to leading banks in the London interbank
market, the default rate will be determined by reference to the
weighted average of the cost of funds to the Banks from whatever
sources they may select.
(d) Default interest will be compounded at the end of each Designated
Interest Period.
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9.4 Notification
The Agent shall promptly notify the Borrower and each Bank of the
determination of a rate of interest under this Agreement.
10. SELECTION OF OPTIONAL CURRENCIES
10.1 Availability
A Borrower may not request that a Loan be denominated in an Optional
Currency (other than an Agreed Optional Currency) unless the Agent has
confirmed to the Borrower that the Optional Currency is readily
available and freely transferable in the London foreign exchange
market.
10.2 Selection
(a) All Facility B Loans shall be denominated in Dollars.
(b) The Borrower may select the currency of a Facility A Loan for an
Interest Period in either the relevant Request or, if such Loan
is outstanding, a notice received by the Agent not later than
10.00 a.m. on the third (in the case of a Loan to be denominated
in Dollars or an Agreed Optional Currency during that Interest
Period) or the fifth (in the case of a Loan to be denominated in a
currency other than Dollars or an Agreed Optional Currency during
that Interest Period) Business Day before the commencement of
that Interest Period. The Borrower may specify in any such notice
whether that Loan is to be denominated in more than one currency,
and, if so, the amount in Dollars of each such currency (being an
integral multiple of an Original Dollar Amount of $5,000,000 or
the balance of the Loan, if more).
(c) If the Borrower fails to give a notice in respect of an
outstanding Loan in accordance with paragraph (b) above, that
Loan shall remain denominated for its next Interest Period in the
same currency in which it is then denominated.
(d) Each part of a Loan which is to be denominated in a different
currency from any other part of that Loan shall be treated as a
separate Loan.
(e) The Borrower may not choose a currency if as a result the Loans
would be denominated at any one time in more than six currencies.
(f) The Agent shall notify each Bank of the currency of each Facility
A Loan promptly after it is ascertained.
10.3 Revocation of currency
Notwithstanding Clause 10.1 (Availability), if before 10.00 a.m. on
the fourth Business Day before the commencement of an Interest Period,
the Agent receives notice from a Bank that:-
(a) it is impracticable for the Bank to fund or make its
participation in the Loan in the relevant Optional Currency
(other than an Agreed Optional Currency) during that Interest
Period; or
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2O
(b) the use of the proposed Optional Currency (other than an Agreed
Optional Currency) might contravene any law or regulation,
the Agent shall give notice to the Borrower, the Borrowers' Agent and
to the Banks to that effect before 11.00 a.m. on that day and, unless
the Borrower, the Borrowers' Agent and the Banks agree otherwise, the
Loan shall be denominated in Dollars during that Interest Period.
11. AMOUNT OF OPTIONAL CURRENCIES
11.1 Drawdowns
If a Loan is to be drawn down in an Optional Currency, the amount of
each Bank's participation in Loan will be determined by converting
into that Optional Currency the Bank's participation in the Original
Dollar Amount of that Loan on the basis of the Agent's Spot Rate of
Exchange three Business Days before its Drawdown Date.
11.2 Change of currency
(a) If a Loan is to be continued during its next Interest Period in a
different currency (the "new currency") from that in which it is
then denominated, such Loan shall be repaid by the Borrower in
full at the end of its current Interest Period in the currency in
which it is then denominated and, subject to the terms of this
Agreement, shall be re-advanced by the Banks forthwith in the new
currency.
(b) If the new currency is Dollars, the amount of each Bank's
participation in that Loan will be its participation in the
Original Dollar Amount of that Loan for that Interest Period.
(c) If the new currency is an Optional Currency, the amount of each
Bank's participation in that Loan will be determined by
converting into the new currency its participation in the
Original Dollar Amount of that Loan on the basis of the Agent's
Spot Rate of Exchange three Business Days before the commencement
of that Interest Period.
11.3 Same Optional Currency
(a) If a Loan is to be continued during its next Interest Period in
the same Optional Currency as that in which it is denominated
during its current Interest Period, there shall be calculated the
difference between the amount of such Loan (in that Optional
Currency) for the current Interest Period and for the next
Interest Period. The amount of such Loan for the next Interest
Period will be determined by notionally converting into that
Optional Currency the Original Dollar Amount of such Loan on the
basis of the Agent's Spot Rate of Exchange three Business Days
before the commencement of that Interest Period.
(b) At the end of the current Interest Period (but subject always to
paragraph (c) below):-
(i) if the amount of such Loan for the next Interest Period is
less than for the preceding Interest Period, the Borrower
shall repay the difference; or
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21
(ii) if the amount of such Loan for the next Interest Period is
greater, each Bank shall forthwith make available to the
Agent for the Borrower its participation in the difference.
(c) If the Agent's Spot Rate of Exchange for the next Interest Period
shows an appreciation or depreciation of the Optional Currency
against Dollars of less than five per cent. when compared with
the Original Exchange Rate, no amounts are payable in respect of
the difference. In this Clause 11 (Amount of Optional Currencies)
"Original Exchange Rate" means the Agent's Spot Rate of Exchange
used for determining the amount of the Optional Currency for the
Interest Period which is the later of the following:-
(i) the Interest Period during which such Loan was first
denominated in that Optional Currency if such Loan has since
then remained denominated in that Optional Currency; and
(ii) the most recent Interest Period immediately prior to which a
difference was required to be paid under this Clause 11.3.
11.4 Prepayments and Repayments
If a Loan is to be repaid or prepaid by reference to an Original
Dollar Amount, the amount actually to be repaid or prepaid in the
relevant Optional Currency shall be determined by applying to the
relevant part of the Original Dollar Amount to be repaid or prepaid
the Agent's Spot Rate of Exchange last used for determining the
Optional Currency amount of that Loan under Clause 11 (Amount of
Optional Currencies) or, if applicable, the Original Exchange Rate.
11.5 Notification
Except for Optional Currency amounts for a Loan to be drawn down in an
Agreed Optional Currency of which the Agent shall notify the Banks in
accordance with Clause 5.2 (Requests) the Agent shall notify the
Banks, the Borrower and the Borrowers' Agent of Optional Currency
amounts (and the applicable Agent's Spot Rate of Exchange) promptly
after they are ascertained.
12. PAYMENTS
12.1 Place
All payments by an Obligor or a Bank under this Agreement shall be
made to the Agent to its account at such office or bank as it may, at
least three Business Days prior to the due date of such payment,
notify to that Obligor or Bank for this purpose.
12.2 Funds
Payments under this Agreement to the Agent shall be made for value on
the due date at such times and in such funds as are customary at the
time for the settlement of transactions in the relevant currency in
the place for payment.
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22
12.3 Distribution
(a) Each payment received by the Agent under this Agreement for
another Party shall, subject to paragraphs (b) and (c) below, be
made available by the Agent to that Party by payment (on the date
and in the currency and funds of receipt) to its account with
such office or bank in the principal financial centre of the
country of the relevant currency as it may notify to the Agent
for this purpose by not less than five Business Days' prior
notice.
(b) The Agent may apply any amount received by it for the Borrower
in or towards payment (on the date and in the currency and funds
of receipt) of any amount due from the Borrower under this
Agreement or in or towards the purchase of any amount of any
currency to be so applied.
(c) Where a sum is to be paid to the Agent under this Agreement for
another Party, the Agent is not obliged to pay that sum to that
Party until it has established that it has actually received that
sum. The Agent may, however, assume that the sum has been paid to
it in accordance with this Agreement, and, in reliance on that
assumption, make available to that Party a corresponding amount.
If the sum has not been made available but the Agent has paid a
corresponding amount to another Party, that Party shall forthwith
on demand by the Agent refund the corresponding amount together
with interest on that amount from the date of payment to the date
of receipt, calculated at a rate determined by the Agent to
reflect its cost of funds.
12.4 Currency
(a) A repayment or prepayment of a Loan or any part of a Loan is
payable in the currency in which the Loan is denominated on its
due date.
(b) Interest is payable in the currency in which the relevant amount
in respect of which it is payable is denominated.
(c) Amounts payable in respect of costs, expenses and taxes and the
like are payable in the currency in which they are incurred.
(d) Any other amount payable under this Agreement is, except as
otherwise provided in this Agreement, payable in Dollars.
12.5 Set-off and counterclaim
All payments made by an Obligor under this Agreement shall be made
without set-off or counterclaim.
12.6 Non-Business Days
(a) If a payment under this Agreement is due on a day which is not a
Business Day, the due date for that payment shall instead be the
next Business Day in the same calendar month (if there is one) or
the preceding Business Day (if there is not).
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23
(b) During any extension of the due date for payment of any principal
under this Agreement interest is payable on that principal at the
rate payable on the original due date.
12.7 Partial payments
(a) If the Agent receives a payment insufficient to discharge all the
amounts then due and payable by the Obligors under this
Agreement, the Agent shall apply that payment towards the
obligations of the Obligors under this Agreement in the following
order:-
(i) first, in or towards payment pro rata of any unpaid costs
and expenses of the Agent under this Agreement;
(ii) secondly, in or towards payment pro rata of any accrued
interest due but unpaid under this Agreement;
(iii) thirdly, in or towards payment pro rata of any principal
due but unpaid under this Agreement; and
(iv) fourthly, in or towards payment pro rata of any other sum due but
unpaid under this Agreement.
(b) The Agent shall, if so directed by all the Banks, vary the order
set out in sub-paragraphs (a)(ii) to (iv) above.
(c) Paragraphs (a) and (b) above shall override any appropriation
made by an Obligor.
13. TAXES
13.1 Gross-up
All payments by an Obligor under the Finance Documents shall be made
without any deduction and free and clear of and without deduction for
or on account of any taxes (other than Taxes on Overall Net Income),
except to the extent that the Obligor is required by law to make
payment subject to any taxes. If any tax or amounts in respect of tax
must be deducted, or any other deductions for or on account of any
taxes must be made, from any amounts payable or paid by an Obligor, or
paid or payable by the Agent to a Bank, under the Finance Documents
(other than Taxes on Overall Net Income), the Obligor shall (subject to
Clause 13.2(c)) pay such additional amounts as may be necessary to
ensure that the relevant Bank receives a net amount equal to the full
amount which it would have received had payment not been made subject
to tax.
13.2 Forms
(a) To the extent that at that time any Bank is entitled to complete
or partial, as the case may be, exemption from deduction or
withholding for or on account of any taxes with respect to all
payments to be made by any Obligor under the Finance Documents
merely by completing certain forms, that Bank agrees, upon request
by such Obligor, to execute and deliver to such Obligor, such
forms, if they are required by law or are such as the Obligor may
reasonably request. Further, if COBE becomes an Additional
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24
Borrower, each Bank which is organised under the laws of a
jurisdiction outside the US hereby agrees (insofar as it can
lawfully do so):
(i) within 10 days after the date on which COBE becomes an
Additional Borrower to deliver to COBE and the Agent:-
(aa) for the office, if any, identified with such Bank's
signature which is located in the United States of
America, two accurate and complete, original signed
copies of Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"); or
(bb) for the office, if any, identified with such Bank's
signature below which is located outside the United
States of America, two accurate and complete, original
signed copies of Internal Revenue Service Form 1001 or
any successor thereto ("Form 1001"),
in each case indicating that such Bank is on the date hereof
entitled to receive all payments under this Agreement
through such office free from withholding of US federal
income tax; and
(ii) before or promptly after the occurrence of any event
(including the passage of time or the designation of an
Additional Borrower) requiring the delivery of an additional
or replacement Form 4224 or 1001 to deliver to COBE and the
Parent, upon the request of COBE, the Parent or the Agent,
(if delivery of the same be lawful under then applicable
law), two accurate and original signed copies of Form 4224
or 1001 in addition to or replacement for the forms
previously delivered by such Bank claiming an exemption from
withholding tax or the greatest reduction of withholding tax
available under then applicable law.
(b) Each Bank agrees that, to the extent any form claiming or
otherwise establishing complete or partial exemption from
withholding and deduction of taxes delivered under this Agreement
is incomplete or incorrect in any material respect when delivered
or thereafter, such Bank shall execute and deliver complete and
correct replacement forms.
(c) If a Bank fails to comply with paragraph (a) above, such Obligor
shall not be obliged to pay additional amounts under Clause 13.1
(Gross-up) in respect of any deduction for or on account of taxes
that would not have been made had such Bank complied.
13.3 Tax receipts
All taxes required by law to be deducted or withheld by an Obligor
from any amounts paid or payable under the Finance Documents shall be
paid by the relevant Obligor when due and the Obligor shall, as soon
as reasonably practicable after the payment is made, deliver to the
Agent for the relevant Bank evidence satisfactory to that Bank
(including all relevant tax receipts (or similar evidence) or copies
thereof) that the payment has been duly remitted to the appropriate
authority.
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25
13.4 Tax credits
(a) If, following the payment by any Obligor of any additional
amounts under Clause 13.1 (Gross-up), the Agent or any Bank shall
determine that it has received or been granted a credit against
or remission for any taxes payable by it, the Agent or such Bank
shall reimburse such Obligor with such amount as the Agent or
such Bank shall in its absolute discretion certify to be the
proportion of such credit or remission (if any) as will leave the
Agent or such Bank (after such reimbursement) in no worse
position than it would have been in had the relevant deduction or
withholding not been made. Such reimbursement shall be made
promptly upon the Agent or such Bank making any such
determination.
(b) Nothing in paragraph (a) above shall:
(i) require the Agent or any Bank to disclose to any Obligor any
details of its tax affairs;
(ii) interfere with the right of the Agent or any Bank to arrange
its tax affairs in whatever manner it thinks fit; and
(iii) neither the Agent nor any Bank shall be under any
obligation to claim relief in respect of any payment
under Clause 13.1 in priority to any other reliefs,
claims or credits available to it.
14. MARKET DISRUPTION
14.1 Absence of quotations
If the Agent requests a quotation from the Reference Banks and a
Reference Bank does not supply an offered rate by 1.00 p.m. on a Rate
Fixing Day, the applicable LIBOR or EIBOR (as the case may be) shall,
subject to Clause 14.2 (Market disruption), be determined on the basis
of the quotation of the other Reference Banks.
14.2 Market disruption
If, on or prior to a Rate Fixing Day:-
(a) the Agent requests a quotation from the Reference Banks and two
Reference Banks do not supply an offered rate by 1.00 p.m. on a
Rate Fixing Day; or
(b) the Agent determines that adequate and fair means do not exist
for ascertaining LIBOR or EIBOR (as the case may be); or
(c) the Agent receives notification from Banks whose participations
in a Loan exceed 50 per cent. of that Loan that, in their
opinion:-
(i) matching deposits are not available to them in the relevant
interbank market in the ordinary course of business to fund
their participations in that Loan for the relevant Interest
Period; or
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26
(ii) the cost to them of obtaining matching deposits in the
relevant interbank market would be in excess of LIBOR or
EIBOR (as the case may be) for the relevant Interest Period,
the Agent shall promptly notify the Borrower and the Banks of the fact and
that this Clause 14 (Market Disruption) is in operation.
For the purposes of this Clause, "relevant interbank market" means:
(1) in the case of all Loans other than a Sterling Loan, London; and
(2) in the case of a Sterling Loan, such interbank market outside the
United Kingdom as a Bank may reasonably select for the purpose of
funding its participation.
14.3 Suspension of drawdowns
If a notification under Clause 14.2 (Market disruption) applies to a
Loan which has not been made, the Borrowers' Agent may (by notice to
the Agent) elect that the Loan shall not be made. If the Borrowers'
Agent does not so elect and such Loan is made, Clause 14.4 shall apply
thereto. If the Borrowers' Agent does so elect, the Borrower's Agent
and the Agent shall, within five Business Days of the relevant Rate
Fixing Day, enter into negotiations for a period of not more than 30
days with a view to agreeing an alternative basis for the borrowing of
that and any future Loan made while such circumstances continue. Any
alternative basis agreed shall be, with the prior consent of all the
Banks, binding on all the Parties.
14.4 Alternative basis for outstanding Loans
If a notification under Clause 14.2 (Market disruption) applies to a
Loan which is (or, by virtue of the Borrower's Agent not making an
election under Clause 14.3 (Suspension of drawdowns), which has
become) outstanding, then, notwithstanding any other provision of this
Agreement:-
(a) within five Business Days of receipt of the notification, the
Borrowers' Agent and the Agent shall enter into negotiations for
a period of not more than 30 days with a view to agreeing an
alternative basis for determining the rate of interest and/or
funding applicable to that Loan and/or any other Loans
denominated or to be denominated in the currency of that Loan;
(b) any alternative basis agreed under paragraph (a) above shall be,
with the prior consent of all the Banks, binding on all the
Parties;
(c) if no alternative basis is agreed, each Bank shall (through the
Agent) certify on or before the last day of the Interest Period
to which the notification relates an alternative basis for
maintaining its participation in that Loan;
(d) any such alternative basis may include an alternative method of
fixing the interest rate, alternative Interest Periods or
alternative currencies but it must reflect the cost to the Bank
of funding its participation in the Loan from whatever sources it
may reasonably select plus the Applicable Margin plus any
applicable MLA Costs; and
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27
(e) each alternative basis so certified shall be binding on the
Borrower, the Borrowers' Agent and the certifying Bank and
treated as part of this Agreement.
(f) Any alternative basis for the borrowing of any Loan shall cease
as soon as reasonably practicable (as determined by the Agent)
after the relevant circumstances have ceased to apply and the
normal provisions of this Agreement shall apply thereafter.
15. INCREASED COSTS
15.1 Increased costs
(a) Subject to Clause 15.2 (Exceptions), the relevant Borrower or,
where the increased cost cannot be attributed to a particular
Loan, the Borrowers' Agent, shall within 5 Business Days of
demand by a Finance Party to the Borrowers' Agent pay to that
Finance Party the amount of any increased cost incurred by it as
a result of:-
(i) any change after the date of this Agreement in, or in the
official interpretation or application of, any law or
regulation; or
(ii) compliance with any regulation made after the date of this
Agreement,
(including any law or regulation relating to reserve asset,
special deposit, cash ratio, liquidity or capital adequacy
requirements or any other form of banking or monetary control).
(b) In this Agreement "increased cost" means:-
(i) an additional cost incurred by a Finance Party as a result
of it having entered into, or performing, maintaining or
funding its obligations under, this Agreement; or
(ii) that portion of an additional cost incurred by a Finance
Party in making, funding or maintaining all or any advances
comprised in a class of advances formed by or including its
participations in the Loans made or to be made under this
Agreement as is attributable to it making, funding or
maintaining those participations; or
(iii) a reduction in any amount payable to a Finance Party or
in the effective return to a Finance Party under this
Agreement on its capital; or
(iv) the amount of any payment made by a Finance Party, or the
amount of any interest or other return foregone by a Finance
Party, on or in relation to any amount received or
receivable by that Finance Party from the Agent or an
Obligor under this Agreement.
(c) A Finance Party intending to make a claim under paragraph (a)
above shall, promptly upon its Facility Office becoming aware of
an event by reason of which it is entitled to do so and the
possible results thereof, notify the Agent, and the Agent shall
promptly notify the Borrower and the Borrowers' Agent of such
event. For the purpose of this
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28
Clause 15.1 each Bank may in good faith allocate or spread costs
and/or losses among its assets and liabilities (or any class
thereof) on such basis as it considers appropriate.
15.2 Exceptions
Clause 15.1 (Increased costs) does not apply to any increased cost:-
(a) compensated for by the payment of any MLA Costs;
(b) provided for by the operation of Clause 13 (Taxes); or
(c) attributable to any change in the rate or basis of calculation of
Tax on Overall Net Income of a Bank (or tax on the overall net
income of a division or branch of the Bank); or
(d) incurred or suffered by a Bank as a consequence of the
implementation of the matters set out in the report of the Basle
Committee on Banking Regulations and Supervisory Practices dated
July 1988 and entitled "International Convergence of Capital
Measurement and Capital Standards" (as that report is in effect
on the date of this Agreement).
16. ILLEGALITY
If it becomes unlawful in any jurisdiction for a Bank to give effect
to any of its obligations as contemplated by this Agreement or to fund
or maintain its participation in any Loan, then:-
(a) that Bank may notify the Borrowers' Agent through the Agent
accordingly; and
(b) (i) if so requested by that Bank through the Agent, the Borrower
shall forthwith prepay that Bank's participation in all
Loans made to it together with all other amounts payable by
it to that Bank under this Agreement; and
(ii) the Bank's undrawn Commitment shall forthwith be cancelled.
17. MITIGATION
If, in respect of any Finance Party, circumstances arise which would
or would upon the giving of notice result in:
(i) the prepayment of its share of any outstanding Loans and the
cancellation of its Commitment pursuant to Clause 16
(Illegality); or
(ii) the payment of additional amounts for its account pursuant to
Clause 13.1 (Gross-up); or
(iii) a claim for payment pursuant to Clause 15.1 (Increased
costs),
or if payments are being made to a Finance Party pursuant to Clauses
13.1 (Gross-up) and 15.1 (Increased costs), then, without in any way
limiting, reducing or otherwise qualifying the Obligors' obligations
hereunder (and, in particular, the Borrower's obligations under any of
the
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29
Clauses referred to in sub-paragraphs (i), (ii), and (iii) above), such
Finance Party shall take such steps as such Finance Party in its bona
fide opinion considers appropriate to mitigate the effects of such
circumstances including (if such Bank considers it so appropriate) the
transfer of its Facility Office to another jurisdiction or the
transfer of its rights and obligations hereunder to another financial
institution willing to participate herein PROVIDED THAT such Finance
Party shall be under no obligation to take any such steps if, in its
bona fide opinion, such steps would have an adverse effect upon its
business, operations or financial condition.
18. GUARANTEE
18.1 Guarantee
The Parent irrevocably and unconditionally:-
(a) as principal obligor guarantees to each Finance Party prompt
payment by each Borrower (other than the Parent) of all amounts
payable by that Borrower under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower
(other than the Parent) does not pay any amount when due under or
in connection with any Finance Document, the Parent shall
forthwith on demand by the Agent pay that amount as if the Parent
instead of the relevant Borrower were expressed to be the
principal obligor; and
(c) agrees to indemnify each Finance Party on demand against any loss
or liability suffered by it if any obligation guaranteed by the
Parent is or becomes unenforceable, invalid or illegal.
18.2 Continuing guarantee
This guarantee is a continuing guarantee and will extend to the
ultimate balance of all sums payable by the Borrowers (other than the
Parent) under the Finance Documents, regardless of any intermediate
payment or discharge in whole or in part.
18.3 Reinstatement
(a) Where any discharge (whether in respect of the obligations of any
Borrower or any security for those obligations or otherwise) is
made in whole or in part or any arrangement is made on the faith
of any payment, security or other disposition which is avoided or
must be restored on insolvency, liquidation or otherwise without
limitation, the liability of the Parent under this Clause 18
(Guarantee) shall continue as if the discharge or arrangement had
not occurred.
(b) Each Finance Party may concede or compromise any claim that any
payment, security or other disposition is liable to avoidance or
restoration.
18.4 Waiver of defences
The obligations of the Parent under this Clause 18 (Guarantee) will
not be affected by any act, omission, matter or thing which, but for
this provision, would reduce, release or prejudice any
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30
of its obligations under this Clause 18 (Guarantee) or prejudice or
diminish those obligations in whole or in part, including (whether or
not known to it or any Finance Party):-
(a) any time or waiver granted to, or composition with, any Borrower
(other than the Parent) or other person;
(b) the taking, variation, compromise, exchange, renewal or release
of, or refusal or neglect to perfect, take up or enforce, any
rights against, or security over assets of, any Borrower (other
than the Parent) or other person or any non-presentation or
non-observance of any formality or other requirement in respect
of any instrument or any failure to realise the full value of any
security;
(c) any incapacity or lack of powers, authority or legal personality
of or dissolution or change in the members or status of a
Borrower or any other person;
(d) any variation (however fundamental) or replacement of a Finance
Document or any other document or security so that references to
that Finance Document in this Clause 18 (Guarantee) shall include
each variation or replacement;
(e) any unenforceability, illegality or invalidity of any obligation
of any person under any Finance Document or any other document or
security, to the intent that the Parent's obligations under this
Clause 18 (Guarantee) shall remain in full force and its
guarantee be construed accordingly, as if there were no
unenforceability, illegality or invalidity; or
(f) any postponement, discharge, reduction, non-provability or other
similar circumstance affecting any obligation of any Borrower
(other than the Parent) under a Finance Document resulting from
any insolvency, liquidation or dissolution proceedings or from
any law, regulation or order so that each such obligation shall
for the purposes of the Parent's obligations under this Clause 18
(Guarantee) be construed as if there were no such circumstance.
18.5 Immediate recourse
The Parent waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person
before claiming from the Parent under this Clause 18 (Guarantee).
18.6 Appropriations
Until all amounts which may be or become payable by the Borrowers
under or in connection with the Finance Documents have been
irrevocably paid in full, each Finance Party (or any trustee or agent
on its behalf) may, after an Event of Default which is continuing:-
(a) refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and neither the Parent nor
any Borrower shall be entitled to the benefit of the same; and
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31
(b) hold in a suspense account any moneys received from the Parent or
on account of the Parent's liability under this Clause 18
(Guarantee), which shall bear interest at such Finance Party's
best rate for comparable commercial deposits.
18.7 Non-competition
Until all amounts which may be or become payable by the Borrowers
under or in connection with the Finance Documents have been irrevocably
paid in full, the Parent shall not, by virtue of any payment or
performance by it under this Clause 18 (Guarantee):-
(a) exercise any right to be subrogated to any rights, security or
moneys held, received or receivable by any Finance Party (or any
trustee or agent on its behalf) or exercise any right of
contribution or indemnity in respect of any payment made or
moneys received on account of the Parent's liability under this
Clause 18 (Guarantee);
(b) claim, rank, prove or vote as a creditor of any Borrower (other
than the Parent) or its estate in competition with any Finance
Party (or any trustee or agent on its behalf); or
(c) receive or exercise the right to claim any payment, distribution
or security from or on account of any Borrower (other than the
Parent), or exercise any right of set-off as against any such
Borrower.
The Parent shall hold in trust for and forthwith pay or transfer to
the Agent for the Finance Parties any payment or distribution or
benefit of security received by it contrary to this Clause 18.7.
18.8 Additional security
This guarantee is in addition to and is not in any way prejudiced by
any other security now or subsequently held by any Finance Party.
19. REPRESENTATIONS AND WARRANTIES
19.1 Representations and warranties
Each Obligor makes the representations and warranties set out in this
Clause 19 (Representations and warranties) to each Finance Party
(subject in each case however, to any qualifications as to matters of
law set out in any legal opinion delivered pursuant to this
Agreement).
19.2 Status
(a) It is a limited liability company, duly incorporated and validly
existing under the laws of the jurisdiction of its incorporation;
and
(b) It has (as a matter of corporate capacity) the power to own its
assets and carry on its business as it is being conducted.
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19.3 Powers and authority
It has the power to enter into and perform, and has taken all
necessary action to authorise the entry into, performance and delivery
of, the Finance Documents to which it is or will be a party and the
transactions contemplated by those Finance Documents.
19.4 Legal validity
Each Finance Document to which it is or will be a party constitutes, or
when executed in accordance with its terms will constitute, its legal,
valid and binding obligation enforceable in accordance with its terms
subject, however, to any limitations due to bankruptcy, insolvency,
liquidation, re-organisation, limitation and other laws of general
application regarding or affecting the rights of creditors and to
general equitable principles.
19.5 Non-conflict
The entry into and performance by it of, and the transactions
contemplated by, the Finance Documents do not and will not:-
(a) conflict with any law or regulation or judicial or official
order; or
(b) conflict with its Articles of Association; or
(c) conflict with any document which is, to a material extent,
binding upon it or any of its assets.
19.6 No default
(a) No Default is outstanding or would result from the making of any
Loan; and
(b) no other event is outstanding which constitutes (or with the
giving of notice, lapse of time, determination of materiality or
the fulfilment of any other applicable condition or any
combination of the foregoing, might constitute) a default under
any document which is binding on it or any of its assets to an
extent or in a manner which would be likely to have a material
adverse effect on its ability to perform its obligations which
(in the sole opinion of the Majority Banks) are material under
this Agreement or on the business or financial condition of the
Group as a whole.
19.7 Authorisations
All authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, the Finance Documents have been obtained or effected
(as appropriate) and are in full force and effect.
19.8 Accounts
In the case of the Parent, the audited consolidated accounts of the
Group and the unaudited consolidated income statement of the Group
most recently delivered to the Agent (which, at the date of this
Agreement, are the Original Group Accounts):-
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33
(i) have been prepared in accordance with accounting principles and
practices generally accepted in Sweden consistently applied and,
in the case of the audited consolidated accounts, audited by an
internationally recognised firm of accountants or by Swedish
public authorised accountants; and
(ii) fairly represent the consolidated financial condition of the
Group as at the date to which they were drawn up,
and there has been no material adverse change in the consolidated
financial condition of the Group, taken as a whole, since the date to
which those accounts were drawn up.
19.9 Litigation
Except as set out in the Disclosure Letter, no litigation, arbitration
or administrative proceedings (other than any frivolous or vexatious
claims which are being contested by appropriate proceedings) are
current or, to its knowledge, pending or threatened, which would, if
adversely determined, have a material adverse effect on the ability of
any Obligor to perform its obligations under this Agreement or the
business or financial condition of the Group as a whole.
19.10 Times for making representations and warranties
The representations and warranties set out in this Clause 19
(Representations and warranties) are made by each Obligor or the
Parent, as the case may be, on the date of this Agreement and (with
the exception of Clauses 19.6 (No default), 19.8 (Accounts) and 19.9
(Litigation)) are deemed to be repeated by each Obligor on the date of
each Request, each Drawdown Date and on the first day of each Interest
Period and by each Additional Borrower, on the date on which it enters
into a Deed of Accession, with reference to the facts and
circumstances then existing.
20. UNDERTAKINGS
20.1 Duration
The undertakings in this Clause 20 (Undertakings) remain in force from
the date of this Agreement for so long as any amount is or may be
outstanding under this Agreement or any Commitment is in force.
20.2 Financial Information
The Parent shall supply to the Agent in sufficient copies for all the
Banks:-
(a) as soon as the same are available (and in any event within 180
days of the end of each of its financial years), the audited
consolidated accounts of the Group for that financial year;
(b) as soon as the same are available (and in any event within 120
days of the end of the first half-year of each of its financial
years), the unaudited consolidated income statement of the Group
for that half-year;
(c) together with the accounts specified in paragraphs (a) and (b)
above, a certificate signed by two of its senior officers on its
behalf setting out in reasonable detail
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34
computations establishing compliance with Clause 20.12 (Financial
covenants) as at the date to which those accounts were drawn-up;
and
(d) such a certificate stating which members of the Group are
Material Subsidiaries whenever there is a change in such Material
Subsidiaries and in any event at least once in each financial
year together with the accounts specified in paragraph (a) above.
20.3 Information - Miscellaneous
The Parent shall (save to the extent that it considers that to do so
would be in violation of the applicable rules or requirements of the
Stockholm Stock Exchange or any other exchange on which its equity or
debt securities are listed) supply to the Agent:-
(a) all documents despatched by it to its shareholders or creditors
generally at the same time as they are despatched;
(b) promptly upon becoming aware of them, reasonable details of any
litigation, arbitration or admininistrative proceedings (other
than any frivolous or vexatious claims, which are being contested
by appropriate proceedings) which are current, threatened or
pending, and which would, if adversely determined, have a
material adverse effect on the ability of any Obligor to perform
its obligations which (in the sole opinion of the Majority Banks)
are material under this Agreement or on the business or financial
condition of the Group as a whole; and
(c) promptly, such further information in the possession or control
of the Parent regarding its financial condition and operations
(or the financial condition and operations of any member of the
Group) as the Agent, or any Bank through the Agent, may
reasonably request,
in sufficient copies for all of the Banks, if the Agent so requests.
20.4 Notification of Default
The Parent shall notify the Agent of any Default (and the steps, if
any, being taken to remedy it) promptly upon any Obligor becoming
aware of the same.
20.5 Compliance certificates
The Parent shall supply to the Agent:-
(a) together with the accounts specified in Clause 20.2(a) (Financial
information); and
(b) promptly at any other time, if the Agent so reasonably requests,
a certificate signed by two of its senior officers on its behalf
certifying that no Default is outstanding or, if a Default is
outstanding, specifying the Default and the steps, if any, being taken
to remedy it.
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35
20.6 Authorisations
Each Obligor shall promptly obtain, maintain and comply with the terms
of any authorisation required under any law or regulation to enable it
to perform its obligations under, or for the validity or
enforceability of, any Finance Document.
20.7 Pari passu ranking
Each Obligor shall procure that its obligations under the Finance
Documents do and will rank at least pari passu with all its other
present and future unsecured and unsubordinated obligations, except
for obligations which are mandatorily preferred by law.
20.8 Negative pledge
(a) No Obligor shall, and the Parent shall procure that no other
member of the Group will, create or permit to subsist any Security
Interest on any of its assets.
(b) Paragraph (a) does not apply to:-
(i) any lien arising by operation of law in the ordinary course
of business and securing amounts not more than 60 days
overdue or being contested in good faith by appropriate
proceedings;
(ii) any Security Interest created in connection with any loan or
credit granted, or guaranteed wholly or partially, by the
Swedish Export Credit Corporation or the Swedish Export
Credit Board or any other export credit or similar public
institution;
(iii) any Security Interest created in connection with any
loan, debt or other obligation (including an obligation
under a guarantee) of a member of the Group in respect
of borrowed money where the borrowed money is by its
terms repayable not more than 12 months after the date
on which the member of the Group assumes liability in
respect thereof and the purpose of the borrowed money
is to meet the funding requirements of that company in
the ordinary course of business;
(iv) any Security Interest over an asset acquired after the date
hereof which was not created in contemplation of such
acquisition and so long as the outstanding principal amount
secured thereby is not increased on or after the date of
that acquisition;
(v) any Security Interest created prior to the date of its
acquisition by a company which becomes a member of the Group
after the date hereof provided that such Security Interest
only secures Financial Indebtedness up to a stated maximum
principal amount and was not created in contemplation of
such acquisition and so long as the principal committed
amount (whether drawn or not) is not increased on or after
the date of that acquisition;
(vi) any Security Interest created in favour of persons providing
tender, performance, bid or similar bonds or guarantees
relating to or arising out of
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36
contracts undertaken in the normal course of business by any
members of the Group to secure amounts which may become
payable by those persons pursuant to those bonds or
guarantees (but not where those bonds or guarantees are
issued to facilitate the incurrence of any Financial
Indebtedness);
(vii) any Security Interest created (a) in connection with
any loan, debt or other obligation (including an
obligation under a guarantee but in each case not
having a maturity of longer than twelve months from the
date of its creation) of a member of the Group in order
to take advantage of interest arbitrage and hedging
opportunities where the assets secured comprise cash or
debt securities or (b) in the ordinary course of business
over cash or debt securities provided as collateral to
any bank, financial institution, stock exchange or
clearing house for back to back, foreign exchange,
swaps or other derivatives transactions;
(viii) any Security Interest created on any asset acquired or
developed by it after the date of this Agreement for
the sole purpose of financing that acquisition or
development and securing principal monies not exceeding
the cost of that acquisition or development;
(ix) any Security Interest created pursuant to mandatory
provisions of Swedish law securing the payment of the
purchase price by any member of the Group in favour of
minority shareholders of a company or corporation the shares
of which are subject to a compulsory sale ("tvangsinlosen")
to a member of the Group;
(x) any Security Interest created in favour of a bank over any
clearing or current account in connection with a cash
management agreement entered into between that bank and a
member of the Group;
(xi) any Security Interest created by any member of the Group
incorporated in Sweden in favour of the Swedish pension fund
to which such member of the Group makes contributions (the
"Pension Fund") as security in accordance with the Pension
Fund's requirement for loans made according to Swedish law
by the Pension Fund to that member of the Group;
(xii) any Security Interest created in connection with any
refinancing and in substitution for any Security
Interest otherwise permitted under the terms of this
Clause 20.8(b) to the extent that such Security
Interest relates to the same asset and the principal
amount secured by such Security Interest is not more
than the principal amount of the indebtedness being
refinanced;
(xiii) any Security Interest disclosed to the Agent prior to
the date hereof so long as the maximum principal amount
that could be secured thereby was approved by the Agent
and is not increased after the date hereof;
(xiv) any Security Interest consented to by the Majority Banks;
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37
(xv) any Security Interest created by a member of the Group in
favour of the Parent; and
(xvi) any Security Interest over an asset which does not fall
within sub-paragraphs (i) - (xv) above up to but not
exceeding an aggregate principal amount secured thereby
of an amount equal to ten per cent. of Consolidated
Total Assets at that time;
PROVIDED THAT the aggregate amount of all claims in respect of
indebtedness for a principal sum which are, at any time,
outstanding and secured by any Security Interest (other than a
Security Interest created or existing in reliance on
sub-paragraphs (i), (vii), (x) or (xv) above) shall not exceed
twenty-five per cent. of the Consolidated Total Assets at that
time.
For the avoidance of doubt, any transaction which is permitted
under this Clause 20.8 shall be deemed not to be prohibited under
Clause 20.9 or 20.10.
20.9 Transactions similar to security
(a) No Obligor shall, and the Parent shall procure that no other
member of the Group will, except with the prior written consent
of the Majority Banks, sell, transfer or otherwise dispose of any
of its fixed assets on terms whereby any such assets are or may
be leased to or re-acquired or acquired by a member of the Group
or any of its related entities (other than in circumstances where
such transaction is not entered into primarily as a method of
raising finance).
(b) Paragraph (a) does not apply to any sales, transfers or disposals:
(i) by a member of the Group to another member of the Group, or
(ii) of fixed assets with a value not exceeding in aggregate
three per cent. of the Consolidated Total Assets (calculated
at the book value net of depreciation and other similar
allowances).
For the avoidance of doubt, any equipment produced and sold or
distributed as commercial agents in the ordinary course of
business shall not be regarded as fixed assets (notwithstanding
that it is so classified in the Group's financial statements) and
any transaction which is permitted under this Clause 20.9 shall
be deemed not to be prohibited under Clause 20.8 or 20.10.
20.10 Disposals
(a) No Obligor shall, and the Parent shall procure that no other
member of the Group will, except with the prior written consent
of the Majority Banks, either in a single transaction or in a
series of transactions, whether related or not and whether
voluntarily or involuntarily, sell, transfer, grant or lease or
otherwise dispose of all or any substantial part of its assets.
(b) Paragraph (a) does not apply to:-
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38
(i) any disposal made in the ordinary course of business
(including the sale with recourse of accounts receivable
arising out of the sale of such assets);
(ii) any disposal of obsolete plant or equipment;
(iii) any disposal by one member of the Group to another
member of the Group;
(iv) any disposal made on arm's length terms representing fair
market value (which shall if so requested by the Agent be
confirmed by a valuation carried out by a valuer agreed to
by both the Parent and the Agent) (or in default of such
agreement appointed by the Agent); and
(v) any other disposal not within sub-paragraphs (i)-(iv) above
where the value of the asset disposed of (when aggregated
with the value of all other assets disposed of after the
date hereof and for so long as any Commitment or Loan is
outstanding hereunder (not within sub-paragraphs (i)-(iv)
above)) does not exceed 40 per cent. of Consolidated Total
Assets (as measured in the latest published financial
statements of the Group for the period immediately preceding
the disposal).
For the avoidance of doubt, for the purposes of paragraph (v),
the value of an asset shall be equal to its book value net of
depreciation and other similar allowances and any transaction
which is permitted under this Clause 20.10 shall be deemed not to
be prohibited under Clause 20.8 or 20.9.
20.11 Change of business
The Parent shall procure that no substantial change is made to the
general nature of the business of the Parent or the Group taken as a
whole from that carried on at the date of this Agreement.
21.12 Financial covenants
(a) In this Clause 20.12:-
"Net Interest Expense"
means, in relation to any twelve month period, consolidated
interest expense less consolidated interest income during that
period.
"Operating Income"
means, in relation to any twelve month period, consolidated
income before taxes, plus any extraordinary or exceptional
losses, less any extraordinary or exceptional gains, plus
minority expense less minority income, plus interest expense less
interest income, plus foreign exchange losses less foreign
exchange gains, plus any other financial costs less any other
financial income during that period.
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(b) (i) All the terms used in paragraph (a) above are to be
calculated in accordance with the accounting principles
applied in connection with the Original Group Accounts.
(ii) If there is a dispute as to any interpretation of or
computation for paragraph (a) above, the interpretation
or computation of the Parent's auditors prevails.
(c) The Parent shall procure that the ratio of Operating Income to
Net Interest Expense is not, at the end of each half-year of each
financial year of the Group, less than 2.2 to 1.
20.13 Insurance
Provided that such insurance is available in the market and can be
purchased on reasonable terms and conditions, each Obligor shall
maintain with reputable insurance companies, funds or underwriters
(reasonably believed by each Obligor to be financially sound) adequate
insurance of the kinds, covering such risks and in such amounts and
with such deductibles (including captive or similar self-insuring
arrangements) and exclusions as are consistent with prudent business
practice for an entity engaged in businesses similar to those of the
Obligors.
21. DEFAULT
21.1 Events of Default
Each of the events set out in Clauses 21.2 (Non-payment) to 21.15
(Material adverse change) (inclusive) is an Event of Default (whether
or not caused by any reason whatsoever outside the control of any
Obligor or any other person).
21.2 Non-payment
Any Obligor does not pay any amount of principal payable by it under
the Finance Documents on the due date or any other amount payable by
it under the Finance Documents within three (or, if the reason
therefor is technical or administrative error, five) Business Days
after the due date, in each case at the place at and in the currency
in which it is expressed to be payable.
21.3 Breach of other obligations
Any Obligor does not comply with any of its obligations under the
Finance Documents (other than those referred to in Clause 21.2
(Non-Payment) and such non-compliance, if capable of remedy, continues
unremedied for 30 days after such Obligor received notice thereof from
the Agent or, if not capable of remedy, such non-compliance is
materially prejudicial (in the sole opinion of the Majority Banks), to
the interests of the Banks.
21.4 Misrepresentation
A representation, warranty or statement made or repeated in or in
connection with any Finance Document or in any document delivered by
or on behalf of any Obligor under or in connection with any Finance
Document is incorrect in any material respect when made or deemed to
be made or repeated.
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21.5 Cross-default
(a) Any Financial Indebtedness of an Obligor or a Material Subsidiary
is not paid when due or after the expiry of any applicable grace
period (but this paragraph (a) shall not apply to non-payment by
a member of the Group under any performance or bid bond (or
similar instrument) issued by it where there is a bona fide
dispute as to its liability); or
(b) an event of default howsoever described occurs under any document
relating to Financial Indebtedness of a member of the Group and
discussions with the relevant creditors are arranged with a view
to rescheduling or otherwise varying the terms of the Financial
Indebtedness in question or considering other remedial action; or
(c) any Financial Indebtedness of a member of the Group becomes
prematurely due and payable or is placed on demand as a result of
an event of default (howsoever described) under the document
relating to that Financial Indebtedness; or
(d) any commitment for, or underwriting of, any Financial
Indebtedness of a member of the Group is cancelled or suspended
as a result of an event of default (howsoever described) under
the document relating to that Financial Indebtedness; or
(e) steps are taken to enforce any Security Interest securing
Financial Indebtedness over any asset of a member of the Group
following the occurrence of an enforcement event howsoever
described in any relevant document.
PROVIDED THAT there shall not be an Event of Default under this
clause 21.5 unless the aggregate of all amounts at any one time
unpaid or in default as a result of events referred to above
exceed $15,000,000 (or its equivalent).
21.6 Insolvency
(a) Any Obligor or Material Subsidiary is, or is deemed for the
purposes of any law to be, unable to pay its debts as they fall
due or to be insolvent, or admits inability to pay its debts as
they fall due (unless, in the case of a Material Subsidiary, the
Parent gives a support letter satisfactory to the auditors so
that no qualification is required to be made in relation to the
accounts of the Material Subsidiary concerned); or
(b) any Obligor or Material Subsidiary suspends making payments on
all or any class of its debts or announces an intention to do so,
or a moratorium is declared in respect of any of its
indebtedness; or
(c) any Obligor or Material Subsidiary, by reason of financial
difficulties, begins negotiations with its creditors generally
with a view to the readjustment or rescheduling of any of its
indebtedness.
21.7 Insolvency proceedings
(a) Any step (including petition, proposal or convening a meeting) is
taken by any Obligor or Material Subsidiary with a view to a
composition, assignment or arrangement with any of its creditors;
or
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(b) a meeting of any Obligor or Material Subsidiary is convened for
the purpose of considering any resolution for (or to petition
for) its winding-up or its administration or any such resolution
is passed (save where such meeting is called on frivolous or
vexatious grounds by a person other than an Obligor or a Material
Subsidiary); or
(c) any person presents a petition (other than a frivolous or
vexatious petition) for the bankruptcy, winding-up or for the
administration of any Obligor or Material Subsidiary unless the
same is discharged within 45 days; or
(d) any order for the bankruptcy, winding-up or administration of any
Obligor or Material Subsidiary is made; or
(e) any other step (including petition, proposal or convening a
meeting but excluding steps taken on frivolous or vexatious
grounds or any step taken by a person other than an Obligor or a
Material Subsidiary which is discharged within 45 days) is taken
with a view to the rehabilitation, administration, custodianship,
bankruptcy, liquidation, winding-up or dissolution of any Obligor
or Material Subsidiary or any other insolvency proceedings
involving any Obligor or Material Subsidiary,
PROVIDED THAT the solvent winding-up of a Material Subsidiary on
terms approved by the Majority Banks (whose approval shall not be
unreasonably withheld) shall not be an Event of Default under
this or any other Clause.
21.8 Appointment of receivers and managers
(a) Any liquidator, trustee in bankruptcy, judicial custodian,
compulsory manager, receiver, administrative receiver,
administrator or the like is appointed in respect of any Obligor
or Material Subsidiary or any substantial part of its assets; or
(b) the directors of any Obligor or Material Subsidiary request the
appointment of a liquidator, trustee in bankruptcy, judicial
custodian, compulsory manager, receiver, administrative receiver,
administrator or the like; or
(c) any other steps are taken to enforce any Security Interest over
any part of the assets of any Obligor or Material Subsidiary and
are followed by legal proceedings which are initiated and not
discharged within 45 days.
21.9 Creditors' process
Any attachment, sequestration, distress or execution affects any asset
of any Obligor or Material Subsidiary and is not discharged within 45
days.
21.10 Analogous proceedings
There occurs, in relation to any Obligor or Material Subsidiary, any
event in any relevant jurisdiction which is analogous to any of those
mentioned in Clauses 21.6 to 21.9 (inclusive).
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21.11 Cessation of business
Any Obligor or Material Subsidiary ceases, or threatens to cease, to
carry on all or a substantial part of its business where this would
have a material adverse effect on the business or financial condition
of the Group as a whole or on the ability of any Obligor to perform
its obligations which (in the sole opinion of the Majority Banks) are
material under this Agreement.
21.12 Unlawfulness
It is or becomes unlawful for any Obligor to perform any of its
material obligations under the Finance Documents.
21.13 Guarantee
The guarantee of the Parent is not effective or is alleged by it to be
ineffective for any reason.
21.14 Ownership of the Borrowers
Any Borrower (other than the Parent) is not or ceases to be a
Subsidiary of the Parent, unless the Majority Banks consent to the
sale of such Borrower.
21.15 Material adverse change
Any event or series of events occurs which would be likely to have a
material and adverse effect on the business or financial condition of
the Group taken as a whole or on the ability of any Obligor to comply
with its obligations which (in the sole opinion of the Majority Banks)
are material under the Finance Documents.
21.16 Acceleration
On and at any time after the occurrence of an Event of Default (for so
long as such Event of Default is continuing) the Agent may, and shall
if so directed by the Majority Banks, by notice to the Parent:-
(a) cancel the Total Commitments; and/or
(b) demand that all or part of the Loans, together with accrued
interest, and all other amounts accrued under this Agreement be
immediately due and payable, whereupon they shall become
immediately due and payable; and/or
(c) demand that all or part of the Loans be payable on demand,
whereupon they shall immediately become payable on demand.
22. THE AGENT AND THE ARRANGER
22.1 Appointment and duties of the Agent
Each Finance Party (other than the Agent) irrevocably appoints the
Agent to act as its agent under and in connection with the Finance
Documents, and irrevocably authorises the Agent on its behalf to
perform the duties and to exercise the rights, powers and discretions
that are
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43
specifically delegated to it under or in connection with the Finance
Documents, together with any other incidental rights, powers and
discretions. The Agent has only those duties which are expressly
specified in this Agreement, and those duties are solely of a
mechanical and administrative nature.
22.2 Role of the Arranger
Except as specifically provided in this Agreement, the Arranger has no
obligations of any kind to any other Party under or in connection with
any Finance Document.
22.3 Relationship
The relationship between the Agent and the other Finance Parties is
that of agent and principal only. Nothing in this Agreement
constitutes the Agent as trustee or fiduciary for any other Party or
any other person and the Agent need not hold in trust any moneys paid
to it for a Party or be liable to account for interest on those
moneys.
22.4 Majority Banks' directions
The Agent will be fully protected if it acts in accordance with the
instructions of the Majority Banks in connection with the exercise of
any right, power or discretion or any matter not expressly provided
for in this Agreement. Any such instructions given by the Majority
Banks will be binding on all the Banks. In the absence of such
instructions, the Agent may act as it considers to be in the best
interests of all the Banks.
22.5 Delegation
The Agent may act under the Finance Documents through its personnel
and agents whose acts shall be binding upon it.
22.6 Responsibility for documentation
Neither the Agent nor the Arranger is responsible to any other Party
for:-
(a) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(b) the collectability of amounts payable under any Finance Document;
or
(c) the accuracy of any statements (whether written or oral) made in
or in connection with any Finance Document.
22.7 Default
(a) The Agent is not obliged to monitor or enquire as to whether or
not a Default has occurred. The Agent will not be deemed to have
knowledge of the occurrence of a Default. However, if the Agent
receives notice from a Party referring to this Agreement,
describing the Default and stating that the event is a Default, or
if the officers of the Agent actually engaged in carrying out the
agency function under this Agreement acquire actual knowledge of
a Default, it shall promptly notify the Banks.
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44
(b) The Agent may require the receipt of security satisfactory to it
from any other Finance Party, whether by way of payment in
advance or otherwise, against any liability or loss which it will
or may incur in taking any proceedings or action arising out of
or in connection with any Finance Document before it commences
those proceedings or takes that action.
22.8 Exoneration
(a) Without limiting paragraph (b) below, the Agent will not be
liable to any other Party for any action taken or not taken by it
under or in connection with any Finance Document, unless directly
caused by its gross negligence or wilful misconduct.
(b) No Party may take any proceedings against any officer, employee
or agent of the Agent in respect of any claim it might have
against the Agent or in respect of any act or omission of any
kind (including gross negligence or wilful misconduct) by that
officer, employee or agent in relation to any Finance Document.
22.9 Reliance
The Agent may:-
(a) rely on any notice or document believed by it to be genuine and
correct and to have been signed by, or with the authority of, the
proper person;
(b) rely on any statement made by a director or employee of any
person regarding any matters which may reasonably be assumed to
be within his knowledge or within his power to verify; and
(c) engage, pay for and rely on legal or other professional advisers
selected by it (including those in the Agent's employment and
those representing a Party other than the Agent).
22.10 Credit approval and appraisal
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance
Document, each Bank confirms that it:-
(a) has made its own independent investigation and assessment of the
financial condition and affairs of each Obligor and its related
entities in connection with its participation in this Agreement
and has not relied exclusively on any information provided to it
by the Agent or the Arranger in connection with any Finance
Document; and
(b) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities while
any amount is or may be outstanding under the Finance Documents
or any Commitment is in force.
22.11 Information
(a) The Agent shall promptly forward to the person concerned the
original or a copy of any document which is delivered to the
Agent by a Party for that person.
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45
(b) The Agent shall promptly supply a Bank with a copy of each
document received by the Agent under Clause 4 (Conditions
Precedent) upon the request and at the expense of that Bank.
(c) Except where this Agreement specifically provides otherwise, the
Agent is not obliged to review or check the accuracy or
completeness of any document it forwards to another Party,
(d) Except as provided above, the Agent has no duty:-
(i) either initially or on a continuing basis to provide any
Bank with any credit or other information concerning the
financial condition or affairs of any Obligor or any related
entity of any Obligor whether coming into its possession
before, on or after the date of this Agreement; or
(ii) unless specifically requested to do so by a Bank in
accordance with this Agreement, to request any certificates
or other documents from any Obligor.
22.12 The Agent and the Arranger
(a) If it is also a Bank, each of the Agent and the Arranger has the
same rights and powers under this Agreement as any other Bank and
may exercise those rights and powers as though it were not the
Agent or the Arranger.
(b) Each of the Agent and the Arranger may:-
(i) carry on any business with an Obligor or its related
entities;
(ii) act as agent or trustee for, or in relation to any financing
involving, an Obligor or its related entities; and
(iii) retain any profits or remuneration in connection with
its activities under this Agreement or in relation to
any of the foregoing.
22.13 Indemnities
(a) Without limiting the liability of any Obligor under the Finance
Documents, each Bank shall forthwith on demand indemnify the Agent
for its proportion of any liability or loss incurred by the Agent
in any way relating to or arising out of its acting as the Agent,
except to the extent that the liability or loss arises directly
from the Agent's gross negligence or wilful misconduct.
(b) A Bank's proportion of the liability set out in paragraph (a)
above will be the proportion which its participation in the Loans
(if any) bears to all the Loans on the date of the demand. If,
however, there are no Loans outstanding on the date of demand,
then the proportion will be the proportion which its Commitment
bears to the Total Commitments at the date of demand or, if the
Total Commitments have then been cancelled, bore to the Total
Commitments immediately before being cancelled.
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46
22.14 Compliance
(a) The Agent may refrain from doing anything which might, in its
opinion, constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person, and may do
anything which, in its opinion, is necessary or desirable to
comply with any law or regulation of any jurisdiction.
(b) Without limiting paragraph (a) above, the Agent need not disclose
any information relating to any Obligor or any of its related
entities if the disclosure might, in the opinion of the Agent,
constitute a breach of any law or regulation or any duty of
secrecy or confidentiality or be otherwise actionable at the suit
of any person.
22.15 Resignation of the Agent
(a) Notwithstanding its irrevocable appointment, the Agent may resign
by giving notice to the Banks and the Obligors, in which case the
Agent may forthwith appoint one of its Affiliates as successor
Agent or, failing that, the Majority Banks may appoint a
successor Agent.
(b) If the appointment of a successor Agent is to be made by the
Majority Banks but they have not, within 30 days after notice of
resignation, appointed a successor Agent which accepts the
appointment, the Agent may appoint a successor Agent.
(c) The resignation of the Agent and the appointment of any successor
Agent will both become effective only upon the successor Agent
notifying all the Parties that it accepts its appointment. On
giving the notification, the successor Agent will succeed to the
position of the Agent and the term "Agent" will mean the
successor Agent.
(d) The retiring Agent shall, at its own cost, make available to the
successor Agent such documents and records and provide such
assistance as the successor Agent may reasonably request for the
purposes of perfoming its functions as the Agent under this
Agreement.
(e) Upon its resignation becoming effective, this Clause 22 (The
Agent and the Arranger) shall continue to benefit the retiring
Agent in respect of any action taken or not taken by it under or
in connection with the Finance Documents while it was the Agent,
and, subject to paragraph (d) above, it shall have no further
obligations under any Finance Document.
(f) Any successor Agent must be acceptable to the Borrower but the
Borrower may not unreasonably withhold his acceptance.
(g) If the Majority Banks so direct, the Agent shall resign and the
Majority Banks shall appoint a successor Agent.
22.16 Banks
The Agent may treat each Bank as a Bank, entitled to payments under
this Agreement and as acting through its Facility Office(s).
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47
23. FEES
23.1 Management fee
The Parent shall pay to the Agent on the earlier of the first Drawdown
Date and the date 10 days after the date hereof a management fee in
the amount agreed in the relevant Fee Letter. The management fee shall
be distributed by the Agent among the Banks in its sole discretion.
23.2 Commitment fee
(a) The Parent shall pay to the Agent for each Bank a commitment fee
computed at the rate of 0.15 per cent. per annum during the
period from the date hereof until the fifth anniversary of the
date hereof and thereafter 0.175 per cent. per annum on the
undrawn, uncancelled amount of that Bank's Facility A Commitment.
For this purpose, Facility A Loans are taken at their Original
Dollar Amount.
(b) Accrued commitment fee is payable quarterly in arrear. Accrued
commitment fee is also payable to the Agent for the relevant
Bank(s) on the cancelled amount of its Facility A Commitment.
23.3 Agent's fee
The Parent shall pay to the Agent for its own account an agency fee in
the amount agreed in the relevant Fee Letter. The agency fee is
payable annually in advance. The first payment of this fee is payable
on the date of this Agreement and each subsequent payment is payable
on each anniversary of the date of this Agreement for so long as any
amount is or may be outstanding under this Agreement or any Commitment
is in force.
23.4 VAT
Any fee referred to in this Clause 23 (Fees) is exclusive of any value
added tax or any other tax which might be chargeable in connection
with that fee. If any value added tax or other tax is so chargeable,
it shall be paid by the Parent at the same time as it pays the
relevant fee.
24. EXPENSES
24.1 Initial and special costs
The Parent shall within 5 Business Days of demand pay the Agent and
the Arranger the amount of all reasonable out-of-pocket costs and
expenses (including legal fees) incurred by either of them in
connection with:-
(a) the negotiation, preparation, printing and execution of:-
(i) this Agreement and any other documents (not being a document
referred to in Clause 29.2 or 29.3 other than in circumstances
where Clause 17 (Mitigation) applies) referred to in this
Agreement; and
(ii) any other Finance Document executed after the date of this
Agreement; and
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48
(b) any amendment, waiver, consent or suspension of rights (or any
proposal for any of the foregoing) requested by or on behalf of
an Obligor and relating to a Finance Document or a document
referred to in any Finance Document.
24.2 Enforcement costs
Following a Default, the Parent shall forthwith on demand (or within 5
Business Days of demand in the case of preservation costs) pay to each
Finance Party the amount of all costs and expenses (including legal
fees) properly incurred by it in connection with the enforcement of,
or the preservation of any rights under, any Finance Document.
25. STAMP DUTIES
The Parent shall pay and forthwith on demand (in the case of
enforcement) (or otherwise within 5 Business Days of demand) indemnify
each Finance Party against any liability it incurs in respect of, any
stamp, registration and similar tax which is or becomes payable in
connection with the entry into, performance or enforcement of any
Finance Document.
26. INDEMNITIES
26.1 Currency indemnity
(a) If a Finance Party receives an amount in respect of an Obligor's
liability under the Finance Documents or if that liability is
converted into a claim, proof, judgment or order in a currency
other than the currency (the "contractual currency") in which the
amount is expressed to be payable under the relevant Finance
Document:-
(i) that Obligor shall indemnify that Finance Party as an
independent obligation against any loss or liability arising
out of or as a result of the conversion;
(ii) if the amount received by that Finance Party, when converted
into the contractual currency at a market rate in the usual
course of its business is less than the amount owed in the
contractual currency, the Obligor concerned shall forthwith
on demand pay to that Finance Party an amount in the
contractual currency equal to the deficit; and
(iii) the Obligor shall pay to the Finance Party concerned
forthwith on demand any exchange costs and taxes
payable in connection with any such conversion.
(b) Each Obligor waives any right it may have in any jurisdiction to
pay any amount under the Finance Documents in a currency other
than that in which it is expressed to be payable.
26.2 Other indemnities
The Parent shall forthwith on receipt of a demand following a Default
(or otherwise within 5 Business Days of demand) setting out reasonable
details of the relevant loss or liability indemnify each Finance Party
against any loss or liability which that Finance Party incurs as a
consequence of:-
(a) the occurrence of any Default;
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49
(b) the operation of Clause 21.16 (Acceleration);
(c) any payment of principal or an overdue amount being received from
any source otherwise than on the last day of a relevant Interest
Period or Designated Interest Period (as defined in Clause 9.3
(Default interest)) relative to the amount so received; or
(d) (other than by reason of negligence or default by a Finance
Party) a Loan not being made after the Borrower has delivered a
Request or a Loan (or part of a Loan) not being prepaid in
accordance with a notice of prepayment.
The Parent's liability in each case includes any loss of margin (in
the case of paragraph (a) or (b) above applying) or other loss or
expense on account of funds borrowed, contracted for or utilised to
fund any amount payable under any Finance Document, any amount repaid
or prepaid or any Loan.
26.3 No restriction on Obligors
Nothing in this Agreement shall prevent any Obligor from enforcing any
rights it may have against any Finance Party which fails to fulfil its
obligations hereunder.
27. EVIDENCE AND CALCULATIONS
27.1 Accounts
Accounts maintained by a Finance Party in connection with this
Agreement are prima facie evidence of the matters to which they
relate.
27.2 Certificates and determinations
Any certification or determination by a Finance Party of a rate or
amount under this Agreement is, in the absence of manifest error,
conclusive evidence of the matters to which it relates.
27.3 Calculations
Interest (including any applicable MLA Costs) and the fee payable
under Clause 23.2 (Commitment fee) accrue from day to day and are
calculated on the basis of the actual number of days elapsed and a
year of 360 days, or, in the case of interest payable on an amount
denominated in Sterling only, 365 days.
28. AMENDMENTS AND WAIVERS
28.1 Procedure
(a) Subject to Clause 28.2 (Exceptions), any term of the Finance
Documents may be amended or waived with the agreement of the
Parent, the Majority Banks and the Agent. The Agent may effect,
on behalf of the Majority Banks, an amendment or waiver to which
they have agreed.
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50
(b) The Agent shall promptly notify the other Parties of any
amendment or waiver effected under paragraph (a) above, and any
such amendment or waiver shall be binding on all the Parties.
28.2 Exceptions
An amendment or waiver which relates to:-
(a) the definition of "Majority Banks" in Clause 1.1;
(b) an extension of the date for, or a decrease in an amount or a
change in the currency of, any payment under the Finance
Documents;
(c) an increase in a Bank's Commitment;
(d) a term of a Finance Document which expressly requires the consent
of each Bank; or
(e) Clause 18 (Guarantee), Clause 29.1 (Changes to the Parties),
Clause 32 (Pro rata sharing) or this Clause 28 (Amendments and
waivers),
may not be effected without the consent of each Bank.
28.3 Waivers and Remedies Cumulative
The rights of each Finance Party under the Finance Documents:-
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the general
law; and
(c) may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
29. CHANGES TO THE PARTIES
29.1 Transfers by Obligors
No Obligor may assign, transfer, novate or dispose of any of, or any
interest in, its rights and/or obligations under this Agreement.
29.2 Transfers by Banks
(a) A Bank (the "Existing Bank") may, with the prior written consent
of the Borrower (such consent not to be unreasonably withheld),
at any time assign, transfer or novate any of its rights and/or
obligations under this Agreement to another bank or financial
institution (the "New Bank").
Provided that each Bank (so long as it remains a Bank hereunder)
shall, subject to the other terms of this Agreement, continue to
maintain a Commitment and/or participation
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51
in the facilities in an aggregate amount at least equal to
US$10,000,000 (or its equivalent) hereunder.
(b) A transfer of obligations will be effective only if either:-
(i) the obligations are novated in accordance with Clause 29.3
(Procedure for novations); or
(ii) the New Bank confirms to the Agent and the Obligors
that it undertakes to be bound by the terms of this
Agreement as a Bank in form and substance satisfactory
to the Agent. On the transfer becoming effective in
this manner the Existing Bank shall be relieved of its
obligations under this Agreement to the extent that
they are transferred to the New Bank.
(c) Nothing in this Agreement restricts the ability of a Bank to
sub-contract an obligation if that Bank remains liable under this
Agreement for that obligation.
(d) On each occasion an Existing Bank assigns, transfers or novates
any of its rights and/or obligations under this Agreement, the
New Bank shall, on the date the assignment, transfer and/or
novation takes effect, pay to the Agent for its own account a fee
of $500.
(e) An Existing Bank is not responsible to a New Bank for:-
(i) the execution, genuineness, validity, enforceability or
sufficiency of any Finance Document or any other document;
(ii) the collectability of amounts payable under any Finance
Document; or
(iii) the accuracy of any statements (whether written or
oral) made in or in connection with any Finance
Document.
(f) Each New Bank confirms to the Existing Bank and the other Finance
Parties that it:-
(i) has made its own independent investigation and assessment of
the financial condition and affairs of each Obligor and its
related entities in connection with its participation in
this Agreement and has not relied exclusively on any
information provided to it by the Existing Bank in
connection with any Finance Document; and
(ii) will continue to make its own independent appraisal of the
creditworthiness of each Obligor and its related entities
while any amount is or may be outstanding under this
Agreement or any Commitment is in force.
(g) Nothing in any Finance Document obliges an Existing Bank to:-
(i) accept a re-transfer from a New Bank of any of the rights
and/or obligations assigned, transferred or novated under
this Clause; or
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52
(ii) support any losses incurred by the New Bank by reason of the
non-performance by the Borrower of its obligations under
this Agreement or otherwise.
(h) Any reference in this Agreement to a Bank includes a New Bank but
excludes a Bank if no amount is or may be owed to or by it under
this Agreement and its Commitment has been cancelled or reduced
to nil.
29.3 Procedure for novations
(a) A novation is effected if:-
(i) the Existing Bank and the New Bank deliver to the Agent a
duly completed certificate, substantially in the form of
Part I of Schedule 5 (a "Novation Certificate"); and
(ii) the Agent executes it.
(b) Each Party (other than the Existing Bank and the New Bank)
irrevocably authorises the Agent to execute any duly completed
Novation Certificate on its behalf.
(c) To the extent that they are expressed to be the subject of the
novation in the Novation Certificate:-
(i) the Existing Bank and the other Parties (the "existing
Parties") will be released from their obligations to each
other (the "discharged obligations");
(ii) the New Bank and the existing Parties will assume
obligations towards each other which (subject to Clause
29.5) differ from the discharged obligations only insofar as
they are owed to or assumed by the New Bank instead of the
Existing Bank;
(iii) the rights of the Existing Bank against the existing
Parties and vice versa (the "discharged rights") will
be cancelled; and
(iv) the New Bank and the existing Parties will acquire rights
against each other which (subject to Clause 29.5) differ
from the discharged rights only insofar as they are
exercisable by or against the New Bank instead of the
Existing Bank,
all on the date of execution of the Novation Certificate by the
Agent or, if later, the date specified in the Novation
Certificate.
29.4 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Bank, the Bank
of which it is an Affiliate) ceases to be a Bank, the Agent shall (in
consultation with the Parent) appoint another Bank or an Affiliate of
a Bank to replace that Reference Bank.
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53
29.5 No extra cost
If:-
(a) any assignment or transfer of all or any part of the rights or
obligations of a Bank pursuant to Clause 29; or
(b) any change in a Bank's Facility Office,
results, as a result of laws or regulations in force or the subject of
a formal government proposal at that time, in amounts becoming due at
that time under Clauses 13.1 (Gross-up) or 15 (Increased costs), then
the assignee, transferee, New Bank or Bank, as the case may be, shall
be entitled to receive those amounts only to the extent that the
assignor, transferor, Existing Bank or Bank, as the case may be, would
have been so entitled had there been no such assignment, transfer, or
change in Facility Office.
30. DISCLOSURE OF INFORMATION
(a) A Bank may disclose to one of its Affiliates or (subject to prior
notification to the Borrower of the identity of such person) any
person with whom it is proposing to enter, or has entered into,
any kind of transfer, participation or other agreement in relation
to this Agreement:-
(i) a copy of any Finance Document; and
(ii) any information which that Bank has acquired under or in
connection with any Finance Document.
(b) A Finance Party shall keep confidential any and all information
(except information which is publicly available or in respect of
which disclosure is required by law or regulation) relating to
the Group or a member of the Group which is disclosed to the
Finance Party for the purpose of or in connection with any
Finance Document.
31. SET-OFF
A Finance Party may set off any amount due and owed by an Obligor
under this Agreement (to the extent beneficially owned by that Finance
Party) against any obligation (whether or not matured) owed by that
Finance Party to that Obligor, regardless of the place of payment,
booking branch or currency of either obligation. If the obligations
are in different currencies, the Finance Party may convert either
obligation at a market rate of exchange in its usual course of business
for the purpose of the set-off.
32. PRO RATA SHARING
32.1 Redistribution
If any amount owing by an Obligor under this Agreement to a Finance
Party (the "recovering Finance Party") is discharged by payment,
set-off or any other manner other than through the Agent in accordance
with Clause 12 (Payments) (a "recovery"), then:-
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54
(a) the recovering Finance Party shall, within three Business Days,
notify details of the recovery to the Agent;
(b) the Agent shall determine whether the recovery is in excess of
the amount which the recovering Finance Party would have received
had the recovery been received by the Agent and distributed in
accordance with Clause 12 (Payments);
(c) subject to Clause 32.3 (Exception), the recovering Finance Party
shall within three Business Days of demand by the Agent pay to
the Agent an amount (the "redistribution") equal to the excess;
(d) the Agent shall treat the redistribution as if it were a payment
by the Obligor concerned under Clause 12 (Payments) and shall pay
the redistribution to the Finance Parties (other than the
recovering Finance Party) in accordance with Clause 12.7 (Partial
Payments); and
(e) after payment of the full redistribution, the recovering Finance
Party will be subrogated to the portion of the claims paid under
paragraph (d) above and that Obligor will owe the recovering
Finance Party a debt which is equal to the redistribution,
immediately payable and of the type originally discharged.
32.2 Reversal of redistribution
If under Clause 32.1 (Redistribution):-
(a) a recovering Finance Party must subsequently return a recovery,
or an amount measured by reference to a recovery, to an Obligor;
and
(b) the recovering Finance Party has paid a redistribution in
relation to that recovery,
each Finance Party shall, within three Business Days of demand by the
recovering Finance Party through the Agent, reimburse the recovering
Finance Party all or the appropriate portion of the redistribution
paid to that Finance Party. Thereupon, the subrogation in Clause
32.1(e) (Redistribution) will operate in reverse to the extent of the
reimbursement.
32.3 Exception
(a) A recovering Finance Party need not pay a redistribution to the
extent that it would not, after the payment, have a valid claim
against the Obligor concerned in the amount of the redistribution
pursuant to Clause 32.1(e) (Redistribution).
(b) A Finance Party is not entitled to participate in a
redistribution if the redistribution results from the proceeds of
a judicial enforcement order obtained by the recovering Finance
Party and the other Finance Party had adequate notice of and
opportunity to participate in the proceedings concerned but did
not do so.
33. SEVERABILITY
If a provision of any Finance Document is or becomes illegal, invalid
or unenforceable in any jurisdiction, that shall not affect:-
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55
(a) the validity or enforceability in that jurisdiction of any other
provision of the Finance Documents; or
(b) the validity or enforceability in other jurisdictions of that or
any other provision of the Finance Documents.
34. COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a
single copy of this Agreement.
35. NOTICES
35.1 Giving of notices
All notices or other communications under or in connection with this
Agreement shall be given in writing or by telex (as between the
Finance Parties only) or facsimile. Any such notice will be deemed to
be given as follows:-
(a) if in writing, when delivered;
(b) if by telex, when despatched, but only if, at the time of
transmission, the correct answerback appears at the start and at
the end of the sender's copy of the notice; and
(c) if by facsimile, when received.
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
35.2 Addresses for notices
(a) The address, telex number and facsimile number of each Party
(other than the Agent and the Parent) for all notices under or in
connection with this Agreement are:-
(i) those notified by that Party for this purpose to the Agent
on or before the date it becomes a Party; or
(ii) any other notified by that Party for this purpose to the
Agent by not less than five Business Days' notice.
(b) The address, telex number and facsimile number of the Agent are:-
Banque Nationale de Paris
59-61 Rue la Fayette
75009 Paris
France
Attention: COE Gestion des Credits Financiers
Telex: 290 181
Facsimile: (33-1) 40 14 77 85
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56
or such other as the Agent may notify to the other Parties by not
less than five Business Days' notice.
(c) The address and facsimile number of the Parent are:-
Gambro AB
P.O. Box 10101
S-220 10 Lund
Sweden
Attention: Messrs. Goran Anderberg/Christer Gustavsson
Facsimile: 46 46 18 87 28
or such other as the Parent may notify to the other parties by not
less than five Business Days' notice.
(d) All notices from or to an Obligor shall be sent through the
Agent.
(e) The Agent shall, promptly upon request from any Party, give to
that Party the address, telex number or fax number of any other
Party applicable at the time for the purposes of this Clause.
36. LANGUAGE
(a) Any notice given under or in connection with any Finance Document
shall be in English.
(b) All other documents (other than the accounts and the
constitutional documents of each Obligor) provided under or in
connection with any Finance Document shall be:-
(i) in English; or
(ii) if not in English, accompanied by a certified English
translation and, in this case, the English translation shall
prevail unless the document is a statutory or other official
document.
37. JURISDICTION
37.1 Submission to English Courts
For the benefit of each Finance Party, each Obligor irrevocably agrees
that the courts of England are to have jurisdiction to settle any
disputes which may arise out of or in connection with any Finance
Document and that, accordingly, any legal action or proceedings
arising out of or in connection with any Finance Document
("Proceedings") may be brought in those courts and each Obligor
irrevocably submits to the jurisdiction of those courts.
<PAGE>
57
37.2 Submission to Swedish Courts
Without prejudice to Clause 37.1 each Obligor further irrevocably
agrees that any Proceedings may be brought in the courts of Sweden
and submits to the non-exclusive jurisdiction of such courts.
37.3 Service of process
Without prejudice to any other mode of service, each Obligor:-
(a) irrevocably appoints:
(i) Gambro Limited of 124 Station Road, Sidcup, Kent DA15 7AS as
its agent for service of process relating to any proceedings
before the English courts in connection with any Finance
Document;
(ii) the Parent of Magistratsvagen 16, Box 10101, S-22010 Lund as
its agent for service of process relating to any proceedings
before the courts of the Kingdom of Sweden in connection with
any Finance Document,
except where an Obligor is incorporated in the relevant
jurisdiction;
(b) agrees that failure by a process agent to notify the Obligors of
the process will not invalidate the proceedings concerned; and
(c) consents to the service of process relating to any such
proceedings by prepaid posting of a copy of the process to its
address for the time being applying under Clause 35.2 (Addresses
for notices).
37.4 Forum convenience and enforcement abroad
Each Obligor:-
(a) waives objection to the English and Swedish courts on
grounds of inconvenient forum or otherwise as regards
proceedings in connection with a Finance Document; and
(b) agrees that a judgment or order, other than an interim
judgment or order, of an English or Swedish Court in
connection with a Finance Document is conclusive and binding
on it and may be enforced against it in the courts of any
other jurisdiction in accordance with the laws and
procedures of that jurisdiction.
37.5 Non-exclusivity
Nothing in this Clause 37 limits the right of a Finance Party to bring
proceedings against an Obligor in connection with any Finance Document
in any other court of competent jurisdiction.
38. GOVERNING LAW
This Agreement is governed by English law.
This Agreement has been entered into on the date stated at the beginning of
this Agreement.
<PAGE>
58
SCHEDULE 1
PART I
BANKS AND COMMITMENTS - FACILITY A
Banks Commitments
$
Banque Nationale de Paris p.l.c. 12,500,000
Commerzbank International S.A. 12,500,000
Enskilda Corporate, Skandinaviska Enskilda Banken 12,500,000
Nordbanken 12,500,000
Sanwa International (Ireland) PLC 12,500,000
Societe Generale 12,500,000
Svenska Handelsbanken 12,500,000
Union Bank of Switzerland, London Branch/
Union de Banques Suisses (Luxembourg) S.A. 12,500,000
----------------
Total A Commitments U.S.$100,000,000
----------------
<PAGE>
59
PART II
BANKS AND COMMITMENTS - FACILITY B
Banks Commitments
$
Banque Nationale de Paris p.l.c. 12,500,000
Commerzbank International S.A. 12,500,000
Enskilda Corporate, Skandinaviska Enskilda Banken 12,500,000
Nordbanken 12,500,000
Sanwa International (Ireland) PLC 12,500,000
Societe Generale 12,500,000
Svenska Handelsbanken 12,500,000
Union Bank of Switzerland, London Branch/
Union de Banques Suisses (Luxembourg) S.A. 12,500,000
----------------
Total B Commitments U.S.$100,000,000
----------------
<PAGE>
60
SCHEDULE 2
CONDITIONS PRECEDENT DOCUMENTS
1. ALL OBLIGORS
A copy of the constitutional documents of each Obligor.
2. PARENT
(a) A copy of a resolution of the board of directors of the Parent:-
(i) approving the transactions contemplated by this Agreement
and resolving that it execute this Agreement;
(ii) authorising a specified person or persons to execute this
Agreement and the Fee Letter on its behalf; and
(iii) authorising a specified person or persons, on its
behalf, to sign and/or despatch all other documents and
notices to be signed and/or despatched by it under or in
connection with this Agreement;
(b) a power of attorney executed on behalf of the Parent by a person
or persons authorised by the resolution referred to in paragraph
(a) above;
(c) a specimen of the signature of each person authorised by the
resolution referred to in paragraph (a) above;
(d) a registration certificate not older than four months issued by
the Swedish Patent and Registration Office and certified by an
officer of the Parent to be a true copy; and
(e) a certificate of an authorised signatory of the Parent certifying
that each copy document specified in this Schedule 2 is correct,
complete and in full force and effect as at a date no earlier
than the date of this Agreement.
3. BORROWER (OTHER THAN THE PARENT)
(a) A copy of a resolution of the board of directors of each
Borrower:-
(i) approving the transactions contemplated by this Agreement
and resolving that it accedes to this Agreement;
(ii) authorising a specified person or persons to execute a Deed
of Accession on its behalf; and
(iii) authorising a specified person or persons, on its
behalf, to sign and/or despatch all other documents and
notices to be signed and/or despatched by it under or in
connection with this Agreement;
<PAGE>
61
(b) a power of attorney executed on behalf of the Borrower by a person
or persons authorised by the resolution referred to in paragraph
(a) above;
(c) a specimen of the signature of each person authorised by the
resolution referred to in paragraph (a) above; and
(d) a legal opinion from a law firm in the jurisdiction of the
Borrower addressed to the Finance Parties.
4. PROCESS AGENTS
Evidence of acceptance by the process agents referred to in Clause
37.3 of their appointments of that Clause.
5. OTHER DOCUMENTS
A copy of any other authorisation or other document, opinion or
assurance which the Agent considers to be necessary or desirable in
connection with the entry into and performance of, and the
transactions contemplated by, any Finance Document or for the validity
and enforceability of any Finance Document.
6. LEGAL OPINION
(a) A legal opinion of Vinge, legal advisers in Sweden to the Parent,
addressed to the Finance Parties.
(b) A legal opinion of Allen & Overy, legal advisers to the Agent,
addressed to the Finance Parties.
<PAGE>
62
SCHEDULE 3
CALCULATION OF THE MLA COST
(a) The MLA Cost for a Loan maintained in Sterling for each of
its Interest Periods is calculated in accordance with the
following formula:-
BY + L(Y - X) + S(Y - Z)
------------------------ % per annum = MLA Cost
100 - (B + S)
where on the day of application of the formula:-
B is the percentage of the Agent's eligible liabilities which
the Bank of England requires the Agent to hold on a
non-interest-bearing deposit account in accordance with its
cash ratio requirements;
Y is the rate at which Sterling deposits are offered by the
Agent to leading banks in the London interbank market at or
about 11.00 a.m. on that day for the relevant period;
L is the percentage of eligible liabilities which the Bank of
England requires the Agent to maintain as secured money with
members of the London Discount Market Association and/or as
secured call money with certain money brokers and gilt-edged
primary market makers;
X is the rate at which secured Sterling deposits may be placed
by the Agent with members of the London Discount Market
Association and/or as secured call money with certain money
brokers and gilt-edged primary market makers at or about
11.00 a.m. on that day for the relevant period;
S is the percentage of the Agent's eligible liabilities which
the Bank of England requires the Agent to place as a special
deposit; and
Z is the interest rate per annum allowed by the Bank of
England on special deposits.
(b) For the purposes of this Schedule 3:-
(i) "eligible liabilities" and "special deposits" have the
meanings given to them at the time of application of the
formula by the Bank of England; and
(ii) "relevant period" in relation to each Interest Period,
means:-
(A) if it is 3 months or less, that Interest Period; or
(B) if it is more than 3 months, each successive period of
3 months and any necessary shorter period comprised in
that Interest Period.
<PAGE>
63
(c) In the application of the formula, B, Y, L, X, S and Z are
included in the formula as figures and not as percentages, e.g.
if B = 0.5% and Y = 15%, BY is calculated as 0.5 x 15.
(d) (i) The formula is applied on the first day of each relevant
period comprised in the relevant Interest Period.
(ii) Each rate calculated in accordance with the formula is, if
necessary, rounded upward to four decimal places.
(e) If the Agent determines that a change in circumstances has
rendered, or will render, the formula inappropriate, the Agent
(after consultation with the Banks and the Borrowers' Agent)
shall notify the Banks and the Borrowers' Agent of the manner in
which the MLA Cost will subsequently be calculated. The manner of
calculation so notified by the Agent shall, in the absence of
manifest error, be binding on all the Parties.
<PAGE>
64
SCHEDULE 4
FORMS OF REQUEST
To: BANQUE NATIONALE DE PARIS as Agent
From: [BORROWER]
Date: [ ]
GAMBRO AB
U.S.$200,000,000 Facility Agreement dated [DATE]
1. We wish to borrow a Loan as follows:-
(a) Drawdown Date: [ ]
(b) Facility: [ ]
(c) Original Dollar Amount: [ ]
(d) Currency: [ ]
(e) First Interest Period(s): [ ]/
alternative Interest Period [ ]*
(f) Payment Instructions: [ ].
2. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Request.
By:
[BORROWER]
Authorised Signatory
* Complete only if the requested Interest Period is of an optional
duration. The splitting of Loans is dealt with in Clause 8.4.
<PAGE>
65
SCHEDULE 5
FORM OF NOVATION CERTIFICATE
To: BANQUE NATIONALE DE PARIS
From: [THE EXISTING BANK] and [THE NEW BANK] Date:[ ]
GAMBRO AB
U.S.$200,000,000 Facility Agreement dated [DATE]
We refer to Clause 29.3 (Procedure for novations).
1. We [ ] (the "Existing Bank") and [ ] (the "New Bank") agree to the
Existing Bank and the New Bank novating all the Existing Bank's rights
and obligations referred to in the Schedule in accordance with Clause
29.3 (Procedure for novations).
2. The specified date for the purposes of Clause 29.3(c) is [date of
novation].
3. The Facility Office and address for notices of the New Bank for the
purposes of Clause 35.2 (Addresses for notices) are set out in the
Schedule.
4. This Novation Certificate is governed by English law.
<PAGE>
66
THE SCHEDULE
Rights and obligations to be novated
[Details of the rights and obligations of the Existing Bank to be novated].
[Existing Bank] [New Bank]
By: By:
Date: Date:
[New Bank]
[Facility Office Address for notices]
BANQUE NATIONALE DE PARIS
By:
Date:
<PAGE>
67
SCHEDULE 6
Form of Deed of Accession
THIS DEED OF ACCESSION dated [ ] and made between:-
(1) [ ] (the "Additional Borrower");
(2) BANQUE NATIONALE DE PARIS as agent (the "Agent") on behalf of itself
and the Banks (as defined in the Facility Agreement referred to
below);
is supplemental to the revolving credit and term loan facility agreement
dated [ ], 1994 and made between Gambro AB, BNP Capital Markets Limited as
Arranger, the Banks defined therein and the Agent (the "Facility Agreement").
NOW HIS DEED WITNESSETH:-
1. ACCESSION
In consideration of the Banks through the Agent agreeing to the
Additional Borrower becoming an additional borrower pursuant to Clause
2.5 of the Facility Agreement, the Additional Borrower hereby affirms
and ratifies the Facility Agreement and by the execution of this Deed
agrees to observe and be bound by the terms and provisions of the
Facility Agreement insofar as they apply to Borrowers as if it were an
original party to the Facility Agreement.
2. INTEGRATION
This Deed of Accession shall be read as one with the Facility
Agreement so that any reference therein to "this Agreement",
"hereunder" and similar shall include and be deemed to include this
Deed of Accession.
3. CONDITIONS PRECEDENT
The obligations of the Agent and each Bank hereunder are subject to
the condition that the Agent is satisfied that all appropriate
conditions precedent have been fulfilled by the Additional Borrower
including, without limitation, the delivery of documents equivalent to
those referred to in Schedule 2 to the Facility Agreement but relating
to the Additional Borrower and this Deed of Accession.
4. NOTICES
The Additional Borrower's address for notices and demands under the
Facility Agreement is [ ] (marked for the attention of [ ]) (Telex
No. [ ]) (Facsimile No. [ ]).
5. LAW
This Deed of Accession is governed by English law.
<PAGE>
68
IN WITNESS whereof the parties hereto have caused this Deed of Accession to
be duly executed on the date first written above.
EXECUTED as a deed by )
[The Additional Borrower] )
acting by [NAME OF DIRECTOR] )
and [NAME OF DIRECTOR/SECRETARY] )
- ------------------ ---------------------
director director/secretary
BANQUE NATIONALE DE PARIS
for itself and as Agent for the
Banks
By:
-------------------------
<PAGE>
69
SCHEDULE 7
Approved Additional Borrowers
Gambro GmbH (Germany)
Gambro SpA (Italy)
Gambro K.K. (Japan)
Gambro S.A. (France)
Sopamed AG (Switzerland)
Hogamed S.A. (France)
Hospal Industrie S.A. (France)
Hospal Dasco SpA (Italy)
COBE Laboratories, Inc. (USA)
<PAGE>
70
SIGNATORIES
The Parent
GAMBRO AB
By: INGMAR MAGNUSSON GORAN ANDERBERG
Arranger
BNP CAPITAL MARKETS LIMITED
By: DENIS QUILLET
Agent
BANQUE NATIONALE DE PARIS
By: PHILIPPE KIRCHNER
Banks
BANQUE NATIONALE DE PARIS P.L.C.
By: DENIS QUILLET
COMMERZBANK INTERNATIONAL S.A.
By: PHILIPPE KIRCHNER
ENSKILDA CORPORATE, SKANDINAVISKA ENSKILDA BANKEN
By: PHILIPPE KIRCHNER
NORDBANKEN
By: PHILIPPE KIRCHNER
<PAGE>
71
SANWA INTERNATIONAL (IRELAND) PLC
By: PHILIPPE KIRCHNER
SOCIETE GENERALE
By: DENIS QUILLET
SVENSKA HANDELSBANKEN
By: DENIS QUILLET
UNION BANK OF SWITZERLAND, LONDON BRANCH
By: DENIS QUILLET
UNION DE BANQUES SUISSES (LUXEMBOURG) S.A.
By: DENIS QUILLET
[LOGO]
Union Bank of Switzerland
New York Branch
January 14, 1991
COBE Laboratories, Inc.
Corporate Headquarters
1185 Oak Street
Lakewood, Colorado 80215-4407
Attention: Mr. James C. Brod, Corporate Controller
Re: Uncommitted Line of Credit
--------------------------
Gentlemen:
Union Bank of Switzerland New York Branch (the "Bank") is pleased to
inform you that it has established an uncommitted line of credit in favor of
COBE Laboratories, Inc. (the "Company") pursuant to which the Bank is prepared
to consider making, in its discretion, loans to the Company (each a "Loan"),
upon the terms and conditions contained herein in such amounts, to a maximum
aggregate amount at any one time outstanding not to exceed $ 10,000,000.00 as
may be agreed between the Company and the Bank at the time of the making
thereof.
1. The Company's obligation to repay Loans shall be evidenced by its
promissory grid note (the "Note") in substantially the form of Exhibit A hereto,
dated the date hereof. The principal amount of each Loan and each payment of
principal shall be endorsed by the Bank on the schedule attached to the Note,
and such notations shall be presumptive as to the subject thereof, provided,
--------
however, that any failure to make any such notations shall not affect the
- -------
obligations of the Company hereunder or under the Note.
2. The Company may utilize the above line of credit in either of the
following ways:
A. Domestic dollar loans, payable on demand, bearing a per annum
interest rate equal to the higher of the Bank's floating prime
lending rate as announced from time to time or b) .3% in excess
of the cost to the Bank of maintaining such loans, or
299 Park Avenue (212) 715-3000
New York, N.Y. 10171 Cable Address: UNIONBANK, New York
<PAGE>
B. Eurodollar loans, with maturities of one, two, three, six, nine
or twelve months, bearing a per annum interest rate equal to .3%
over the interbank offered rate ("IBOR"), as quoted by the Bank
for periods and in amounts corresponding to the terms of such
loans.
Each Loan will bear interest from its date until maturity at the rate per annum
(calculated on the basis of a 360-day year for the actual number of days
involved) agreed between the Company and the Bank immediately prior to the
making of such Loan, payable at the maturity thereof, and if such maturity is
longer than three months, at each three month anniversary of the making of such
Loan. After maturity of a Loan, whether by acceleration or otherwise, interest
will be payable on demand at a rate equal to 3% per annum in excess of the cost
to the Bank of maintaining the Loan. The Bank's determination of such cost
shall be conclusive and binding on the Company.
3. All payments made by the Company under this agreement (the
"Letter Agreement") or the Note will be made to the Bank at 299 Park Avenue, New
York, New York or such other branch or offices as the Bank may designate.
All payments under this Letter Agreement and under the Note (including, without
limitation, payments of interest and principal) will be payable to the Bank free
and clear of any and all present and future taxes, levies, imposts, duties,
deductions, withholdings, fees, liabilities and similar charges other than those
imposed on the overall net income of the Bank ("Taxes"). If any Taxes are
required to be withheld or deducted from any amount payable under this Letter
Agreement or the Note, then the amount payable under this Letter Agreement or
the Note will be increased to the amount which, after deduction from such
increased amount of all Taxes required to be withheld or deducted therefrom,
will yield to the Bank the amount stated to be payable under this Letter
Agreement or the Note. The Company will execute and deliver to the Bank at its
request such further instruments as may be necessary or desirable to give full
force and effect to any such increase, including, but not limited to, a new Note
of the Company to be issued in exchange for any Note theretofore issued. If any
of the Taxes specified in this paragraph are paid by the Bank, the Company will,
upon demand of the Bank, reimburse the Bank for such payments, together with any
interest and penalties which may be imposed by the governmental agency, but
without any interest imposed by the Bank.
In the event that after the date hereof the implementation of or any change in
any law or regulation or any guideline or directive (whether or not having the
force of law) or the interpretation or administration thereof imposes or
modifies any capital adequacy or similar requirement and, as a result thereof,
in the opinion of the Bank, the rate of return on the Bank's capital as a
consequence of its obligations hereunder is reduced to a level below that which
it could have achieved but for such circumstances, then upon demand from time to
time the Company shall pay to the Bank such additional amounts as shall
compensate the Bank for such reduction in rate of return. In determining such
additional amount the Bank may use any reasonable averaging and attribution
methods.
4. In the event that the Company makes a repayment to the Bank of
any Loan prior to the scheduled maturity date thereof for any reason, including
without limitation, due to acceleration following the occurrence of an Event of
Default, the Company will pay to the Bank, on demand, an amount which will
<PAGE>
compensate the Bank for any loss or premium or penalty incurred in respect of
funds obtained for the purposes of making or maintaining such loan. The Bank's
determination of such amount shall be conclusive and binding on the Company,
absent manifest error. In the event the Company is required to pay to the Bank
additional amounts in connection with loans pursuant to paragraph 3., it may, or
not less than five Business Days' written or telexed notice to the Bank prepay
the loans in whole (but not in part), without premium or penalty, but with
accrued interest on the principal being prepaid to the date of prepayment and
such amount as may be required to compensate the Bank for any loss incurred in
connection therewith (including, without limitation, any loss arising in respect
of the redeployment of funds, but excluding any consequential or indirect
damages). The Bank's determination of such amount shall be conclusive and
binding on the Company, absent manifest error.
5. The Company represents and warrants to the Bank that:
(a) The Company has full power and authority to enter into this
Letter Agreement, to make the borrowings, to execute and deliver the Note and to
incur the obligations provided for herein and therein, all of which have been
duly authorized by all proper and necessary corporate action. No consent or
approval of stockholders or any governmental authority is required as a
condition to the validity of this Letter Agreement or the Note.
(b) This Letter Agreement constitutes, and the Note, when issued
and delivered pursuant hereto for value received, will constitute, the valid and
legally binding obligations of the Company in accordance with their terms. The
Loans will rank pari passu with all other senior unsecured indebtedness of the
----------
Company.
(c) The unaudited consolidated balance sheet of the Company and
its subsidiaries as of September 28, 1990, for the first three quarters of its
fiscal year ending December 31, 1990, a copy of which has heretofore been
delivered to the Bank, fairly present the financial condition of the Company and
its subsidiaries and the results of its operations, as of the date and for the
period referred to and have been prepared in accordance with generally accepted
accounting principles consistently maintained throughout the period involved.
There has been no material adverse change in the business, properties, condition
(financial or other) or operations, present or prospective, of the Company or
any of its subsidiaries since September 28, 1990.
6. The Company shall request each Loan hereunder in writing (or
telephonically, to be confirmed immediately in writing) not later than by 11:00
a.m. on the day for which such Loan is requested, specifying the requested
amount and maturity date therefor. The Bank will promptly advise the Company by
telephone of the interest rate to be applicable thereto. The Company shall
accept or reject the Loan at the quoted rate at the time such notice is given by
the Bank.
The making of any Loan hereunder shall be subject to the condition
precedent that prior thereto the Bank shall have received, in form and substance
satisfactory to the Bank, a duly executed copy of the Note, accompanied by
copies of all corporate action taken to authorize this Letter Agreement, the
Note and the Loans. In addition, on the date of any Loan (i)
<PAGE>
the Company shall have complied and be in compliance with all the terms,
covenants and conditions of this Letter Agreement which are binding upon it,
(ii) there shall have occurred no Event of Default (as defined in paragraph 9)
and no event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default, and (iii) the representations and warranties
contained in paragraph 5 hereof shall be true and correct as of such date and
shall be true with the same effect as though made on and as of such date, and
the Company's request for any Loan shall be deemed to be confirmation of the
foregoing.
7. Until repayment in full of the Loans and the performance of all
other obligations of the Company hereunder, the Company will:
(a) Furnish to the Bank (i) as soon as available but in no event
more than 120 days after the close of each of the Company's fiscal years audited
consolidated balance sheets of the Company and its subsidiaries together with
audited consolidated statements of income and expense, retained earnings, paid-
in capital and surplus and changes in financial position for such fiscal year,
prepared in accordance with generally accepted accounting principles and (ii)
such additional information, reports or statements as the Bank may from time to
time reasonably request.
(b) Maintain its corporate existence, and qualify and remain
qualified to do business as a foreign corporation in each jurisdiction in which
the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary and cause each of
its subsidiaries so to do.
(c) Not create, incur, assume or suffer to exist, or permit any
subsidiary to create, incur, assume or suffer to exist any mortgage, pledge,
lien or other encumbrance of any kind (including the charge upon property
purchased under conditional sale or other title retention agreements) upon, or
any security interest in, any of this property, assets or investments, whether
now owned or hereafter acquired, except (i) liens for taxes not delinquent or
being contested in good faith and by appropriate proceedings; (ii) deposits or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of money), leases, statutory obligations, surety and appeal bonds and other
obligation's of like nature arising in the ordinary course of business; (iii)
mechanics, workmen's, materialmen's or other like liens arising in the
ordinary course of business with respect to obligations which are not due or
which are being contested in good faith; (iv) any mortgage, encumbrance or other
lien upon, or security interest in, any property hereafter acquired by the
Company or any subsidiary, created contemporaneously with such acquisition to
secure or provide for the payment or financing of any part of the purchase price
thereof, or the assumption of any mortgage, encumbrance or lien upon, or
security interest in, any such property hereafter acquired existing at the time
of such acquisition, or the acquisition of any such property subject to any
mortgage, encumbrance or other lien or security interest without the assumption
thereof, provided that each such mortgage, encumbrance, lien or security
interest shall attach only to the property so acquired and fixed improvements
thereon; (v) liens and mortgages existing on the date of this Agreement as
disclosed by the Company to the Bank; (vi) easements, rights-of-way,
restrictions and other similar encumbrances incurred in the ordinary course of
business and encumbrances consistent zoning restrictions, easements, licenses,
restrictions on the use of property or minor imperfections in title thereto
which, in the aggregate, are not material
<PAGE>
in amount, and which do not in any case materially detract from the value of the
property subject thereto or interfere with the ordinary conduct of the business
of the Company or any of its subsidiaries; and (vii) any extension, renewal or
replacement of the foregoing, provided that the liens and encumbrances permitted
hereunder shall not be spread to cover any additional debt or property (other
than a substitution of like property); and (viii) liens securing obligations
incurred in the ordinary course of business of the Company's subsidiary, COBE
Leasing Incorporated.
(d) Maintain a Consolidated Equity of at least $130,000,000 and
cause the ratio of Total Bank Debt to Total Consolidated Equity not to exceed
2 : 1 during fiscal year 1991 and each of the Company's fiscal years thereafter.
"Consolidated Equity" is defined as the amount by which the total consolidated
assets of the Company and its subsidiaries exceeds the total consolidated
liabilities. Total consolidated assets and total consolidated liabilities are
to be determined as to both classification of items and amount in accordance
with generally accepted accounting principles consistently maintained by the
Company. "Bank Debt" means any obligation to repay money, any indebtedness
evidenced by notes, bonds, debentures or similar obligations toward banks, and
reimbursement obligations to banks in respect of Letters of Credit.
8. If one or more of the following events (each an "Event of
Default") shall occur:
(a) Default shall be made in the payment of principal of or
interest on any Loan when due and payable or in the payment of any other amount
payable hereunder when due and payable; or
(b) Default shall be made in the due performance or observance
of any covenant contained in paragraph 7; or
(c) Default shall be made in the due observance or performance
of any other term, covenant or agreement contained in this Letter Agreement, and
such default shall have continued unremedied for a period of 30 days after any
officer of the Company becomes aware of such default; or
(d) Any representation or warranty made by the Company herein or
any statement or representation made in any certificate, report or opinion
delivered in connection herewith shall prove to have been misleading in any
material respect when made; or
(e) There shall have occurred, in the reasonable judgment of the
Bank, a material adverse change in the business, properties, condition
(financial or other) or operations, present or prospective, of the Company or
any of its subsidiaries since the date of the most recent Loan to the Company
hereunder; or
(f) Any obligation of the Company (other than its obligations
hereunder) or of any subsidiary for the payment of borrowed money is not paid
when due or becomes or is declared to be due and payable prior to the expressed
maturity thereof, or there shall have occurred an event which, with the giving
of notice or lapse of time, or both, would cause any such obligation to become,
or allow any such obligation to be declared to be, due and payable; or
<PAGE>
(g) The Company or any subsidiary makes an assignment for the
benefit of creditors, files a petition in bankruptcy, is adjudicated insolvent
or bankrupt, petitions or applies to any tribunal for any receiver of or any
trustee for the Company or any subsidiary or any substantial part of its
property, commences any proceeding relating to the Company or any subsidiary
under any reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, or if there is commenced against the Company or any subsidiary any such
proceeding which remains undismissed for a period of 30 days, or the Company or
any subsidiary by any act indicates its consent to, approval of or acquiescence
in any such proceeding or the appointment of any receiver of or any trustee for
the Company or any subsidiary or any substantial part of its property, or
suffers any such receivership or trusteeship to continue undischarged for a
period of 30 days; or
(h) One or more judgments against the Company or any subsidiary
or attachments against its property, which in the aggregate exceed
$ 10,000,000.00, or the operation or result of which could be to interfere
materially and adversely with the conduct of the business of the Company or any
subsidiary, remain unpaid, unstayed on appeal, undischarged, unbonded, or
undismissed for a period of 30 days; or
(i) Gambro AB, Sweden ceases at any time to directly or
indirectly own 100% of the Company's issued and outstanding stock;
then upon the happening of any of the foregoing Events of Default which shall be
continuing, the Note shall become and be immediately due and payable upon
declaration to that effect delivered by the Bank to the Company; provided, that
upon the happening of any event specified in subsection (g) of this paragraph 8,
the Note shall be immediately due and payable without declaration or other
notice to the Company. The Company expressly waives any presentment, demand,
protest or other notice of any kind.
9. This Letter Agreement shall be governed by and construed in
accordance with the laws of the State of New York, United States of America. If
any suit is instituted by the Bank to enforce this Letter Agreement and/or the
Note, the Company hereby submits to jurisdiction and to the laying of venue in
the County of New York, State of New York.
10. The Company agrees to pay all reasonable out-of-pocket expenses
of the Bank (including the reasonable fees of its counsel) in connection with
the enforcement of any provision of this Letter Agreement or any amendment or
supplement and the collection of the Note.
<PAGE>
11. Any communication, demand or notice to be given hereunder or with
respect to the Loans and the Note will be duly given when delivered in writing
or sent by telex or authenticated cable to a party at its address as indicated
below.
A communication, demand or notice given pursuant to this paragraph 11 shall be
addressed:
If to the Company, at
COBE Laboratories, Inc.
Corporate Headquarters
1185 Oak Street
Lakewood, Colorado 80215-4407
Attention: Mr. James C. Brod
Corporate Controller
If to the Bank, at
Union Bank of Switzerland
c/o New York Branch
299 Park Avenue
New York, New York 10171
Attention: Mr. Andreas Knoepfel
Assistant Vice President
12. This Letter Agreement shall be binding upon and inure to the
benefit of the Company and the Bank and their respective successors and assigns.
Please indicate your acceptance of the foregoing terms and conditions
by signing and returning to us a counterpart of this letter.
Very truly yours,
UNION BANK OF SWITZERLAND
NEW YORK BRANCH
Andreas Knoepfel Walter Graf
Assistant Vice President Assistant Treasurer
Accepted and agreed to:
COBE Laboratories, Inc.
By ________________________________ By ____________________________
Title: Title:
Date: Date:
<PAGE>
[LOGO]
Union Bank of Switzerland
New York Branch
September 25, 1992
Cobe Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Mr. Herbert S. Lawson
Treasurer
RE: Amendment No. 1 to Letter Agreement dated January 14, 1991
----------------------------------------------------------
Dear Sirs:
We refer to that certain Letter Agreement (the "Agreement") dated as of
January 14, 1991 between Cobe Laboratories, Inc. (the "Company") and Union
Bank of Switzerland, New York Branch (the "Bank") extending an uncommitted
line of credit in the amount of $ 10,000,000.
This is to confirm that we have increased the uncommitted line of credit by
$5,000,000 to the new amount of $15,000,000. Furthermore, we confirm that
paragraph 2 of the Agreement is herewith amended as reads now as follows:
"2. The Company may utilize the above line of credit in either of the
following ways:
A. Domestic dollar Loans, payable on demand, in minimum amounts of
$1,000,000, bearing a per annum interest rate (calculated on the
basis of a 360 day year for the actual number of days elapsed)
equal to the higher of a) the Bank's floating prime lending rate as
announced from time to time or b) .375% in excess of the cost to
the Bank of Maintaining such Loans, or
B. Eurodollar Loans, with maturities of one, two, three, six, nine or
twelve months, in minimum amounts of $1,000,000 bearing a per annum
interest rate (calculated on the basis of a 360 day year for the
actual number of days elapsed) as agreed between the Company and
the Bank at the time of making such Loans.
Interest on each Loan will accrue from the date of the Loan until
maturity and is due and payable at the maturity thereof. After maturity
of a Loan, whether by acceleration or otherwise, interest will be
payable on demand at a rate equal to 2% per annum above the Bank's
floating prime lending rate."
In all other respects the Agreement remains in full force and effect.
299 Park Avenue (212) 715-3000
New York, N.Y. 10171-0026 Cable Address: UNIONBANK, New York
<PAGE>
-2-
Cobe Laboratories
If you agree to the foregoing please sign and return to as the enclosed copy
of this letter and the new promissory note. Upon such execution and delivery,
the promissory note previously delivered to us under the Agreement shall be
null and void.
Sincerely,
UNION BANK OF SWITZERLAND
New York Branch
/s/ Andreas Knoepfel /s/ Walter Graf
Andreas Knoepfel Walter Graf
Assistant Vice President Assistant Vice President
Accepted and agreed to:
Cobe Laboratories, Inc.
By /s/ Herbert S. Lawson By ____________________________
Title:Vice President Title: Controller
Date: 1/28/92 Date:
[ COMMERZBANK "LETTERHEAD" ]
April 28, 1995
SL/mm
Cobe Laboratories, Inc.
1185 Oak Street
Lakewood, CO 80215
Attention: Mr. Sandy Lawson
Vice President/Treasurer
U.S. $ Revolving Credit Facility
Dear Mr. Lawson:
We, Commerzbank Aktiengesellschaft (the "Bank"), acting through our respective
----
Lending Offices (this term and certain other capitalized terms used herein
are defined on Attachment 2), are pleased to confirm that, on the terms and
conditions set forth herein, we hold available to you, Cobe Laboratories,
Inc., a Colorado corporation (the "Borrower"), a committed revolving credit
--------
facility (the "Facility") in the aggregate amount of
--------
USD 5,000,000.00
(USD FIVE MILLION)
until April 26, 1996 (the "Maturity Date"), subject to the following terms and
-------- ----
conditions.
1. The Facility: Options. Subject to the terms and conditions herein, we will
---------------------
make advances (the "Advances") available to you under any of the Options
--------
listed below from the date of your acceptance of this Letter Agreement to the
Maturity Date in an amount not to exceed USD 5,000,000.00 at any one time
outstanding (such amount, unless reduced pursuant to Paragraph 5 or otherwise
terminated in accordance with the terms hereof, constituting our "Commitment").
----------
Within the limits of the Commitment, you may borrow, prepay in accordance with
Paragraph 6 and reborrow, provided that each Advance shall be repaid in full
not later than the Maturity Date.
The availability of any credit hereunder to the Borrower shall be subject to,
among other conditions, the receipt by the Bank, and the continued
effectiveness at all times hereunder, of a letter of comfort (the "Letter of
Comfort") executed by Gambro AB, a company organized under the law of
Sweden, in favor of the Bank in form and substance satisfactory to the Bank.
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 2 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
Options
- -------
Eurodollar Rate Option: Eurodollar Rate Loans under the Facility may be made at
- ---------- ---- -------
the Eurodollar Lending Office in minimum principal amounts of USD 500,000.00
and in integral multiples of USD 100,000.00 for fixed Interest Periods
selected by the Borrower and agreed to by the Bank. The principal amount of
each Eurodollar Rate Loan shall be repaid on the last day of the Interest
Period therefor with accrued interest. The interest rate per annum for each
Eurodollar Rate Loan will be negotiated not later than two Business Days
prior to the requested drawdown and will equal the Eurodollar Rate plus 1/4
---
of 1% per annum. Interest for any Interest Period longer than three months
shall also be payable on the last day of each calendar quarter after such
loan is made.
Prime Rate Option: Prime Rate Loans under the Facility may be made at the
- ----- ---- -------
Domestic Lending Office either for an agreed-upon period or without a fixed
maturity date (in each case not beyond the Maturity Date), as the parties may
agree, at an interest rate per annum equal to our fluctuating Prime Rate.
The principal amount of any Prime Rate Loan shall be repaid on the earlier
of any agreed-upon maturity date or the Maturity Date and may be repaid, in
whole or in part, on any earlier date selected by the Borrower, in each case
with accrued interest on the principal amount repaid. Interest shall also
be payable on the last day of each calendar quarter on any Prime Rate Loan
then outstanding.
2. Note. Your indebtedness under the Facility shall be evidenced by the Note
-----
in the principal amount of USD 5,000,000.00.
3. Borrowing Procedure. Advances will be made at your request upon notice to
--------- ----------
us made by telephone, telex or letter, and we shall be entitled to rely upon
any such request which we believe in good faith has been made by an officer
or other person authorized to borrow on the Borrower's behalf. We will
confirm each Advance by sending you a confirmation containing the relevant
terms and conditions, which confirmation shall constitute a supplement to
and part of this Letter Agreement. You agree to confirm the terms of each
Advance by returning to the Bank a signed copy of the respective
confirmation, but notwithstanding such confirmation, you shall be deemed
to have incurred indebtedness from the Bank on terms and conditions set forth
herein in the principal amount of any credit made to your current account
with us or, if you have no account with us, equal to any amount transferred
by us on your behalf.
Each confirmation or other document or instrument executed in connection
with this Letter Agreement shall be signed on your behalf by individuals duly
authorized for such purposes by your borrowing resolution most recently
delivered to us.
Our obligation to make Advances hereunder is subject to the condition
precedent that the corresponding funding in the relevant market and amount,
and for the relevant period, is
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 3 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
available to the respective Lending Office.
4. Interest. Interest shall be calculated on the exact number of days elapsed
---------
based on a year of 360 days. Any amount of principal or, to the extent
permitted by law, interest on any Advance hereunder which is not paid when
due shall bear interest until paid in full at a rate per annum equal to 2
above the Prime Rate.
5. Facility Fee. You agree to pay us a facility fee of 1/8 of 1% per annum
-------- ----
on the total amount of this line of credit, payable in arrears on the last
day of each March, June, September and December, with the first such
payment to be made on June 30, 1995.
6. Prepayment. On at least two Business Days' notice you may, or if it
----------
becomes unlawful for us to continue to fund or maintain outstanding any
extension of credit or to perform our obligations hereunder then upon our
demand you shall (and upon such demand our Commitment shall terminate),
prepay each Advance with accrued interest to the date of prepayment on the
amount prepaid, provided that if due to any such prepayment, or any other
prepayment made by you hereunder (including without limitation prepayment
made under Paragraph 8 or 13), we receive payment of principal of any such
credit other than on the last day of the Interest Period (if any) therefor,
you agree to compensate us upon our demand for any applicable Prepayment
Costs.
7. Payments and Notices. All payments of principal, interest and commitment
-------- --- -------
fee hereunder shall be made in immediately available funds to the Federal
Reserve Bank of New York, for the account of Commerzbank Aktiengesellschaft,
New York Branch, ABA no. 026-008-044, reference Cobe Laboratories, Inc.,
Account No. 123/1004704, for the account of the respective Lending Office.
If any payment becomes due hereunder or under the Note, or any Interest
Period for an Advance would otherwise end, on a day which is not a Business
Day, then such payment shall be made, and such Interest Period shall end,
on the next succeeding Business Day and such extension of time shall be
included in the computation of interest due, but if, in the case of a
Eurodollar Rate Loan, such payment or termination would occur in a new
calendar month then the same shall occur instead on the next preceding
Business Day.
All notices and other communications hereunder shall be sent to you at your
above address, or by telefax to (303) 231-4957, or by telephone to (303)
239-2169, in each case Attention: Sandy Lawson/Denise Martinez and to the
Bank (subject to Paragraph 3 above) at 660 S. Figueroa Street, Suite 1450,
Los Angeles, CA 90017, or by telex to 678338 CZKLA or by telephone to
213-623-8223, in each case Attention: Corporate Banking I.
8. Increased Costs. If we shall determine that (a) due to any Legal Event,
--------- -----
there shall be any
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 4 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
increase in our cost of funding, making or maintaining any Advance, or (b)
due to any Legal Event regarding capital adequacy, the rate of return on our
Bank's capital shall be reduced, as a consequence of any extension of
credit hereunder, to a level below that which we could have achieved but for
such Legal Event, then and in any such event you shall have the option of
either (i) paying to us an amount necessary to compensate us for such
increased cost and/or reduction or (ii) prepaying the principal amount of
the relevant Advance plus accrued interest to the date of prepayment,
together with any applicable Prepayment Costs.
9. Closing Conditions. Each Advance will be made available to you upon your
------- ----------
fulfillment of the applicable conditions precedent set forth on Attachment 3
hereto.
10. Representations and Warranties. The Borrower hereby represents and
--------------- --- ----------
warrants as follows:
(a) It is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Colorado.
(b) The execution, delivery and performance by it of this Letter
Agreement and the Note are within its corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene its
charter or by-laws or any law or contractual restriction binding on or
affecting it.
(c) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery or performance by it of this
Letter Agreement or the Note.
(d) This Letter Agreement is, and the Note when delivered hereunder
will be, its legal, valid and binding obligations enforceable against it
in accordance with their respective terms.
(e) The consolidated balance sheets of the Borrower and its
Subsidiaries as at December 31, 1993, and the related consolidated statements
of income and retained earnings for the fiscal year then ended, copies of
which have been furnished to us, fairly present the consolidated financial
condition of it and its Subsidiaries as at such date and the respective
consolidated results of operations for the period ended on such date, all
in accordance with generally accepted accounting principles consistently
applied, and since June 30, 1994 there has been no material adverse change
in such condition or operations.
(f) There is no pending or threatened action or proceeding affecting
it or any of its Subsidiaries before any court, governmental agency or
arbitrator, which may materially adversely affect the financial condition
or operations of such entity.
(g) No proceeds of any Advance will be used to acquire any security in any
transaction
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 5 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- -------------------------------------------------------------------------------
which is subject to Sections 13 and 14 of the Securities Exchange Act of
1934, and no proceeds of any Advance will be used to purchase or carry any
margin stock (as defined in Regulation U of the Board of Governors of the
Federal Reserve System) or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
11. Financial Statements. Applicable banking regulations and our own internal
--------- ----------
policies require us to maintain on file credit information sufficient for an
adequate appraisal of our assets. Accordingly, it is hereby agreed that you
will provide to us, as soon as they become available, your audited annual
and semi annual consolidated financial statements including, without limitation,
consolidated balance sheets and statements of income and changes in
financial position.
12. Covenants. So long as any of the Advances or other extensions of credit
---------
shall remain outstanding, the Borrower will ensure that at all times its
obligations under this Letter Agreement constitute its unconditional
general obligations ranking at least pari passu with all its other
---- -----
obligations for money borrowed (or contingent obligations in respect
thereof). Likewise, so long as any of the Advances or other extensions of
credit made by any creditor other than the Bank is guaranteed, supported or
in any way secured by whatever means other than by means of the guarantees
of the Parent, the Borrower shall at its expense also secure or cause to be
ratably guaranteed, supported or secured, as the case may be, any
indebtedness under this Note by such means, causing it to be ranked at
least pari passu with all other debt thereby guaranteed, supported or secured;
---- -----
13. Events of Default. Upon the occurrence of any of the events listed on
------ -- -------
Attachment 4 as "Events of Default", our Commitment shall automatically
------ -- -------
terminate and the Bank may declare the Note and all Advances, interest
thereon and all other amounts then outstanding hereunder to be, and in the
case of an Event of Default specified in Paragraph 6 of said Attachment the
same shall automatically be, immediately due and payable, without
presentment, demand, protest or further notice of any kind, the same being
hereby expressly waived by you, whereupon all such Advances, interest and
amounts shall be immediately due and payable.
14. Costs and Expenses. The Borrower agrees to pay on demand all losses,
----- --- --------
costs and expenses, if any, of the Bank in connection with the enforcement
of this Letter Agreement and the Note including, without limitation, the
reasonable fees and out-of-pocket expenses of legal counsel for the Bank.
15. Binding Effect and Severability. This Letter Agreement and the Note
------- ------ --- ------------
shall be binding upon and inure to the benefit of both parties hereto and
their respective successors and assigns, provided that the Borrower shall
not have the right to transfer any of its rights or obligations hereunder
without the Bank's prior written consent. If any provision of this Letter
Agreement or the Note shall be held to be invalid or unenforceable, in
whole or in part, neither the validity nor the enforceability of the
remainder hereof or thereof shall in any way be affected. Nothing
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 6 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
herein shall prohibit the Bank from pledging or assigning the Note to any
Federal Reserve Bank in accordance with applicable law.
16. Governing Law and Jurisdiction. This Letter Agreement and the Note shall be
--------- --- --- ------------
governed by and construed in accordance with the law of the State of New York.
Place of jurisdiction for both parties shall be the State and Federal courts
sitting in New York City, New York, to the jurisdiction of which you hereby
irrevocably submit.
Kindly express your agreement to the foregoing terms by returning to us the
attached copy of this Letter Agreement, duly signed.
We appreciate this opportunity to be of service to your fine company and
look forward to a long and mutually beneficial relationship.
Very truly yours,
C O M M E R Z B A N K
Aktiengesellschaft
Los Angeles Branch
/s/ Christian Jagenberg /s/ Steven F. Larsen
Christian Jagenberg Steven F. Larsen
SVP and Manager Vice President
AGREED AND ACCEPTED:
COBE LABORATORIES, INC.
By: /s/ George L. Garcia
--------------------------------
Name: George L. Garcia
Title: Corporate Controller
By: /s/ Herbert S. Lawson
--------------------------------
Name: Herbert S. Lawson
Title: Vice Pres., CFO
Date: 5/12/95 , 1995
--------------
[ COMMERZBANK "LETTERHEAD" ]
April 28, 1995
SL/mm
Cobe Laboratories, Inc,
1185 Oak Street
Lakewood, CO 80215
Attention: Mr. Sandy Lawson
Vice President/Treasurer
U.S. $ Line of Credit Facility
Dear Mr. Lawson:
We, Commerzbank Aktiengesellschaft (the "Bank"), acting through our respective
----
Lending Offices (this term and certain other capitalized terms used herein are
defined on Attachment 2), are pleased to confirm that, on the terms and
conditions set forth herein, we hold available to Cobe Laboratories, Inc., a
Colorado corporation, (the "Borrower"), a line of credit (the "Line of Credit")
-------- ---- -- ------
in the aggregate principal amount at any time outstanding to the Borrower not
exceeding
USD 5,000,000.00
(USD FIVE MILLION)
until further notice.
This letter agreement ("Letter Agreement") is not a commitment to lend but
------ ---------
rather set forth options for loans or other extensions of credit which we
may, in our sole discretion, make available to the Borrower and the terms
of the Borrower's obligations to us in the event that any such credit is
made available hereunder. We shall have the right to notify the Borrower
orally or in writing at any time if, in our sole discretion, loans or
other extensions of credit are no longer available hereunder or we have
otherwise reduced the amount, or restricted the availability, of the Line
of Credit, but no such notice shall affect the Borrower's obligations or
our rights hereunder with respect to loans or other credits outstanding
at the time of such notice.
The availability of any credit hereunder to the Borrower shall be subject
to, among other conditions, the receipt by the Bank, and the continued
effectiveness at all times hereunder, of
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 2 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
a letter of comfort (the "Letter of Comfort") executed by Gambro AB, a
------ -- -------
company organized under the law of Sweden, in favor of the Bank in form
and substance satisfactory to the Bank.
Options
- -------
Eurodollar Rate Option: Eurodollar Rate Loans under the Line of Credit may
- ---------- ---- -------
be made at the Eurodollar Lending Office in minimum principal amounts of
USD 500,000.00 and in integral multiples of USD 100,000.00 for fixed
Interest Periods as selected by the Borrower and agreed to by the Bank. The
principal amount of each Eurodollar Rate Loan shall be repaid on the last
day of the Interest Period therefor or, if earlier, upon our DEMAND, in
each case with accrued interest. The interest rate per annum for each
Eurodollar Rate Loan will be negotiated not later than two Business Days
prior to the requested drawdown on the basis of the Eurodollar Rate.
Interest for any Interest Period longer than three months shall also be
payable on the last day of each calendar quarter after such loan is made.
Prime Rate Option: Prime Rate Loans under the Facility may be made
- ----- ---- -------
available at the Domestic Lending Office either for an agreed-upon period
or without a fixed maturity date, as the parties may agree, at an interest
rate equal to our fluctuating Prime Rate. The principal amount of any
Prime Rate Loan shall be repaid on the earlier of any agreed-upon maturity
date and may be repaid, in whole or in part, on any earlier date selected
by the Borrower, in each case with accrued interest on the principal
amount repaid. Interest shall also be payable on the last day of each
calendar quarter on any Prime Rate Loan then outstanding.
Additionally, the following terms and conditions will apply to the Line of
Credit:
1. Note. Your indebtedness under the Line of Credit shall be evidenced by
----
the Note in the principal amount of USD 5,000,000.00.
2. Borrowing Procedure. Loans may be made at your request upon notice to us
--------- ----------
made by telephone, telex or letter, and we shall be entitled to rely upon
any such request which we believe in good faith has been made by an officer
or other person authorized to borrow on the Borrower's behalf. We will
confirm each loan by sending you a confirmation containing the relevant
terms and conditions, which confirmation shall constitute a supplement to
and be part of this Letter Agreement. You agree to confirm the terms of each
loan by returning to the Bank a signed copy of the respective confirmation,
but notwithstanding such confirmation, you shall be deemed to have incurred
indebtedness from the Bank, on terms and conditions set forth herein, in a
principal amount equal to any credit made to any of your accounts with us or,
if you have no account with us, equal to any amount transferred by us on your
behalf. Each confirmation or other document or instrument executed in
connection with this Letter Agreement shall be signed on your behalf by
individuals duly authorized for such purposes by your borrowing resolution
most recently delivered to us.
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 3 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
3. Interest. Interest shall be calculated on the exact number of days elapsed
--------
based on a year of 360 days. Any amount of principal or, to the extent
permitted by law, interest on any loan hereunder which is not paid when due
shall bear interest until paid in full at a rate per annum equal to 2% above
the Prime Rate.
4. Prepayment. You may, on at least two Business Days' notice, prepay any
----------
loan in whole or in part with accrued interest to the date of prepayment on
the amount prepaid, provided that if due to any such prepayment, or any other
prepayment made by you hereunder (including without limitation prepayment
made upon our demand), we receive payment of principal of any loan other
than on the last day of the Interest Period (if any) therefor, you agree
to compensate us upon our demand for any applicable Prepayment Costs.
5. Payments and Notices. All payments of principal and interest hereunder
-------- --- -------
shall be made in immediately available funds to the Federal Reserve Bank
of New York, for the account of Commerzbank Aktiengesellschaft, New York
Branch, ABA no. 026-008-044, reference Cobe Laboratories, Inc., Account
No. 123-1004704, for the account of the respective Lending Office.
If any payment becomes due hereunder or under the Note, or any Interest
Period for a loan would otherwise end, on a day which is not a Business Day,
then such payment shall be made, and such Interest Period shall end, on the
next succeeding Business Day and such extension of time shall be included
in the computation of interest due, but if, in the case of a Eurodollar
Rate Loan, such payment or termination would occur in a new calendar
month then the same shall occur instead on the next preceding Business Day.
All notices and other communications hereunder shall be sent to you at your
above address, or by telefax to (303) 231-4957 or by telephone to (303)
239-2169 in each case Attention: Sandy Lawson/Denise Martinez and to the
Bank (subject to Paragraph 2 above) at 660 South Figueroa Street, Suite
1450, Los Angeles, CA 90017, or by telex to 678338 CBKLA UI or by telephone
to (213) 623-8223, in each case Attention: Corporate Banking I.
6. Increased Costs. If we shall determine that (a) due to any Legal Event,
--------- -----
there shall be any increase in our cost of funding, making or maintaining
any loan hereunder, or (b) due to any Legal Event regarding capital
adequacy, the rate of return on our Bank's capital shall be reduced, as a
consequence of any extension of credit hereunder, to a level below that
which we could have achieved but for such Legal Event, then and in any
such event you shall have the option of either (i) paying to us an amount
necessary to compensate us for such increased cost and/or reduction or
(ii) prepaying the principal amount of the relevant loan plus accrued
interest to the date of prepayment, together with any applicable
Prepayment Costs.
7. Financial Statements. Applicable banking regulations and our own
--------------------
internal policies require
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 4 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
us to maintain on file credit information sufficient for an adequate appraisal
of our assets. Accordingly, it is hereby agreed that you will provide to us,
as soon as they become available, your annual and semiannual consolidated
financial Statements including, without limitation, consolidated balance
sheets and statements of income and changes in financial position.
8. Costs and Expenses. Each Borrower agrees to pay on demand all losses,
----- --- --------
costs and expenses, if any, of the Bank in connection with the enforcement
of this Letter Agreement and the Note including, without limitation, the
reasonable fees and out-of-pocket expenses of legal counsel for the Bank.
9. Binding Effect and Severability. This Letter Agreement and the Note shall
------- ------ --- ------------
be binding upon and inure to the benefit of both parties hereto and their
respective successors and assigns, provided that the Borrower shall not
have the right to transfer any of its rights or obligations hereunder
without the Bank's prior written consent. If any provision of this Letter
Agreement or the Note shall be held to be invalid or unenforceable, in whole
or in part, neither the validity nor the enforceability of the remainder
hereof or thereof shall in any way be affected. Nothing herein shall
prohibit the Bank from pledging or assigning the Note to any Federal Reserve
Bank in accordance with applicable law.
10. Governing Law and Jurisdiction. This Letter Agreement and the Note shall
--------- --- --- ------------
be governed by and construed in accordance with the law of the State of New
York. Place of jurisdiction for the parties shall be the State and Federal
courts sitting in New York City, New York, to the jurisdiction of which
you hereby irrevocably submit.
Kindly express your agreement to the foregoing terms by returning to us (1)
the attached copies of this Letter Agreement and the execution copy of the
Note, each duly signed, (2) corporate resolutions of the Borrower
evidencing the authority of the individuals executing this Letter Agreement,
the Note and other documents hereunder, and (3) an incumbency certificate
certifying the names and true signatures of such individuals authorized
to sign this Letter Agreement, the Note and any other documents to be
delivered hereunder.
We appreciate this opportunity to be of service to your fine company and
look forward to a long and mutually beneficial relationship.
Very truly yours,
C O M M E R Z B A N K
Aktiengesellschaft
Los Angeles Branch
/s/ Christian Jagenberg /s/ Steven F. Larsen
Christian Jagenberg Steven F. Larsen
SVP and Manager Vice President
<PAGE>
[ COMMERZBANK "LETTERHEAD" ]
page 5 of letter dd. April 28, 1995 to Cobe Laboratories, Inc.
- --------------------------------------------------------------------------------
AGREED AND ACCEPTED
COBE LABORATORIES, INC.
By: /s/ George L. Garcia
--------------------------------
Name: George L. Garcia
Title: Corporate Controller
By: /s/ Herbert S. Lawson
--------------------------------
Name: Herbert S. Lawson
Title: Vice Pres., CFO
Date: 5/12/95 , 1995
--------------
EXHIBIT (b)(6)
January 7, 1991
Cobe Laboratories, Inc.
Golden Hill Office Center
12600 W. Colfax Avenue
Building C, Suite 500
Lakewood, Colorado 80215-3736
Re: $5,000,000 Uncommitted Revolving Credit Facility
----------------------------------------------------
Gentlemen:
It is a pleasure for us to confirm to you that,
pursuant to the terms and conditions of this Agreement, we are
placing at your disposal an uncommitted revolving credit
facility in the amount of Five Million Dollars (U.S.
$5,000,000).
1. DEFINITIONS
-----------
(a) Defined terms: As used in this Agreement, the
-------------
following terms have the respective meanings assigned thereto:
"Agreement" means this letter agreement and
---------
all schedules and exhibits attached hereto, as they
may be amended, supplemented or otherwise modified
from time to time.
"Borrowings" means any amounts outstanding
----------
under the Facility, whether in respect of Eurodollar
Borrowings or Foreign Exchange Contracts.
"Business Day" means any day other than a
------------
Saturday, Sunday or any day on which commercial banks
in New York, New York are authorized or obligated by
law to close.
"Dollars" or "$" means the lawful currency of
------- -
the United States of America.
"Domestic Dollar Borrowings" means any
--------------------------
borrowings under the Facility made pursuant to Section
4.1 of this Agreement.
"Eurodollar Borrowings" means any borrowings
---------------------
under the Facility made pursuant to Section 4.2 of
this Agreement.
-1-
<PAGE>
"Effective Date" shall have the meaning
--------------
attributed to it in Section 6 of this Agreement.
"Event of Default" means any event specified
----------------
in Section 9 of this Agreement.
"Facility" means the credit available to you,
--------
pursuant to the terms set forth in this Agreement for
Borrowings.
"Federal Bankruptcy Laws" means the Bankruptcy
-----------------------
Reform Act of 1978, as amended by the Bankruptcy
Amendments and Federal Judgeship Act of 1984, and all
of the Rules of Bankruptcy Procedure, as any or all of
the foregoing may hereafter be amended, supplemented
or otherwise modified.
"Federal Funds Rate" shall have the meaning
------------------
attributed to it in the second paragraph of Section
4.1(c) of this Agreement.
"Foreign Exchange Contract" shall have the
-------------------------
meaning attributed to it in Section 4.2 of this
Agreement.
"Interest Period" shall have the meaning
---------------
attributed to it in Section 4.1(b) of this Agreement.
"Interest Period Conventions" means the
---------------------------
following:
(a) if any Interest Period would
otherwise expire on a day which is not a Business Day,
such Interest Period shall expire on the next
succeeding Business Day, provided that if any Interest
Period in respect of a Eurodollar Borrowing would
otherwise expire on a day which is not a Business Day
but is a day of the month after which no further
Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business
Day:
(b) any Interest Period in respect of a
Eurodollar Borrowing which begins on the last Business
Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on
the last Business Day of a calendar month;
(c) no Interest Period shall extend
beyond the Termination Date.
"Loan Documents" shall have the meaning
--------------
attributed to it in Section 6(a) of this Agreement.
-2-
<PAGE>
"Note" shall have the meaning attributed to it
----
in Section 3 of this Agreement.
"Prime Rate" shall have the meaning attributed
----------
to it in Section 4.1(c) of this Agreement.
"Termination Date" shall have the meaning
----------------
attributed to it in Section 2 of this Agreement.
(b) Accounting Terms: All accounting terms
----------------
(whether or not capitalized) used but not defined in this
Agreement shall be construed in accordance with generally
accepted accounting principles in the United States.
2. AMOUNT AND AVAILABILITY
-----------------------
We may, on the terms and conditions of this
Agreement, make Eurodollar Borrowings to you and enter Foreign
Exchange Contracts with you from time to time and in such
amounts as you shall request, up to but not exceeding Five
Million Dollars ($5,000,000) in the aggregate at any time
outstanding. The Facility is available for Eurodollar
Borrowings and Foreign Exchange Contracts. We may, in our
discretion, terminate this Facility upon 15 days prior notice to
you.
3. EVIDENCE OF INDEBTEDNESS
------------------------
All Borrowings under the Facility shall be
evidenced by your promissory note in the form of Exhibit A
attached to this Agreement (as the same may be amended,
supplemented or modified from time to time, the "Note"). All
Foreign Exchange Contracts shall be evidenced by the appropriate
deal tickets or confirmations. our records shall be sufficient
proof of your actual indebtedness to us. You hereby authorize
us to make notations of all Borrowings and repayments under the
Facility on the schedule attached to the Note. Such notations,
if made, shall be presumed correct unless the contrary is
established.
4. THE FACILITY
------------
4.1 EURODOLLAR BORROWINGS
---------------------
(a) Availability: Any Eurodollar Borrowings made
------------
shall be available for periods of, at your option, overnight to
six months (each such period shall be referred to as an
"Interest Period"), provided that matching deposits can be
obtained by us in the interbank Eurodollar market for the same
Interest Period. The availability of such deposit is to be
determined by us in good faith in our sole discretion.
(b) Operating Procedure: Each Eurodollar
-------------------
Borrowing shall be made on notice given to us in writing, or by
telephone to be confirmed promptly thereafter in writing, no
later than 11:00 A.M. (New York City time) on the day of the
-3-
<PAGE>
proposed Eurodollar Borrowing, specifying (i) the requested date
of such Eurodollar Borrowing; (ii) the Interest Period for the
Eurodollar Borrowing; and (iii) the amount of such Eurodollar
Borrowing.
(c) Interest: Upon our receipt of the notice
--------
specified in paragraph (b) above, we shall quote you the
interest rate which shall be equal to a rate per annum that is
the interbank Eurodollar market rate quoted to us for deposits
of a corresponding amount and duration plus a margin acceptable
to us at such time, which rate shall apply to the Eurodollar
Borrowing requested. If accepted by you by the close of
business that same Business Day, such rate shall be in effect
for the entire Interest Period selected. Interest on Eurodollar
Borrowings shall be payable on the last day of each Interest
Period (subject to the Interest Period Conventions) and, in
addition, in the case of Interest Periods of greater than three
months, at the end of each successive three-month period during
such Interest Period.
(d) Prepayments: Prepayments of principal are
-----------
not permitted prior to the end of an Interest Period, except as
provided in Sections 4.1(g) and 4.1(h) of this Agreement.
(e) Repayment: You shall have the option either
---------
to repay an outstanding Eurodollar Borrowing on the last day of
Eurodollar Borrowing for another Interest Period, provided that
you notify us in writing, or by telephone to be confirmed
promptly thereafter in writing, not later than two Business Days
prior to the last day of such Interest Period, whether you shall
repay such Eurodollar Borrowing or continue it for another
Interest Period and, if you elect to continue such Eurodollar
Borrowing, the duration of the Interest Period selected. The
giving of such notice shall be irrevocable and binding on you
and shall commit you to accept the interest rate established in
accordance with Section 4.1(c) of this Agreement. In the event
that we do not receive such notice within the time specified
above, the applicable Eurodollar Borrowing shall automatically
be converted into a Borrowing which shall accrue interest at the
Prime Rate.
(f) Mandatory Prepayment: In the event that any
--------------------
change in any applicable law or regulation or in the
interpretation thereof by any governmental authority shall make
it unlawful for us to make or maintain any Eurodollar Borrowing,
you shall, upon notice to such effect from us, repay to us
within 30 days the aggregate unpaid principal amount of all
Eurodollar Borrowings, together with accrued interest thereon.
You shall also pay to us all out-of-pocket expenses and funding
costs incurred by us in connection with such prepayment and
compensate us for any loss suffered by us by reason of such
prepayment's not being made on the last day of an Interest
Period.
(g) Reserve Requirements: If at any time during
--------------------
-4-
<PAGE>
the term of this Agreement, any reserve, special deposit or
similar requirement against our assets, deposits with us or for
our account, or credit extended by us, shall be imposed on us,
or we shall be subject to any tax, duty or other charge with
respect to Eurodollar Borrowings, then at our sole discretion
the interest rate applicable to each Eurodollar Borrowing will
be subject to upward adjustment to compensate us for the cost
(as determined by us) of complying with the foregoing. In the
event of such adjustment, you shall have the right to prepay the
aggregate unpaid principal amount to all Eurodollar Borrowings,
together with accrued interest thereon. You shall pay to us all
out-of-pocket expenses and funding costs incurred in connection
with such prepayment and compensate us for any loss suffered by
reason of such prepayment's not being made on the last day of an
Interest Period.
(h) Inability to Determine Interest Rate: In the
------------------------------------
event what we shall have determined (which determination shall
be conclusive and binding upon you) that by reason of
circumstances affecting the interbank Eurodollar market,
adequate and reasonable means do not exist for ascertaining the
interest rate with respect to Eurodollar Borrowings for any
Interest Period, we shall forthwith give you telex or telecopier
notice of such determination, and no further Eurodollar
Borrowings shall be made until we shall have withdrawn such
notice. You may continue to borrow under the Facility at a rate
to be agreed upon by both parties.
4.2 FOREIGN EXCHANGE CONTRACTS
--------------------------
The Facility may be available for foreign
exchange contracts, whether spot or forward transactions with
maturities of up to one hundred eighty (180) days for the
purchase and sale of foreign currencies and options to purchase
and sell such currencies ("Foreign Exchange Contracts") in a
maximum aggregate amount of up to $2,000,000 and having a
maximum aggregate weighted risk of up to $200,000. Each Foreign
Exchange Contract shall be negotiated, and the conditions
thereof established, by us on a case-by-case basis. All amounts
paid by us and unreimbursed by you for unsettled or failed
Foreign Exchange contracts shall be deemed to be Borrowings
hereunder and interest shall accrue thereon at the rate and
shall be payable at the times specified in Section 5 hereof.
5. INTEREST AFTER DUE DATE
-----------------------
Interest on all Borrowings outstanding after
their due date (whether at their stated maturity, by
acceleration or otherwise) shall be immediately payable without
demand at a rate equal to two percent (2%) per annum in excess
of the Prime Rate, which interest shall accrue and be calculated
in accordance with the terms of this Agreement. The Prime Rate
shall change when and as such Prime Rate changes. The Prime
Rate is a reference rate and is not intended to be the lowest or
best rate actually charged to any customer. We may make
commercial or other loans at rates of interest at, above or
-5-
<PAGE>
below the Prime Rate.
In the event that for any reason the rate for
overnight Federal Funds, as published by the Federal Reserve
Bank of New York (the "Federal Funds Rate"), is greater than the
Prime Rate for any day, then the Prime Rate shall be deemed to
equal one and one-quarter percent (1-1/4%) in excess of the
Federal Funds Rate for each such day.
6. CONDITIONS PRECEDENT
--------------------
The availability of the Facility is subject to
the condition that there shall have been delivered to us, in
form and substance satisfactory to us and our counsel (the date
on which all such conditions shall have been met being the
"Effective Date"):
(a) Loan Documents: This Agreement, the Note and
--------------
all other instruments, agreements and documents required under
this Agreement (collectively, the "Loan Documents"), duly
executed by your authorized officers;
(b) Certificate of Incorporation and By-Laws: A
----------------------------------------
copy of your certificate of incorporation, certified by the
Secretary of State of the State of your incorporation, and of
your by-laws, certified by your Secretary or Assistant
Secretary;
(c) Good Standing Certificate: A good standing
-------------------------
certificate for you, certified by the Secretary of State of the
State of your incorporation, dated no later than thirty (30)
days prior to the date hereof;
(d) Corporate Resolutions: A copy of a resolution
---------------------
or resolutions adopted by your Board of Directors, in form and
substance satisfactory to us, certified by your Secretary or
Assistant Secretary as being in full force and effect on the
date of this Agreement, authorizing the Borrowings provided for
in this Agreement, the entry of the Borrower into Foreign
Exchange Contracts hereunder and the execution, delivery and
performance of the Loan Documents:
(e) Certificate of Incumbency: A certificate,
-------------------------
signed by your Secretary or Assistant Secretary and dated the
date of this Agreement, as to the incumbency of the person or
persons authorized on your behalf to execute and deliver the
Loan Documents, to give any notice of any borrowing requested
hereunder and to give any confirmation of any Foreign Exchange
Contract entered pursuant hereto;
(f) Letter: A letter from Gambro AB to us,
------
substantially in the form of Exhibit B attached to this
Agreement.
7. REPRESENTATIONS AND WARRANTIES
------------------------------
-6-
<PAGE>
You hereby represent and warrant to us that the
following statements are true and accurate as of the date of
your acceptance of this Agreement and shall be true and accurate
as of the date of any Borrowing or the entry of any Foreign
Exchange Contract hereunder, except as previously communicated
to, and approved by, us in writing:
(a) You are a corporation duly organized, validly
existing and in good standing under the laws of the state of
your incorporation; you are fully qualified to do business
wherever the nature of your business or the ownership or use of
your property requires such qualification; you have full
power and authority, corporate or otherwise, to enter into this
Agreement, to make the Borrowings contemplated by this Agreement
and to deliver the Loan Documents;
(b) Neither the execution and delivery of this
Agreement or any other Loan Document, nor compliance with the
provisions thereof will violate any law or regulation or any
order or decree of any court or governmental instrumentality, or
will conflict with, or result in the breach of, or constitute a
default under, any indenture, mortgage, deed of trust, agreement
or other instrument to which you are a party or by which you may
be bound, or result in the creation or imposition of any lien,
charge or encumbrance upon, any of your property thereunder, or
violate any provision of your Certificate of Incorporation,
By-laws or any preferred stock provisions;
(c) This Agreement and the other Loan Documents
constitute your valid and legally binding obligations,
enforceable against you in accordance with their terms;
(d) Except as set forth in the disclosure
statement attached hereto as Exhibit C, there are no pending or
threatened actions, suits or proceedings before any court,
arbitrator or governmental or administrative body or agency
which might result in any material adverse change in your
business, operations, properties or assets or in your condition,
financial or otherwise;
(e) You are not in default under any indenture,
mortgage, deed of trust, agreement or other instrument to which
you are a party;
(f) You have good and marketable title to all
your properties and assets, subject to no liens, mortgages,
pledges, security interests, encumbrances or charges of any
kind, except for (i) a mortgage in the amount of $2.6 million on
the former Gambro AB headquarters in Chicago, (ii) a mortgage in
the amount of $31,000 on the plant manager's home in Newport
News, Virginia and (iii) residual ownership interests in certain
equipment sold by the Borrower pursuant to capitalized leases;
(g) You have filed all tax returns which are
required to be filed, and have paid all taxes which have become
due pursuant to such returns or pursuant to any assessment
-7-
<PAGE>
received by you; and
(h) All information relative to you and your
financial condition furnished to us for the purpose of obtaining
the Facility is true and correct in all respects.
8. COVENANTS
---------
During the term of the Facility and until all of
your obligations and liabilities incurred under this Agreement
have been repaid in full.
(a) You shall, unless we shall give our prior
written consent otherwise:
(i) Furnish to us:
(A) within 90 days after the end of each of
your fiscal years, a copy of your
balance sheet as of the end of such
fiscal year and statements of income and
surplus account and of the source and
application of your funds for such
fiscal year, certified by independent
public accountants of recognized
standing acceptable to us;
(B) within 45 days after the end of each
six-month period during your fiscal
year, a copy of your balance sheet and
statement of income and surplus as of
the end of such period prepared in
accordance with generally accepted
accounting principles; and
(C) such other information respecting your
business, properties, condition or
operations, financial or otherwise, as
we may from time to time reasonably
request;
(ii) Notify us of:
(A) any material change in your business
which could impair your ability to repay
amounts outstanding under the Facility;
(B) the occurrence of any default, or any
event which, with the passage of time or
the giving of notice (or both), would
result in any default, in any mortgage,
indenture, instrument or agreement
(including, without limitation, this
Agreement) under which there may be
issued, or by which there may be
incurred or evidenced, any of your
-8-
<PAGE>
indebtedness for borrowed money; and
(c) all pending or threatened actions, suits
or proceedings before any court,
arbitrator or governmental or
administrative body or agency which
might result in any material adverse
change in your business, operations,
properties or assets or in your
condition, financial or otherwise;
(ii) Keep at all times books of records and
accounts in which full, true and correct entries shall be made
of all dealings and transactions in relation to your business
and affairs;
(iii) Maintain your corporate existence and
keep all property which is required for your ongoing operations,
business or condition (financial or otherwise) in good repair,
working order and condition;
(iv) Pay and discharge all taxes,
assessments and governmental charges or levies imposed upon you
or your income or profits, or upon any of your property, prior
to the date on which penalties attach thereto, unless you shall
contest in good faith and by proper proceedings the payment of
any such tax, assessment, charge or levy and you shall maintain
adequate reserves therefor;
(v) Keep all of your properties adequately
insured at all times with responsible insurance carriers against
loss or damage by fire and other hazards, maintain adequate
insurance at all times with responsible insurance carriers
against liability on account of damage to persons and property
and under all worker's compensation laws and maintain adequate
insurance covering such other risks as we may reasonably
request;
(vi) Allow us to visit and inspect any of
your properties, examine your books of account and other records
and files and make copies thereof, and to discuss your business
affairs and finances with your officers and employees, at such
reasonable times as we shall request; and
(vii) Comply with the requirements of all
applicable laws, rules, regulations and orders.
(b) You shall not, unless we shall give our prior
written consent otherwise, create, assume or incur, or permit or
suffer to exist or to be created, assumed or incurred, any lien,
mortgage, pledge, attachment or encumbrance upon any of your
properties or assets, whether now owned or hereafter acquired, except
for those created by COBE Laboratories, Inc., a wholly-owned subsidiary,
in the normal course of business.
9. EVENTS OF DEFAULT
-----------------
If any of the following events (each an "Event of
-9-
<PAGE>
Default") shall occur:
(a) If you shall default in the payment of any
principal or accrued interest on the Note or any other amount
payable under a Foreign Exchange Contract or under any of the
Loan Documents;
(b) If you shall default in the due performance
and observance of any provision contained in this Agreement or
any other Loan Document;
(c) If any representation or warranty made by you
in this Agreement or any other Loan Document, or any statement
in any certificate, schedule, financial statement, or other
instrument furnished to us in accordance with the provisions of
this Agreement or any other Loan Document, shall prove to have
been untrue in any material respect when made or given;
(d) If you Shall default under any agreement or
instrument creating or evidencing any obligation to you, direct
or contingent, for the payment of borrowed money, which default
would permit the acceleration of any such obligation;
(e) If you shall:
(i) apply for or consent to the appointment
of, or the taking of possession by, a
receiver, custodian, trustee or
liquidator of all or any substantial
part of your assets or voluntarily
terminate your operation;
(ii) be unable, or admit in writing your
inability, to pay your debts as they
mature;
(iii) make a general assignment for the
benefit of creditors;
(iv) be adjudicated bankrupt or insolvent; or
(v) file a voluntary petition in bankruptcy
or a petition or an answer seeking
reorganization or an arrangement with
creditors or to take advantage of any
insolvency law or an answer admitting
the material allegations of a petition
filed against you in any bankruptcy,
reorganization or insolvency proceeding;
or take any action for the purpose of
effecting any of the foregoing;
(f) If an order, judgment or decree shall be
entered by any court of competent jurisdiction, approving a
petition seeking your reorganization or appointing a receiver,
trustee or liquidator of all or any substantial part of your
-10-
<PAGE>
assets or an order for relief under the Federal Bankruptcy Laws
or any similar law shall have been entered against you;
(g) If a proceeding shall be instituted in any
court of competent jurisdiction seeking your adjudication in
bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with your creditors, a
re-adjustment of your debts, the appointment of a trustee,
receiver, custodian, liquidator or the like of all or any
substantial part of your assets, or other like relief under any
bankruptcy or insolvency law and, if such proceeding is being
contested by you in good faith, the same shall continue
undismissed or unstayed and in effect for any period of 30
consecutive days;
(h) If there shall be entered against you one or
more judgments or decrees, all or any significant part of which
are uninsured, which judgments or decrees have not been paid,
vacated, discharged, stayed or bonded pending appeal within 30
days from the entry thereof; or
(i) If there shall occur, as determined by us in
our sole discretion, any material adverse change in your
condition (financial or otherwise) which might render you unable
to perform your obligations under this Agreement in accordance
with their terms;
THEREUPON, in the case of any such Event of Default,
the availability of the Facility shall thereupon terminate, and
the principal of, and any accrued interest on the Note and all
other amounts due and payable hereunder, shall automatically,
without any action on our part and without notice to you and
without protest, presentment or demand, all of which are hereby
expressly waived by you, become immediately due and payable.
10. CHANGES IN CAPITAL REQUIREMENTS
-------------------------------
If after the date hereof, we shall have determined
that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein or any change
in the interpretation or administration thereof, by any
governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
compliance by us with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have
the effect of reducing our rate of return on our capital as a
consequence of our obligation hereunder to a level below that
which we could have achieved but for such adoption, change or
compliance (taking into consideration our policies with respect
to capital adequacy) by an amount deemed by us to be material,
then from time to time, within 15 days after demand by us, you
shall pay to us such additional amount or amounts as will
compensate us for such reduction. We will promptly notify you
of any event of which we have knowledge, occurring after the
date hereof, which will entitle us to such compensation.
-11-
<PAGE>
11. MISCELLANEOUS
-------------
(a) No waiver; Cumulative Remedies: No failure
------------------------------
or delay on our part, or on the part of any other holder of the
Note in exercising any right, power or remedy under this
Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The remedies
provided in this Agreement are cumulative and not exclusive of
any remedies provided by law.
(b) Payments, Interest and Taxes:
-----------------------------
(i) All payments of principal and interest
and other amounts payable under this
Agreement and the other Loan Documents
shall be made to us at 50 Rockefeller
Plaza, New York, New York 10020, in
immediately available funds.
(ii) All interest payments to be made
hereunder shall be computed for the
exact number of days elapsed on the
basis of a 360-day year. Interest shall
be calculated to include the first, but
not the last day, of an Interest Period.
(iii) All payments under this Agreement and
the other Loan Documents shall be made
without setoff or counterclaim and
without deduction for any present or
future taxes, levies, imposts, charges
or withholdings (collectively, "Taxes").
If you shall be required by law to
deduct any Taxes from or in respect of
any sum payable under this Agreement or
any other Loan Document, (x) the sum
payable shall be increased so that we
receive an amount equal to that which we
would have received had no deduction
been made and (y) you shall pay the full
amount deducted to the appropriate
authority in accordance with applicable
law.
(c) Addresses for Notices, etc.: Except as
---------------------------
provided otherwise in this Agreement, all notices, requests,
demands and other communications provided for under this
Agreement shall be in writing (including teletransmissions) and
shall be deemed delivered when sent if delivered by hand or
teletransmitted or, if mailed, three Business Days after
mailing, and all mailed notices shall be by registered mail,
postage prepaid, to the appropriate party or parties at the
address or addresses appearing on the signature pages hereof,
-12-
<PAGE>
or, as to each party, at such other address as shall be
designated by such party in written notice to the other party,
complying as to delivery with the terms of this Section 11(c).
(d) Jurisdiction: You agree to submit to the
------------
jurisdiction of all federal and state courts located in the
State of New York for any legal proceeding arising from this
Agreement or any other Loan Document and consent that personal
jurisdiction may be obtained over you by mailing a summons by
registered mail or certified mail, return receipt requested,
within or without such court's jurisdiction, or by personal
service, provided a reasonable time for appearance is allowed.
(e) Modifications: No modification or waiver of
-------------
any provision in this Agreement or any other Loan Document and
no consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by us
and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given.
(f) Maximum Interest Rate: No provision of this
---------------------
Agreement or any other Loan Document shall require the payment,
or permit the collection, of any interest in excess of the
highest rate permitted by applicable law.
(g) Survival of Agreements: All covenants,
----------------------
representations, warranties and other agreements made in this
Agreement or any other Loan Document and any certificates
delivered in connection therewith shall survive any Borrowings
under the Facility and shall continue in full force and effect
so long as any amount owing under any of the Loan Documents is
outstanding and unpaid or this Agreement remains in effect.
(h) Severability: Any provision of this
------------
Agreement that is prohibited or unenforceable in any
jurisdiction shall be ineffective only in such jurisdiction to
the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement.
(j) Costs and Expenses: You agree to pay to us
------------------
all costs and expenses (including reasonable attorneys' fees and
disbursements) arising from or incidental to the enforcement against
you or any other person of any provision of
-13 -
<PAGE>
this Agreement or any other Loan Document.
(k) Successors and Assigns: This Agreement shall
----------------------
be binding upon and inure to the benefit of us and you and all
future holders of the Note, and their respective successors and
assigns, except that you may not assign or transfer your rights
or obligations under this Agreement without our prior written
consent.
(l) Governing Law: This Agreement and all other
-------------
Loan Documents shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New
York.
We are pleased to offer you this Facility. If the
terms and conditions specified above are acceptable to you,
please indicate your acceptance thereof by signing and returning
to us the attached copy of this Agreement, whereupon this
Agreement shall become a binding agreement between us.
Very truly yours,
SOCIETE GENERALE,
NEW YORK AND GRAND CAYMAN BRANCHES
By
-----------------------------
Name:
Title:
Address for notices:
50 Rockefeller Plaza
New York, New York 10020
Attention:
-------------------
Telex:
---------------------
Telecopier:
-------------------
AGREED AND ACCEPTED:
COBE LABORATORIES
By: /s/ James C. Brod
---------------------------
Name: James C. Brod
---------------------------
(Printed or typed)
-14-
<PAGE>
Title:
---------------------------
Date:
---------------------------
Address for notices:
1185 Oak St
- ---------------------------------
Lakewood, CO 80215-4407
- ---------------------------------
Attention: Corporate Controller
----------------------
Telex:
---------------------------
Telecopier: (303) 239-2040
----------------------
/s/ Ronald Plusk
VP CFO
-15-
<PAGE>
EXECUTION COPY
SECOND AMENDMENT TO LETTER AGREEMENT
-------------------------------------
SECOND AMENDMENT dated November 20, 1992, (this
--
"Amendment") to Letter Agreement dated as of January 7, 1991, as
amended by Amendment No. 1 dated June 17, 1991 (the "Agreement"),
between Cobe Laboratories, Inc. (the "Borrower") and Societe
Generale, New York Branch (the "Bank"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings
assigned to such terms in the Letter Agreement referred to below.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Agreement, the Bank agreed to
provide the Borrower with an uncommitted revolving credit facility in
the amount of Five Million Dollars (U.S. $5,000,000) (the
"Facility"); and
WHEREAS, the Borrower and the Bank wish to amend the
Agreement as herein provided;
NOW, THEREFORE, the parties hereto agree as follows:
1. Amendments to the Agreement.
---------------------------
On the Amendment Effective Date (as hereinafter defined),
the Agreement shall be amended as follows:
(1) The reference at the beginning of the Agreement shall
be amended by deleting the amount "$5,000,000" and inserting in lieu
thereof the amount "$10,000,000".
(2) The preamble to the Agreement shall be amended by
deleting the amount "Five Million Dollars (U.S. $5,000,000)" and
inserting in lieu thereof the amount "Ten Million Dollars (U.S.
$10,000,000").
(3) Section 10, line 10 shall be amended by adding after
the words "the effect of" the words "increasing the amount of capital
that we must maintain or" Section 10, line 17 shall be amended by
deleting "such reduction." as well as the last sentence and inserting
in lieu thereof:
"the cost of such additional capital or reduced rate of
return. We shall furnish you with certificate as to the
amount of any such cost or reduced rate of return, which
certificate, absent manifest error, shall be final,
conclusive and binding for all purposes."
<PAGE>
2. Effectiveness.
-------------
This Amendment shall become effective on the date (the
"Amendment Effective Date") when (i) this Amendment shall have been
signed by the parties hereto, (ii) the Borrower shall have executed
and delivered to the Bank (a) a new Promissory Note (the "New Note")
in the form of Exhibit A attached hereto, (b) a copy of a resolution
or resolutions adopted by the Borrower's Board of Directors, in form
and substance satisfactory to the Bank, certified by the Borrower's
Secretary or Assistant Secretary as being in full force and effect,
authorizing the execution, delivery and performance of this Amendment
and the New Note and a related incumbency certificate, executed by
the Borrower's Secretary or Assistant Secretary, (c) a new Letter of
Comfort from Gambro AB and (d) a favorable opinion by the Borrower's
counsel (who shall be satisfactory to the Bank), substantially in the
form of Exhibit B attached hereto.
3. Representations and Warranties.
------------------------------
In order to induce the Bank to amend the Agreement as
provided for in this Amendment, the Borrower confirms, reaffirms and
restates its representations and warranties set forth in the
Agreement.
4. Reference to and Effect on the Agreement.
----------------------------------------
4.1. Upon the effectiveness of this Amendment, (i) each
reference in the Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import shall mean and be a
reference to the Agreement as amended hereby and (ii) each reference
in the Agreement to "the Note" shall be deemed to be a reference to
the New Note.
4.2. Except as specifically amended above, all of the
terms of the Agreement shall remain unchanged and in full force and
effect.
4.3. The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, constitute
a waiver of any provision of the Agreement.
5. Governing Law.
-------------
This Amendment and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance
with the laws of the State of New York.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered as of the date first
written above.
COBE LABORATORIES, INC.
/s/ George L. Garcia By: /s/ Herbert S. Lawson
-------------------------------
GEORGE L. GARCIA Name: HERBERT S. LAWSON
CORP. CONTROLLER Title: VICE PRESIDENT
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/ Jean-Claude Luu Van Lang
-------------------------------
Name: JEAN-CLAUDE LUU VAN LANG
Title: VICE PRESIDENT
-3-
<PAGE>
EXECUTION COPY
PROMISSORY NOTE
$10,000,000 November 20, 1992
--
New York, New York
FOR VALUE RECEIVED, the undersigned, Cobe
Laboratories, Inc. (the "Borrower"), hereby unconditionally
promises to pay to the order of Societe Generale, New York
Branch (the "Bank"), on demand, at the Bank's office located at
50 Rockefeller Plaza, New York, New York 10020, in immediately
available funds, the principal sum of Ten Million Dollars
($10,000,000) or the unpaid principal amount of all Borrowings
by the Borrower from the Bank pursuant to the Agreement (as
hereinafter defined), whichever is less. All payments of
principal of the outstanding amounts of all Borrowings evidenced
by this Note shall be made, on the dates and in the manner
specified in the Agreement.
The Borrower hereby further promises to pay interest
in like money and funds on the daily outstanding balance of each
such Borrowing for the period commencing on the date of each
such Borrowing until repaid in full, at the rate, on the dates
and in the manner specified in the Agreement.
The Bank is authorized to make notations of all
Borrowings made by the Borrower from the Bank pursuant to the
Agreement and all repayments of the outstanding principal
amounts and accrued interest on such Borrowings on the schedule
attached to and made a part of this Note. Such notations, if
made, will be presumed correct unless the contrary is
established.
If this Note becomes due and payable on any day other
than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day and interest shall be payable
on such outstanding amount at the rate specified in the
Agreement during such extension.
This Note is the note referred to in that certain
letter agreement dated January 7, 1991, as amended by an
Amendment No. 1 dated June 17, 1991 and a Second Amendment to
Letter Agreement dated November , 1992 (as so amended, the
--
"Agreement"), between the Borrower and the Bank, which provides
for the prepayment of this Note on certain events, the
acceleration of its maturity and other terms and conditions
relating to this Note, all of which are herein incorporated by
reference.
<PAGE>
In addition to all principal and accrued interest on
this Note, the Borrower agrees to pay (a) all reasonable costs
and expenses incurred by all of the holders of this Note in
collecting this Note, whether through probate, reorganization,
bankruptcy or other proceedings; and {b) reasonable attorneys'
fees when and if this Note is placed in the hands of an attorney
for collection.
Presentment, demand, protest and notices of any kind
with respect to this Note are hereby expressly waived by the
Borrower.
Capitalized terms used but not defined in this Note
shall have the meanings attributed to them in the Agreement.
This Note and the rights and obligations of the
parties under this note shall be governed by, and construed and
interpreted in accordance with, the law of the State of New
York.
COBE LABORATORIES, INC.
/s/ George L. Garcia By: /s/ Herbert S. Lawson
-------------------------------
(Signature)
GEORGE L. GARCIA Name: HERBERT S. LAWSON
-------------------------
(Printed or typed)
CORP. CONTROLLER Title: VICE PRESIDENT
------------------------
-2-
<PAGE>
Schedule to Promissory Note of
Cobe Laboratories, Inc. dated November __, 1992
Date of Principal Maturity Interest Payment
Borrowing Amount Date Rate Date Amount
- --------- --------- -------- -------- ------- ------
scp-3945
<PAGE>
EXECUTION
COPY
AMENDMENT NO. 1
AMENDATORY AGREEMENT, dated as of June 17, 1991, by and
--
between Cobe Laboratories, Inc., a Colorado corporation (the
"Borrower"), and Societe Generale, a French bank acting through
its New York Branch (the "Bank").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Borrower and the Bank are party to a letter
agreement in connection with an uncommitted revolving credit
facility, dated as of January 7, 1991 (said letter agreement,
as it may hereafter be amended or otherwise modified from time
to time, being the "Loan Agreement", and the terms defined
therein and not otherwise defined herein being used herein as
therein defined); and
WHEREAS, the Borrower and the Bank wish to amend the
Loan Agreement upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, it is
hereby agreed by the parties as follows:
SECTION 1. Section 1(a) of the Loan Agreement is hereby
amended by the addition of the following definition:
"Revolving Credit and Term Loan Facility" means
---------------------------------------
the Revolving Credit and Term Loan Facility, dated December 21,
1990, between Gambro AB, as the Parent and Cobe Laboratories,
Inc., as a Borrower, arranged by Skandinaviska Enskilda Banken
Capital Markets, as Arranger, and Credit Suisse First Boston
Limited and Nordbanken, as Co-Arrangers, and Skandinaviska
Enskilda Banken, as Agent.
SECTION 2. Section 8(b) of the Loan Agreement is hereby
amended to read in its entirety as follows:
(b) You shall not, unless we shall give our
prior written consent otherwise, create, assume or incur, or
permit or suffer to exist or to be created, assumed or
incurred, any lien, mortgage, pledge, attachment or encumbrance
upon any of your or your subsidiaries' properties or assets,
whether now owned or hereafter acquired, except as follows:
(i) liens set forth in Section 7(f); and
(ii) any lien, mortgage, pledge, attachment,
encumbrance or security interest expressly permitted by Clauses
20.8(b) and 20.9 of the Revolving Credit and Term Loan
Facility.
<PAGE>
SECTION 3. The Borrower agrees to pay all costs and
expenses of the Bank in connection with the preparation,
execution and delivery of this Amendatory Agreement.
SECTION 4. This Amendatory Agreement shall become
effective when it shall have been executed by the Borrower and
the Bank and thereafter shall be binding upon and inure to the
benefit of the Borrower and the Bank and their perspective
successors and assigns, except that the Borrower may not assign
or transfer its rights hereunder or any interest herein without
the prior written consent of the Bank. The Loan Agreement and
all representations and warranties thereunder, as amended by
this Amendatory Agreement, are hereby ratified, approved,
restated and confirmed in full force and effect. From and
after the date hereof, all references in any document or
instrument to the Loan Agreement shall mean and include the
Loan Agreement as amended by this Amendatory Agreement.
SECTION 5. This Amendatory Agreement may be executed in
any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and
delivered, shall be deemed to be an original and all of which
taken together shall constitute but one and the same
instrument.
SECTION 6. THIS AMENDATORY AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES
THEREOF REGARDING CONFLICTS OF LAW.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
COBE LABORATORIES, INC.
By: /s/ Ronald F. Plusk
---------------------------------
Name: Ronald F. Plusk
Title: Vice President
SOCIETE GENERALE,
NEW YORK BRANCH
By: /s/ Jean-Claude Luu Van Lang
---------------------------------
Name: Jean-Claude Luu Van Lang
Title: Vice President
drh-300
<PAGE>
["GENERALE" LOGO]
SOCIETE GENERALE
50 ROCKEFELLER PLAZA
NEW YORK, NY 10020
212 830 6966
FAX 212 581 8422
PASCAL C. PINSON TELEX: 428802
ASSISTANT VICE PRESIDENT CABLES: SOCIEGEN
SWIFT: SOGEUS33
January 13, 1994
Mr. Herbert S. Lawson
Vice President & Treasurer
COBE Laboratories Inc.
1185 Oak St.
Lakewood, CO 80215
Dear Sandy,
Reference is made to the following lines available to Cobe
Laboratories Inc. with our Bank:
- $5,000,000 committed Short-term line,
- $10,000,000 uncommitted Short-term line.
As requested by you during my visit to your company last
Monday in Lakewood, Colorado, we hereby confirm that the above
mentioned lines, both scheduled to terminate on December 31,
1993, are temporarily extended until documentation for an
official renewal can be drafted.
If you need anything else, please let me know.
Very truly yours,
/s/ Pascal
NEW YORK - CHICAGO - DALLAS - HOUSTON - LOS ANGELES - SAN FRANCISCO
<PAGE>
["GENERALE" LOGO]
SOCIETE GENERALE
50 ROCKEFELLER PLAZA
NEW YORK, NY 10020
212 830 6966
FAX 212 581 8422
PASCAL C. PINSON TELEX: 428802
ASSISTANT VICE PRESIDENT CABLES: SOCIEGEN
SWIFT: SOGEUS33
March 29, 1994
Mr. Herbert S. Lawson
Treasurer
Cobe Laboratories Inc.
1185 Oak Street
Lakewood, CO 80215
Dear Sandy:
As I mentioned to you during our phone conversation of
yesterday, please find attached the documentation for the
renewal for 2 years of the $5MM Committed Revolving Credit
Facility that Societe Generale New York Branch is happy to make
available to Cobe Laboratories Inc.
I hope this text, which is similar to the one in force in
the past, will satisfy you. For the $10MM Uncommitted Facility,
we will keep the existing documentation.
Please let me know if you have any comments. If not, I
would greatly appreciate if you could execute this document and
fax it back to me, if possible before the 1st of April 1994 (I
apologize for the short notice). You will receive 2 original
sets by mail this week.
I remain available if you have any questions and I look
forward to meeting with Denise and you in New York on 4/13/94.
Sincerely yours,
/s/ Pascal
NEW YORK - CHICAGO - DALLAS - HOUSTON - LOS ANGELES - SAN FRANCISCO
EXHIBIT (b)(7)
[LOGO] BANK OF BOSTON
--------------
July 29, 1995
Mr. Herbert S. Lawson
Vice President & Treasurer
COBE Laboratories, Inc.
1185 Oak Street
Lakewood, CO 80215-4407
Dear Sandy:
The First National Bank of Boston (the "Bank") is pleased to make available to
COBE Laboratories, Inc. (the "Company") a $10,000,000 unsecured line of credit
for general corporate purposes, which includes a $1,000,000 sublimit for
letters of credit, on the following terms and conditions.
1. Term. This line of credit shall commence July 31, 1995 and expire on
----
July 30, 1996, unless extended by mutual agreement.
2. Notice and Manner of Borrowings. Each Eurodollar Loan made under this line
-------------------------------
of credit must be in a minimum amount of $100,000 or any larger amount which is
an integral multiple of $100,000. Each Money Market Loan must be for a minimum
amount of $1,000,000.00. Base Rate Loans may be in any amount, provided that
aggregate loans outstanding may not exceed $10,000,000. Requests by the Company
for loans must be received by the Bank no later than 12:00 noon (Boston time),
on the same business day of the requested loan in the case of Base Rate and
Money Market Loans and two business days in advance of the requested loan in
the case of Eurodollar Loans. If such notice is given by telephone, it shall
be immediately confirmed in writing. Loans will be made by crediting the
proceeds thereof to the demand deposit account of the Company maintained with
the Bank.
3. Evidence of Indebtedness. All loans will be evidenced by a promissory note
------------------------
in the form attached hereto (the "Note"). The Company hereby authorizes the
Bank to record each loan and the corresponding information on the schedule
forming part of the Note, and, absent manifest error, this record shall be
conclusive and binding.
4. Interest Rates. Subject to the terms and conditions hereof, the Company may
--------------
elect in its request for a loan to have interest thereon accrue at any of the
following rates:
(a) a rate per annum equal to the greater of (i) the rate of interest
announced from time to time by the Bank at its head office and (ii) the
weighted average of the published rates on overnight Federal Funds
transactions with members of the Federal Reserve System plus 1/2%, such
greater rate being herein called the "Base Rate", which interest rate shall
change as and when the Base Rate changes; or
(b) a rate quoted by the Bank to the Company as the prevailing rate per
annum at which U.S. dollar deposits are offered to the Bank by first class
banks in the interbank Eurodollar market in which it regularly participates at
approximately 12:00 noon (Boston time) two business days before the date of the
requested loan in the amount and for an interest period approximately equal to
that of the requested loan, adjusted for reserves, if any, plus 1/2% per annum;
or
THE FIRST NATIONAL BANK OF BOSTON, Boston, Massachusetts 02106
<PAGE>
(c) a rate quoted by the Bank in its sole discretion (it being understood
that the Bank is under no obligation to quote such rates) as the fixed rate of
interest at which it is willing to make a "Money Market" advance in the amount
and for the period of the requested loan.
Loans bearing interest as provided in paragraphs (a) (b) and (c) of this
Section 4 shall be referred to herein as "Base Rate Loans", "Eurodollar Loans"
and "Money Market Loans", respectively. Eurodollar Loans may be requested for
interest periods of one, two, three or six months. Money Market Loans may be
requested for interest periods of one, seven fourteen, twentyone or thirty
days. No loan shall have an interest period that extends beyond the expiration
of this line of credit. In the event that the Company fails to specify an
interest period in its request for a loan, the interest period for Eurodollar
Loans shall be one month. Interest on each loan shall be calculated on the
basis of a 360-day year for the actual number of days elapsed and shall be
payable as set forth in the Note.
Letters of credit will be priced according to the Bank's standard schedule.
5. Payments and Prepayment. Base Rate Loans shall be payable on demand.
-----------------------
Eurodollar Loans shall be payable on demand or if demand is not earlier made,
the last day of the interest period applicable thereto. The Company may
prepay Base Rate Loans, in whole or in part, at any time and without prepayment
penalties, but no prepayments of Eurodollar Loans or Money Market Loans will
be permitted. If the Company for any reason makes any payment with respect to a
Eurodollar Loan or Money Market Loan before its maturity, or fails to borrow a
Eurodollar Loan or Money Market Loan requested under Section 2, the Company
will be required to pay out of pocket costs, losses or liabilities (including
lost profits) incurred by the Bank as a result thereof, including any losses
incurred in obtaining, liquidating or employing deposits with reference to
which the rate of interest for such loan was determined, upon presentation by
the Bank of a statement in the amount and setting forth the Bank's calculation
thereof, which statement shall be deemed true and correct absent manifest error.
6. Other Pricing. The Company shall pay a facility fee of 1/4% per annum on
-------------
the unused amount of the line of credit, computed as the average over the
quarter, payable quarterly in arrears on the last day of each quarter.
7. Changed Circumstances; Increased Costs.
---------------------------------------
(a) In the event that at any time the Bank shall have determined in good
faith (which determination shall be final and conclusive) that the making or
maintaining of any Eurodollar Loan has been made unlawful or impractical by
compliance by the Bank in good faith with any law or governmental regulation,
guideline, order or other action (whether or not having the force of law),
then, the Bank shall forthwith so notify the Company. On such date as the Bank
shall request, the Bank's obligation to quote a Eurodollar Rate shall cease and
the Company shall repay all outstanding affected loans with accrued interest.
(b) In the event that any law, regulation, treaty or official directive or
the interpretation or application thereof by any court or governmental
authority or the compliance with any guideline or request of any central bank
or other governmental authority (whether or not having the force of law):
(i) subjects the Bank to any tax with respect to any amounts payable
hereunder by the Company or otherwise with respect to the transactions
contemplated hereunder (except for taxes on the overall net income of the
Bank imposed by the United States of America or any political subdivision
thereof), or
<PAGE>
(ii) imposes, modifies or deems applicable any deposit insurance, reserve,
special deposit, capital maintenance or similar requirement against assets
held by, or deposits in or for the account of, or loans or commitments to
make loans by, the Bank (other than such requirements the effect of which
is included in the determination of the interest rates for loans made
hereunder), or
(iii) imposes upon the Bank any other condition with respect to the loans
made hereunder,
and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by or return on equity of the Bank or impose any
expense upon the Bank with respect to any Eurodollar Loans or commitments to
make loans hereunder, the Bank shall so notify the Company. The Company agrees
to pay the Bank the amount of such increase in cost, reduction in income,
reduced return on equity or additional expense as and when such cost, reduction
or expense is incurred or determined, upon presentation by the Bank of a
statement in the amount and setting forth the Bank's calculation thereof, which
statement shall be deemed true and correct absent manifest error.
8. Negative Pledge. The Company will not and will not permit any of its
---------------
subsidiaries to, assign or otherwise convey any right to receive income (not
including any dividends or other distributions by any subsidiary to the
Company on account of the capital stock of such subsidiary), or create, incur,
assume or suffer to exist any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or related security
interest of a conditional vendor) of any nature (collectively, "liens"), on any
assets of the Company or any subsidiary.
9. Availability of Loans. The availability of loans and letters of credit under
---------------------
this facility is subject to the Bank's usual condition that the Bank continue
to be satisfied with the affairs of the Company and of Gambro AB and to any
changes in government regulations or monetary policies. The availability of
loans and letters of credit is further subject to the Bank's having received
a "comfort letter" from Gambro AB, ("Gambro") substantially in the form
attached hereto, which shall remain in full force and effect so long as any
loans and letters of credit remain outstanding.
10. Other Conditions.
-----------------
(a) Receipt of the Company's audited fiscal year end consolidated financial
statements of the legal borrower, 90 days after year end. Receipt of the
Company's interim 6 months management consolidated financial statements,
60 days after that period.
(b) Discussion with the Company's management of quarterly consolidated
financial statements and discussion of management's annual budget, as
soon as available.
(c) Receipt of Gambro's audited fiscal year end consolidated financial
statements 180 days after year end. Receipt of Gambro's interim 6 months
management consolidated financial statements 120 days after that period.
<PAGE>
If the foregoing satisfactorily sets forth the terms and conditions of this
line of credit, please execute and return the enclosed copy of this letter and
the attached promissory note. We are pleased to provide this line and look
forward to the ongoing development our relationship.
Sincerely,
The First National Bank of Boston
By: /s/
------------------------------
Title: Vice President
---------------------------
Acknowledged and accepted:
COBE LABORATORIES, INC.
By: /s/ Herbert S. Lawson By: /s/ George L. Garcia
------------------------------- ---------------------------------
Title: CFO Title: Corp. Controller
------------------------------- ---------------------------------
Date: 8/8/95 Date: 8/9/95
------------------------------- ---------------------------------
<PAGE>
PROMISSORY NOTE
---------------
Boston, Massachusetts
July 29, 1995
FOR VALUE RECEIVED, the undersigned hereby promises to pay to THE FIRST
NATIONAL BANK OF BOSTON (the "Bank"), or order, at the head office of the
Bank in Boston, Massachusetts, the aggregate principal amount of all loans
made by the Bank to the undersigned pursuant to the letter agreement between
the Bank and the undersigned dated July 29, 1995, as shown in the schedule
attached hereto (the "Note Schedule"), together with interest on each loan
from the date such loan is made until the maturity thereof at the applicable
rate set forth in the Note Schedule. The principal amount of each loan shall
be payable on demand or if demand is not earlier made, on the last day of the
interest period applicable to such loan indicated in the Note Schedule, and in
any event, the aggregate outstanding principal amount of all loans hereunder
shall be due and payable on July 30, 1996. Interest on the principal amount
of each loan shall be payable in arrears on the same day as the principal
amount is due, provided that (i) interest on each loan bearing interest at
the Base Rate shall be payable on the last day of each borrowing period,
beginning on the first of such dates occurring after the date of such loan and
when such loan is due, and (ii) if the maturity of any loan is more than 90
days from the date of such loan, then interest shall be payable at intervals
of 90 days and when such is due. Loans which are shown as bearing interest
at the Base Rate shall bear interest at a rate per annum equal to the greater
of (i) the rate of interest announced from time to time by the Bank at its
head office, and (ii) the rate equal to the weighted average of the published
rates on overnight Federal Funds transactions with members of the Federal
Reserve System plus 1/2%, such greater rate being herein called the "Base
Rate", which interest rate shall change as and when the Base Rate changes.
Interest shall be computed on the basis of a 360-day year and paid for the
actual number of days elapsed. All payments shall be made in lawful currency
of the United States of America in immediately available funds.
Overdue payments of principal of any loan (whether at stated maturity,
by acceleration or otherwise), and, to the extent permitted by law, overdue
interest, shall bear interest on demand and compounded daily, at a rate per
annum equal to three percent (3%) above the greater of (i) the Base Rate and
(ii) the rate applicable to such loan prior to the date such loan was due.
If any of the following events of default shall occur ("Defaults"):
--------
(a) default in the payment amounts due hereunder or performance of any of the
obligations hereunder or of any obligations of the undersigned or Gambro AB
to the Bank or to others for borrowed money or in respect of any extension of
credit or accommodation or under any lease; (b) failure to be materially true
and correct of any representation or warranty, statement or information in
any documents or financial statements delivered to Bank for the purpose of
inducing it to make or maintain any loan under this Note; (c) failure of the
undersigned or Gambro AB to file any tax return, or to pay or remit any tax,
when due; (d) failure to furnish the Bank promptly on request with financial
information about, or to permit inspection by the Bank of books, records
and properties of, the undersigned or Gambro AB; (e) the undersigned or
Gambro AB shall be generally not paying its debts as they become due; (f)
death, dissolution, termination of existence, insolvency, business failure,
appointment of a receiver or other custodian of any part of the property
of, assignment for the benefit of creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency laws by or against the
undersigned or Gambro AB; (g) change in the condition or affairs (financial
or otherwise) of the undersigned or Gambro AB which in the opinion of the
Bank will increase its risk; then immediately and automatically with respect
to any Defaults set forth in clauses (e) and (f) above, and thereupon or at
any time thereafter with respect to each other Default (such Default not
having been previously cured), at the option of the Bank, all obligations of
the undersigned shall become immediately due and payable without notice or
demand.
The undersigned hereby waives presentment, demand, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
<PAGE>
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note. No waiver of any right shall be effective unless in writing and
signed by the Bank nor shall a waiver on one occasion be construed as a bar
to or waiver of any such right on any future occasion.
The undersigned agrees to pay all charges of the Bank in connection with
the collection or enforcement of this Note, including reasonable attorneys'
fees.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by the laws of The Commonwealth of Massachusetts.
COBE Laboratories, Inc.
By: /s/ Herbert S. Lawson By: /s/ George L. Garcia
------------------------------ ----------------------------
Title: CFO By: Corp. Controller
--------------------------- ----------------------------
<PAGE>
NOTE SCHEDULE TO PROMISSORY NOTE
DATE: July 29, 1995
<TABLE><CAPTION>
Date Principal Maturity* Interest** Date and Amount of Notation
of Loan Amount of Loan Date Rate Payment Received made by
------- -------------- ---- ---- ---------------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
--------------------------
* Insert "Demand" for loans bearing interest calculated with reference to
the Base Rate.
** Insert "Base Rate" for loans bearing interest calculated with reference
to the Base Rate.
EXHIBIT (b)(8)
[LOGO] BANK OF BOSTON
--------------
July 29, 1995
Mr. Herbert S. Lawson
Vice President & Treasurer
COBE Laboratories, Inc.
1185 Oak Street
Lakewood, CO 80215-4407
Dear Sandy:
The First National Bank of Boston (the "Bank") is pleased to make available to
COBE Laboratories, Inc. (the "Company") a $5,000,000 demand, discretionary
line of credit for general corporate purposes on the following terms and
conditions.
1. Term. This line of credit shall commence July 31, 1995 and expire on
----
July 30, 1996, unless extended by mutual agreement.
2. Notice and Manner of Borrowings. Each loan made under this line of credit
-------------------------------
must be in a minimum amount of $100,000 or any larger amount which is an
integral multiple of $100,000, and aggregate loans outstanding may not exceed
$5,000,000. Requests by the Company for loans must be received by the Bank no
later than 12:00 noon (Boston time), on the same business day of the requested
loan in the case of Base Rate and two business days in advance of the
requested loan in the case of Eurodollar Loans. If such notice is given by
telephone, it shall be immediately confirmed in writing. Loans will be made by
crediting the proceeds thereof to the demand deposit account of the Company
maintained with the Bank.
3. Evidence of Indebtedness. All loans will be evidenced by a promissory note
------------------------
in the form attached hereto (the "Note"). The Company hereby authorizes the
Bank to record each loan and the corresponding information on the schedule
forming part of the Note, and, absent manifest error, this record shall be
conclusive and binding.
4. Interest Rates. Subject to the terms and conditions hereof, the Company
--------------
may elect in its request for a loan to have interest thereon accrue at any of
the following rates:
(a) a rate per annum equal to the greater of (i) the rate of interest
announced from time to time by the Bank at its head office and (ii) the
weighted average of the published rates on overnight Federal Funds
transactions with members of the Federal Reserve System plus 1/2%, such
greater rate being herein called the "Base Rate", which interest rate
shall change as and when the Base Rate changes;
or
(b) a rate quoted by the Bank to the Company as the prevailing rate per
annum at which U.S. dollar deposits are offered to the Bank by first
class banks in the interbank Eurodollar market in which it regularly
participates at approximately 12:00 noon (Boston time) two business days
before the date of the requested loan in the amount and for an interest
period approximately equal to that of the requested loan, adjusted for
reserves, if any, plus 1/2% per annum.
THE FIRST NATIONAL BANK OF BOSTON, Boston Massachusetts O2106
<PAGE>
Loans bearing interest as provided in paragraphs (a) and (b) of this Section 4
shall be referred to herein as "Base Rate Loans" and "Eurodollar Loans",
respectively. Eurodollar Loans may be requested for interest periods of one,
two, three or six months and no loan shall have an interest period that
extends beyond the expiration of this line of credit. In the event that the
Company fails to specify an interest period in its request for a loan, the
interest period for Eurodollar Loans shall be one month. Interest on each loan
shall be calculated on the basis of a 360-day year for the actual number of
days elapsed and shall be payable as set forth in the Note.
5. Payments and Prepayment. Base Rate Loans shall be payable on demand.
-----------------------
Eurodollar Loans shall be payable on demand or if demand is not earlier made,
the last day of the interest period applicable thereto. The Company may prepay
Base Rate Loans, in whole or in part, at any time and without prepayment
penalties, but no prepayments of Eurodollar Loans will be permitted. If
the Company for any reason makes any payment with respect to a Eurodollar Loan
before its maturity, or fails to borrow a Eurodollar Loan requested under
Section 2, the Company will be required to pay out of pocket costs, losses or
liabilities (including lost profits) incurred by the Bank as a result thereof,
including any losses incurred in obtaining, liquidating or employing deposits
with reference to which the rate of interest for such loan was determined, upon
presentation by the Bank of a statement in the amount and setting forth the
Bank's calculation thereof, which statement shall be deemed true and correct
absent manifest error.
6. Changed Circumstances; Increased Costs.
---------------------------------------
(a) In the event that at any time the Bank shall have determined in good
faith (which determination shall be final and conclusive) that the making or
maintaining of any Eurodollar Loan has been made unlawful or impractical by
compliance by the Bank in good faith with any law or governmental regulation,
guideline, order or other action (whether or not having the force of law),
then, the Bank shall forthwith so notify the Company. On such date as the Bank
shall request, the Bank's obligation to quote a Eurodollar Rate shall cease
and the Company shall repay all outstanding affected loans with accrued
interest.
(b) In the event that any law, regulation, treaty or official directive
or the interpretation or application thereof by any court or governmental
authority or the compliance with any guideline or request of any central bank
or other governmental authority (whether or not having the force of law):
(i) subjects the Bank to any tax with respect to any amounts payable
hereunder by the Company or otherwise with respect to the transactions
contemplated hereunder (except for taxes on the overall net income of
the Bank imposed by the United States of America or any political
subdivision thereof), or
(ii) imposes, modifies or deems applicable any deposit insurance,
reserve, special deposit, capital maintenance or similar requirement
against assets held by, or deposits in or for the account of, or loans
or commitments to make loans by, the Bank (other than such
requirements the effect of which is included in the determination of
the interest rates for loans made hereunder), or
(iii) imposes upon the Bank any other condition with respect to the
loans made hereunder,
<PAGE>
and the result of any of the foregoing is to increase the cost to the Bank,
reduce the income receivable by or return on equity of the Bank or impose any
expense upon the Bank with respect to any Eurodollar Loans or commitments to
make loans hereunder, the Bank shall so notify the Company. The Company
agrees to pay the Bank the amount of such increase in cost, reduction in
income, reduced return on equity or additional expense as and when such cost,
reduction or expense is incurred or determined, upon presentation by the Bank
of a statement in the amount and setting forth the Bank's calculation thereof,
which statement shall be deemed true and correct absent manifest error.
7. Negative Pledge. The Company will not and will not permit any of its
---------------
subsidiaries to, assign or otherwise convey any right to receive income (not
including any dividends or other distributions by any subsidiary to the
Company on account of the capital stock of such subsidiary), or create, incur,
assume or suffer to exist any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance (including the lien or related
security interest of a conditional vendor) of any nature (collectively,
"liens"), on any assets of the Company or any subsidiary.
8. Other Conditions.
-----------------
(a) Receipt of the Company's audited fiscal year end consolidated
financial statements of the legal borrower, 90 days after year end.
Receipt of the Company's interim 6 months management consolidated
financial statements, 60 days after that period.
(b) Discussion with the Company's management of quarterly consolidated
financial statements and discussion of management's annual budget, as soon
as available.
(c) Receipt of Gambro's audited fiscal year end consolidated financial
statements 180 days after year end. Receipt of Gambro's interim 6 months
management consolidated financial statements 120 days after that period.
If the foregoing satisfactorily sets forth the terms and conditions of this
line of credit, please execute and return the enclosed copy of this letter and
the attached promissory note. We are pleased to provide this line and look
forward to the ongoing development of our relationship.
Sincerely,
The First National Bank of Boston
By: /s/
-------------------------
Title: Vice President
---------------------
Acknowledged and accepted:
COBE Laboratories Inc.
By: /s/ By: /s/
------------------------- -------------------------
Title: CFO Title: Corp. Controller
--------------------- ---------------------
Date: 8/8/95 Date: 8/9/95
---------------------- ----------------------
<PAGE>
PROMISSORY NOTE
---------------
Boston, Massachusetts
July 29, 1995
FOR VALUE RECEIVED, the undersigned hereby promises to pay to THE FIRST
NATIONAL BANK OF BOSTON (the "Bank"), or order, at the head office of the
Bank in Boston, Massachusetts, the aggregate principal amount of all loans
made by the Bank to the undersigned pursuant to the letter agreement between
the Bank and the undersigned dated July 29, 1995, as shown in the schedule
attached hereto (the "Note Schedule"), together with interest on each loan
from the date such loan is made until the maturity thereof at the applicable
rate set forth in the Note Schedule. The principal amount of each loan shall
be payable on demand or if demand is not earlier made, on the last day of the
interest period applicable to such loan indicated in the Note Schedule, and in
any event, the aggregate outstanding principal amount of all loans hereunder
shall be due and payable on July 30, 1996. Interest on the principal amount
of each loan shall be payable in arrears on the same day as the principal
amount is due, provided that (i) interest on each loan bearing interest at
the Base Rate shall be payable on the last day of each borrowing period,
beginning on the first of such dates occurring after the date of such loan and
when such loan is due, and (ii) if the maturity of any loan is more than 90
days from the date of such loan, then interest shall be payable at intervals
of 90 days and when such is due. Loans which are shown as bearing interest
at the Base Rate shall bear interest at a rate per annum equal to the greater
of (i) the rate of interest announced from time to time by the Bank at its
head office, and (ii) the rate equal to the weighted average of the published
rates on overnight Federal Funds transactions with members of the Federal
Reserve System plus 1/2%, such greater rate being herein called the "Base
Rate", which interest rate shall change as and when the Base Rate changes.
Interest shall be computed on the basis of a 360-day year and paid for the
actual number of days elapsed. All payments shall be made in lawful currency
of the United States of America in immediately available funds.
Overdue payments of principal of any loan (whether at stated maturity,
by acceleration or otherwise), and, to the extent permitted by law, overdue
interest, shall bear interest on demand and compounded daily, at a rate per
annum equal to three percent (3%) above the greater of (i) the Base Rate and
(ii) the rate applicable to such loan prior to the date such loan was due.
If any of the following events of default shall occur ("Defaults"):
--------
(a) default in the payment amounts due hereunder or performance of any of the
obligations hereunder or of any obligations of the undersigned or Gambro AB
to the Bank or to others for borrowed money or in respect of any extension of
credit or accommodation or under any lease; (b) failure to be materially true
and correct of any representation or warranty, statement or information in
any documents or financial statements delivered to Bank for the purpose of
inducing it to make or maintain any loan under this Note; (c) failure of the
undersigned or Gambro AB to file any tax return, or to pay or remit any tax,
when due; (d) failure to furnish the Bank promptly on request with financial
information about, or to permit inspection by the Bank of books, records
and properties of, the undersigned or Gambro AB; (e) the undersigned or
Gambro AB shall be generally not paying its debts as they become due; (f)
death, dissolution, termination of existence, insolvency, business failure,
appointment of a receiver or other custodian of any part of the property
of, assignment for the benefit of creditors by, or the commencement of any
proceedings under any bankruptcy or insolvency laws by or against the
undersigned or Gambro AB; (g) change in the condition or affairs (financial
or otherwise) of the undersigned or Gambro AB which in the opinion of the
Bank will increase its risk; then immediately and automatically with respect
to any Defaults set forth in clauses (e) and (f) above, and thereupon or at
any time thereafter with respect to each other Default (such Default not
having been previously cured), at the option of the Bank, all obligations of
the undersigned shall become immediately due and payable without notice or
demand.
The undersigned hereby waives presentment, demand, notice of
dishonor, protest and all other demands and notices in connection with the
delivery, acceptance, performance and enforcement of this Note.
<PAGE>
No delay or omission on the part of the Bank in exercising any right
hereunder shall operate as a waiver of such right or of any other right under
this Note. No waiver of any right shall be effective unless in writing and
signed by the Bank nor shall a waiver on one occasion be construed as a bar
to or waiver of any such right on any future occasion.
The undersigned agrees to pay all charges of the Bank in connection with
the collection or enforcement of this Note, including reasonable attorneys'
fees.
This instrument shall have the effect of an instrument executed under
seal and shall be governed by the laws of The Commonwealth of Massachusetts.
COBE Laboratories, Inc.
By: /s/ Herbert S. Lawson By: /s/ George L. Garcia
------------------------------ ----------------------------
Title: CFO By: Corp. Controller
--------------------------- ----------------------------
<PAGE>
NOTE SCHEDULE TO PROMISSORY NOTE
DATE: July 29, 1995
<TABLE><CAPTION>
Date Principal Maturity* Interest** Date and Amount of Notation
of Loan Amount of Loan Date Rate Payment Received made by
------- -------------- ---- ---- ---------------- -------
<S> <C> <C> <C> <C> <C>
</TABLE>
--------------------------
* Insert "Demand" for loans bearing interest calculated with reference to
the Base Rate.
** Insert "Base Rate" for loans bearing interest calculated with reference
to the Base Rate.
===========================================================================
AGREEMENT AND PLAN OF MERGER
Among
GAMBRO AB,
COBE LABORATORIES, INC.,
REN ACQUISITION CORP.
and
REN CORPORATION-USA
Dated as of September 12, 1995
===========================================================================
<PAGE>
Glossary of Defined Terms
[(Not Part of this Agreement)]
----------------------------
Defined Term Location of Definition
- ------------ ----------------------
affiliate . . . . . . . . . . . . . . . . Sec. 8.04(a)
Agreement . . . . . . . . . . . . . . . . Preamble
Alex. Brown . . . . . . . . . . . . . . . Recitals
Articles of Merger . . . . . . . . . . . . Sec. 2.02
beneficial owner . . . . . . . . . . . . . Sec. 8.04(b)
Blue Sky Laws . . . . . . . . . . . . . . Sec. 3.04(b)
Board . . . . . . . . . . . . . . . . . . Recitals
business day . . . . . . . . . . . . . . . Sec. 8.04(c)
Certificates . . . . . . . . . . . . . . . Sec. 2.08(b)
Company . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . Recitals
Company Preferred Stock . . . . . . . . . Sec. 3.02
control . . . . . . . . . . . . . . . . . Sec. 8.04(d)
Disclosure Schedule . . . . . . . . . . . Sec. 3.01
Dissenting Shares . . . . . . . . . . . . Sec. 2.07(a)
Effective Time . . . . . . . . . . . . . . Sec. 2.02
ESPP . . . . . . . . . . . . . . . . . . . Sec. 2.11
Exchange Act . . . . . . . . . . . . . . . Sec. 1.02(b)
Gambro . . . . . . . . . . . . . . . . . . Preamble
Indemnified Parties . . . . . . . . . . . Sec. 5.03(c)
Material Adverse Effect . . . . . . . . . Sec. 3.01
Merger . . . . . . . . . . . . . . . . . . Recitals
Merger Consideration . . . . . . . . . . . Sec. 2.06(a)
Offer . . . . . . . . . . . . . . . . . . Recitals
Offer Documents . . . . . . . . . . . . . Sec. 1.01(b)
Offer to Purchase . . . . . . . . . . . . Sec. 1.01(b)
Option . . . . . . . . . . . . . . . . . . Sec. 2.09
Parent . . . . . . . . . . . . . . . . . . Preamble
Paying Agent . . . . . . . . . . . . . . . Sec. 2.08(a)
Per Share Amount . . . . . . . . . . . . . Recitals
person . . . . . . . . . . . . . . . . . . Sec. 8.03(e)
Plan Amount . . . . . . . . . . . . . . . Sec. 2.11
Proxy Statement . . . . . . . . . . . . . Sec. 3.07
Purchaser . . . . . . . . . . . . . . . . Preamble
Schedule 14D-9 . . . . . . . . . . . . . . Sec. 1.02(b)
Schedule 14D-1 . . . . . . . . . . . . . . Sec. 1.01(b)
Schedule 13E-3 . . . . . . . . . . . . . . Sec. 1.01(b)
SEC . . . . . . . . . . . . . . . . . . . Sec. 1.01(b)
SEC Reports . . . . . . . . . . . . . . . Sec. 3.06(a)
Securities Act . . . . . . . . . . . . . . Sec. 3.06(a)
Series A Preferred Stock . . . . . . . . . Sec. 3.02
Series B Preferred Stock . . . . . . . . . Sec. 3.02
Shares . . . . . . . . . . . . . . . . . . Recitals
<PAGE>
Defined Term Location of Definition
- ------------ ----------------------
Special Committee . . . . . . . . . . . . Recitals
Stockholders' Meeting . . . . . . . . . . Sec. 5.01
Stock Option Plan . . . . . . . . . . . . Sec. 2.09
Stock Purchase Agreement . . . . . . . . . Recitals
Subsidiary . . . . . . . . . . . . . . . . Sec. 3.01
subsidiary . . . . . . . . . . . . . . . . Sec. 8.04(f)
Surviving Corporation . . . . . . . . . . Sec. 2.01
Tennessee Law . . . . . . . . . . . . . . Recitals
Termination Date . . . . . . . . . . . . . Sec. 2.11
Transactions . . . . . . . . . . . . . . . Sec. 3.03
Warrant . . . . . . . . . . . . . . . . . Sec. 2.10
<PAGE>
TABLE OF CONTENTS
PAGE
SECTION 1.02. Company Action . . . . . . . . . . . . . . . . . . 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02. Effective Time; Closing . . . . . . . . . . . . . . 5
SECTION 2.03. Effect of the Merger . . . . . . . . . . . . . . . 5
SECTION 2.04. Charter; By-laws . . . . . . . . . . . . . . . . . 5
SECTION 2.05. Directors and Officers . . . . . . . . . . . . . . 5
SECTION 2.06. Conversion of Securities . . . . . . . . . . . . . 5
SECTION 2.07. Dissenting Shares . . . . . . . . . . . . . . . . . 6
SECTION 2.08. Surrender of Shares; Stock Transfer Books . . . . . 7
SECTION 2.09. Employee Stock Options. . . . . . . . . . . . . . . 8
SECTION 2.10. Warrants . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.11. Employee Stock Purchase Plan . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification; Subsidiaries . . . 9
SECTION 3.02. Capitalization . . . . . . . . . . . . . . . . . . 10
SECTION 3.03. Authority Relative to this Agreement . . . . . . . 11
SECTION 3.04. No Conflict; Required Filings and Consents . . . . 11
SECTION 3.05. Compliance . . . . . . . . . . . . . . . . . . . . 12
SECTION 3.06. SEC Filings; Financial Statements . . . . . . . . . 12
SECTION 3.07. Offer Documents; Schedule 14D-9; Schedule 13E-3;
Proxy Statement . . . . . . . . . . . . . . . . . 13
SECTION 3.08. Brokers . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GAMBRO, PARENT AND PURCHASER
SECTION 4.01. Corporate Organization . . . . . . . . . . . . . . 14
SECTION 4.02. Authority Relative to this Agreement . . . . . . . 14
SECTION 4.03. No Conflict; Required Filings and Consents . . . . 15
SECTION 4.04. Financing . . . . . . . . . . . . . . . . . . . . . 15
SECTION 4.05. Offer Documents; Proxy Statement . . . . . . . . . 15
SECTION 4.06. Full Disclosure . . . . . . . . . . . . . . . . . . 16
SECTION 4.07. Brokers . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE V
<PAGE>
PAGE
ADDITIONAL AGREEMENTS
SECTION 5.01. Stockholders' Meeting . . . . . . . . . . . . . . . 16
SECTION 5.02. Proxy Statement . . . . . . . . . . . . . . . . . . 17
SECTION 5.03. Directors' and Officers' Indemnification and
Insurance . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.04. Further Action; Reasonable Best Efforts . . . . . . 19
SECTION 5.05. Public Announcements . . . . . . . . . . . . . . . 19
SECTION 5.06. Gambro Guarantee . . . . . . . . . . . . . . . . . 19
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to the Merger . . . . . . . . . . . . . 19
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . 22
SECTION 7.03. Fees and Expenses . . . . . . . . . . . . . . . . . 22
SECTION 7.04. Amendment . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7.05. Waiver . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Non-Survival of Representations, Warranties and
Agreements . . . . . . . . . . . . . . . . . . . 22
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 8.03. Enforcement of Agreement . . . . . . . . . . . . . 24
SECTION 8.04. Certain Definitions . . . . . . . . . . . . . . . . 24
SECTION 8.05. Severability . . . . . . . . . . . . . . . . . . . 25
SECTION 8.06. Entire Agreement; Assignment . . . . . . . . . . . 26
SECTION 8.07. Parties in Interest . . . . . . . . . . . . . . . . 26
SECTION 8.08. Specific Performance . . . . . . . . . . . . . . . 26
SECTION 8.09. Governing Law . . . . . . . . . . . . . . . . . . . 26
SECTION 8.10. Headings . . . . . . . . . . . . . . . . . . . . . 26
SECTION 8.11. Counterparts . . . . . . . . . . . . . . . . . . . 26
ANNEX A - Conditions to the Offer
<PAGE>
AGREEMENT AND PLAN OF MERGER dated as of September 12, 1995
(this "Agreement") among Gambro AB, a Swedish corporation ("Gambro"), COBE
--------- ------
Laboratories, Inc., a Colorado corporation and an indirect wholly owned
subsidiary of Gambro ("Parent"), REN Acquisition Corp., a Tennessee
------
corporation and a wholly owned subsidiary of Parent ("Purchaser"), and REN
---------
Corporation-USA, a Tennessee corporation (the "Company").
-------
WHEREAS, on September 12, 1995, Parent contributed to the capital
of Purchaser 10,036,221 shares of issued and outstanding Common Stock, no
par value, of the Company ("Company Common Stock") (outstanding shares of
--------------------
Company Common Stock being hereinafter collectively referred to as the
"Shares") representing approximately 53% of the Shares; and
------
WHEREAS, the Boards of Directors of Gambro, Parent and Purchaser
and the Board of Directors of the Company (the "Board"), acting upon the
-----
unanimous recommendation of the Special Committee of independent directors
of the Board (the "Special Committee"), have each determined that it is in
-----------------
the best interests of their respective stockholders for Parent to acquire
the Company upon the terms and subject to the conditions set forth herein;
and
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all the
-----
issued and outstanding Shares for $20.00 per Share (such amount, or any
greater amount per Share paid pursuant to the Offer, being hereinafter
referred to as the "Per Share Amount"), net to the seller in cash, upon the
----------------
terms and subject to the conditions of this Agreement and the Offer; and
WHEREAS, the Board, acting upon the unanimous recommendation of
the Special Committee, has unanimously (A) determined that this Agreement
and the transactions contemplated hereby are fair to and in the best
interests of the stockholders of the Company, (B) approved and adopted this
Agreement and the transactions contemplated hereby, including the making of
the Offer and resolved and agreed to recommend that holders of Shares
tender their Shares pursuant to the Offer, and (C) pursuant to Section 5.11
of the Stock Purchase Agreement dated as of May 24, 1991, as amended
through April 26, 1994, between Parent and the Company (the "Stock Purchase
--------------
Agreement"), the Board has requested that Gambro, Parent and Purchaser
- ---------
enter into this Agreement and consummate the transactions contemplated
hereby in accordance with the terms and conditions of this Agreement; and
WHEREAS, also in furtherance of such acquisition, the Board,
acting upon the unanimous recommendation of the Special Committee, and the
Boards of Directors of Parent and Purchaser have each approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with
------
the Tennessee Business Corporation Act ("Tennessee Law") following the
-------------
consummation of the Offer and upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the Company has been advised by each of its directors
and executive officers that they intend either to tender all Shares
beneficially owned by them to Purchaser pursuant to the Offer or to vote
all Shares beneficially owned by them in favor of the approval and adoption
by the stockholders of the Company of this Agreement and the transactions
contemplated hereby; and
WHEREAS, Alex. Brown & Sons Incorporated ("Alex. Brown") has
-----------
delivered to the Special Committee an opinion (the "Fairness Opinion") that
------------------
the consideration to be received by the holders of Shares, other than
Gambro, Purchaser, Parent or any of their affiliates, pursuant to this
Agreement is fair to the holders of such Shares from a financial point of
view;
<PAGE>
2
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally
bound hereby, Gambro, Parent, Purchaser and the Company hereby agree as
follows:
ARTICLE I
THE OFFER
---------
SECTION 1.01. The Offer. (a) Provided that this Agreement
---------
shall not have been terminated in accordance with Section 7.01 and none of
the events set forth in Annex A hereto shall have occurred or be existing,
Purchaser shall commence the Offer as promptly as reasonably practicable
after the date hereof, but in no event later than five business days after
the initial public announcement of Purchaser's intention to commence the
Offer. The obligation of Purchaser to accept for payment and pay for
Shares tendered pursuant to the Offer shall be subject to the condition
(the "Minimum Condition") that at least a majority of the then outstanding
-----------------
Shares, other than Shares owned beneficially by or of record by Gambro,
Parent, Purchaser or any of their affiliates, shall have been validly
tendered and not withdrawn prior to the expiration of the Offer and also
shall be subject to the satisfaction of the other conditions set forth in
Annex A hereto. Purchaser expressly reserves the right to waive any such
condition, to increase the price per Share payable in the Offer, and to
make any other changes in the terms and conditions of the Offer; provided,
--------
however, that the Minimum Condition may not be waived except with the prior
- -------
written consent of the Special Committee; and provided further that no
-------- -------
change may be made which decreases the price per Share payable in the Offer
or which reduces the maximum number of Shares to be purchased in the Offer
or which imposes conditions to the Offer in addition to those set forth in
Annex A hereto. The Per Share Amount shall, subject to applicable
withholding of taxes, be net to the seller in cash, upon the terms and
subject to the conditions of the Offer. Subject to the terms and
conditions of the Offer, Purchaser shall pay, as promptly as practicable
after expiration of the Offer, for all Shares validly tendered and not
withdrawn.
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, Purchaser shall file with the Securities and
Exchange Commission (the "SEC") (i) a Tender Offer Statement on
---
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer and (ii) a Rule 13e-3
--------------
Transaction Statement on Schedule 13E-3 (together with all amendments and
supplements thereto, the "Schedule 13E-3") with respect to the Offer and
--------------
the other Transactions (as hereinafter defined). The Schedule 14D-1 and
the Schedule 13E-3 shall contain or shall incorporate by reference an offer
to purchase (the "Offer to Purchase") and forms of the related letter of
-----------------
transmittal and any related summary advertisement (the Schedule 14D-1, the
Schedule 13E-3, the Offer to Purchase and such other documents, together
with all supplements and amendments thereto, being referred to herein
collectively as the "Offer Documents"). Gambro, Parent, Purchaser and the
---------------
Company agree to correct promptly any information provided by any of them
for use in the Offer Documents which shall have become false or misleading,
and Gambro, Parent and Purchaser further agree to take all steps necessary
to cause the Schedule 14D-1 and the Schedule 13E-3 as so corrected to be
filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws.
SECTION 1.02. Company Action. (a) The Company, acting through
--------------
the Board
<PAGE>
3
acting upon the unanimous recommendation of the Special Committee, hereby
approves of and consents to the Offer and represents that (i) the Board,
acting upon the unanimous recommendation of the Special Committee, at a
meeting duly called and held on September 12, 1995, has unanimously
(A) determined that this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger, are fair to and in the
best interests of the holders of Shares, (B) approved and adopted this
Agreement, the execution of this Agreement and the transactions
contemplated by this Agreement, which approval includes the approval of a
majority of the Company's disinterested directors, and (C) recommended that
the stockholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions contemplated hereby, and (ii) Alex. Brown
has delivered to the Special Committee an opinion that the consideration to
be received by the holders of Shares, other than Gambro, Purchaser, Parent
or any of their affiliates, pursuant to this Agreement is fair to the
holders of such Shares from a financial point of view. Subject to the
fiduciary duties of the Board under applicable law as advised by outside
counsel, the Company hereby consents to the inclusion in the Offer
Documents of the unanimous recommendation of the Board, acting upon the
unanimous recommendation of the Special Committee, described in the
immediately preceding sentence. The Company has been advised by each of
its directors and executive officers that they intend either to tender all
Shares beneficially owned by them to Purchaser pursuant to the Offer or to
vote such Shares in favor of the approval and adoption by the stockholders
of the Company of this Agreement and the transactions contemplated hereby.
(b) As promptly as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing,
--------------
subject to the fiduciary duties of the Board under applicable law as
advised by outside counsel, the recommendation of the Board, acting upon
the unanimous recommendation of the Special Committee, described in
Section 1.02(a) and shall disseminate the Schedule 14D-9 to the extent
required by Rule 14d-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any other applicable federal
------------
securities laws. The Company, Gambro, Parent and Purchaser agree to
correct promptly any information provided by any of them for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as
so corrected to be filed with the SEC and disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
(c) The Company shall promptly furnish Purchaser with mailing
labels containing the names and addresses of all record holders of Shares
and with security position listings of Shares held in stock depositories,
each as of a recent date, together with all other available listings and
computer files containing names, addresses and security position listings
of record holders and beneficial owners of Shares. The Company shall
furnish Purchaser with such additional information, including, without
limitation, updated listings and computer files of stockholders, mailing
labels and security position listings, and such other assistance as Parent,
Purchaser or their agents may reasonably request. 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 Offer or the Merger, Gambro, Parent and Purchaser shall hold
in confidence the information contained in such labels, listings and files,
shall use such information only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated in accordance with
Section 7.01, shall deliver to the Company all copies of such information
then in their possession.
<PAGE>
4
(d) For purposes of this Agreement, the fiduciary duties of the
Board or the Company under applicable law as advised by outside counsel
shall be determined by the Special Committee.
ARTICLE II
THE MERGER
----------
SECTION 2.01. The Merger. Upon the terms and subject to the
----------
conditions set forth in Article VI, and in accordance with Tennessee Law,
at the Effective Time (as hereinafter defined) Purchaser shall be merged
with and into the Company. As a result of the Merger, the separate
corporate existence of Purchaser shall cease and the Company shall continue
as the surviving corporation after the Merger (the "Surviving Corporation").
---------------------
SECTION 2.02. Effective Time; Closing. As promptly as
-----------------------
practicable after the satisfaction or, if permissible, waiver of the
conditions set forth in Article VI, the parties hereto shall cause the
Merger to be consummated by filing Articles of Merger with the Secretary of
State of the State of Tennessee (the "Articles of Merger"), in such form as
------------------
is required by, and executed in accordance with the relevant provisions of,
Tennessee Law (the date and time of such filing being the "Effective
---------
Time"). Prior to such filing, a closing shall be held at the offices of
- ----
Shearman & Sterling, 599 Lexington Avenue, New York, New York, 10022, or
such other place as the parties shall agree, for the purpose of confirming
the satisfaction or waiver, as the case may be, of the conditions set forth
in Article VI.
SECTION 2.03. Effect of the Merger. At the Effective Time, the
--------------------
effect of the Merger shall be as provided in the applicable provisions of
Tennessee Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Purchaser shall vest
in the Surviving Corporation, and all debts, liabilities, obligations,
restrictions, disabilities and duties of the Company and Purchaser shall
become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
SECTION 2.04. Charter; By-laws. (a) Subject to Section 5.03,
----------------
at the Effective Time the Charter of the Company, as in effect immediately
prior to the Effective Time, shall be the Charter of the Surviving
Corporation until thereafter amended as provided by law and such Charter.
(b) Subject to Section 5.03, at the Effective Time the By-laws
of the Company, as in effect immediately prior to the Effective Time, shall
be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Charter of the Surviving Corporation and such By-laws.
SECTION 2.05. Directors and Officers. The directors of the
----------------------
Company immediately prior to the Effective Time shall be the directors of
the Surviving Corporation immediately following the Merger, each to hold
office in accordance with the Charter and By-laws of the Surviving
Corporation, and the officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation
immediately following the Merger, in each case until their respective
successors are duly elected or appointed and qualified.
<PAGE>
5
SECTION 2.06. Conversion of Securities. At the Effective Time,
------------------------
by virtue of the Merger and without any further action on the part of
Purchaser, the Company or the holders of any of the following securities,
other than as specified herein:
(a) Each Share issued and outstanding immediately prior to
the Effective Time (other than any Shares to be cancelled pursuant to
Section 2.06(b) and any Dissenting Shares (as hereinafter defined))
shall be cancelled and shall be converted automatically into the right
to receive an amount equal to the Per Share Amount in cash (the
"Merger Consideration") payable, without interest, to the holder of
--------------------
such Share, upon surrender, in the manner provided in Section 2.08, of
the certificate that formerly evidenced such Share;
(b) Each Share held by the Company and each Share owned by
Purchaser, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company immediately prior to the Effective Time shall
be cancelled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) Each share of Common Stock, par value $.01 per share,
of Purchaser issued and outstanding immediately prior to the Effective
Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of Common Stock of the Surviving
Corporation.
SECTION 2.07. Dissenting Shares. (a) Notwithstanding any
-----------------
provision of this Agreement to the contrary, any Shares of a record or
beneficial owner who has properly demanded and perfected his right for
appraisal of such shares in accordance with Tennessee Law and who, as of
the Effective Time, has not effectively withdrawn or lost such right to
appraisal (collectively, the "Dissenting Shares") shall not be converted
-----------------
into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of
such Shares held by them in accordance with the provisions of Tennessee
Law, except that all Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Shares under Tennessee Law shall thereupon be deemed to
have been converted into, and to have become exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 2.08,
of the certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal received by the Company, withdrawals of such demands,
and any other instruments served pursuant to Tennessee Law and received by
the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Tennessee Law. The
Company shall not, except with the prior written consent of Parent, make
any payment with respect to any demands for appraisal or offer to settle or
settle any such demands.
SECTION 2.08. Surrender of Shares; Stock Transfer Books. (a)
-----------------------------------------
Prior to the Effective Time, Purchaser shall deposit the full amount of the
Merger Consideration with Bank of New York, as agent (the "Paying Agent"),
------------
for the holders of Shares in connection with the Merger to receive the
funds to which holders of Shares shall become entitled pursuant to
Section 2.06(a). Such funds shall be invested by the Paying Agent as
directed by the Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be
<PAGE>
6
mailed to each person who was, at the Effective Time, a holder of record of
Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
------------
delivery of the Certificates to the Paying Agent) and instructions for use
in effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may
be required pursuant to such instructions, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration
for each Share formerly evidenced by such Certificate, and such Certificate
shall then be cancelled. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any Certificate for the benefit
of the holder of such Certificate. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the
surrendered Certificate is registered on the stock transfer books of the
Company, it shall be a condition of payment that the Certificate so
surrendered shall be endorsed properly or otherwise be in proper form for
transfer and that the person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of
the Surviving Corporation that such taxes either have been paid or are not
applicable.
(c) At any time following the first anniversary of the Effective
Time, the Surviving Corporation shall be entitled to require the Paying
Agent to deliver to it any funds which had been made available to the
Paying Agent and not disbursed to holders of Shares (including, without
limitation, all interest and other income received by the Paying Agent in
respect of all funds made available to it), and thereafter such holders
shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of any Share(s) for any Merger
Consideration delivered in respect of such Share(s) to a public official
pursuant to any abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time,
the stock transfer books of the Company shall be closed and thereafter
there shall be no further registration of transfers of Shares on the
records of the Company. From and after the Effective Time, the holders of
Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided
herein or by applicable law.
SECTION 2.09. Employee Stock Options. (a) Each holder of a
----------------------
stock option (an "Option") to purchase shares of Company Common Stock under
------
the Company's Non-Statutory Stock Option Plan of 1988, as amended (the
"Stock Option Plan"), which Option is outstanding immediately prior to the
-----------------
Effective Time (whether or not then exercisable) shall, pursuant to the
Cancellation of Option Agreements entered into by the Company with each of
the Optionees (as defined in such Cancellation of Option Agreements), be
entitled to receive, and shall receive, in settlement and cancellation
thereof, an amount in cash equal to the product of (i) the excess, if any,
of the Per Share Amount over the exercise price of each such Option and
(ii) the number of shares of Company Common Stock covered by such Option.
All payments by the Company in respect of Options, other than Options
granted within six months prior to the Effective Time, shall be made
promptly following the Effective Time. Payments in respect of Options
granted within six months prior to the Effective
<PAGE>
7
Time shall be made six months and one day after the date of grant of such
Options. No person shall be entitled to receive any of the payments
described in this Section 2.09 until the time established therefor in this
Section 2.09. The Company shall cause the Stock Option Plan to terminate
as of the Effective Time and certificates evidencing Options shall be
deemed to be cancelled as of the Effective Time, and thereafter the only
rights of participants therein shall be the right to receive the
consideration set forth in this Section 2.09. Prior to the Effective Time,
the Company shall use its reasonable best efforts to cause each holder of
an outstanding Option to acknowledge in writing the cancellation of such
Option and to release the Company from any obligation in respect thereof in
consideration for the payment provided herein and shall take such other
action as may be necessary to carry out the terms of this Section 2.09.
SECTION 2.10. Warrants. (a) Each holder of a warrant (a
--------
"Warrant") to purchase shares of Company Common Stock, which Warrant is
-------
outstanding immediately prior to the Effective Time (whether or not then
exercisable) shall, pursuant to the Cancellation of Warrant Agreements
entered into by the Company with each of the Warrant Holders (as defined
in the Cancellation of Warrant Agreements), be entitled to receive, and
shall receive, in settlement and cancellation thereof, an amount in cash
equal to the product of (i) the excess, if any, of the Per Share Amount
over the exercise price of each such Warrant and (ii) the number of shares
of Company Common Stock covered by such Warrant. The Company shall cause
each such warrant agreement to which it is a party to terminate as of the
Effective Time, and thereafter the only rights of the holders of the
Warrants shall be the right to receive the consideration set forth in this
Section 2.10. Prior to the Effective Time, the Company shall use its
reasonable best efforts to cause each holder of an outstanding Warrant to
acknowledge in writing the termination of such Warrants and to release the
Company from any obligation in respect thereof in consideration for the
payment provided herein and shall take such other action as may be
necessary to carry out the terms of this Section 2.10.
SECTION 2.11. Employee Stock Purchase Plan. The Company shall
----------------------------
terminate the Company's Employee Stock Purchase Plan, as amended, of July
1, 1994 (the "ESPP"), effective September 30, 1995 (the "Termination Date")
---- ----------------
pursuant to which (i) all further payroll deductions from each Participant
(as defined in the ESPP) shall cease, (ii) the amount (the "Plan Amount")
-----------
credited to the account of each Participant as of the Termination Date
shall at the election of each Participant either (A) be paid by the Company
to such Participant (without interest) as soon as administratively
practicable or (B) be applied as of the Termination Date to the purchase of
shares of the Company's Common Stock in an aggregate amount equal to each
Participant's Plan Amount at a price per share of Common Stock equal to 85%
of the lower of the Fair Market Value (as defined in the ESPP) per share of
Common Stock on July 1, 1995 or on the Termination Date (rounded up to the
next whole dime), in accordance with the terms of the current phase under
the ESPP, and (iii) for purposes of the current phase, the Termination Date
shall be treated for all purposes of the ESPP as the last day of such
phase. In the event that a Participant makes no election under Section
2.11(ii) above, such Participant shall be deemed to have elected as of the
Termination Date to apply such Participant's Plan Amount to the purchase of
shares of the Company's Common Stock in accordance with the provisions of
Section 2.11(ii)(B) above.
<PAGE>
8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Gambro, Parent and
Purchaser that:
SECTION 3.01. Organization and Qualification; Subsidiaries.
--------------------------------------------
Each of the Company and each subsidiary of the Company (a "Subsidiary") is
----------
a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has the requisite
power and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Material Adverse Effect (as
defined below). The Company and each Subsidiary is duly qualified or
licensed as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for such failures to be so qualified or
licensed and in good standing that would not, individually or in the
aggregate, have a Material Adverse Effect. When used in connection with
the Company, Gambro, Parent or Purchaser or any of their Subsidiaries, the
term "Material Adverse Effect" means any change or effect that is or is
-----------------------
reasonably likely to be materially adverse to the business, operations,
properties or financial condition of the Company, Gambro, Parent or
Purchaser or any of their Subsidiaries taken as a whole. A true and
complete list of all the Subsidiaries, together with the jurisdiction of
incorporation of each Subsidiary and the percentage of the outstanding
capital stock of each Subsidiary owned by the Company and by each other
Subsidiary, is set forth in Section 3.01 of the Disclosure Schedule to this
Agreement previously delivered by the Company to Parent (the "Disclosure
----------
Schedule"). Except as disclosed in such Section 3.01, 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, partnership, joint venture or other
business association or entity.
SECTION 3.02. Capitalization. The authorized capital stock of
--------------
the Company consists of 60,000,000 shares of Company Common Stock and
10,000,000 shares of Preferred Stock ("Company Preferred Stock"), including
-----------------------
1,218,000 shares of Series A Preferred Stock, no par value (the "Series A
--------
Preferred Stock") and 500,000 Shares of Series B Preferred Stock, no par
- ---------------
value (the "Series B Preferred Stock"). As of the date hereof,
------------------------
(i) 18,951,834 shares of Company Common Stock are issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) 178,792
shares of Company Common Stock are held by the Company, (iii) 1,750,000
shares of Company Common Stock are reserved for issuance pursuant to
Options granted under the Stock Option Plan, and, as of the date hereof,
542,225 Options have been granted under the Stock Option Plan, (iv) 400,000
shares of Company Common Stock are reserved for issuance pursuant to
Options granted under the Company's ESPP as disclosed in Section 3.02 of
the Disclosure Schedule and (v) Warrants to purchase 74,000 shares of
Company Common Stock are outstanding. As of the date hereof, no shares of
Company Preferred Stock have been issued or are outstanding, 1,218,000
shares of Series A Preferred Stock have been issued (all of which have been
converted into shares of Company Common Stock) and 462,172 shares of Series
B Preferred Stock have been issued (all of which have been converted into
shares of Company Common Stock). Except as set forth in this Section 3.02
or in Section 3.02 of the Disclosure Schedule, there are no options,
warrants or other rights, agreements,
<PAGE>
9
arrangements or commitments of any character relating to the issued or
unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue or sell any shares of capital stock of,
or other equity interests in, the Company or any Subsidiary. All Shares
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be
duly authorized, validly issued, fully paid and nonassessable. Except as
set forth in this Section 3.02 or in 3.02 of the Disclosure Schedule, there
are no outstanding contractual obligations of the Company or any Subsidiary
to repurchase, redeem or otherwise acquire any Shares or any capital stock
of any Subsidiary. Each outstanding share of capital stock of each
Subsidiary is duly authorized, validly issued, fully paid and nonassessable
and each such share owned by the Company or another Subsidiary is free and
clear of all security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on the Company's or such other
Subsidiary's voting rights, charges and other encumbrances of any nature
whatsoever.
SECTION 3.03. Authority Relative to this Agreement. The Company
------------------------------------
has all necessary power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby (the "Transactions"). The execution and delivery of
------------
this Agreement by the Company and the consummation by the Company of the
Transactions have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the then
outstanding Shares if and to the extent required by applicable law, and the
filing and recordation of appropriate merger documents as required by
Tennessee Law). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Gambro, Parent and Purchaser, constitutes a legal, valid and
binding obligation of the Company enforceable against the Company in
accordance with its terms. The restrictions on business combinations
contained in the Tennessee Business Combination Act have been satisfied
with respect to the Transactions, the provisions of the Tennessee Investor
Protection Act do not apply to the Transactions, and the restrictions on
voting rights contained in the Tennessee Control Share Acquisition Act have
been satisfied with respect to the Transactions.
SECTION 3.04. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, (i) conflict
with or violate the Charter or By-laws or equivalent organizational
documents of the Company or any Subsidiary, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to the
Company or any Subsidiary or by which any material property or asset of the
Company or any Subsidiary is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any right
of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or other encumbrance on any property or asset of the
Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which the Company or any Subsidiary is a party or by which
the Company or any Subsidiary or any of their respective properties is
bound or affected, except, in the case of clauses (ii) and (iii) of this
Section 3.04, for conflicts, violations, breaches, defaults, rights, liens,
and encumbrances which would not individually or in the aggregate have a
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company
do not, and the
<PAGE>
10
performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic or foreign, except
(i) for applicable requirements, if any, of the Exchange Act, the Health
Care Financing Administration, state securities or "blue sky" laws ("Blue
----
Sky Laws") and state takeover laws, and filing and recordation of
- --------
appropriate merger documents as required by Tennessee Law and (ii) where
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay
consummation of the Offer or the Merger, or otherwise prevent the Company
from performing its obligations under this Agreement, and would not,
individually or in the aggregate, have a Material Adverse Effect.
(c) The approval and adoption by the Board, acting upon the
unanimous recommendation of the Special Committee, of this Agreement and
the Transactions (which approval by the Board includes the approval of a
majority of the Company's disinterested directors as set forth in Section
1.02(a)(B) of this Agreement) constitutes sufficient approval by a majority
of the Company's disinterested directors for purposes of Article X of the
Company's By-laws.
SECTION 3.05. Compliance. Neither the Company nor any
----------
Subsidiary is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or
any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a party
or by which the Company or any Subsidiary or any property or asset of the
Company or any Subsidiary is bound or affected, except for any such
conflicts, defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.06. SEC Filings; Financial Statements. (a) The
---------------------------------
Company has filed all forms, reports and documents required to be filed by
it with the SEC since December 31, 1993, and has heretofore made available
to Parent, in the form filed with the SEC, (i) its Annual Reports on
Form 10-K for the fiscal years ended December 31, 1992, 1993, and 1994,
(ii) its Quarterly Report on Form 10-Q for the period ended June 30, 1995,
as amended, and (iii) all proxy statements relating to the Company's
meetings of stockholders (whether annual or special) held since January 1,
1993 and (iv) all other forms, reports and other registration statements
(other than Quarterly Reports on Form 10-Q not referred to in clause (ii)
above) filed by the Company with the SEC since January 1, 1993 (the forms,
reports and other documents referred to in clauses (i), (ii), (iii) and
(iv) above being referred to herein, collectively, as the "SEC Reports").
-----------
The SEC Reports (i) were prepared in accordance with the requirements of
the Securities Act of 1933, as amended (the "Securities Act"), and the
--------------
Exchange Act, as the case may be, and the rules and regulations thereunder
and (ii) did not at the time they were filed 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 made therein, in the
light of the circumstances under which they were made, not misleading. No
Subsidiary is required to file any form, report or other document with the
SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the SEC Reports was prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented the consolidated
financial position, results of operations and changes in financial position
of the Company and the consolidated Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein except as
otherwise noted
<PAGE>
11
therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not and are not expected,
individually or in the aggregate, to have a Material Adverse Effect).
Since December 31, 1994, there has been no material adverse change to any
of the consolidated financial statements (including, in each case, any
notes thereto) contained in the SEC Reports.
SECTION 3.07. Offer Documents; Schedule 14D-9; Schedule 13E-3;
------------------------------------------------
Proxy Statement. Neither the Schedule 14D-9 nor any information supplied
- ---------------
by the Company for inclusion in the Offer Documents nor the Schedule 13E-3
shall, at the respective times the Schedule 14D-9, the Offer Documents, the
Schedule 13E-3 or any amendments or supplements thereto are filed with the
SEC or are first published, sent or given to stockholders of the Company,
as the case may be, 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 made therein, in the light of the
circumstances under which they are made, not misleading. Neither the proxy
statement to be sent to the stockholders of the Company in connection with
the Stockholders' Meeting (as hereinafter defined) nor the information
statement to be sent to such stockholders, as appropriate (such proxy
statement or information statement, as amended or supplemented, being
referred to herein as the "Proxy Statement"), shall, at the date the Proxy
---------------
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Stockholders' Meeting and
at the Effective Time, be false or misleading with respect to any material
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they are made, not misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. The Schedule 14D-9 and the Proxy Statement
shall comply in all material respects as to form with the requirements of
the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, the Company makes no representation or warranty with respect
to any information supplied by Gambro, Parent, Purchaser or any of their
representatives which is contained in any of the foregoing documents.
SECTION 3.08. Brokers. No broker, finder or investment banker
-------
(other than Alex. Brown) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements
made by or on behalf of the Company. The Company has heretofore furnished
to Parent a complete and correct copy of all agreements between the Company
and Alex. Brown pursuant to which such firm would be entitled to any
payment relating to the Transactions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF GAMBRO, PARENT AND PURCHASER
--------------------------------------------------------------
Gambro, Parent and Purchaser hereby, jointly and severally,
represent and warrant to the Company that:
SECTION 4.01. Corporate Organization. Each of Gambro, Parent
----------------------
and Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the Kingdom of Sweden, the State of Colorado and
the State of Tennessee, respectively, and has the requisite power and
authority and all necessary governmental approvals to own, lease and
operate its properties and to
<PAGE>
12
carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such
power, authority and governmental approvals would not, individually or in
the aggregate, have a material adverse effect on the business or operations
of Gambro, Parent and Purchaser and their respective subsidiaries taken as
a whole.
SECTION 4.02. Authority Relative to this Agreement. Each of
------------------------------------
Gambro, Parent and Purchaser has all necessary corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the Transactions. The execution and delivery
of this Agreement by Gambro, Parent and Purchaser and the consummation by
Gambro, Parent and Purchaser of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Gambro, Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than,
with respect to the Merger, the filing and recordation of appropriate
merger documents as required by Tennessee Law). This Agreement has been
duly and validly executed and delivered by Gambro, Parent and Purchaser
and, assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Gambro, Parent
and Purchaser enforceable against each of Gambro, Parent and Purchaser in
accordance with its terms.
SECTION 4.03. No Conflict; Required Filings and Consents. (a)
------------------------------------------
The execution and delivery of this Agreement by Gambro, Parent and
Purchaser do not, and the performance of this Agreement by Gambro, Parent
and Purchaser will not, (i) conflict with or violate the Charter or By-laws
or similar organizational documents of any of Gambro, Parent or Purchaser,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to Gambro, Parent or Purchaser or by which any property
or asset of any of them is bound or affected, or (iii) result in any breach
of or constitute a default (or an event which with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of Gambro,
Parent or Purchaser pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which Gambro, Parent or Purchaser is a party or by which
Gambro, Parent or Purchaser or any property or asset of any of them is
bound or affected, except for any such breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a
material adverse effect on the business or operations of Gambro, Parent or
Purchaser and their respective subsidiaries taken as a whole.
(b) The execution and delivery of this Agreement by Gambro,
Parent and Purchaser do not, and the performance of this Agreement by
Gambro, Parent and Purchaser will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act, Blue Sky Laws and
state takeover laws and filing and recordation of appropriate merger
documents as required by Tennessee Law and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the
Offer or the Merger, or otherwise prevent Gambro, Parent or Purchaser from
performing their respective obligations under this Agreement.
SECTION 4.04. Financing. Parent has, or has commitments from
---------
responsible financial institutions to enable it to borrow, sufficient funds
to permit Purchaser to acquire all the outstanding Shares in the Offer and
the Merger and has provided the Special Committee with copies of any such
commitments.
<PAGE>
13
SECTION 4.05. Offer Documents; Proxy Statement. The Offer
--------------------------------
Documents will not, at the time the Offer Documents are filed with the SEC
or are first published, sent or given to stockholders of the Company, as
the case may be, 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 made therein, in the light of the circumstances
under which they are made, not misleading. The information supplied by
Gambro, Parent or Purchaser for inclusion in the Proxy Statement will not,
on the date the Proxy Statement (or any amendment or supplement thereto) is
first mailed to stockholders of the Company, at the time of the
Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is
made, is false or misleading with respect to any material fact, or omits to
state any material fact required to be stated therein or necessary in order
to make the statements therein not false or misleading or necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Gambro, Parent
and Purchaser make no representation or warranty with respect to any
information supplied by the Company or any of its representatives which is
contained in any of the foregoing documents or the Offer Documents. The
Offer Documents shall comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations thereunder.
SECTION 4.06. Full Disclosure. On the date the Schedule 14D-1
---------------
and the Schedule 13E-3 are first filed with the SEC, at the time of the
Stockholders' Meeting (as defined below) and at the Effective Time, (i) the
Schedule 14D-1 and the Schedule 13E-3 will both comply as to form in all
material respects with the provisions of Sections 14(d), 14(e) and 13(e) of
the Exchange Act and the rules and regulations promulgated under such
Sections 14(d), 14(e) and 13(e), and (ii) the Schedule 14D-1 and the
Schedule 13E-3 will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statement
made, in the light of the circumstances under which they are made, not
misleading.
SECTION 4.07. Brokers. No broker, finder or investment banker
-------
(other than UBS Securities, Inc.) is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Gambro, Parent or Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Stockholders' Meeting. If required by applicable
---------------------
law in order to consummate the Merger, the Company, acting through the
Board upon the unanimous recommendation of the Special Committee, shall, in
accordance with applicable law and the Company's Charter and By-laws,
(i) duly call, give notice of, convene and hold an annual or special
meeting of its stockholders as soon as practicable following consummation
of the Offer for the purpose of considering and taking action on this
Agreement and the Transactions (the "Stockholders' Meeting") and
---------------------
(ii) unless in breach of its fiduciary duties under applicable law as
advised by outside counsel, (A) include in the Proxy Statement the
unanimous recommendation of the Board, acting upon the unanimous
recommendation of the Special Committee, that the stockholders of the
Company approve and adopt this Agreement and the Transactions and (B) use
its reasonable best efforts to obtain such approval and adoption. At the
Stockholders' Meeting, Gambro, Parent and Purchaser shall cause all Shares
then owned by them and their subsidiaries to be voted in favor of the
approval and adoption of this
<PAGE>
14
Agreement and the Transactions.
SECTION 5.02. Proxy Statement. If required by applicable law,
---------------
as promptly as practicable following consummation of the Offer, the Company
shall file the Proxy Statement with the SEC under the Exchange Act and
shall use its reasonable best efforts to have the Proxy Statement cleared
by the SEC. Parent, Purchaser and the Company shall cooperate with each
other in the preparation of the Proxy Statement, and the Company shall
notify Parent of the receipt of any comments of the SEC with respect to the
Proxy Statement and of any requests by the SEC for any amendment or
supplement thereto or for additional information and shall provide to
Parent promptly copies of all correspondence between the Company or any
representative of the Company and the SEC. The Company shall give Parent
and its counsel the opportunity to review the Proxy Statement prior to its
being filed with the SEC and shall give Parent and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement
and all responses to requests for additional information and replies to
comments prior to their being filed with, or sent to, the SEC. Each of the
Company, Gambro, Parent and Purchaser agrees to use its reasonable best
efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC and to cause the
Proxy Statement and all required amendments and supplements thereto to be
mailed to the holders of Shares entitled to vote at the Stockholders'
Meeting at the earliest practicable time.
SECTION 5.03. Directors' and Officers' Indemnification and
--------------------------------------------
Insurance. (a) Parent shall cause the Surviving Corporation to keep in
- ---------
effect the provisions in its Charter and By-laws containing the provisions
with respect to exculpation of director and officer liability and
indemnification set forth in the Charter and By-laws of the Company on the
date of this Agreement to the fullest extent permitted under applicable
law, which provisions shall not be amended, repealed or otherwise modified
except as required by applicable law or except to make changes permitted by
applicable law that would enlarge the exculpation or rights of
indemnification thereunder.
(b) From and after the Effective Time, Gambro and Parent each
hereby agree, jointly and severally, to guarantee and to cause the
Surviving Corporation to perform all of its obligations under the Charter
and By-laws of the Company with respect to indemnification.
(c) To the extent that paragraphs (a) and (b) or the provisions
of the Charter or By-laws of the Surviving Corporation shall not serve to
indemnify and hold harmless each present director and officer of the
Company (the "Indemnified Parties"), after the Effective Time, Gambro and
-------------------
Parent shall, subject to the terms set forth herein, indemnify and hold
harmless, to the fullest extent permitted under applicable law (and shall
also advance expenses as incurred to the fullest extent permitted under
applicable law provided the person to whom expenses are advanced provides
an undertaking to repay such advances if it is ultimately determined that
such person is not entitled to indemnification), each Indemnified Party
against any costs or expenses (including reasonable attorney's fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative,
arising out of or pertaining to the Transactions for a period of six years
after the date hereof; provided that, in the event any claim or claims are
--------
asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until final
disposition of any and all such claims. Any Indemnified Party wishing to
claim indemnification under this paragraph (c), upon learning of any such
claim, action, suit, proceeding or investigation, shall promptly notify
Gambro and Parent thereof, but the failure to so notify shall not relieve
Gambro and Parent of any liability they may have to such Indemnified Party
if such failure does not materially
<PAGE>
15
prejudice the indemnifying party. In the event of any such claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) Gambro, Parent or the Surviving Corporation shall have
the right to assume the defense thereof with competent counsel reasonably
satisfactory to the Indemnified Party and Parent shall not be liable to
such Indemnified Parties for any legal expenses of other counsel
subsequently incurred by such Indemnified Parties in connection with the
defense thereof, except that if Gambro, Parent or the Surviving Corporation
elects not to assume or fails to assume any such defense or there are
issues which raise actual or potential conflicts of interest between
Gambro, Parent and the Surviving Corporation and the Indemnified Parties or
between the Indemnified Parties, the Indemnified Parties may retain counsel
satisfactory to them, and Parent or the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that
-------- -------
Parent shall be obligated pursuant to this paragraph (c) to pay for only
one firm of counsel for all Indemnified Parties, and one firm of local
counsel in each jurisdiction, unless the use of one counsel for such
Indemnified Parties would present such counsel with an actual or potential
conflict of interest; (ii) the Indemnified Parties will cooperate in the
defense of any such matter and (iii) Gambro and Parent shall not be liable
for any settlement effected without their prior written consent which
consent shall not be unreasonably withheld; and provided further that
-------- -------
Gambro and Parent shall not have any obligation hereunder to any
Indemnified Party when, if and to the extent a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final, that the indemnification of such Indemnified Party in the
manner contemplated hereby is prohibited by applicable law. Gambro and
Parent hereby consent to personal jurisdiction, service and venue in any
court in the State of Tennessee for purposes of enforcement of the
foregoing provisions.
(d) Parent shall cause the Surviving Corporation to use its best
efforts to maintain in effect for six years from the Effective Time, if
available, the coverage provided by 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.
SECTION 5.04. Further Action; Reasonable Best Efforts. Upon the
---------------------------------------
terms and subject to the conditions hereof, each of the parties hereto
shall use its reasonable best efforts to take, or cause to be taken, all
appropriate 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, including, without limitation, using its
reasonable best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company and the Subsidiaries
as are necessary for the consummation of the Transactions and to fulfill
the conditions to the Offer and the Merger. 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 directors of each
party to this Agreement shall use their reasonable best efforts to take all
such action.
SECTION 5.05. Public Announcements. Parent and the Company
--------------------
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any
Transaction and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange to which
Parent or the Company is a party.
<PAGE>
16
SECTION 5.06. Gambro Guarantee. Gambro hereby guarantees the
----------------
performance by Parent and Purchaser of their agreements and obligations
hereunder and consents to personal jurisdiction, service and venue in any
court in the State of Tennessee for purposes of enforcement of this
provision.
ARTICLE VI
CONDITIONS TO THE MERGER
------------------------
SECTION 6.01. Conditions to the Merger. The respective
------------------------
obligations of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the
--------------------
transactions contemplated hereby shall have been approved and adopted
by the affirmative vote of the stockholders of the Company to the
extent required by Tennessee Law and the Charter of the Company;
(b) Agreements and Covenants. The parties hereto shall
------------------------
have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Effective Time;
(c) No Order. No governmental authority or other agency or
--------
commission or court of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any law, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect
of making the acquisition of Shares by Gambro, Parent or Purchaser or
any affiliate of either of them illegal or otherwise restricting,
preventing or prohibiting consummation of the Transactions; and
(d) Offer. 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 Gambro, Parent or Purchaser if, in
breach of this Agreement or the terms of the Offer, Purchaser fails to
purchase any Shares validly tendered and not withdrawn pursuant to the
Offer.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 7.01. Termination. This Agreement may be terminated and
-----------
the Merger and the other Transactions may be abandoned at any time prior to
the Effective Time, notwithstanding any requisite approval and adoption of
this Agreement and the transactions contemplated hereby by the stockholders
of the Company:
(a) By mutual written consent of Gambro, Parent, Purchaser
and the Special Committee, acting on behalf of the Company; or
<PAGE>
17
(b) By either Parent, Purchaser or the Special Committee,
acting on behalf of the Company, if (i) the Effective Time shall not
have occurred on or before March 31, 1996; provided, however, that the
-------- -------
right to terminate this Agreement under this Section 7.01(b) shall not
be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before such date or
(ii) any court of competent jurisdiction or other governmental
authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have
become final and nonappealable; or
(c) By Parent if (i) due to an occurrence or circumstance
that would result in a failure to satisfy any condition set forth in
Annex A hereto, Purchaser shall have (A) failed to commence the Offer
within 60 days following the date of this Agreement, (B) terminated
the Offer without having accepted any Shares for payment thereunder or
(C) failed to pay for Shares pursuant to the Offer within 90 days
following the commencement of the Offer, unless such failure to pay
for Shares shall have been caused by or resulted from the failure of
Gambro, Parent or Purchaser to perform in any material respect any
material covenant or agreement of either of them contained in this
Agreement or the material breach by Gambro, Parent or Purchaser of any
material representation or warranty of either of them contained in
this Agreement or (ii) prior to the purchase of Shares pursuant to the
Offer, the Special Committee, acting on behalf of the Company, shall
have withdrawn or modified in a manner adverse to Purchaser or Parent
its approval or recommendation of the Offer, this Agreement, the
Merger or any other Transaction or shall have recommended another
merger, consolidation, business combination with, or acquisition of,
the Company or its assets or another tender offer for Shares, or shall
have resolved to do any of the foregoing; or
(d) By the Special Committee acting on behalf of the
Company, if Purchaser shall have (A) failed to commence the Offer
within 60 days following the date of this Agreement, (B) terminated
the Offer without having accepted any Shares for payment thereunder or
(C) failed to pay for Shares pursuant to the Offer within 90 days
following the commencement of the Offer, unless such failure to pay
for Shares shall have been caused by or resulted from the failure of
the Company to perform in any material respect any material covenant
or agreement of it contained in this Agreement or the material breach
of the Company of any material representation or warranty of it
contained in this Agreement; or
(e) Prior to the purchase of Shares pursuant to the Offer,
by the Special Committee, acting on behalf of the Company, (i) if any
representation or warranty of Gambro, Parent or Purchaser was untrue
or incorrect in any material respect when made and on and as of the
expiration of the Offer, except for changes contemplated by this
Agreement, with the same force and effect as if made on and as of the
date of such expiration, or in the case of a representation or
warranty made or given as of a specified time, if such representation
or warranty was untrue or incorrect in any material respect as of such
time or (ii) if Parent, Purchaser or Gambro has failed to perform or
comply with, in any material respect, any of their covenants and
agreements in this Agreement.
(f) By either Parent, Purchaser or the Special Committee,
acting on behalf of the Company, if the conditions to the Merger set
forth in Section 6.01 are not reasonably capable of being satisfied on
or before March 31, 1996.
<PAGE>
18
SECTION 7.02. Effect of Termination. In the event of the
---------------------
termination of this Agreement pursuant to Section 7.01, this Agreement
shall forthwith become void, and there shall be no liability on the part of
any party hereto, except (i) as set forth in Sections 7.03 and 8.01 and
(ii) nothing herein shall relieve any party from liability for any wilful
breach hereof.
SECTION 7.03. Fees and Expenses. All fees, costs and expenses
-----------------
incurred in connection with this Agreement and the Transactions shall be
paid by the party incurring such fees, costs and expenses, whether or not
any Transaction is consummated, provided, however, that the Purchaser and
-------- -------
the Company shall each pay for one-half of all fees, costs and expenses
incurred in connection with this Agreement and the Transactions which are
payable to the SEC and to any financial or other printer.
SECTION 7.04. Amendment. This Agreement may be amended by the
---------
parties hereto at any time prior to the Effective Time, provided, however,
-------- -------
that the Company can take action to amend this Agreement only with the
consent of the Special Committee and, provided further that, after the
-------- -------
approval and adoption of this Agreement and the transactions contemplated
hereby by the stockholders of the Company, no amendment may be made which
would reduce the amount or change the type of consideration into which each
Share shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 7.05. Waiver. At any time prior to the Effective Time,
------
any party hereto may (i) extend the time for the performance of any
obligation or other act of any other party hereto, (ii) waive any
inaccuracy in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) waive compliance with any
agreement or condition contained herein. Any such extension or waiver
shall be valid if set forth in an instrument in writing signed by the party
or parties to be bound thereby. Any such extension or waiver by the
Company may be made only by the Special Committee.
ARTICLE VIII
GENERAL PROVISIONS
------------------
SECTION 8.01. Non-Survival of Representations, Warranties and
-----------------------------------------------
Agreements. The representations, warranties and agreements in this
- ----------
Agreement shall terminate at the Effective Time or upon the termination of
this Agreement pursuant to Section 7.01, as the case may be, except that
the agreements set forth in Article II and Section 5.03 shall survive the
Effective Time indefinitely and those set forth in Section 7.03 shall
survive termination indefinitely.
SECTION 8.02. Notices. All notices, requests, claims, demands
-------
and other communications hereunder shall be in writing and shall be given
(and shall be deemed to have been duly given upon receipt) by delivery in
person, by cable, telecopy, telegram or telex or by registered or certified
mail (postage prepaid, return receipt requested) to the respective parties
at the following addresses (or at such other address for a party as shall
be specified in a notice given in accordance with this Section 8.02):
if to Parent or Purchaser:
<PAGE>
19
Herbert S. Lawson
COBE Laboratories, Inc.
1185 Oak Street
Lakewood, CO 80215-4498
Telecopier No: (303) 231-4915
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No: (212) 848-7179/80/81/82
Attention: Peter D. Lyons, Esq.
if to the Company:
J. Kenneth Jacobs, M.D.
Special Committee of the Board of Directors
REN Corporation-USA
6820 Charlotte Pike
Nashville, TN 37209
Telecopier No: (615) 352-1938
and with a copy to:
Ralph Z. Levy, Esq.
REN Corporation-USA
6820 Charlotte Pike
Nashville, TN 37209
Telecopier No: (615) 352-1938
and with a copy to:
Waller, Landsden, Dortch & Davis
Nashville City Center
511 Union Street, Suite 2100
Nashville, TN 37219-1760
Telecopier No: (615) 244-5686
Attention: J. Chase Cole, Esq.
and with a copy to:
Mayer, Brown & Platt
190 S. LaSalle Street
Chicago, IL 60603
Telecopier No: (312) 701-7711
Attention: Scott J. Davis, Esq.
<PAGE>
20
SECTION 8.03 Enforcement of Agreement. Until the Effective
------------------------
Time, the Special Committee shall continue in existence and shall have the
right to cause the Company to take any action necessary to enforce the
rights of the Company and the obligations of Gambro, Parent and Purchaser
under this Agreement.
SECTION 8.04. Certain Definitions. For purposes of this
-------------------
Agreement, the term:
(a) "affiliate" of a specified person means a person who
---------
directly or indirectly through one or more intermediaries controls, is
controlled by, or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a
----------------
person who shall be deemed to be the beneficial owner of such Shares
(i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates has, directly or indirectly,
(A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or otherwise,
or (B) the right to vote pursuant to any agreement, arrangement or
understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any Shares;
(c) "business day" means any day on which the principal
------------
offices of the SEC in Washington, D.C. are open to accept filings, or,
in the case of determining a date when any payment is due, any day on
which banks are not required or authorized to close in the City of New
York;
(d) "control" (including the terms "controlled by" and
------- -------------
"under common control with") means the possession, directly or
-------------------------
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management and policies of a person, whether
through the ownership of voting securities, as trustee or executor, by
contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership,
------
limited partnership, syndicate, person (including, without limitation,
a "person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of the Company, the
---------- ------------
Surviving Corporation, Gambro, Parent or any other person means an
affiliate controlled by such person, directly or indirectly, through
one or more intermediaries.
SECTION 8.05. Severability. If any term or other provision of
------------
this Agreement is invalid, illegal or incapable of being enforced by any
rule of law, or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any
manner materially adverse to any
<PAGE>
21
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually
acceptable manner in order that the Transactions be consummated as
originally contemplated to the fullest extent possible.
SECTION 8.06. Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to
the subject matter hereof. This Agreement shall not be assigned by
operation of law or otherwise, except that Gambro, Parent and Purchaser may
assign all or any of their rights and obligations hereunder to any
affiliate of Parent provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not
perform such obligations.
SECTION 8.07. Parties in Interest. This Agreement shall be
-------------------
binding upon and inure solely to the benefit of each party hereto, and
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement, other than Section 5.03
(which is intended to be for the benefit of the persons covered thereby and
may be enforced by such persons).
SECTION 8.08. Specific Performance. The parties hereto agree
--------------------
that irreparable damage would occur in the event any provision of this
Agreement were not performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof,
in addition to any other remedy at law or equity.
SECTION 8.09. Governing Law. This Agreement shall be governed
-------------
by, and construed in accordance with, the laws of the State of Tennessee
applicable to contracts executed in and to be performed in that State.
SECTION 8.10. Headings. The descriptive headings contained in
--------
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 8.11. Counterparts. This Agreement may be executed in
------------
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
<PAGE>
22
IN WITNESS WHEREOF, Gambro, Parent, Purchaser and the Company
have caused this Agreement to be executed as of the date first written
above by their respective officers thereunto duly authorized.
GAMBRO AB
By
-------------------------------------
Title:
By
-------------------------------------
Title:
COBE LABORATORIES, INC.
By
-------------------------------------
Title:
REN ACQUISITION CORP.
By
-------------------------------------
Title:
REN CORPORATION-USA
By
-------------------------------------
Title:
<PAGE>
ANNEX A
-------
Conditions to the Offer
-----------------------
Notwithstanding any other provision of the Offer, Purchaser shall
not be required to accept for payment or pay for any Shares tendered
pursuant to the Offer, and may terminate or amend the Offer and may
postpone the acceptance for payment of and payment for Shares tendered, if
the Minimum Condition shall not have been satisfied or at any time on or
after the date of this Agreement, and prior to the acceptance for payment
of Shares, any of the following conditions shall exist:
(a) there shall have been any action taken, or any statute,
rule, regulation, legislation, interpretation, judgment, order or
injunction enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to Parent, the Company or any subsidiary or
affiliate of Gambro, Parent or the Company restraining or prohibiting
the consummation of the Offer or the Merger and that has a Material
Adverse Effect;
(b) (i) the Board, with the consent of the Special
Committee, shall have withdrawn or modified in a manner adverse to
Gambro, Parent or Purchaser the approval or recommendation of the
Offer, the Merger, the Merger Agreement, or approved or recommended
any takeover proposal or any other acquisition of Shares other than
the Offer or the Merger or (ii) the Board, with the consent of the
Special Committee, shall have resolved to do any of the foregoing;
(c) any representation or warranty of the Company in the
Merger Agreement which is qualified as to materiality shall not be
true and correct or any such representation or warranty that is not so
qualified shall not be true and correct in any material respect, in
each case either when made or on and as of the expiration of the
Offer, except for changes contemplated by the Merger Agreement, with
the same force and effect as if made on and as of the expiration of
the Offer, or in the case of a representation or warranty made on or
given as of a specified time, if such representation or warranty was
untrue or incorrect as of such time;
(d) 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;
(e) the Merger Agreement shall have been terminated in
accordance with its terms; or
(f) Purchaser and the Company shall, with the consent of
the Special Committee, have agreed that Purchaser shall terminate the
Offer or postpone the acceptance for payment of or payment for Shares
thereunder;
which, in the reasonable judgment of Purchaser in any such case, and
regardless of the circumstances (including any action or inaction by Parent
or any of its affiliates) giving rise to any such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
<PAGE>
A-2
The foregoing conditions are for the sole benefit of Purchaser
and Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by
Purchaser or Parent in whole or in part at any time and from time to time
in their sole discretion; provided, however, that the Minimum Condition may
-------- -------
not be waived except with the prior written consent of the Special
Committee. The failure by Gambro, Parent or Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts
and other 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.
COMPOSITE CONFORMED COPY
- ------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
between
COBE LABORATORIES, INC.
and
REN CORPORATION-USA
As Amended
- ------------------------------------------------------------------------
<PAGE>
(i)
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01 Definitions ................................. 1
ARTICLE II
PURCHASE AND SALE OF SHARES;
CLOSING
2.01 Authorization, Purchase and
Sale of Shares ........................... 7
2.02 Closing ..................................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification;
Subsidiaries ............................. 8
3.02 Charter of Incorporation and By-Laws ........ 8
3.03 Capitalization .............................. 9
3.04 Authority Relative to This Agreement ........ 10
3.05 No Conflict; Required Filings and
Consents .................................. 10
3.06 Common Stock ................................ 11
3.07 Compliance with Laws ........................ 12
3.08 SEC Filings; Financial Statements ........... 12
3.09 Absence of Certain Changes, Events
and Conditions ............................ 13
3.10 Employee Benefit Plans ...................... 14
3.11 Owned Real Property; Leased Real Property.... 17
3.12 Intellectual Property Rights ................ 17
3.13 Environmental Matters ....................... 17
3.14 Litigation .................................. 19
3.15 Insurance ................................... 19
3.16 Agreements .................................. 19
3.17 Licenses and Permits ........................ 19
<PAGE>
(ii)
Section Page
- ------- ----
3.18 Private Offering ............................ 20
3.19 Brokers ..................................... 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
4.01 Corporate Organization ...................... 20
4.02 Authority Relative to This Agreement ........ 20
4.03 No Conflict; Required Filings and Consents... 21
4.04 Funds ....................................... 22
4.05 Securities Act .............................. 22
4.06 Brokers ..................................... 23
4.07 Business of the Purchaser's Affiliates ...... 23
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Conduct of Business by the Company
Pending the Closing ....................... 23
5.02 Required Bank Amendment ..................... 23
5.03 Access to Information ....................... 24
5.04 Notification of Certain Matters ............. 24
5.05 Further Action; Reasonable Efforts .......... 25
5.06 Public Announcements ........................ 25
5.07 Registration Rights ......................... 25
5.08 Board Representation; Committees ............ 25
5.09 Legend ...................................... 26
5.10 Purchaser's Preemptive Right ................ 26
5.11 Standstill Agreement ........................ 28
5.12 Non-Competition; Disclosure of
Opportunities ............................ 29
5.13 Supply Agreement ............................ 29
5.14 Shareholder Approval ........................ 31
5.15 The Company's Right of First Offer .......... 32
ARTICLE VI
CONDITIONS TO THE CLOSING
6.01 Conditions to Obligations of the Purchaser... 32
6.02 Conditions to Obligations of the Company .... 35
<PAGE>
(iii)
Section Page
- ------- ----
ARTICLE VII
INDEMNIFICATION
7.01 Survival of Representations and Warranties.... 35
7.02 Indemnification by the Company................ 36
7.03 Indemnification by the Purchaser.............. 36
7.04 Materiality................................... 36
7.05 Time Period; Dollar Threshold................. 36
7.06 Notice and Defense............................ 37
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination................................... 37
8.02 Effect of Termination......................... 39
8.03 Amendment..................................... 39
8.04 Waiver........................................ 39
ARTICLE IX
GENERAL PROVISIONS
9.01 Notices....................................... 39
9.02 Entire Agreement; Assignment.................. 40
9.03 Parties in Interest........................... 40
9.04 Governing Law................................. 40
9.05 Headings...................................... 41
9.06 Counterparts.................................. 41
9.07 Specific Performance.......................... 41
EXHIBIT A Summary of Terms of Convertible
Redeemable Preferred Stock
EXHIBIT B Contents of Opinion of Wyatt, Tarrant, Combs,
Gilbert & Milan
EXHIBIT C Contents of Opinion of Latham & Watkins
EXHIBIT D Registration Rights
EXHIBIT E Form of Shareholders' Agreement
DISCLOSURE SCHEDULE
<PAGE>
STOCK PURCHASE AGREEMENT (this "Agreement"), as
---------
amended, between REN CORPORATION-USA, a Tennessee corporation
(the "Company"), and COBE LABORATORIES, INC., a Colorado
-------
corporation (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to authorize, issue,
and sell to the Purchaser, and the Purchaser desires to
purchase from the Company, the Shares (as hereinafter
defined).
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01. Definitions. As used in this
-----------
Agreement, the following terms shall have the following
meanings:
"Affiliate" of a Person means a Person that directly
---------
or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with, the first
mentioned Person.
"Bankruptcy Proceeding" has the meaning specified in
---------------------
Section 6.01.
"Board" means the Board of Directors of the Company.
-----
"Business" has the meaning specified in Section 5.12.
--------
"Business Day" means any day other than a Saturday,
------------
Sunday, or federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Eastern Standard Time.
"By-Laws" means the Restated By-Laws of the Company,
-------
as amended through the date hereof.
"CERCLA" has the meaning specified in the definition
------
of "Environmental Laws".
<PAGE>
2
"CERCLIS" means the Comprehensive Environmental
-------
Responsive, Compensation and Liability Information System, 42
U.S.C. Sec. 9616(a).
"Charter of Incorporation" means the Restated
------------------------
Charter of Incorporation of the Company, as amended through
the date hereof.
"Closing" means the completion of the transactions
-------
specified herein relating to the purchase and sale of the
Shares as contemplated by Section 2.01 hereof.
"Closing Date" means the date on which the Closing
------------
shall occur.
"Code" means the Internal Revenue Code of 1986, as
----
amended, together with the rules and regulations promulgated
thereunder.
"Common Stock" means the common shares of the
------------
Company, no par value.
"Company" means REN Corporation-USA, a Tennessee
-------
corporation.
"Company Loss" has the meaning specified in
------------
Section 7.03.
"Control" (including the terms "controlled by" and
------- -------------
"under common control with") means the possession, directly
-------------------------
or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management and/or
policies of a Person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or
otherwise.
"Disclosure Schedule" means the Disclosure Schedule
-------------------
dated as of the date hereof delivered to the Purchaser by the
Company and forming a part of this Agreement.
"Encumbrance" means any security interest, pledge,
-----------
mortgage, lien (including environmental liens), charge,
adverse claim or restriction of any kind, including, without
limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of
ownership, but excluding such Encumbrances which, taken as a
whole, would not have a Material Adverse Effect.
<PAGE>
3
"Environmental Laws" means any federal, state or
------------------
local statute, code, ordinance, rule, regulation, permit,
consent, approval, license, judgment, order, writ, judicial
decision, decree, agency interpretation, injunction or other
authorization or requirement whenever promulgated, issued, or
modified, relating to:
(a) emissions, discharges, spills, releases or
threatened releases of pollutants, contaminants,
Hazardous Substances, materials containing Hazardous
Substances, or hazardous or toxic materials or wastes
into ambient air, surface water, groundwater,
watercourses, publicly or privately owned treatment
works, drains, sewer systems, wetlands, septic systems or
onto land;
(b) the use, treatment, storage, disposal,
handling, manufacturing, transportation, or shipment of
Hazardous Substances, materials containing Hazardous
Substances or hazardous and/or toxic wastes, material,
products or by-products (or of equipment or apparatus
containing Hazardous Substances) as defined in or
regulated under the following statutes and their
implementing regulations: the Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 1801 et seq., the
-- ---
Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901
et seq., the Comprehensive Environmental Response,
- -- ---
Compensation and Liability Act, 42 U.S.C. Sec. 9601 et seq.
-- ---
("CERCLA"), The Clean Water Act, 33 U.S.C. Sec. 1251 et
------ --
seq., The Clean Air Act, 42 U.S.C. Sec. 7401 et seq.,
- --- -- ---
and/or the Toxic Substances Control Act, 15 U.S.C.
Sec. 2601 et seq., each as amended from time to time; or
-- ---
(c) otherwise relating to pollution or the
protection of human health or the environment.
"ERISA" means the Employee Retirement Income
-----
Security Act of 1974, as amended, together with the rules and
regulations promulgated thereunder.
"Exchange Act" means the Securities Exchange Act of
------------
1934, as amended, together with the rules and regulations
promulgated thereunder.
"Existing Regions" has the meaning specified in
----------------
Section 5.12(a).
"First Union" means First Union National Bank of
-----------
North Carolina, a national banking association under the laws
of the United States.
<PAGE>
4
"First Union Loan Aqreement" means the amended and
--------------------------
restated loan agreement dated as of March 18, 1990 between
the Company and First Union, as such agreement has been
amended, supplemented, restated or otherwise modified from
time to time, together with any notes, security pledge,
guaranty or other ancillary agreements executed pursuant
thereto.
"GAAP" means U.S. generally accepted accounting
----
principles and practices in effect from time to time applied
consistently throughout the periods involved.
"Hazardous Substances" means (a) hazardous
--------------------
materials, hazardous wastes and hazardous substances as
defined or regulated under any Environmental Laws, (b) any
mixtures, blends, compounds or liquids containing any
hazardous substances in any proportions, (c) petroleum and
petroleum products including crude oil and any fractions
thereof, (d) asbestos and/or any material which contains any
hydrated mineral silicates, whether friable or non-friable,
(e) PCBs, or PCB-containing materials or fluids, (f) any
other hazardous radioactive, toxic or noxious substance,
material, pollutant, or solid, liquid or gaseous waste, and
(g) any substance with respect to which a federal, state or
local agency requires environmental investigation, monitoring
or remediation.
"Identified Regions" has the meaning specified in
------------------
Section 5.12(a).
"Intellectual Property" has the meaning specified in
---------------------
Section 3.12.
"IRS" means the United States Internal Revenue
---
Service.
"Leased Real Property" means the real property
--------------------
leased by the Company or its Subsidiaries, together with, to
the extent leased by the Company, all buildings and other
structures, facilities or improvements presently or hereafter
located thereon, all fixtures, systems, equipment and items
of personal property of the Company or its Subsidiaries
attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to the foregoing.
"Liabilities" means any and all debts, liabilities
-----------
and obligations, whether accrued or fixed, absolute or
contingent, mature or unmatured or determined or
<PAGE>
5
determinable, including, without limitation, those arising
under any law, rule, regulation, or order by a governmental
authority and those arising under any contract, agreement,
commitment or undertaking.
"Loss" has the meaning specified in Section 8.03.
----
"March Balance Sheet" means the balance sheet dated
-------------------
as of March 31, 1991 included in the March Financial
Statements.
"March Financial Statements" has the meaning
--------------------------
specified in Section 3.08(c).
"Material Adverse Effect" means any circumstance,
-----------------------
change, event, transaction, loss, failure, effect or other
occurrence that is, or is reasonably likely to be, materially
adverse to the business, operations, properties (including
intangible properties), condition (financial or otherwise),
assets, Liabilities, results of operations or prospects of
the Company and its Subsidiaries taken as a whole.
"1990 Balance Sheet" means the audited balance sheet
------------------
of the Company dated December 31, 1990.
"Other Regions" has the meaning specified in
-------------
Section 5.12(b).
"Owned Real Property" means the real property owned
-------------------
by the Company or its Subsidiaries, together with all
buildings and other structures, facilities or improvements
presently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the
Company or its Subsidiaries attached or appurtenant thereto
and all easements, licenses, rights and appurtenances
relating to the foregoing.
"Person" means an individual, corporation,
------
partnership, association, trust, joint venture,
unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
"Preferred Stock" means the shares of preferred
---------------
stock of the Company, which shall have the rights and terms
set forth in Exhibit A hereto.
"Purchase Agreement" shall mean this agreement, as
------------------
amended by the letter agreement dated as of May 24, 1991
between the Company and the Purchaser.
<PAGE>
6
"Purchase Price" has the meaning specified in
--------------
Section 2.01.
"Purchaser Loss" has the meaning specified in
--------------
Section 7.02.
"Purchaser's Directors" has the meaning specified in
---------------------
Section 5.08.
"Quarterly Date" has the meaning specified in
--------------
Section 6.14(e).
"Real Property" means the Leased Real Property and
-------------
the Owned Real Property.
"Representation Period" has the meaning specified in
---------------------
Section 5.08(a).
"Required Bank Amendment" means the amendment in
-----------------------
form and substance satisfactory to the Purchaser and the
Company to the First Union Loan Agreement contemplated by and
on terms substantially consistent with the terms set forth in
the term sheet delivered by the Purchaser to the Company on
the date hereof.
"Restricted Period" has the meaning specified in
-----------------
Section 5.11(a).
"SEC" means the Securities and Exchange Commission.
---
"SEC Reports" means all forms, reports and documents
-----------
required to be filed by the Company with the SEC since
November 28, 1989, including, without limitation, (i) the
Company's Annual Reports on Form 10-K for the fiscal years
ended December 31, 1989 and 1990 and (ii) all other reports
or registrations filed by the Company with the SEC since
November 28, 1989.
"Securities Act" means the Securities Act of 1933,
--------------
as amended, together with the rules and regulations
promulgated thereunder.
"Shares" has the meaning specified in Section 2.01.
------
"Shareholders' Agreement" has the meaning specified
-----------------------
in Section 5.11.
"Stock Option Plan" means the 1988 nonqualified
-----------------
stock option plan, as amended through the date of this
Agreement, of the Company.
<PAGE>
7
"Subscription Notice" has the meaning specified in
-------------------
Section 5.10(a).
"Subsidiary" or "Subsidiaries" means any
---------- ------------
corporation, partnership, joint venture or other legal entity
of which the Company or any other Person, as the case may be
(either alone or through or together with any other
Subsidiary), owns, directly or indirectly, fifty percent or
more of the stock or other equity interests, the holders of
which are generally entitled to vote for the election of the
board of directors or other governing body of such
corporation or other legal entity.
"Tax" or "Taxes" means all income, gross receipts,
--- -----
sales, use, transfer, employment, franchise, profits,
property, excise or other similar taxes, estimated import
duties, fees, stamp taxes and duties, value added taxes,
assessments or charges of any kind whatsoever (whether
payable directly or by withholding), together with any
interest and any penalties, additions to tax or additional
amounts imposed by any taxing authority with respect thereto.
"Total Voting Power" means the combined voting power
------------------
of all the Voting Securities.
"Voting Securities" means any shares of any class of
-----------------
capital stock of the Company entitled to vote generally in
the election of directors.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
------------------------------------
SECTION 2.01. Authorization, Purchase and Sale of
-----------------------------------
Shares. Upon the terms and subject to the conditions set
- ------
forth herein, at the Closing, the Company shall authorize,
issue and sell to the Purchaser, and the Purchaser shall
purchase from the Company, (i) 2,204,495 shares of Common
Stock and (ii) 462,172 shares of Preferred Stock (such shares
of Common Stock and Preferred Stock being herein the
"Shares") for an aggregate purchase price of $12,000,000 (the
------
"Purchase Price").
--------------
SECTION 2.02. Closing. (a) The Closing of the
-------
purchase and sale shall take place within three Business Days
of the satisfaction of the conditions set forth herein at the
offices of Shearman & Sterling, 599 Lexington Avenue, New
York, New York, or at such other time and place as the
Company and the Purchaser may mutually agree in writing.
<PAGE>
8
(b) At the Closing, the Company shall deliver or
cause to be delivered to the Purchaser: (i) stock
certificates evidencing the Shares registered in the name of
the Purchaser (or its designee); (ii) the certificate
referred to in Section 6.01(c); (iii) the legal opinions
referred to in Section 6.01(h); (iv) a receipt for the
Purchase Price and (v) such other documents as the Purchaser
shall reasonably request.
(c) At the Closing, the Purchaser shall deliver to
the Seller: (i) the Purchase Price, by wire transfer, to an
account or accounts designated by the Company at least two
Business Days prior to the Closing Date; (ii) the certificate
referred to in Section 6.02(a); (iii) a receipt for the
Shares and (iv) such other documents as the Company shall
reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Purchaser
that:
SECTION 3.01. Organization and Qualification;
-------------------------------
Subsidiaries. The Company and each of its Subsidiaries is a
- ------------
corporation duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation, and have the requisite corporate power and
authority to own, lease and operate their properties and
carry on their business in all material respects as presently
owned or conducted. The Company and each of its Subsidiaries
is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by
it or the nature of its activities makes such qualification
or licensing necessary, except those jurisdictions, if any,
in which the failure to be so duly qualified or licensed and
in good standing would not, taken as a whole, have a Material
Adverse Effect. Schedule 3.01 of the Disclosure Schedule
sets forth a complete and correct list of each of the
Subsidiaries of the Company.
SECTION 3.02. Charter of Incorporation and
----------------------------
By-Laws. The Company has heretofore furnished to the
- -------
Purchaser a complete and correct copy of the Charter of
<PAGE>
9
Incorporation and the By-Laws, each as amended to date, each
of which is in full force and effect. The Company is not in
violation of any of the provisions of the Charter of
Incorporation or By-Laws, and its Subsidiaries are not in
violation of any of the provisions of their charters of
incorporation, by-laws or equivalent organizational
documents, except where such violation would not, taken as a
whole, have a Material Adverse Effect.
SECTION 3.03. Capitalization. (a) The authorized
--------------
capital stock of the Company consists of (x) 10,000,000
shares of Preferred Stock of which none is issued,
outstanding or reserved for issuance and (y) 60,000,000
shares of Common Stock, of which (i) 8,835,502 shares of
Common Stock are issued and outstanding, (ii) 0 shares of
Common Stock are held in the treasury of the Company, (iii)
an aggregate of 251,325 shares of Common Stock are subject to
outstanding options, and 500,000 shares are reserved for
issuance, pursuant to the Company's Stock Option Plan, (iv)
an aggregate of 331,838 shares of Common Stock are subject to
outstanding promissory notes that are convertible into shares
of Common Stock, (v) 180,000 shares of Common Stock are held
in escrow on behalf of the Company and certain shareholders
in connection with a settlement of a claim arising from an
acquisition of a treatment center in Douglas, Georgia, and
(vi) an aggregate of 96,700 shares of Common Stock are
subject to outstanding warrants that are convertible into
shares of Common Stock.
(b) Except as set forth in this Section 3.03 or in
Schedule 3.03(b) of the Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements
or commitments of any character to which the Company or any
of its Subsidiaries is a party or obligating the Company or
any of its Subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, the Company
or any of its Subsidiaries. Except as set forth in Schedule
3.03(b) of the Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any
of the capital stock of the Company or any Subsidiary or to
provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any Subsidiary or
any other entity. Each of the outstanding shares of capital
stock of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and
is owned by the Company, directly or indirectly, free and
clear of all Encumbrances except as set forth in
Schedule 3.03(b) of the Disclosure Schedule and for any
<PAGE>
10
Encumbrances incurred pursuant to the First Union Loan
Agreement and Encumbrances for taxes not yet due and payable.
(c) Except as set forth on Schedule 3.03(c) of the
Disclosure Schedule and as set forth herein, the Company is
not party to any agreement granting registration rights to
any Person with respect to any equity or debt securities of
the Company.
SECTION 3.04. Authority Relative to This
--------------------------
Agreement. The Company has all necessary corporate power and
- ---------
authority to execute and deliver this Agreement and to
perform its obligations and to consummate the transactions
contemplated hereunder. The execution, delivery and
performance of this Agreement by the Company have been duly
and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and
delivery hereof by the Purchaser and payment for the Shares
as contemplated by this Agreement, constitutes the legal,
valid and binding obligation of the Company enforceable
against the Company in accordance with its terms (except in
each such case as enforceability may be limited by
bankruptcy, insolvency, reorganization and other similar laws
now or hereafter in effect relating to or affecting
creditors' rights generally and to the extent that the remedy
of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses
and to the discretion of the court before which any
proceeding therefor may be brought and except as rights to
indemnity and contribution under Section 5.07 may be limited
by Federal or state securities laws).
SECTION 3.05. No Conflict; Required Filings and
---------------------------------
Consents. (a) Assuming the satisfaction of the conditions
- --------
set forth in Article VI hereof, the execution and delivery of
this Agreement by the Company do not, and the performance of
this Agreement (including, without limitation, the
consummation of the transactions contemplated hereunder and
the conversion or redemption, if any, of the Preferred Stock)
will not, (i) conflict with or violate the Charter of
Incorporation or By-Laws, (ii) conflict with or violate the
charters of incorporation or by-laws or equivalent
organizational documents of any of the Company's
<PAGE>
11
Subsidiaries, (iii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the
Company or any of its Subsidiaries or by which its or any of
their respective properties are bound or affected, or
(iv) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or
assets of the Company or any of its Subsidiaries pursuant to
any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, insurance policy or other instrument
or obligation to which the Company or any of its Subsidiaries
is a party, or by which the Company or any of its
Subsidiaries or its or any of their respective properties are
bound or affected, except in the case of clauses (ii), (iii)
and (iv) above for such conflicts which would not, taken as a
whole, have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by
the Company (including, without limitation, the consummation
of the transactions hereunder and the conversion or
redemption, if any, of the Preferred Stock) will not, require
any consent, approval, authorization or permit of, or filing
(other than filings, if any, required on Form 8-K with the
SEC) with or notification to, any governmental or regulatory
authority, domestic or foreign, on the part of the Company or
any of its Subsidiaries.
SECTION 3.06. Common Stock; Preferred Stock.
-----------------------------
Assuming all conditions set forth in Article VI are
satisfied, following the consummation of the transactions
hereunder, all shares of Common Stock and Preferred Stock
subject to issuance pursuant to this Agreement (including,
without limitation, the Common Stock issuable upon conversion
of the Preferred Stock), upon such issuance against payment
for such shares of Common Stock as contemplated by this
Agreement or upon conversion of the Preferred Stock, as the
case may be, shall (i) be duly authorized, validly issued,
fully paid and nonassessable and (ii) not be subject to any
Encumbrances (other than those that may be incurred by the
Purchaser). With respect to the shares of Common Stock, such
shares shall have accorded to them full voting rights. With
respect to the shares of Preferred Stock, such shares will be
convertible into shares of Common Stock in accordance with
the terms of the Preferred Stock. None of the Shares nor the
shares of Common Stock issuable upon conversion of the
<PAGE>
12
Preferred Stock are "Control Shares" as such term is defined
in the Tennessee Business Corporation Act.
SECTION 3.07. Compliance with Laws. Except as set
--------------------
forth in Schedule 3.07 of the Disclosure Schedule, neither
the Company nor any of its Subsidiaries is in conflict with,
or violation of, any law, rule, regulation, order, judgment
or decree applicable to the Company or any of its
Subsidiaries or by which the Company or any of its
Subsidiaries or any of its or their respective properties are
bound or affected, except for any such conflicts or
violations which would not, individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.08. SEC Filings; Financial Statements.
---------------------------------
(a) The Company has filed all forms, reports, statements and
documents required to be filed with the SEC since
November 28, 1989, including, without limitation, the SEC
Reports. The SEC Reports (i) were each prepared in
accordance with, and at the time of filing complied in all
material respects with, the requirements of the Securities
Act, or the Exchange Act, as the case may be, and (ii) did
not at the time they were filed 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 the light of the circumstances under
which they were made, not misleading. None of the Company's
Subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto)
contained in the SEC Reports has been prepared in accordance
with GAAP (except as may be indicated in the notes thereto),
and each presents fairly the consolidated financial position
of the Company and its consolidated Subsidiaries at the
respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods
indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring
year-end adjustments which were not and are not expected to
be material in amount.
(c) Schedule 3.08(c) of the Disclosure Schedule
hereto sets forth the unaudited consolidated balance sheet of
the Company and its Subsidiaries and the unaudited statement
of operations and statement of cash flows for the three-month
period ended March 31, 1991 (the "March Financial
---------------
<PAGE>
13
Statements"). The March Financial Statements have been
- ----------
prepared in accordance with GAAP (except as may be indicated
in the notes thereto) and present fairly the financial
condition of the Company and its consolidated Subsidiaries as
of March 31, 1991 and the consolidated results of its
operations and changes in cash flows for the three-month
period ended March 31, 1991 except that the March Financial
Statements are subject to normal or recurring year-end
adjustments which are not expected to be material in amount.
(d) Except as set forth in Schedule 3.08(d) of the
Disclosure Schedule hereto and as and to the extent set forth
on the March Financial Statements, including the notes
thereto, neither the Company nor any of its Subsidiaries has
any Liabilities, including, without limitation, liabilities
for taxes which would be required to be reflected on a
balance sheet or in the notes thereto prepared in accordance
with GAAP except for liabilities or obligations incurred in
the ordinary course of business since March 31, 1991 which
would not, taken as a whole, have a Material Adverse Effect.
SECTION 3.09. Absence of Certain Changes, Events
----------------------------------
and Conditions. (a) Since January 1, 1991, except as
- --------------
disclosed in the March Financial Statements and in Schedule
3.09(a) of the Disclosure Schedule, there has not been any
change having a Material Adverse Effect. Except as disclosed
in Schedule 3.09(a) of the Disclosure Schedule, there are no
conditions known to the Company existing, with respect to the
markets, proposed marketing plans, products, facilities,
existing and prospective technologies, capabilities or
personnel, of the Company that reasonably would be expected
to have a Material Adverse Effect.
(b) Since January 1, 1991, the Company has been
operated only in the ordinary course. As amplification and
not limitation of the foregoing, except as disclosed in
Schedule 3.09(b) of the Disclosure Schedule and except as
disclosed in the March Financial Statements, neither the
Company nor any of its Subsidiaries has, since January 1,
1991:
(i) made any change in any method of accounting or
accounting practice or policy used by the Company, other
than such changes required by GAAP that are identified in
Schedule 3.09(b)(i) of the Disclosure Schedule;
(ii) made any material changes in the customary
methods of operations of the Company, including practices
<PAGE>
14
and policies relating to purchasing, inventory,
marketing, selling or pricing;
(iii) failed to maintain the Company's plant,
property and equipment in good repair, ordinary wear and
tear excepted;
(iv) redeemed any of the Company's capital stock or
declared, made or paid any dividends or distributions
(whether in cash, securities or property) to the
Company's stockholders or otherwise with respect to the
Common Stock;
(v) issued or sold any of the Company's stock,
notes, bonds or other securities, or any option or
warrant to purchase the same;
(vi) amended or restated the Company's Charter of
Incorporation or By-Laws;
(vii) merged with, been merged with, entered into a
consolidation with or acquired (by purchase, merger,
consolidation, stock acquisition or otherwise) a
substantial portion of the assets of any other entity or
business of any other corporation, partnership,
association or other business entity or any division
thereof, or otherwise acquired assets other than in the
ordinary course and in accordance with past practice; or
(viii) agreed, whether in writing or otherwise, to
take any of the actions specified in this Section
3.09(b), except for those contemplated by this Agreement
and the Required Bank Amendment.
SECTION 3.10. Employee Benefit Plans.
----------------------
(a) Schedule 3.10(a) of the Disclosure Schedule sets forth
(i) all employee benefit plans (within the meaning of Section
3(3) of ERISA) and all bonus, stock option, stock purchase,
restricted stock, incentive, deferred compensation, retiree
medical, dental or life insurance, supplemental retirement,
severance or other benefit plans, programs or arrangements,
and all employment, termination, severance or other contracts
or agreements with respect to which the Company or any of its
Subsidiaries is a party (including, without limitation, all
medical director agreements and non competition agreements),
with respect to which the Company or any of its Subsidiaries
has any obligation (whether primary or secondary) or which
are maintained, contributed to or sponsored by the Company or
<PAGE>
15
any of its Subsidiaries for the benefit of any current or
former employee, officer or director of the Company or any
one of its Subsidiaries and (ii) each employee benefit plan
for which the Company or one of its Subsidiaries could incur
liability under Section 4069 of ERISA, in the event such plan
were terminated, or under Section 4212(c) of ERISA, or in
respect of which the Company or one of its Subsidiaries
remains secondarily liable under Section 4204 of ERISA
(collectively, the "Plans"). Each Plan (other than a
-----
multiemployer plan, within the meaning of Section 3(37) or
40001(a)(3) of ERISA (a "Multiemployer Plan")) is in writing
------------------
and, with respect to each such Plan, the Company has
previously furnished or made available to the Purchaser a
true and complete copy of each Plan and (i) a copy of each
trust or other funding arrangement, (ii) the most recent
summary plan description and any relevant summary of material
modifications, (iii) the most recently filed IRS Form 5500,
(iv) the most recently received IRS determination letter for
each such Plan, and (v) the most recently prepared actuarial
report and financial statement, if applicable, in connection
with each such Plan. Except as contemplated herein or as
required by ERISA or the Code, the Company and its
Subsidiaries have no express commitment (i) to create, incur
material liability with respect to or cause to exist any
other employee benefit plan, program or arrangement, (ii) to
enter into any material contract or agreement to provide
compensation or benefits to any individual or (iii) to modify
or terminate any Plan.
(b) None of the Plans is a Multiemployer Plan, or a
single employer pension plan, within the meaning of Section
4001(a)(15) of ERISA, for which the Company or one of its
Subsidiaries could incur liability under Section 4063 or 4064
of ERISA (a "Multiple Employer Plan") having a Material
----------------------
Adverse Effect. Neither the Company nor any of its
Subsidiaries has incurred any liability having a Material
Adverse Effect with respect to a withdrawal from any
Multiemployer Plan or Multiple Employer Plan, and no fact or
event exists which could give rise to such liability. Except
as set forth in Schedule 3.10(b) of the Disclosure Schedule,
none of the Plans provides for the payment of material
severance or similar-type benefits to any person and none of
the Plans obligates the Company or any of its Subsidiaries to
make any payment or provide any benefit that could be subject
to a tax under Section 4999 of the Code.
(c) Except as set forth in Schedule 3.10(c) of the
Disclosure Schedule, none of the Plans provides for or
<PAGE>
16
promises retiree medical, dental or life insurance benefits
to any current or former employee, officer or director of the
Company or any of its Subsidiaries, or their beneficiaries.
(d) Each Plan (other than a Multiemployer Plan)
that is intended to be qualified under Section 401(a) of the
Code has received a favorable determination letter from the
IRS after 1985 providing that it is so qualified and each
trust established in connection with any Plan (other than a
Multiemployer Plan) that is intended to be exempt from
federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS after 1985
providing that it is so exempt and no fact or event has
occurred since the date of such determination letter that
could adversely affect the qualified status of any such Plan
or the exempt status of any such trust. None of the Plans
(other than a Multiemployer Plan) is subject to the laws of
any jurisdiction outside of the United States.
(e) Neither the Company nor any of its Subsidiaries
has engaged in any nonexempt prohibited transaction (within
the meaning of Section 406 of ERISA or Section 4975 of the
Code) with respect to any Plan. Neither the Company nor any
of its Subsidiaries has incurred any liability having a
Material Adverse Effect for any tax arising under Section
4971, 4972, 4979, 4980 or 4980B of the Code. None of the
employees of the Company or its Subsidiaries currently
participates in, or, within the five years preceding the date
hereof, has participated in, a Plan (other than a
Multiemployer Plan) subject to Title IV of ERISA or Section
412 of the Code, and neither the Company nor any of its
Subsidiaries has incurred any liability having a Material
Adverse Effect under, arising out of or by operation of Title
IV of ERISA or Section 412 of the Code in connection with
such Plan. No complete or partial termination has occurred
within the five years preceding the date hereof with respect
to any Plan (other than a Multiemployer Plan). None of the
assets of the Company or its Subsidiaries is the subject of
any lien having a Material Adverse Effect arising under
Section 302(f) of ERISA or Section 412(n) of the Code.
Neither the Company nor any of its Subsidiaries has been
required to post any security having a Material Adverse
Effect under Section 307 of ERISA or Section 401(a)(29) of
the Code.
(f) Each Plan (other than a Multiemployer Plan) is
now and has been operated in all material respects in
accordance with the requirements of all applicable laws
<PAGE>
17
(including, without limitation, ERISA and the Code) and with
the requirements of the terms of such Plan. All employer
contributions, premiums, payments or amounts required to be
made, paid or accrued with respect to any Plan (other than a
Multiemployer Plan) have been made, paid or accrued on or
before their due dates.
SECTION 3.11. Owned Real Property. The Company has
-------------------
valid fee interests in all of its Owned Real Property and
good and marketable title thereto, and such Owned Real
Property is owned by the Company or a Subsidiary free and
clear of all Encumbrances except (i) as set forth on
Schedule 3.11 of the Disclosure Schedule, (ii) Encumbrances
for current taxes not yet due and payable or being contested
in good faith by appropriate proceedings, (iii) Encumbrances
to secure indebtedness incurred pursuant to the First Union
Credit Agreement and (iv) imperfections of title, easements,
pledges, charges and encumbrances which do not interfere with
the Company's ability to use the owned real property or which
do not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.12. Intellectual Property Rights. Except
----------------------------
as set forth in Schedule 3.12 of the Disclosure Schedule, the
Company holds valid title to, or valid and subsisting
licenses in, the patents, patent rights, trademarks, service
marks, trademark rights, trade names, trade name rights, and
registered copyrights owned or used by the Company or any of
its Subsidiaries in the conduct of its business
(collectively, the "Intellectual Property"), free and clear
---------------------
of all Encumbrances. The consummation of the transactions
hereunder will not result in the termination or material
impairment of any of the Company's Intellectual Property.
SECTION 3.13. Environmental Matters. Except as
---------------------
would not, individually or in the aggregate, have a Material
Adverse Effect:
(a) All facilities and property presently owned or
leased by the Company or any of its Subsidiaries have
been, and continue to be, owned and operated by the
Company and its Subsidiaries in material compliance with
all applicable Environmental Laws.
(b) Neither the Company nor any of its Subsidiaries
has received notice of any pending or threatened claims,
complaints or requests for information with respect to
any alleged violation of any Environmental Laws.
(c) There have been no material releases, as
defined under any Environmental Laws, of Hazardous
<PAGE>
18
Substances that give rise to necessary costs of response
at, on, from or under any property now or previously
owned or leased by the Company or any of its Subsidiaries
during the period in which any such property was owned or
leased by the Company or a Subsidiary.
(d) The Company and its Subsidiaries have been
issued and are in material compliance with all permits,
certificates, approvals, licenses, registrations, orders,
administrative consent orders and any other
authorizations, approvals or consents relating to
Environmental Laws or Hazardous Substances necessary to
the operation of their businesses.
(e) Neither the Company nor any of its Subsidiaries
has received notice that property presently owned or
leased, or previously owned or leased, by the Company or
any of its Subsidiaries is listed or proposed for listing
in the National Priorities List created pursuant to
CERCLA or on the CERCLIS or any similar state list of
sites requiring investigation or cleanup.
(f) Neither the Company nor any of its Subsidiaries
has transported or arranged for the transportation of any
Hazardous Substances to any location which is listed on
the National Priorities List or any similar state list,
nor has any of them received notice of pending or
threatened claims as a result of transporting or
arranging to transport Hazardous Substances to any
location.
(g) There are no polychlorinated biphenyls (other
than may be contained in electrical transformers which
are labeled, operated and maintained in accordance with
all Environmental Laws) or asbestos-containing materials
present at any property now or previously owned or leased
by the Company or by any Subsidiary during the period in
which any such property was owned or leased by the
Company or a Subsidiary.
(h) Neither the Company nor any of its Subsidiaries
has received notice of pending or threatened claims
against the Company or any of its Subsidiaries arising
out of any operations, action, inaction or status of any
previously divested property, whether or not the subject
of any indemnity, under any Environmental Laws or
involving any Hazardous Substances.
<PAGE>
19
SECTION 3.14. Litigation. Except as to matters set
----------
forth in Schedule 3.14 of the Disclosure Schedule, there is
no pending or, to the best of the knowledge of the Company or
any of its Subsidiaries threatened, litigation, arbitration
or governmental investigation or legal, administrative or
regulatory proceeding against the Company or any of its
Subsidiaries or to which any of their respective properties
is or would be subject that (a) if adversely determined,
would have a Material Adverse Effect; or (b) relates to this
Agreement or the Required Bank Amendment. Except as set
forth in Schedule 3.14 of the Disclosure Schedule, there are
no material citations, fines or penalties heretofore asserted
against the Company or its Subsidiaries under any federal,
state or local law which remain unpaid or which otherwise
bind the assets of the Company or its Subsidiaries.
SECTION 3.15. Insurance. All insurance policies,
---------
including, without limitation, medical malpractice policies
of the Company, are set forth in Schedule 3.15 of the
Disclosure Schedule and are in full force and effect. The
Company will maintain all insurance policies in force through
the Closing Date.
SECTION 3.16. Agreements. Each agreement,
----------
contract, lease, license commitment or instrument (including
any and all amendments thereto) to which the Company or any
of its Subsidiaries is a party involving aggregate annual
payments of at least $100,000 and which is material,
individually or in the aggregate, to the business, operations
or financial condition of the Company and its Subsidiaries is
in full force and effect and constitutes a legal, valid and
binding obligation of the respective parties thereto, and
except as set forth on Schedule 3.16 of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries is
in default or breach of (with or without the giving of notice
or the passage of time) any such agreement or instrument,
except breaches or defaults, if any, that would not have a
Material Adverse Effect. The Company is not aware of any
third party being in material breach of any of such
agreements.
SECTION 3.17. Licenses and Permits. Except as
--------------------
would not have a Material Adverse Effect, the Company has all
governmental licenses, permits and other governmental
authorizations and approvals required for the conduct of its
businesses as now conducted, and all such material licenses,
permits, authorizations and approvals will remain in full
force and effect immediately following the consummation of
the transactions hereunder.
<PAGE>
20
SECTION 3.18. Private Offering. (a) Assuming the
----------------
accuracy of the representations and warranties of the
Purchaser, the sale of the Shares hereunder is exempt from
the registration and prospectus delivery requirements of the
Securities Act.
(b) No form of general solicitation or general
advertising (including, without limitation, advertisements,
articles, notices or other communications published in any
newspaper, magazine or other medium or broadcast over
television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising) was used by the Company or any other
Person acting on behalf of the Company in respect of the
Shares or in connection with the offer and sale of the Shares.
SECTION 3.19. Brokers. No broker, finder or
-------
investment banker, other than Kidder, Peabody & Co.
Incorporated, is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions
hereunder based upon arrangements made by or on behalf of the
Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Company
that:
SECTION 4.01. Corporate Organization. The
----------------------
Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of Colorado and has the
requisite corporate power and authority and any necessary
governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to
carry on its business as it is now being conducted.
SECTION 4.02. Authority Relative to This Agreement.
-------------------------------------
The Purchaser has all necessary corporate power
and authority to execute and deliver this Agreement and to
perform its obligations and to consummate the transactions
contemplated hereunder. The execution and delivery of this
Agreement by the Purchaser and the purchase of the Shares as
provided in Section 2.01 hereof by the Purchaser hereunder
have been duly and validly authorized by all necessary
<PAGE>
21
corporate action of the Purchaser and no other corporate
proceedings on the part of the Purchaser are necessary to
authorize this Agreement or the purchase of the Shares by the
Purchaser as contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Purchaser and,
assuming the due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation
of the Purchaser enforceable against the Purchaser in
accordance with its terms (except in each such case as
enforceability may be limited by bankruptcy, insolvency,
reorganization and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally
and to the extent that the remedy of specific performance and
injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought and
except as rights to indemnity and contribution under Section
5.07 may be limited by Federal or state securities laws).
SECTION 4.03. No Conflict; Required Filings and
---------------------------------
Consents. (a) The execution and delivery of this Agreement
- --------
by the Purchaser do not, and the performance of this
Agreement by the Purchaser will not, (i) conflict with or
violate the articles of incorporation or by-laws or
equivalent organizational documents of the Purchaser, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Purchaser or by which it
or its properties are bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default)
under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the property or
assets of the Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
the Purchaser is a party or by which the Purchaser or any of
its properties is bound or affected, except, in the case of
this clause (iii) and clause (ii) above, for any such
breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a material adverse
effect on the business, operations, properties (including
intangible properties), condition (financial or otherwise),
assets or liabilities of the Purchaser.
(b) The execution and delivery of this Agreement by
the Purchaser do not, and the performance of this Agreement
by the Purchaser (including, without limitation, the
<PAGE>
22
consummation of the transactions hereunder) will not, require
any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory
authority, domestic or foreign.
SECTION 4.04. Funds. The Purchaser has and,
-----
immediately prior to the Closing, will have the funds
necessary to consummate the purchase of the Shares hereunder.
SECTION 4.05. Securities Act. The Shares purchased
--------------
by the Purchaser pursuant to this Agreement are being
acquired for investment only and not with a view to any sale
or distribution (within the meaning of the Securities Act) of
the Shares or any part thereof. The Purchaser agrees at all
times to sell or otherwise dispose of all or any part of the
Shares so acquired by the Purchaser (and any securities
issued in exchange therefor) only pursuant to a registration,
or exemption therefrom, under the Securities Act and in
compliance with applicable state securities laws. The
Purchaser will take any steps necessary to insure that any
purchaser will agree not to sell or otherwise dispose of
Shares except in compliance with the requirements contained
in the preceding sentence. The Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under
the Securities Act and has such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Shares. The
Purchaser has received all the information it deems material
to its evaluation of the business, assets, liabilities,
financial condition and results of operations of the Company
and all the information it has requested from the Company and
considers necessary or appropriate for deciding whether to
purchase the Shares. The Purchaser has the ability to bear
the economic risks of the Purchaser's prospective investment
and the Purchaser is able, without materially impairing its
financial condition, to hold the Shares for an indefinite
period of time and to suffer complete loss on its
investment. The Purchaser understands and has fully
considered for purposes of this investment the risks of this
investment and understands that: (i) this investment is
suitable only for an investor who is able to bear the
economic consequences of losing his or its entire investment;
(2) the Shares represent an extremely speculative investment
which involves a high degree of risk of loss; (3) there are
substantial restrictions on the transferability of the Shares
and accordingly, it may not be possible for the Investor to
liquidate his or its investment in the Shares in case of
emergency; and (4) there have been no representations as to
the possible future value, if any, of the Shares.
<PAGE>
23
The Purchaser understands and acknowledges that the
sale of the Shares pursuant to this Agreement will not be
registered under the Securities Act on the grounds that the
offering and sale of securities contemplated by this
Agreement are exempt from registration pursuant to Section
4(2) of the Securities Act, and that the Company's reliance
upon such exemption is predicated in part upon the
Purchaser's representations set forth in this Agreement.
SECTION 4.06. Brokers. No broker, finder or
-------
investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions
hereunder based upon arrangements made by or on behalf of the
Purchaser.
SECTION 4.07. Business of the Purchaser's
---------------------------
Affiliates. Neither the Purchaser nor any of its Affiliates
- ----------
is actively, directly or indirectly, engaged in the Business,
or has directly or indirectly made any material investments
in any entity engaged directly or indirectly in the Business,
in North America nor is the Purchaser or any such Affiliates
currently engaged in any negotiations with respect to
acquisition of or investment in any entity that is so engaged
(except for negotiations with the Company). The Purchaser
shall not enter into any such negotiations with any Person
(other than the Company) between the date hereof and the
earlier of the Closing Date or the termination of this
Agreement.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Conduct of Business by the Company
----------------------------------
Pending the Closing. Except as contemplated by this
- -------------------
Agreement, the Company covenants and agrees that, during the
period between the date of this Agreement and through and
including the Closing Date, unless the Purchaser shall
otherwise agree in writing, the businesses of the Company and
its Subsidiaries shall be conducted only in, and the Company
and its Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with
past practice.
SECTION 5.02. Required Bank Amendment. As promptly
-----------------------
as practicable after the execution of this Agreement, the
<PAGE>
24
Company shall negotiate in good faith with First Union the
terms of the Required Bank Amendment. The Company shall use
its best efforts to negotiate and enter into the Required
Bank Amendment as soon as reasonably practicable after the
date hereof. The Company shall (a) consult with the
Purchaser with respect to the terms and conditions of the
Required Bank Amendment and (b) afford the Purchaser and its
representatives the reasonable opportunity to participate in
all negotiations relating to the Required Bank Amendment and
the restructuring of the financing contemplated thereby.
SECTION 5.03. Access to Information. (a) From the
---------------------
date hereof to the Closing Date, the Company shall, and shall
cause its Subsidiaries, officers, directors, employees,
auditors and other agents to, afford the officers, employees,
auditors and other agents of the Purchaser reasonable access
at all reasonable times to its officers, employees, agents,
properties, offices, plants and other facilities and to all
books and records, and shall furnish the Purchaser with all
financial, operating and other data and information with
respect to the business and properties of the Company as the
Purchaser, through its officers, employees or agents, may
reasonably request. The Purchaser agrees to maintain the
strict confidentiality of such data and information and not
to disclose such data to any third party. The Purchaser
further confirms its obligations pursuant to that certain
confidentiality letter agreement executed and delivered prior
to the date hereof by and between the Company and the
Purchaser.
(b) No investigation pursuant to this Section 5.03
shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties
hereto.
SECTION 5.04. Notification of Certain Matters. The
-------------------------------
Company shall give prompt notice to the Purchaser, and the
Purchaser shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be
untrue or inaccurate and (ii) any failure of the Company or
the Purchaser, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the
-------- -------
delivery of any notice pursuant to this Section 5.04 shall
not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
<PAGE>
25
SECTION 5.05. Further Action; Reasonable Efforts.
----------------------------------
Upon the terms and subject to the conditions hereof, each of
the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all appropriate 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 hereunder.
SECTION 5.06. Public Announcements. The Purchaser
--------------------
and the Company shall consult with each other before issuing
any press release or otherwise making any public statements
with respect to the transactions contemplated hereunder and
shall not issue any such press release or make any such
public statement prior to such consultation, except as may
be, and to the extent, required by law or any listing
agreement with the National Association of Securities
Dealers.
SECTION 5.07. Registration Rights. Effective at
-------------------
the Closing, the Purchaser shall have the registration rights
set forth in Exhibit D.
SECTION 5.08. Board Representation; Committees.
--------------------------------
(a) The Company agrees, effective upon the Closing
Date, to decrease the size of the Board to seven directors
and to appoint to the Board two persons designated by the
Purchaser (the "Purchaser's Directors"), one with his term
----------- ---------
expiring at the Company's 1992 annual stockholders' meeting
(the "1992 Meeting") and the other with his term expiring at
---- -------
the Company's 1993 annual stockholders' meeting (the
"Purchaser's 1993 Director"). On or prior to the 1992
----------- ---- --------
Meeting, the size of the Board shall be reduced to five
members.
(b) From and after the 1992 Meeting and during the
period in which the Purchaser owns at least 15% of the issued
and outstanding Common Stock, the Purchaser may request the
Company to include, as a nominee for the Board recommended by
the Board, one person designated by the Purchaser, who,
unless he shall resign prior to the expiration of his term,
may be the Purchaser's 1993 Director, and such person shall
be nominated by the Company unless the Board, in the exercise
of its fiduciary duties, reasonably shall determine that he
is not qualified to serve on the Board and each of the
committees specified in subsection (d). If the Board shall
reasonably determine that such designee of the Purchaser is
not so qualified, the Purchaser shall have the opportunity to
specify one or more additional designees who shall be so
included as a nominee subject to the qualification set forth
in the immediately preceding sentence.
<PAGE>
26
(c) Effective on the Closing Date and throughout
the period in which the Purchaser owns at least 15% of the
issued and outstanding Common Stock (the "Representation
--------------
Period"), the Company agrees to constitute a Human Resource
- ------
Committee of the Board which shall, among other things, make
recommendations with respect to the employment practices of
the Company and the hiring and firing of senior officers of
the Company.
(d) Effective on the Closing Date and throughout
the Representation Period, the Company agrees to place one of
the Purchaser's Directors on each of the Executive, Audit,
Compensation and Human Resources Committees of the Board and
to cause each of the Executive, Audit, Compensation and Human
Resources Committees to consist of three members.
(e) During the Representation Period, the Purchaser
also shall have the right to have an observer at all meetings
of the Board and each of the committees of the Board.
SECTION 5.09. Legend. The Purchaser agrees that
------
all certificates representing the Shares issued pursuant to
this Agreement shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
SECURITIES LAWS OF ANY STATE AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREUNDER. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT (IN CERTAIN CIRCUMSTANCES) TO A
RIGHT OF FIRST OFFER AS SET FORTH IN THE STOCK PURCHASE
AGREEMENT DATED AS OF MAY 11, 1991 BETWEEN THE COMPANY
AND COBE LABORATORIES, INC."
SECTION 5.10. Purchaser's Preemptive Rights.
-----------------------------
During the Representation Period, the Company covenants and
agrees that:
(a) In the event that the Company proposes to issue
Common Stock or any other Voting Securities, it shall
give the Purchaser ten days' prior written notice of such
intention, describing the estimated price and the other
terms upon which the Company proposes to issue the same
(the "Subscription Notice"). The Purchaser shall have
------------ ------
the option to purchase from the Company at the time of
such issuance the number of shares of Common Stock or
other Voting Securities, as the case may be, necessary to
permit the Purchaser to maintain the percentage of Common
Stock owned by the Purchaser immediately prior to such
issuance or the percentage of Total Voting Power it had
<PAGE>
27
immediately prior to such issuance for the price and upon
the other terms upon which the Company actually effects
such issuance.
(b) Within 15 days of the end of each March 31st,
June 30th, September 30th and December 31st (each a
"Quarterly Date") following the Closing Date, the Company
--------------
shall notify the Purchaser of the number of shares of
Common Stock and the number of Voting Securities
outstanding as of each such Quarterly Date. The
Purchaser shall have the option to purchase from the
Company additional shares of Common Stock to the extent
necessary to permit the Purchaser to maintain the higher
of (i) the percentage of shares of Common Stock or Voting
Securities owned by the Purchaser as of the immediately
preceding Quarterly Date, after giving effect to any
purchases thereafter pursuant to this Section 5.10(b), or
(ii) 20% of the issued and outstanding shares of Common
Stock and 20% of Total Voting Power. The Purchaser may
exercise such option by delivery to the Company of
written notice of its intention to exercise such option
within 30 days of such Quarterly Date. The per share
purchase price for such shares of Common Stock shall be
equal to the average of the averages of the closing bid
and asked prices of the Common Stock on each day during
the calendar quarter ending on the Quarterly Date. The
closing of the purchase of such shares of Common Stock
shall take place within five days of the receipt of the
written notice delivered by the Purchaser to the Company
pursuant to this Section 5.10(b).
(c) In the event that the Preferred Stock is
redeemed in accordance with its terms, the Purchaser, in
lieu of its rights under Section 5.10(b), shall have the
option to purchase from the Company on April 30, 1992
additional shares of Common Stock to the extent necessary
to permit the Purchaser to maintain the higher of (i) the
percentage of shares of Common Stock or Voting Stock
owned by the Purchaser as of September 30, 1991 after
giving effect to the redemption of the Preferred Stock
and any other purchases pursuant to Section 5.10(b), or
(ii) 19.99% of the issued and outstanding shares of
Common Stock and 19.99% of the Total Voting Power. The
Purchaser may exercise such option by delivery to the
Company of written notice of its intention to exercise
such option on or prior to April 25, 1992. The per share
purchase price for such shares of Common Stock shall be
equal to the average of the averages of the closing bid
and asked prices of the Common Stock on each day during
the period beginning on the Closing Date and ending on
March 31, 1992. The closing of the purchase of such
<PAGE>
28
shares of Common Stock shall take place within five days
of the receipt of the written notice delivered by the
Purchaser to the Company pursuant to this Section 5.10(c).
(d) In the event that the Shareholders under the
Agreement and Release dated as of January 1, 1991 (the
"Release Agreement") among the Company and such
Shareholders elect Option 1 as set forth in Section 5 of
the Release Agreement and 300,000 shares of Common Stock
(the "Escrowed Shares") are delivered out of Escrow to
such Shareholders, the Purchaser shall have the option to
purchase on the Exercise Date (as hereinafter defined)
69,000 shares of Common Stock at a per share purchase
price equal to the average of the averages of the closing
bid and asked prices of the Common Stock for each trading
day from the Closing Date up to the Exercise Date. The
"Exercise Date" shall mean the date that is 15 Business
Days after the date of delivery of the Escrowed Shares to
such Shareholders or, in the event that the Preferred
Stock is redeemed in accordance with its terms, the later
of (i) April 30, 1992 or (ii) the day that is 15 Business
Days after such delivery of the Escrowed Shares. The
Purchaser may exercise the option set forth herein by
delivery notice thereof to the Company no later than five
(5) Business Days prior to the Exercise Date.
SECTION 5.11. Standstill Agreement. For a period
--------------------
of five years after the Closing Date, neither the Purchaser
nor any entity controlled by Investment AB Cardo ("Cardo"),
nor any other person acting in the capacity as agent for any
of the foregoing, shall (nor shall it assist or encourage
others to) directly or indirectly, unless specifically
requested to do so in writing in advance by the Board of
Directors of the Company, (i) acquire or agree, offer, seek
or propose to acquire, or cause to be acquired, ownership
(including, without limitation, beneficial ownership as
defined in Rule 13d-3 under the Exchange Act) any securities
of the Company, any debt claims of the Company, any
securities convertible or exchangeable into or exercisable
for any securities or assets of the Company, or any rights or
options to acquire such ownership (including from a third
party), except pursuant to (A) the Purchaser's right to
purchase set forth in Section 5.10 hereof and (B) the
Purchaser's right to purchase set forth in the Shareholders'
Agreement, among the Purchaser, Jerome S. Tannenbaum, M.D.
and Mark J. Ginsburg, M.D. substantially in the form of
Exhibit E hereto (the "Shareholders' Agreement"); (ii)
------------ ---------
propose to enter into any merger or business combination
involving the Company, except and unless the Company enters
into a definitive agreement with a third party contemplating
a merger, consolidation or similar transaction in which all
<PAGE>
29
or a majority of the Company's equity securities or
substantially all of its assets are to be acquired by such
third party pursuant to such definitive agreement (a
"Business Combination"), the Purchaser shall be permitted,
-------- -----------
notwithstanding clauses (i) and (v) of this paragraph, to
make a Financially Superior Offer to the Board of Directors
of the Company (but not directly to the stockholders of the
Company) ("Financially Superior Offer" means a proposal by
----------- -------- ----
the Purchaser to acquire at least the same percentage of the
Company's equity securities as contemplated in the Business
Combination, with at least the same evidence of financial
ability to consummate the Business Combination and at least
the same degree of financial commitment in such Business
Combination, and with material conditions substantially
similar to those set forth in the Business Combination);
(iii) make, or in any way participate, directly or
indirectly, in any "solicitation" of "proxies" (as such terms
are used in the Exchange Act) to vote, or seek to advise or
influence any persons with respect to the voting of, any
securities of (or debt claims with respect to) the Company;
(iv) form, join or participate in a "group" (within the
meaning of Section 13(d)(3) of the Exchange Act) with respect
to any securities of the Company except to the extent that
being party to the Shareholders' Agreement constitutes
formation of a group; (v) otherwise act, alone or in concert
with others, to seek to control or exercise (other than
through its representation on the Board of Directors) a
controlling influence over the management, Board of Directors
or the business and affairs of the Company; (vi) call, or
seek or propose to call, a meeting of the Company's
shareholders; and (vii) enter into any discussions,
negotiations, arrangements or understandings with any third
party with respect to any of the foregoing.
SECTION 5.12. Non-Competition; Disclosure of
------------------------------
Opportunities. (a) The Purchaser's Non-Compete. During the
- ------------- ---------------------------
Representation Period and for one year thereafter (the
"Restricted Period"), without the prior written consent of
-----------------
the Company, the Purchaser shall not engage in, and shall not
invest in any entity that engages in, providing renal
dialysis services to patients and related laboratory services
(the "Business") in North America within a 75 mile radius of
--------
(i) each of the Company's treatment centers that are existing
as of the date of this Agreement (the "Existing Regions") or
-------- -------
(ii) each location that has been identified in the strategic
business plan of the Company that is approved, from time to
time, by the Board of Directors of the Company as a location
of likely expansion (except to the extent that such strategic
business plan is subsequently modified to delete such
location) (the "Identified Regions"). The restrictions set
---------- -------
forth in this paragraph shall apply only to the Purchaser's
activities in North America.
<PAGE>
30
(b) Disclosure of Opportunities by the Purchaser.
--------------------------------------------
During the Representation Period, the Purchaser shall
(i) disclose to the Chief Executive Officer of the Company
all investment and acquisition opportunities of renal
dialysis services centers located in North America in areas
outside of the Existing Regions and the Identified Regions
(the "Other Regions") that the Purchaser has identified and
-------------
(ii) engage in good faith discussions with the Company
concerning strategic business ventures with respect to the
identified opportunities in the Other Regions.
Notwithstanding anything to the contrary in the foregoing
sentence, the Company shall not acquire or invest (or attempt
to do so) in such opportunities in the Other Regions which
the Purchaser has so identified and disclosed without the
Purchaser's prior written consent. In the event that the
Purchaser shall not or shall no longer actively pursue any
investment or acquisition opportunities so disclosed to the
Company, the Purchaser shall notify the Company of such event
and it shall, upon written request by the Company, provide
the Company with its written consent to permit the Company to
acquire or invest in such opportunities.
(c) Non-Solicitation of Employees. During the
-----------------------------
Restricted Period, neither the Purchaser nor any other entity
controlled by Gambro shall solicit or endeavor to entice away
from the Company or any of its Affiliates any of their
respective employees (or employ any such employee until one
year after such employee leaves the employ of the Company or
such Affiliate), and the Company and its Affiliates shall do
none of the foregoing with respect to the employees of the
Purchaser or any other entity controlled by Gambro.
SECTION 5.13. Supply Agreement. (a) Subject to
----------------
the immediately following sentence, with respect to renal
dialysis machines and the bloodlines used therewith in the
Company's business, the Company shall, and shall cause its
Subsidiaries to, purchase, and the Purchaser shall sell to
the Company, a minimum of 75% of the aggregate requirements
of the Company and its subsidiaries for such renal dialysis
machines and 100% of the bloodlines used with such renal
dialysis machines from the Purchaser on overall terms and
conditions, including, without limitation, price, volume,
delivery and service, that are no less favorable than the
overall terms and conditions offered by the Purchaser to
independent third parties for the same renal dialysis
machines and bloodlines. Nothing contained herein shall
require the Company to purchase renal dialysis machines for
any treatment facility if the medical director of such
facility has submitted to the Company a written objection to
the use of such machines which includes the reasons for such
objection. Accordingly, the 75% minimum specified in the
<PAGE>
31
first sentence of this paragraph shall be reduced only to the
extent that medical directors in charge of facilities which
have generated more than 25% of the Company's aggregate
purchases of renal dialysis machines have delivered such
written objections.
(b) Upon the written request of the Company, but
not more than once during any six month period, the Company's
external auditors shall have access, upon reasonable notice
and during normal business hours, to the relevant sales
records of the Purchaser solely for the purpose of
determining whether the Company has received overall terms
and conditions for the purchase of renal dialysis machines
and bloodlines no less favorable than those offered to third
parties independent of the Company and the Purchaser. The
Company shall cause such auditors to report to the Company
only whether the terms and conditions are no less favorable
than those offered to independent third parties. The Company
shall cause the auditors not to disclose any specific
information received by the auditors from the Purchaser
during the course of its review.
(c) The obligations set forth in this Section 5.13
shall terminate upon the earlier occurrence of (i) the sixth
year anniversary of the Closing Date or (ii) the Purchaser
owns less than twenty percent of the issued and outstanding
Common Stock for a period of 45 consecutive days after any
Quarterly Date.
(d) To the extent required by applicable law and
the By-Laws, as determined in good faith by the Company on
advice of its counsel, the specific transactions contemplated
in this Section 5.13 shall be reviewed by a majority of the
members of the Board who have no financial interest in such
transaction.
Section 5.14. Shareholder Approval. The Company
--------------------
agrees to include in the proxy statement to be disseminated
to the shareholders of the Company prior to the next annual
meeting of the Company both (1) a resolution to confer voting
rights to the shares of Common Stock issuable upon conversion
of the Preferred Stock purchased by the Purchaser hereunder
and any other shares of Common Stock acquired by the
Purchaser pursuant to this Agreement or the Shareholders'
Agreement, except that the Company shall have no obligation
to include in such shareholders' resolution any such shares
of Common Stock that would entitle the Purchaser and its
associates, immediately upon acquisition of such shares, to
exercise or direct the exercise of the voting power of the
Company in the election of its directors equal to one-third
or more of all such voting power, and (2) a resolution
<PAGE>
32
approving the convertibility and conversion of the Preferred
Stock to Common Stock as required pursuant to Part III,
Section 5(i)(d) of Schedule D of the By-Laws of the National
Association of Securities Dealers, Inc. The Company shall
use its best efforts to solicit from the shareholders of the
Company eligible to vote on such resolutions proxies in favor
of such resolutions and shall take all other action necessary
or advisable to secure the vote of the shareholders required
to approve such resolutions. In the event that such approval
of the shareholders is not obtained at such annual meeting,
the Company shall redeem the Preferred Stock in accordance
with its terms.
SECTION 5.15. The Company's Right of First Offer.
----------------------------------
During the period beginning on the Closing Date and ending on
the third anniversary of the Closing Date, in the event that
the Purchaser desires to sell in a single transaction or in a
series of related transactions shares of Common Stock that
constitute in excess of 50% of the shares of Common Stock
then owned by the Purchaser (the "Offered Shares"), the
--------------
Purchaser shall first offer (the "Offer") in writing such
-----
Offered Shares to the Company at a specified price (the
"Offer Price"). The Company shall have 30 days to accept
-----------
such Offer (the "Offer Period"). In the event that the
------------
Company does not accept the Offer in the Offer Period, the
Purchaser may sell the Offered Shares to a third party during
the 90 day period following the end of the Offer Period (the
"Sales Period") for a price equal to or in excess of the
------------
Offer Price and on other terms no less favorable than
previously offered to the Company; provided, however, that if
-------- -------
during the Sales Period, the Purchaser desires to sell the
Offered Shares for less than the Offer Price (the "Lower
-----
Price") or on other terms that are more favorable to the
- -----
third party purchaser than previously offered to the Company,
the Purchaser shall offer the Offered Shares to the Company
at the Lower Price or on such other terms, and the Company
shall have five days to accept such offer.
ARTICLE VI
CONDITIONS TO THE CLOSING
-------------------------
SECTION 6.01. Conditions to Obligations of the
--------------------------------
Purchaser. The obligations of the Purchaser to effect the
- ---------
Closing shall be subject to the prior fulfillment of each of
the following conditions:
(a) Required Bank Amendment. The Required Bank
-----------------------
Amendment, in form and substance satisfactory to the
<PAGE>
33
Purchaser, shall have been executed and delivered by the
parties thereto and shall be in full force and effect,
and a copy thereof shall have been provided to the
Purchaser.
(b) Representations and Warranties; Agreements and
----------------------------------------------
Covenants. Except for changes permitted or contemplated
- ---------
hereby or consented to by the Purchaser and except for
matters waived or consented to by the Purchaser pursuant
to Section 8.04, (i) the representations and warranties
of the Company contained in this Agreement which are
qualified as to materiality shall be true in all respects
and all other representatives and warranties shall be
true and correct in all material respects on and as of
the Closing, with the same force and effect as if made as
of the Closing, (ii) all the agreements contained in this
Agreement to be performed or complied with by the
Company, at or before the Closing, shall have been
performed or complied with in all material respects and
(iii) the Purchaser shall have received a certificate of
the Company, signed by the Chief Executive Officer
thereof, as to the fulfillment of the conditions set
forth in the foregoing clauses (i) and (ii).
(c) No Cessation Order. No order, ruling or
------------------
determination having the effect of ceasing the trading of
the Common Stock shall have been issued or made by the
SEC or other regulatory authority and be continuing and
no proceedings for that purpose shall have been
instituted and be pending.
(d) Litigation. There shall have been no order or
----------
preliminary or permanent injunction entered in any action
or proceeding before any federal, state or foreign court
or governmental, administrative or regulatory authority
or agency, or no other action taken or threatened, or
statute, rule, regulation, legislation, interpretation,
judgment or order enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to the
Purchaser, the Company or any Subsidiary or Affiliate of
the Purchaser, by any federal, state or foreign
legislative body, court, government or governmental,
administrative or regulatory authority or agency which
shall have remained in effect and which shall have had
the effect of: (i) making illegal, materially delaying
or otherwise directly or indirectly restraining or
prohibiting the consummation of the transactions
hereunder (including, without limitation, the purchase of
the Shares and the conversion or redemption of the
Preferred Stock); (ii) prohibiting or materially limiting
the ownership of the Shares; (iii) imposing material
<PAGE>
34
limitations on the ability of the Purchaser to exercise
full rights of ownership of any of the Shares, including,
without limitation, the right to vote any shares of
Common Stock; or (iv) requiring divestiture by the
Purchaser of any Shares.
(e) Calamities. There shall not have occurred and
----------
be continuing (i) any general suspension of, or
limitation on prices for or trading in, securities on any
United States securities exchange, (ii) a declaration of
a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any
limitation (whether or not mandatory) by any government
or governmental, administrative or regulatory authority
or agency, domestic or foreign, or other event that
materially adversely affects the ability of the Purchaser
to purchase the Shares hereunder, or (iv) a commencement
of a war or armed hostilities or other national or
international calamity directly involving the United
States or Sweden.
(f) Bankruptcy; Insolvency; Etc. No proceeding
---------------------------
shall have been instituted or consented to by or against
the Company seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding-up,
reorganization, arrangement, adjustment, protection,
relief, or composition of its debts under any law
relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee,
custodian or other similar official for it or any
substantial part of its property (each such action being
a "Bankruptcy Proceeding"), and the Company shall not
---------- ----------
have taken any corporate action to authorize any
Bankruptcy Proceeding.
(g) No Material Adverse Effect. No fact, event or
--------------------------
condition (financial or otherwise) shall have occurred
with respect to the Company or any of its Subsidiaries
having, individually or in the aggregate, a Material
Adverse Effect.
(h) Opinion. The Purchaser shall have received an
-------
opinion from Wyatt, Tarrant, Combs, Gibert & Milan
substantially to the effect of Exhibit B hereto and an
opinion from Latham & Watkins substantially to the effect
of Exhibit C hereto.
(i) Right of First Offer. The Shareholders'
--------------------
Agreement shall have been executed and delivered by the
parties thereto.
<PAGE>
35
SECTION 6.02. Conditions to Obligations of the
--------------------------------
Company. The obligations of the Company to effect the
- -------
Closing shall be subject to the prior fulfillment of each of
the following conditions:
(a) Representations and Warranties. (i) The
------------------------------
representations and warranties of the Purchaser contained
in this Agreement and in any certificates or agreements
of the Purchaser delivered pursuant hereto shall be true
and correct in all material respects on and as of the
Closing, with the same force and effect as if made as of
the Closing, (ii) all the agreements contained in this
Agreement and in any certificates or agreements of the
Purchaser delivered pursuant hereto to be performed or
complied with by the Purchaser, at or before the Closing,
shall have been performed or complied with in all
material respects and (iii) the Company shall have
received a certificate of the Purchaser, signed by a duly
authorized officer thereof, as to the fulfillment of the
conditions set forth in the foregoing clauses (i) and
(ii).
(b) Litigation. There shall have been no order or
----------
preliminary or permanent injunction entered in any action
or proceeding before any federal, state or foreign court
or governmental, administrative or regulatory authority
or agency by any federal, state or foreign legislative
body, court, government or governmental, administrative
or regulatory authority or agency which shall have
remained in effect and which shall have had the effect of
making illegal the consummation of any of the
transactions hereunder.
ARTICLE VII
INDEMNIFICATION
---------------
SECTION 7.01. Survival of Representations and
-------------------------------
Warranties. The representations and warranties of the
- ----------
Company in Article III shall survive the Closing until the
second anniversary of the Closing Date; provided, however,
-------- -------
that representations and warranties dealing with Tax matters
shall survive for a period ending six months after the
expiration of the applicable statute of limitations. Neither
the period of survival nor the liability of any party with
respect to the parties' representations and warranties shall
be reduced by any investigation made at any time by or on
behalf of any party.
<PAGE>
36
SECTION 7.02. Indemnification by the Company. The
------------------------------
Purchaser, and its Affiliates, officers, directors,
employees, agents, successors and assigns, shall be
indemnified and held harmless by the Company for any and all
Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without
limitation, legal costs and expenses) actually suffered or
incurred by them (hereinafter a "Purchaser Loss"), arising
--------------
out of or resulting from:
(a) the breach of any representation or warranty
made by the Company contained herein or in any document
delivered by the Company hereunder at the Closing; or
(b) the breach of any covenant or agreement by the
Company contained herein.
SECTION 7.03. Indemnification by the Purchaser.
--------------------------------
The Company, and its Affiliates, officers, directors,
employees, agents, successors and assigns, shall be
indemnified and held harmless by the Purchaser for any and
all Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without
limitation, legal costs and expenses) actually suffered or
incurred by them (hereinafter a "Company Loss" and, together
------- ----
with a Purchaser Loss, a "Loss"), arising out of or resulting
----
from:
(a) the breach of any representation or warranty
made by the Purchaser contained herein or in any document
delivered by the Purchaser hereunder at the Closing; or
(b) the breach of any covenant or agreement by the
Purchaser contained herein.
SECTION 7.04. Materiality. Notwithstanding
-----------
anything in this Agreement to the contrary, for purposes of
application of the indemnity provisions of this Article, the
amount of any Purchaser Loss or Company Loss arising from the
breach of such representation, warranty, covenant or
agreement shall be the entire amount of any such Loss
actually incurred by the respective Indemnitee as a result of
such breach and not just that portion of such Loss that
exceeds the relevant level of materiality.
SECTION 7.05. Time Period; Dollar Threshold. (a)
-----------------------------
The indemnification obligations of the Company and the
Purchaser under this Article VII shall continue for the same
period of survival specified in Section 7.01 for each such
representation and warranty and shall terminate with the
expiration of the two year survival period for each such
representation, warranty and covenant. Any claim or demand
<PAGE>
37
against the Company or the Purchaser which is pending or
asserted at or prior to the expiration of any survival period
may continue to be asserted and indemnified against.
(b) Neither the Company nor the Purchaser shall be
entitled to indemnification under this Article VII unless and
until the aggregate amount of the claims against the other
party exceeds $500,000. If the aggregate amount of such
claims against either party exceeds $500,000, then that party
may claim indemnification for the entire aggregate amount of
such claims.
(c) The provisions of this Article VII shall be the
sole and exclusive remedy (other than injunctive relief) of
the Company or the Purchaser (regardless of against whom
asserted) for the matters subject to indemnification.
SECTION 7.06. Notice and Defense. Each party shall
------------------
within 30 days of learning of any asserted liability or
damage claimed to give rise to indemnification hereunder
notify the party obligated to indemnify it hereof in writing;
provided, however, that the failure of the indemnified party
- -------- -------
to so notify the indemnifying party shall not relieve the
indemnifying party of its obligations hereunder unless, and
only to the extent that, such failure to notify prejudices
the indemnifying party. Thereafter, the indemnifying party
shall have, at its election, the right to compromise or
defend any such matter at its sole cost and expense through
counsel chosen by it. If the indemnifying party so
undertakes to compromise and defend, the indemnifying party
shall notify the other party of its intention to do so. The
indemnifying party must defend such matter diligently or the
indemnified party may assume control of the defense of such
matter. Each party agrees in all cases to cooperate with the
defending party and its counsel in the compromise of or
defending of any such liabilities or claims. The defending
party and the nondefending party may be represented by the
same counsel unless such representation would be
inappropriate due to actual or potential differing interests
between them. In addition, the nondefending party shall at
all times be entitled to monitor such defense through the
appointment of counsel of its own choosing, at it own cost
and expense.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 8.01. Termination. (a) This Agreement may
-----------
be terminated and the transactions contemplated hereby may be
<PAGE>
38
abandoned at any time prior to the Closing Date:
(i) By mutual written consent duly authorized by
the Boards of Directors of the Company and the Purchaser;
or
(ii) By the Purchaser, if (A) (1) any Person, other
than the Purchaser, shall have acquired, or shall have
been granted any option or right, conditional or
otherwise, to acquire, beneficial ownership of 20% or
more of the outstanding shares of the Company's Common
Stock, or (2) any group (other than a group including the
Purchaser) shall have been formed which beneficially owns
20% or more of the outstanding shares of the Company's
Common Stock; or (B) the Company shall have entered into
an agreement with a third party with respect to any
acquisition or purchase of all or a substantial portion
of the assets of, or any equity interest in, the Company
or any of its Subsidiaries or any business combination
with the Company or any of its Subsidiaries by such third
party; or
(iii) By the Purchaser or the Company, if any court
of competent jurisdiction in the United States or other
United States governmental authority shall have issued an
order, decree, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting any of
the transactions hereunder and such order, decree, ruling
or other action shall have become final and
nonappealable; or
(iv) By the Purchaser or the Company, if the Closing
shall not have occurred by May 31, 1991 or such later
date as the Company and the Purchaser shall hereafter
agree; provided, however, that the right to terminate
-------- -------
this Agreement under this Section 8.01(a)(iv) shall not
be available to any party whose wilful failure to fulfill
any material obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to
occur on or before such date; or
(v) By the Purchaser, in the event the Required
Bank Amendment is not executed by the parties thereto
prior to May 20, 1991.
(b) This Agreement shall terminate (without any
action or notice (in writing or otherwise) by any of the
parties hereto) if any Bankruptcy Proceeding shall have been
instituted or consented to by or against the Company.
<PAGE>
39
SECTION 8.02. Effect of Termination. In the event
---------------------
of the termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void and have no
effect and there shall be no liability on the part of any
party hereto or its Affiliates, directors, officers or
shareholders; provided, however, that nothing herein shall
-------- -------
relieve any party from liability for any breach hereof prior
to such termination.
SECTION 8.03. Amendment. This Agreement may be
---------
amended by the parties hereto by action taken by or on behalf
of the Company and the Purchaser at any time prior to the
Closing Date. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the
------
Closing Date, either party hereto may (a) extend the time for
the performance of any of the obligations or other acts of
the other party hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein.
Any such extension or waiver shall be valid if set forth in
an instrument in writing signed by the party to be bound
thereby. The failure of either party to assert any of its
rights hereunder shall not constitute a waiver of any such
rights.
ARTICLE IX
GENERAL PROVISIONS
------------------
SECTION 9.01. Notices. All notices, requests,
-------
claims, demands and other communications hereunder shall be
in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or
certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such
other address for a party as shall be specified by like
notice):
(a) if to the Purchaser:
Cobe Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Mats Wahlstrom
<PAGE>
40
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Peter D. Lyons, Esq.
(b) if to the Company:
REN Corporation-USA
6820 Charlotte Pike
Nashville, Tennessee 37209
Attention: Chief Executive Officer
with a copy to:
Latham & Watkins
1001 Pennsylvania Avenue NW
Suite 1300
Washington, D.C. 20004
Attention: Eric Bernthal, Esq.
SECTION 9.02. Entire Agreement; Assignment. This
----------------------------
Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both
written and oral, between the parties with respect to the
subject matter hereof. This Agreement shall not be assigned
by operation of law or otherwise, except that the Purchaser
may assign all or any of its rights and obligations hereunder
to any wholly owned Subsidiary of Gambro upon the execution
of a written instrument whereby such assignee agrees to
assume all of the Purchaser's obligations hereunder and be
bound by all the terms and conditions of this Agreement;
provided that no such assignment shall relieve the Purchaser
- --------
of its obligations hereunder if such assignee does not
perform such obligations.
SECTION 9.03. Parties in Interest. This Agreement
-------------------
shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person
any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.04. Governing Law. This Agreement shall
-------------
be governed by, and construed in accordance with, the laws of
the State of New York, regardless of the laws that might
otherwise govern under applicable principles of conflicts of
laws thereof.
<PAGE>
41
SECTION 9.05. Headings. The descriptive headings
--------
contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. Counterparts. This Agreement may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.07. Specific Performance. The parties
--------------------
hereto agree that irreparable damage would occur in the event
any of the provisions of this Agreement were not to be
performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or
equity.
IN WITNESS WHEREOF, the Purchaser and the Company
have each caused this Agreement to be executed by its duly
authorized officer as of the date first written above.
COBE LABORATORIES, INC.
By: Ronald F. Plusk
--------------------------------
Title: Vice President and Chief
Financial Officer
REN CORPORATION-USA
By: Jerome S. Tannenbaum, M.D.
--------------------------------
Title: Chairman of the Board and
Chief Executive Officer
<PAGE>
EXHIBIT A
---------
CONVERTIBLE REDEEMABLE
PREFERRED STOCK
SUMMARY OF TERMS
----------------
NUMBER OF SHARES 459,172
LIQUIDATION PREFERENCE $4.50 per share
CONVERSION Each share of Preferred Stock will
be automatically converted into
one share of Common Stock upon
approval by the shareholders of
both (i) voting rights for the
Purchaser for such underlying
shares of Common Stock, and (ii)
the conversion of the Preferred
Stock to Common Stock as required
pursuant to Part III, Section
5(i)(d) of Schedule D of the
By-Laws of the National Association
of Securities Dealers, Inc.
REDEMPTION If such voting rights for the
Purchaser have not been approved
by the Company by September 30,
1991, then each share of Preferred
Stock shall be automatically
redeemed at a per share price (the
"Redemption Price") equal to the
higher of (a) $4.50 plus interest
on such amount at a rate equal to
the Citibank base rate announced
from time to time during the
period from the purchase of the
Preferred Stock through the
Redemption Date and (b) the
average of the averages of the
closing bid and asked prices of
the Common Stock during the 30
trading days prior to the
Redemption Date. The Redemption
Price shall be payable as follows:
(i) $4.36 of the per share
Redemption Price shall be payable
in cash, and (ii) the remainder of
<PAGE>
the per share Redemption Price
shall be payable by issuance of a
promissory note in a principal
amount equal to such remainder.
DIVIDENDS Equal to any dividends paid on the
Common Stock.
VOTING RIGHTS None.
<PAGE>
EXHIBIT B
---------
CONTENTS OF OPINION OF
WYATT, TARRANT, COMBS, GIBERT & MILAN
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Tennessee and
has the requisite corporate power and authority to own, lease
and operate its properties and carry on its business in all
material respects as presently owned or conducted. The
Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except those
jurisdictions, if any, in which the failure to be so duly
qualified or licensed and in good standing would not, taken
as a whole, have a Material Adverse Effect.
2. The Company is not in violation of any of the provisions
of the Charter of Incorporation or By-Laws, except where such
violation would not, individually or in the aggregate, have a
Material Adverse Effect.
3. The Company has all necessary corporate power and
authority to execute and deliver the Agreement and to perform
its obligations and to consummate the transactions
contemplated thereunder. The execution, delivery and
performance of the Agreement by the Company have been duly
and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of the Company are
necessary to authorize the Agreement or to consummate the
transactions contemplated thereunder.
4. (a) The execution and delivery of the Agreement by
the Company do not, and the performance of the Agreement
(including, without limitation, the consummation of the
transactions contemplated thereunder and the conversion or
redemption of the Preferred Stock) will not, (i) conflict
with or violate the Charter of Incorporation or By-Laws, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or by which its
or any of its properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or
assets of the Company which would have a Material Adverse
Effect, taken as a whole, pursuant to any note, bond,
<PAGE>
2
mortgage, indenture, contract, agreement, lease, license,
permit, insurance policy or other instrument or obligation
and which note, bond, mortgage, indenture, contract,
agreement, license, permit, insurance policy or other
instrument or obligation is listed on the Disclosure Schedule
and other schedules appended to the Agreement and to which
the Company is a party, or by which the Company or its
properties are bound or affected.
(b) The execution and delivery of the Agreement by
the Company do not, and the performance of the Agreement by
the Company (including, without limitation, the consummation
of the transactions thereunder and the conversion or
redemption of the Preferred Stock) will not, require any
consent, approval, authorization or permit of, or filing
(other than filings, if any, required on Form 8-K with the
SEC) with or notification to, any governmental or regulatory
authority, domestic or foreign, on the part of the Company.
5. Following the consummation of the transactions
thereunder, all shares of Common Stock and Preferred Stock
subject to issuance pursuant to the Agreement and the Common
Stock issuable upon conversion of the Preferred Stock, upon
such issuance against payment for such shares of Common Stock
and Preferred Stock as contemplated by the Agreement or upon
conversion of the Preferred Stock, as the case may be, shall
(i) be duly authorized, validly issued, fully paid and
nonassessable, (ii) not be subject to any Encumbrances and
(iii) such shares of Common Stock shall have accorded to them
voting rights. The shares of Preferred Stock shall be
convertible into shares of Common Stock in accordance with
the terms of the Preferred Stock. None of the Shares nor the
shares of Common Stock issuable upon conversion of the
Preferred Stock are "Control Shares" as such term is defined
in the Tennessee Business Corporation Law.
The following assumptions shall be made:
1. Reliance upon representations and warranties of the
Company and upon certificates of certain public officials
2. Authenticity of all documents submitted to us as copies,
genuineness of all signatures, and conformity to the
originals of all documents submitted to counsel as copies
3. Due authorization, execution and delivery of the Agreement by the
Purchaser
4. Neither the Purchaser nor any Affiliate of the Purchaser
has acquired any shares of Voting Securities other than
the Shares during the ninety day period prior to the
<PAGE>
3
Closing, and neither the Purchaser nor any Affiliate of
the Purchaser will acquire any shares of Voting
Securities other than the Shares during a period of
ninety days after the Closing
5. Compliance by the Company, the Purchaser and any
Affiliate of either the Company or the Purchaser with the
covenants, representations, warranties and agreements
made and to be performed by them pursuant to the
Agreement.
<PAGE>
EXHIBIT C
---------
CONTENTS OF OPINION OF LATHAM & WATKINS
The Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery hereof by the Purchaser and payment
for the Shares as contemplated by the Agreement, constitutes
the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting
creditors' rights generally and by the availability of
equitable remedies, and except to the extent that
enforceability of the indemnification and contribution
provisions set forth in Article IV of Exhibit C to the
Agreement concerning Registration Rights may be limited by
applicable law.
<PAGE>
EXHIBIT D
---------
REGISTRATION RIGHTS
-------------------
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms defined in the
-----------
Stock Purchase Agreement (the "Agreement") dated as of
---------
May 11, 1991 between REN Corporation-USA, a Tennessee
corporation (the "Company"), and Cobe Laboratories, Inc., a
-------
Colorado corporation (the "Purchaser"), are used herein as
---------
therein defined. In addition, the following terms, as used
herein, have the following meanings:
"Demand Registration" means a Demand Registration as
-------------------
defined in Section 2.02.
"Piggyback Registration" means a Piggyback
----------------------
Registration as defined in Section 2.03.
"Registrable Securities" means shares of Common
----------------------
Stock owned from time to time by the Purchaser and any other
Subsidiary of Gambro.
"Underwriter" means a securities dealer who
-----------
purchases any Registrable Securities as principal and not as
part of such dealer's market making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.01. Registrable Securities. The
----------------------
Registration Rights provided herein apply to Registrable
Securities, but with respect to any particular Registrable
Security, only so long as such security continues to be a
Registrable Security. Any Registrable Security will cease to
be a Registrable Security when (i) a registration statement
covering such Registrable Security has been declared
effective by the SEC and it has been disposed of pursuant to
such effective registration statement, (ii) it is sold under
circumstances in which all of the applicable conditions of
Rule 144 under the Securities Act (or any similar provisions
then in force) are met, (iii) it has been otherwise
<PAGE>
2
transferred, the Company has delivered a new certificate or
other evidence of ownership for it not bearing the legend
required pursuant to the Agreement and it may be resold without
subsequent registration under the Securities Act or any blue sky
law then in force or (iv) it shall have ceased to be outstanding.
SECTION 2.02. Demand Registration. (a) During the
-------------------
period commencing on the third anniversary of the Agreement and
ending on the tenth anniversary thereof (the "Registration
------------
Period"), the Purchaser may make a written request for
- ------
registration under the Securities Act of all or part of its
Registrable Securities (a "Demand Registration") provided,
------------------- --------
however, that the Company shall not be obligated (i) to effect
- -------
more than one Demand Registration in any 12 month period, (ii)
to effect a Demand Registration for less than 500,000 shares of
Common Stock, (iii) to effect a Demand Registration within six
months of the Purchaser selling any Registrable Securities
pursuant to a Piggyback Registration under Section 2.03 or (iv)
to effect more than two Demand Registrations during the
Registration Period. Such request will specify the number of
shares of Registrable Securities proposed to be sold and will
also specify the intended method of disposition thereof. A
registration will not count as a Demand Registration until it
has become effective.
(b) If the Purchaser so elects, the offering of such
Registrable Securities pursuant to such Demand Registration
shall be in the form of an underwritten offering. The Purchaser
and the Company shall jointly select the book-running and other
managing Underwriters in connection with such offering and any
additional investment bankers and managers to be used in
connection with the offering.
SECTION 2.03. Piggyback Registration. If the Company
----------------------
proposes to file a registration statement under the Securities
Act with respect to an offering of Common Stock (i) for the
Company's own account (other than a registration statement on
Form S-4 or S-8 (or any substitute form that may be adopted by
the SEC)), or (ii) for the account of any of its holders of
Common Stock, then the Company shall give written notice of such
proposed filing to the Purchaser as soon as practicable (but in
no event less than ten days before the anticipated filing date),
and such notice shall offer subject to the terms and conditions
hereof the Purchaser the opportunity to register such
Registrable Securities as the Purchaser may request on the same
terms and conditions as the Company's or such holders' Common
Stock (a "Piggyback Registration").
----------------------
<PAGE>
3
SECTION 2.04. Reduction of Offering. Notwithstanding
---------------------
anything contained herein, if the managing Underwriter or
Underwriters of an offering described in Section 2.02 or 2.03
shall advise the Company that (i) the size of the offering that
the Purchaser, the Company and any other Persons intend to make
or (ii) the kind of securities that the Purchaser, the Company
and such other Persons intend to include in such offering are
such that the success of the offering would be materially and
adversely affected, then (A) if the size of the offering is the
basis of such Underwriter's advice, the amount of Registrable
Securities to be offered for the account of the Purchaser shall
be reduced to the extent necessary to reduce the total amount of
securities to be included in such offering to the amount
recommended by such managing Underwriter or Underwriters;
provided, however, that (x) in the case of a Demand
- -------- -------
Registration, the amount of Registrable Securities to be offered
for the account of the Purchaser shall be reduced only after the
amount of securities to be offered for the account of the
Company and such other Persons has been reduced to zero, and (y)
in the case of a Piggyback Registration, if securities are being
offered for the account of Persons other than the Company, then
the proportion by which the amount of such Registrable
Securities intended to be offered for the account of the
Purchaser is reduced shall not exceed the proportion by which
the amount of such securities intended to be offered for the
account of such other Persons is reduced; and (B) if the
combination of securities to be offered is the basis of such
Underwriter's advice, (x) the Registrable Securities to be
included in such offering shall be reduced as described in
clause (A) above (subject to the proviso in clause (A)), or (y)
in the case of a Piggyback Registration, if the actions
described in sub-clause (x) of this clause (B) would, in the
judgment of the managing Underwriter, be insufficient to
eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such offering,
such Registrable Securities will be excluded from such offering.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.01. Filings; Information. Whenever the
--------------------
Purchaser requests that any Registrable Securities be registered
pursuant to Section 2.02 hereof, the Company will use its best
efforts to effect the registration of such Registrable
Securities as quickly as practicable, and in connection with any
such request:
(a) The Company will as expeditiously as possible
prepare and file with the SEC a registration statement on
<PAGE>
4
any form for which the Company then qualifies and which
counsel for the Company shall deem appropriate and available
for the sale of the Registrable Securities to be registered
thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such
filed registration statement to become and remain effective
for a period of not less than 90 days; provided, however,
-------- -------
that if the Company shall furnish to the Purchaser a
certificate signed by its Chief Executive Officer or Chief
Financial Officer stating that in his or her good faith
judgment it would be detrimental or otherwise
disadvantageous to the Company or its shareholders for such
a registration statement to be filed, or, in the case of an
effective registration statement, for sales to be effected
thereunder, the Company shall have a period of not more than
120 days within which to file such registration statement
measured from the date of receipt of the request in
accordance with Section 2.02 or, in the case of an effective
registration statement, the Company shall be entitled to
require the Purchaser to refrain from selling Registrable
Securities under such registration statement for a period of
up to 120 days. If the Company furnishes a notice under
this paragraph at a time when a registration statement filed
pursuant to this Agreement is effective, the Company shall
extend the period during which such registration statement
shall be maintained effective as provided in this Section
3.01(a) hereof by the number of days during the period from
and including the date of the giving of notice under this
paragraph to the date when sales under the registration
statement may recommence.
(b) The Company will, if requested, prior to filing
such registration statement or any amendment or supplement
thereto, furnish to the Purchaser and each managing
Underwriter, if any, copies thereof, and thereafter furnish
to the Purchaser and each such Underwriter, if any, such
number of copies of such registration statement, each
amendment and supplement thereto (in each case including all
exhibits thereto and documents incorporated by reference
therein) and the prospectus included in such registration
statement (including each preliminary prospectus) as the
Purchaser or such Underwriter may reasonably request in
order to facilitate the sale of the Registrable Securities.
(c) After the filing of the registration statement,
the Company will promptly notify the Purchaser of any stop
order issued or, to the knowledge of the Company, threatened
to be issued by the Commission and take all necessary
<PAGE>
5
actions required to prevent the entry of such stop order or
to remove it if entered.
(d) The Company will endeavor to qualify the
Registrable Securities for offer and sale under such other
securities or blue sky laws of such jurisdictions in the
United States as the Purchaser reasonably (in light of the
Purchaser's intended plan of distribution) requests;
provided, however, that the Company will not be required to
- -------- -------
(i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for
this paragraph (d), (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to service of process in
any such jurisdiction.
(e) The Company shall, as promptly as practicable,
notify the Purchaser, at any time when a prospectus relating
to the sale of the Registrable Securities is required by law
to be delivered in connection with sales by an Underwriter
or dealer, of the occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to
make the statements therein, in the light of the
circumstances under which they were made, not misleading,
and as promptly as practicable make available to the
Purchaser and to the Underwriters any such supplement or
amendment. The Purchaser agrees that, upon receipt of any
notice from the Company of the happening of any event of the
kind described in the preceding sentence, the Purchaser will
forthwith discontinue the offer and sale of Registrable
Securities pursuant to the registration statement covering
such Registrable Securities until receipt of the copies of
such supplemented or amended prospectus and, if so directed
by the Company, the Purchaser will deliver to the Company
all copies, other than permanent file copies then in the
Purchaser's possession, of the most recent prospectus
covering such Registrable Securities at the time of receipt
of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which
such registration statement shall be maintained effective as
provided in Section 3.01(a) hereof by the number of days
during the period from and including the date of the giving
of such notice to the date when the Company shall make
available to the Purchaser such supplemented or amended
prospectus.
<PAGE>
6
(f) The Company will enter into customary agreements
(including an underwriting agreement in customary form and
satisfactory in form and substance to the Company in its
reasonable judgment) and take such other actions as are
reasonably required in order to expedite or facilitate the
sale of such Registrable Securities.
(g) The Company will furnish to the Purchaser and to
each managing Underwriter, if any, a signed counterpart,
addressed to the Purchaser and each Underwriter, of (i) an
opinion or opinions of counsel to the Company and (ii) a
comfort letter or comfort letters from the Company's
independent public accountants, each in customary form and
covering such matters of the type customarily covered by
opinions or comfort letters delivered to such parties.
(h) The Company will make generally available to its
securityholders, as soon as reasonably practicable, an
earnings statement covering a period of 12 months, beginning
within three months after the effective date of the
registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities
Act and the rules and regulations of the Commission
thereunder.
(i) The Company will use its best efforts to cause all
such Registrable Securities to be listed on each securities
exchange, if any, and the National Association of Securities
Dealers' interdealer quotation system on which similar
securities issued by the Company are then listed.
The Company may require the Purchaser promptly to
furnish in writing to the Company such information regarding the
Purchaser, the plan of distribution of the Registrable
Securities and other information as the Company may from time to
time reasonably request or as may be legally required in
connection with such registration.
SECTION 3.02. Registration Expenses. In connection
---------------------
with any Demand Registration, the Company, the Purchaser and any
other Persons registering Registrable Securities in any such
registration shall each pay its pro rata portion, calculated on
the basis of the number of Registrable Securities to be
registered by each of them, the following expenses (the
"Registration Expenses") incurred in connection with such
---------------------
registration: (i) all filing fees with the Commission, (ii)
fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Registrable
Securities), (iii) printing expenses, (iv) the fees and expenses
<PAGE>
7
incurred in connection with the listing of the Registrable
Securities, (v) fees and expenses of counsel and independent
certified public accountants for the Company (including the
expenses of any comfort letters pursuant to Section 3.01(g)
hereof) and (vi) the reasonable fees and expenses of any
additional experts retained by the Company in connection with
such registration. The Company shall pay all Registration
Expenses expenses incurred in connection with each Piggyback
Registration. The Company, the Purchaser and each other Person
registering Registrable Securities shall be responsible for any
underwriting discounts or commission that may be payable upon
the sale of its Registrable Securities. The Company shall pay
internal Company expenses (including, without limitation, all
salaries and expenses of its officers and employees performing
legal or accounting duties) relating to any Demand Registration
or Piggyback Registration.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.01. Indemnification by the Company. The
------------------------------
Company agrees to indemnify and hold harmless the Purchaser, its
employees, officers and directors, and each Person, if any, who
controls the Purchaser within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities
caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or
prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused
by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to the
Company by or on behalf of the Purchaser expressly for use
therein; provided, however, that the foregoing indemnity
-------- -------
agreement with respect to any preliminary prospectus shall not
inure to the benefit of the Purchaser if a copy of the current
prospectus was not provided to a purchaser and such current
prospectus would have cured the defect giving rise to such loss,
claim, damage or liability or for any sales occurring after the
Company has informed the Purchaser under Section 3.01(e) and
prior to the delivery by the Company of any supplement or
amendment to such prospectus. The Company also agrees to
<PAGE>
8
indemnify any Underwriters of the Registrable Securities, their
officers and directors and each person who controls such
underwriters on substantially the same basis as that of the
indemnification of the Purchaser provided in this Section 4.01.
SECTION 4.02. Indemnification by the Purchaser. The
--------------------------------
Purchaser agrees to indemnify and hold harmless the Company, its
officers and directors, and each Person, if any, who controls
the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to the
Purchaser, but only with reference to information furnished in
writing by or on behalf of the Purchaser expressly for use in
any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto,
or any preliminary prospectus. The Purchaser also agrees to
indemnify and hold harmless Underwriters of the Registrable
Securities, their officers and directors and each person who
controls such Underwriters on substantially the same basis as
that of the indemnification of the Company provided in this
Section 4.02.
SECTION 4.03. Conduct of Indemnification Proceedings.
--------------------------------------
In case any proceeding (including any governmental
investigation) shall be instituted involving any Person in
respect of which indemnity may be sought pursuant to Section
4.01 or 4.02, such Person (the "Indemnified Party") shall
-----------------
promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Party") in writing and the
------------------
Indemnifying Party, upon the request of the Indemnified Party,
shall retain counsel reasonably satisfactory to such Indemnified
Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall
pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any Indemnified Party shall
have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnified
Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. It is understood
that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and
<PAGE>
9
expenses shall be reimbursed as they are incurred. In the case
of any such separate firm for the Indemnified Parties, such firm
shall be designated in writing by the Indemnified Parties. The
Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled
with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold
harmless such Indemnified Parties from and against any loss or
liability (to the extent stated above) by reason of such
settlement or judgment.
SECTION 4.04. Contribution. If the indemnification
------------
provided for in this Article IV is unavailable to the
Indemnified Parties in respect of any losses, claims, damages or
liabilities referred to herein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or liabilities
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Purchaser and the
Underwriters from the offering of the securities, or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) but
also the relative fault of the Company, the Purchaser and the
Underwriters in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities,
as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Purchaser and the
Underwriters shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts
and commissions but before deducting expenses) received by each
of the Company and the Purchaser and the total underwriting
discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the
prospectus, bear to the aggregate public offering price of the
securities. The relative fault of the Company, the Purchaser
and the Underwriters shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of
a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and the Purchaser agree that it would not
be just and equitable if contribution pursuant to this Section
4.04 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by
any other method of allocation which does not take account of
<PAGE>
10
the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages or
liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of
this Section 4.04, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed
to the public were offered to the public exceeds the amount of
any damages which such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission, and the Purchaser shall not be
required to contribute any amount in excess of the amount by
which the net proceeds of the offering (before deducting
expenses) received by the Purchaser exceeds the amount of any
damages which the Purchaser has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Participation in Underwritten
-----------------------------
Registrations. No Person may participate in any underwritten
- -------------
registered offering contemplated hereunder unless such Person
(a) agrees to sell its securities on the basis provided in any
underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the
terms of such underwriting arrangements and these Registration
Rights.
SECTION 5.02. Rule 144. The Company covenants that it
--------
will use its best efforts to file any reports required to be
filed by it under the Securities Act and the Exchange Act and
that it will take such further action as the Purchaser may
reasonably request, all to the extent required from time to time
to enable the Purchaser to sell Registrable Securities without
registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule
<PAGE>
11
or regulation hereafter adopted by the Commission. Upon the
request of the Purchaser, the Company will deliver to the
Purchaser a written statement as to whether it has complied with
such requirements.
SECTION 5.03. Holdback Agreements. (a) The Purchaser
-------------------
agrees not to offer, sell, contract to sell or otherwise dispose
of any Registrable Securities, or any securities convertible
into or exchangeable or exercisable for such securities, during
the 14 days prior to, and during the 90 day period beginning on,
the effective date of any registration statement registering the
Registrable Securities other than the Registrable Securities to
be sold pursuant to such registration statement.
(b) The Company agrees not to offer, sell, contract to
sell or otherwise dispose of any securities similar to the
Registrable Securities to be sold pursuant hereto, or any
securities convertible into or exchangeable or exercisable for
such securities, during the 14 days prior to, and during the
ninety 90 day period beginning on, the effective date of any
registration statement registering the Registrable Securities
other than any shares of Common Stock sold upon the exercise of
an option or warrant or the conversion of a security outstanding
at such date.
<PAGE>
EXHIBIT E
---------
JEROME S. TANNENBAUM, M.D.
MARK J. GINSBURG, M.D.
c/o Ren Corporation USA
6820 Charlotte Pike
Nashville, Tennessee 37209
Dated as of May 11, 1991
COBE LABORATORIES, INC.
1185 Oak Street
Lakewood, Colorado 80215
Right of First Offer Agreement
------------------------------
Gentlemen:
We refer to the Stock Purchase Agreement (the
"Purchase Agreement") dated the date hereof between Cobe
------------------
Laboratories, Inc., a Colorado corporation ("Cobe"), and Ren
----
Corporation USA, a Tennessee corporation ("Ren").
---
Capitalized terms used herein without definition shall have
the same meaning given to them in the Purchase Agreement.
Jerome S. Tannenbaum, M.D. ("Dr. Tannenbaum") and
--------------
Mark J. Ginsburg, M.D. ("Dr. Ginsburg") are each
------------
shareholders, directors and officers of Ren. As an
inducement for Cobe to enter into the Purchase Agreement and
consummate the equity investment contemplated thereunder, Dr.
Tannenbaum and Dr. Ginsburg agree with Cobe as follows:
(a) Right of First Offer. In the event that either
--------------------
Dr. Tannenbaum or Dr. Ginsburg (a "Selling Party") desires
-------------
to sell shares of Common Stock owned by him (the "Offered
-------
Shares") in a single transaction or series of related
- ------
transactions to a person or "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act) and
(i) such Offered Shares in the aggregate equal or exceed
five percent of the then outstanding shares of Common
Stock or (ii) such Offered Shares are being sold to a
person or group that immediately following the sale of
the Offered Shares in the contemplated transaction or
transactions shall own 10% or more of the then
outstanding shares of Common Stock, then the Selling
Party shall first offer (the "Offer") such Offered Shares
-----
<PAGE>
2
to Cobe at a specified price (the "Offer Price"). Cobe
-----------
shall have 30 days to accept such Offer (the "Offer
-----
Period"). In the event Cobe does not accept the Offer in
- ------
the Offer Period, the Selling Party may sell the Offered
Shares to a third party during the 90 days' period
following the end of the Offer Period (the "Sales
-----
Period") for a price equal to to or in excess of the
- ------
Offer Price and on other terms no less favorable than
previously offered to Cobe; provided, however, that if
-------- -------
during the Sales Period, the Selling Party desires to
sell the Offered Shares for less than the Offer Price
(the "Lower Price") or on other terms that are more
-----------
favorable to the purchaser than previously offered to
Cobe, the Selling Party shall offer the Offered Shares to
Cobe at the Lower Price or on such other terms, and
Purchaser shall have five days to accept such offer.
Notwithstanding anything to the contrary in the
foregoing, the provisions of this paragraph (a) shall not
apply to purchases and sales of Common Stock between Dr.
Tannebaum and Dr. Ginsburg.
(b) Dr. Tannenbaum further agrees with Cobe that the
transactions contemplated by the Purchase Agreement shall
not constitute a "Change in Control" for purposes of the
-----------------
Employment Agreement dated September 11, 1989, by and
between Ren and Dr. Tannenbaum, as amended.
(c) Dr. Ginsburg further agrees with Cobe that the
transactions contemplated by the Purchase Agreement shall
not constitute a "Change in Control" for purposes of the
Employment Agreement dated , by and
----------------------
between Ren and Dr. Ginsburg.
(d) Effectiveness; Term. This Letter Agreement
-------------------
shall be effective as of the Closing Date.
If you accept and agree to the foregoing, please so
indicate by signing in the space provided below.
--------------------------
JEROME S. TANNENBAUM, M.D.
--------------------------
MARK J. GINSBURG, M.D.
<PAGE>
Accepted and Agreed as of
the date first written above:
COBE LABORATORIES, INC.
By
---------------------------
Name:
Title:
COBE LABORATORIES, INC.
1185 Oak Street
Lakewood, Colorado 80215
May 24, 1991
REN Corporation - USA
6820 Charlotte Pike
Nashville, Tennessee 37209
Gentlemen:
Reference is made to the Stock Purchase Agreement dated
as of May 11, 1991 (the "Agreement") between Cobe Laboratories,
Inc. and REN Corporation - USA.
Section 1.01 shall be amended by adding the following
additional definition:
"Purchase Agreement" shall mean this Agreement, as
amended by the letter agreement dated as of May 24, 1991 between
the Company and the Purchaser.
Section 5.08(b) shall be amended in its entirety to
read as follows:
(b) From and after the 1992 Meeting and during the
period in which the Purchaser owns at least 15% of the
issued and outstanding Common Stock, the Purchaser may
request the Company to include, as a nominee for the Board
recommended by the Board, one person designated by the
Purchaser, who, unless he shall resign prior to the
expiration of his term, may be the Purchaser's 1993
Director, and such person shall be nominated by the
Purchaser unless the Board, in the exercise of its fiduciary
duties, reasonably shall determine that he is not qualified
to serve on the Board and each of the committees specified
in subsection (d). If the Board shall reasonably determine
that such designee of the Purchaser is not so qualified, the
Purchaser shall have the opportunity to specify one or more
additional designees who shall be so included as a nominee
subject to the qualification set forth in the immediately
preceding sentence.
<PAGE>
Section 5.10 is amended by amending subsection (b) in
its entirety to read as follows and by adding the following
subsections (c) and (d) thereto:
(b) Within 15 days of the end of each March 31st,
June 30, September 30th and December 31st (each a "Quarterly Date")
--------------
following the Closing Date, the Company shall notify the
Purchaser of the number of shares of Common Stock and the number
of Voting Securities outstanding as of each such Quarterly
Date. The Purchaser shall have the option to purchase from the
Company additional shares of Common Stock to the extent
necessary to permit the Purchaser to maintain the higher of (i)
the percentage of shares of Common Stock or Voting Securities
owned by the Purchaser as of the immediately preceding Quarterly
Date, after giving effect to any purchases thereafter pursuant
to this Section 5.10(b), or (ii) 19.99% of the issued and
outstanding shares of Common Stock and 19.99% of Total Voting
Power. The Purchaser may exercise such option by delivery to
the Company of written notice of its intention to exercise such
option within 30 days of such Quarterly Date. The per share
purchase price for such shares of Common Stock shall be equal to
the average of the averages of the closing bid and asked prices
of the Common Stock on each day during the calendar quarter
ending on the Quarterly Date. The closing of the purchase of
such shares of Common Stock shall take place within five days of
the receipt of the written notice delivered by the Purchaser to
the Company pursuant to this Section 5.10(b).
(c) In the event that the Preferred Stock is redeemed in
accordance with its terms, the Purchaser, in lieu of its rights
under Section 5.10(b), shall have the option to purchase from
the Company on April 30, 1992 additional shares of Common Stock
to the extent necessary to permit the Purchaser to maintain the
higher of (i) the percentage of shares of Common Stock or Voting
Stock owned by the Purchaser as of September 30, 1991 after
giving effect to the redemption of the Preferred Stock and any
other purchases pursuant to Section 5.10(b), or (ii) 19.99% of
the issued and outstanding shares of Common Stock and 19.99% of
the Total Voting Power. The Purchaser may exercise such option
by delivery to the Company of written notice of its intention to
exercise such option on or prior to April 25, 1992. The per
share purchase price for such shares of Common Stock shall be
equal to the average of the averages of the closing bid and
asked prices of the Common Stock on each day during the period
beginning on the Closing Date and ending on March 31, 1992. The
closing of the purchase of such shares of Common Stock shall
take place within five days of the receipt of the written notice
delivered by the Purchaser to the Company pursuant to this
Section 5.10(c).
<PAGE>
(d) In the event that the Shareholders under the Agreement
and Release dated as of January 1, 1991 (the "Release
Agreement") among the Company and such Shareholders elect Option
1 as set forth in Section 5 of the Release Agreement and 300,000
shares of Common Stock (the "Escrowed Shares") are delivered out
of Escrow to such Shareholders, the Purchaser shall have the
option to purchase on the Exercise Date (as hereinafter defined)
69,000 shares of Common Stock at a per share purchase price
equal to the average of the averages of the closing bid and
asked prices of the Common Stock for each trading day from the
Closing Date up to the Exercise Date. The "Exercise Date" shall
mean the date that is 15 Business Days after the date of
delivery of the Escrowed Shares to such Shareholders or, in the
event that the Preferred Stock is redeemed in accordance with
its terms, the later of (i) April 30, 1992 or (ii) the day that
is 15 Business Days after such delivery of the Escrowed Shares.
The Purchaser may exercise the option set forth herein by
delivery notice thereof to the Company no later than five (5)
Business Days prior to the Exercise Date.
Section 5.14 is hereby amended to read in its entirety
as follows:
Section 5.14. Shareholder Approval. The Company
--------------------
agrees to include in the proxy statement to be disseminated
to the shareholders of the Company prior to the next annual
meeting of the Company both (1) a resolution to confer
voting rights to the shares of Common Stock issuable upon
conversion of the Preferred Stock purchased by the Purchaser
hereunder and any other shares of Common Stock acquired by
the Purchaser pursuant to this Agreement or the
Shareholders' Agreement, except that the Company shall have
no obligation to include in such shareholders' resolution
any such shares of Common Stock that would entitle the
Purchaser and its associates, immediately upon acquisition
of such shares, to exercise or direct the exercise of the
voting power of the Company in the election of its directors
equal to one-third or more of all such voting power, and (2)
a resolution approving the convertibility and conversion of
the Preferred Stock to Common Stock as required pursuant to
Part III, Section 5(i)(d) of Schedule D of the By-Laws of
the National Association of Securities Dealers, Inc. The
Company shall use its best efforts to solicit from the
shareholders of the Company eligible to vote on such
resolutions proxies in favor of such resolutions and shall
take all other action necessary or advisable to secure the
vote of the shareholders required to approve such
resolutions. In the event that such approval of the
shareholders is not obtained at such annual meeting, the
Company shall redeem the Preferred Stock in accordance with
its terms.
<PAGE>
Except as expressly modified hereby, all provisions of
the Agreement shall remain in full force and effect.
This amendment supercedes all prior agreements,
discussions or correspondence between the parties concerning the
subject matter of said provisions.
COBE LABORATORIES, INC.
By: /s/ Ronald F. Plusk
--------------------------
Ronald F. Plusk
Vice President and
Chief Financial Officer
Agreed to by:
REN Corporation - USA
By: /s/ Jerome S. Tannenbaum
--------------------------
Jerome S. Tannenbaum, M.D.
Chairman of the Board and
Chief Executive Officer
<PAGE>
EXECUTION COPY
AMENDMENT NO. 2 TO THE
MAY 11, 1991 STOCK PURCHASE AGREEMENT
AMENDMENT NO, 2, dated as of March 17, 1992 (this
"Amendment") to the Stock Purchase Agreement, dated as of May
---------
11, 1991, as amended by Amendment No. 1, dated May 24, 1991,
between REN CORPORATION-USA, a Tennessee corporation (the
"Company") and COBE LABORATORIES, INC., a Colorado
-------
corporation (the "Purchaser").
---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered
into as of May 11, 1991 a Stock Purchase Agreement (the
"Purchase Agreement"; capitalized terms used and not defined
------------------
herein being used herein as defined in the Purchase
Agreement);
WHEREAS, the Company and the Purchaser entered into
on May 24, 1991 an Amendment No. 1 to the Purchase Agreement;
and
WHEREAS, the Company and the Purchaser have
determined that it is in their mutual interests to further
amend the Purchase Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of the premises and
of the mutual agreements and understandings hereinafter set
forth, the Purchaser and the Company agree as follows:
SECTION 1. Amendments to the Purchase Agreement.
------------------------------------
The Purchase Agreement is, effective as of the date hereof,
hereby amended as follows:
(a) New defined terms shall be added to Section
1.01, immediately following the definition of
"Affiliate", to read as follows:
"'Amendment No. 1' means the Amendment No. 1,
---------------
dated May 24, 1991, to this Agreement between the
Company and the Purchaser.
'Amendment No. 2' means the Amendment No. 2,
---------------
dated March 17, 1992, to this Agreement between the
Company and the Purchaser."
(b) The defined term "Purchase Agreement" shall be
restated in full to read as follows:
<PAGE>
2
"'Purchase Agreement' means this Agreement, as
amended by Amendment No. 1 and Amendment No. 2."
(c) Sections 5.08(a) and (b) shall be restated in
full to read as follows:
"(a) The Company agrees, effective upon the
Closing Date, to decrease the size of the Board to
seven directors and to appoint to the Board two
persons designated by the Purchaser (members of the
Board designated by the Purchaser pursuant to this
Section 5.08 are referred to as the "Purchaser's
-----------
Directors"), one with his original term expiring at
---------
the Company's 1992 annual stockholders' meeting and
the other with his original term expiring at the
Company's 1993 annual stockholders' meeting.
Without the prior written consent of the Purchaser,
the Company, acting through the Board, shall not
increase the size of the Board beyond seven members.
(b) Effective on the Closing Date and so long
as the Purchaser owns at least 20% of the issued and
outstanding Common Stock, the Purchaser shall have
the right to request that the Company include (x)
one person designated by the Purchaser as a nominee
to serve as a member of the "Class Three Directors"
(as such term is used in the By-Laws; provided that
--------
for purposes of this Agreement, such term shall be
further defined to be that class of directors of the
Board whose term next expires at the 1992 annual
stockholders' meeting) of the Board and (y) one
person designated by the Purchaser to serve as a
member of the "Class One Directors" (as such term is
used in the By-Laws; provided that for purposes of
--------
this Agreement, such term shall be further defined
to be that class of directors of the Board whose
term next expires at the 1993 annual stockholders'
meeting) of the Board, and such persons shall be
nominated by the Company. In the event the
Purchaser owns 15% or more but less than 20% of the
issued and outstanding Common Stock, the Purchaser
shall have the right to request that the Company
include one person designated by the Purchaser as a
nominee to serve as a member of either the Class
Three Directors or the Class One Directors of the
Board, and such person shall be nominated by the
Company. If the Board, in the exercise of its
fiduciary duties, reasonably shall determine that
any person designated by the Purchaser to be a
nominee to the Board pursuant to this Section 5.08
<PAGE>
3
is not qualified to serve on the Board and each of
the committees specified in subsection (d) of this
Section 5.08, the Purchaser shall have the
opportunity to specify one or more additional
designees who shall be so included as a nominee
subject to the reasonable determination by the
Board, in the exercise of their fiduciary duties,
that any such additional designee is not qualified
to serve on the Board and each of the committees
specified in this Section 5.08. The Board shall
recommend to the stockholders of the Company for
election the designees of the Purchaser who are
nominated by the Company to serve as members of the
Board. In the event that a vacancy is created on the
Board at any time by the death, disability,
retirement, resignation or removal (with or without
cause) of a Purchaser's Director, the Purchaser
shall have the right to select a nominee to fill
such vacancy. If the remaining Board members, in
the exercise of their fiduciary duties, reasonably
shall determine that such nominee is not qualified
to serve on the Board and each of the committees
specified in subsection (d) of this Section 5.08,
the Purchaser shall have the opportunity to select
one or more additional nominees. Subject to the
qualification set forth in the immediately preceding
sentence, the remaining members of the Board shall
elect to the Board to fill such vacancy any such
nominee of the Purchaser."
(d) The second sentence of Section 5.10(b) shall be
restated in full to read as follows:
"The Purchaser shall have the option to purchase
from the Company additional shares of Common Stock
to the extent necessary to permit the Purchaser to
maintain 30% of the issued and outstanding shares of
Common Stock and 30% of the Total Voting Power."
SECTION 2. Counterparts. This Amendment may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 3. Governing Law. This Amendment shall be
-------------
governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and
to be performed in that State.
<PAGE>
4
IN WITNESS WHEREOF, each of the Purchaser and the
Company has caused this Amendment to be executed as of the
date first written above by their respective officers
thereunto duly authorized.
REN CORPORATION-USA
By: /s/ Jerome S. Tannenbaum
---------------------------
Name: Jerome S. Tannenbaum
Title: Chief Executive
Officer
COBE LABORATORIES, INC.
By: /s/ Ronald F. Plusk
---------------------------
Name: Ronald F. Plusk
Title: Vice President and
Chief Financial
Officer
<PAGE>
AMENDMENT NO. 3
TO THE
MAY 11, 1991 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 3, dated as of October 1, 1992 (this
"Amendment"), to the Stock Purchase Agreement, dated as of
---------
May 11, 1991, as amended by Amendment No. 1, dated May 24,
1991, and Amendment No. 2, dated March 17, 1992, between REN
CORPORATION-USA, a Tennessee corporation (the "Company"), and
-------
COBE LABORATORIES, INC., a Colorado corporation (the
"Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered
into a Stock Purchase Agreement, dated as of May 11, 1991
(the "Purchase Agreement"; capitalized terms used and not
------------------
defined herein being used herein as defined in the Purchase
Agreement);
WHEREAS, the Company and the Purchaser have entered
into Amendment No. 1, dated as of May 24, 1991 to the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have entered
into Amendment No. 2, dated as of March 17, 1992 to the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have
determined that it is in their mutual interests to further
amend the Purchase Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements and understandings hereinafter set
forth, the Purchaser and the Company agree as follows:
SECTION 1. Amendments to the Purchase Agreement.
------------------------------------
The Purchase Agreement is, effective as of the date hereof,
hereby amended as follows:
(a) New defined terms shall be added to Section
1.01, immediately following the definition of
"Amendment No. 2", to read as follows:
"'Amendment No. 3' means the Amendment No. 3,
---------------
dated October 1, 1992, to this Agreement between the
Company and the Purchaser."
(b) The defined term "Purchase Agreement" shall be
restated in full to read as follows:
<PAGE>
2
"'Purchase Agreement' means this Agreement, as
------------------
amended by Amendment No. 1, Amendment No. 2 and
Amendment No. 3."
(c) Sections 5.08 shall be restated in full to read
as follows:
"(a) The Company agrees, effective upon the
Closing Date (as defined in the Stock Purchase
Agreement dated as of July 2, 1992 between the
Company and the Purchaser), to increase the size of
the Board to nine directors and to appoint as
directors three persons designated by the Purchaser
(such three directors, together with the two members
of the Board previously designated by the Purchaser
being the 'Purchaser's Directors'), one such
---------------------
additional Purchaser's Director with his term
expiring at the Company's 1993 annual stockholders'
meeting and the other two additional Purchaser's
Directors with their term expiring at the Company's
1994 annual stockholders' meeting. Without the
prior written consent of the Purchaser, the Company,
acting through the Board, shall not change the size
of the Board.
(b) Effective on the Closing Date and so long
as the Purchaser owns a majority of the issued and
outstanding Common Stock, the Purchaser shall have
the right to request that the Company include (x)
two persons designated by the Purchaser as a nominee
to serve as a member of the 'Class One Directors'
(as such term is used in the By-Laws; provided that
--------
for purposes of this Agreement, such term shall be
further defined to be that class of directors of the
Board whose term next expires at the 1993 annual
stockholders' meeting) of the Board, (y) two persons
designated by the Purchaser to serve as a member of
the 'Class Two Directors' (as such term is used in
the By-Laws; provided that for purposes of this
--------
Agreement, such term shall be further defined to be
that class of directors of the Board whose term next
expires at the 1994 annual stockholders' meeting) of
the Board and (z) one person designated by the
Purchaser to serve as a member of the 'Class Three
Directors' (as such term is used in the By-Laws;
provided that for purposes of this Agreement, such
--------
term shall be further defined to be that class of
directors of the Board whose term next expires at
the 1995 annual stockholders' meeting) of the
<PAGE>
3
Board, and such persons shall be nominated by the
Company. If the Board, in the exercise of its
fiduciary duties, reasonably shall determine that
any person designated by the Purchaser to be a
nominee to the Board pursuant to this Section 5.08
is not qualified to serve on the Board and the
committees specified in subsection (c) of this
Section 5.08 for which such person has been
designated to serve upon by the Purchaser, the
Purchaser shall have the opportunity to specify one
or more additional designees who shall be so
included as a nominee subject to the reasonable
determination by the Board, in the exercise of their
fiduciary duties, that any such additional designee
is qualified to serve on the Board and such
committees. The Board shall recommend to the
stockholders of the Company for election the
designees of the Purchaser who are nominated by the
Company to serve as members of the Board. In the
event that a vacancy is created on the Board at any
time by the death, disability, retirement,
resignation or removal (with or without cause) of a
Purchaser's Director, the Purchaser shall have the
right to select a nominee to fill such vacancy. If
the remaining Board members, in the exercise of
their fiduciary duties, reasonably shall determine
that such nominee is not qualified to serve on the
Board and the committees specified in subsection (c)
of this Section 5.08 for which such person has been
designated to serve upon by the Purchaser, the
Purchaser shall have the opportunity to select one
or more additional nominees. Subject to the
qualification set forth in the immediately preceding
sentence, the remaining members of the Board shall
elect to the Board to fill such vacancy any such
nominee of the Purchaser.
(c) Effective on the Closing Date and so long
as the Purchaser owns a majority of the issued and
outstanding Common Stock, the Company agrees to
place two of the Purchaser's Directors on each of
the Executive, Compensation and Human Resources
Committees, each of which is to consist of three
members and to place two of the Purchaser's
Directors on the Audit Committee, which is to
consist of four members."
(d) The second sentence of Section 5.10(b) shall be restated
in full to read as follows:
"The Purchaser shall have the option to purchase
from the Company additional shares of Common Stock
<PAGE>
4
to the extent necessary to permit the Purchaser to
maintain 50.1% of the issued and outstanding shares
of Common Stock and 50.1% of the Total Voting Power."
(e) Article VIII is amended by adding a new
Section 8.05 at the end thereof to read as follows:
"SECTION 8.05. Disinterested Directors.
-----------------------
Effective on the Closing Date and so long as the
Purchaser's Directors constitute a majority of the
Board, no amendment of this Agreement by which the
Company is to be bound shall be effective unless
approved by a majority of the members of the Board
who are not Purchaser's Directors."
SECTION 2. Counterparts. This Amendment may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 3. Governing Law. This Amendment shall be
-------------
governed by, and construed in accordance with, the laws of
the State of New York, applicable to contracts executed in
and to be performed entirely within that state.
IN WITNESS WHEREOF, each of the purchaser and the
Company has caused this Amendment to be executed as of the
date first written above by their respective officers
thereunto duly authorized.
REN CORPORATION-USA
By /s/
-------------------------
Name:
Title: President
COBE LABORATORIES, INC.
By /s/
-------------------------
Name:
Title: President
<PAGE>
EXHIBIT A
---------
FORM OF AMENDMENT NO. 3 TO THE
MAY 11, 1991 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 3, dated as of __________, 1992 (this
"Amendment"), to the Stock Purchase Agreement, dated as of
---------
May 11, 1991, as amended by Amendment No. 1, dated May 24,
1991, and Amendment No. 2, dated March 17, 1992, between REN
CORPORATION-USA, a Tennessee corporation (the "Company"), and
-------
COBE LABORATORIES, INC., a Colorado corporation (the
"Purchaser").
---------
W I T N E S S E T H:
-------------------
WHEREAS, the Company and the Purchaser have entered
into a Stock Purchase Agreement, dated as of May 11, 1991
(the "Purchase Agreement"; capitalized terms used and not
------------------
defined herein being used herein as defined in the Purchase
Agreement);
WHEREAS, the Company and the Purchaser have entered
into Amendment No. 1, dated as of May 24, 1991 to the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have entered
into Amendment No. 2, dated as of March 17, 1992 to the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have
determined that it is in their mutual interests to further
amend the Purchase Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements and understandings hereinafter set
forth, the Purchaser and the Company agree as follows:
SECTION 1. Amendments to the Purchase Agreement.
------------------------------------
The Purchase Agreement is, effective as of the date hereof,
hereby amended as follows:
(a) New defined terms shall be added to Section
1.01, immediately following the definition of
"Amendment No. 2", to read as follows:
"'Amendment No. 3' means the Amendment No. 3,
---------------
dated , 1992, to this Agreement between
----------------
the Company and the Purchaser."
(b) The defined term "Purchase Agreement" shall be
restated in full to read as follows:
<PAGE>
A-2
"'Purchase Agreement' means this Agreement, as
------------------
amended by Amendment No. 1, Amendment No. 2 and
Amendment No. 3."
(c) Sections 5.08 shall be restated in full to read
as follows:
"(a) The Company agrees, effective upon the
Closing Date (as defined in the Stock Purchase
Agreement dated as of July 2, 1992 between the
Company and the Purchaser), to increase the size of
the Board to nine directors and to appoint as
directors three persons designated by the Purchaser
(such three directors, together with the two members
of the Board previously designated by the Purchaser
being the 'Purchaser's Directors'), one such
---------------------
additional Purchaser's Director with his term
expiring at the Company's 1993 annual stockholders'
meeting and the other two additional Purchaser's
Directors with their term expiring at the Company's
1994 annual stockholders' meeting. Without the
prior written consent of the Purchaser, the Company,
acting through the Board, shall not change the size
of the Board.
(b) Effective on the Closing Date and so long
as the Purchaser owns a majority of the issued and
outstanding Common Stock, the Purchaser shall have
the right to request that the Company include (x)
two persons designated by the Purchaser as a nominee
to serve as a member of the `Class One Directors'
(as such term is used in the By-Laws; provided that
--------
for purposes of this Agreement, such term shall be
further defined to be that class of directors of the
Board whose term next expires at the 1993 annual
stockholders' meeting) of the Board, (y) two persons
designated by the Purchaser to serve as a member of
the 'Class Two Directors' (as such term is used in
the By-Laws; provided that for purposes of this
--------
Agreement, such term shall be further defined to be
that class of directors of the Board whose term next
expires at the 1994 annual stockholders' meeting) of
the Board and (z) one person designated by the
Purchaser to serve as a member of the 'Class Three
Directors' (as such term is used in the By-Laws;
provided that for purposes of this Agreement, such
--------
term shall be further defined to be that class of
directors of the Board whose term next expires at
the 1995 annual stockholders' meeting) of the
<PAGE>
A-3
Board, and such persons shall be nominated by the
Company. If the Board, in the exercise of its
fiduciary duties, reasonably shall determine that
any person designated by the Purchaser to be a
nominee to the Board pursuant to this Section 5.08
is not qualified to serve on the Board and the
committees specified in subsection (c) of this
Section 5.08 for which such person has been
designated to serve upon by the Purchaser, the
Purchaser shall have the opportunity to specify one
or more additional designees who shall be so
included as a nominee subject to the reasonable
determination by the Board, in the exercise of their
fiduciary duties, that any such additional designee
is qualified to serve on the Board and such
committees. The Board shall recommend to the
stockholders of the Company for election the
designees of the Purchaser who are nominated by the
Company to serve as members of the Board. In the
event that a vacancy is created on the Board at any
time by the death, disability, retirement,
resignation or removal (with or without cause) of a
Purchaser's Director, the Purchaser shall have the
right to select a nominee to fill such vacancy. If
the remaining Board members, in the exercise of
their fiduciary duties, reasonably shall determine
that such nominee is not qualified to serve on the
Board and the committees specified in subsection (c)
of this Section 5.08 for which such person has been
designated to serve upon by the Purchaser, the
Purchaser shall have the opportunity to select one
or more additional nominees. Subject to the
qualification set forth in the immediately preceding
sentence, the remaining members of the Board shall
elect to the Board to fill such vacancy any such
nominee of the Purchaser.
(c) Effective on the Closing Date and so long
as the Purchaser owns a majority of the issued and
outstanding Common Stock, the Company agrees to
place two of the Purchaser's Directors on each of
the Executive, Compensation and Human Resources
Committees, each of which is to consist of three
members and to place two of the Purchaser's
Directors on the Audit Committee, which is to
consist of four members."
(d) The second sentence of Section 5.10(b) shall be
restated in full to read as follows:
"The Purchaser shall have the option to purchase
from the Company additional shares of Common Stock
<PAGE>
A-4
to the extent necessary to permit the Purchaser to
maintain 50.1% of the issued and outstanding shares
of Common Stock and 50.1% of the Total Voting Power."
(e) Article VIII is amended by adding a new
Section 8.05 at the end thereof to read as follows:
"SECTION 8.05. Disinterested Directors.
-----------------------
Effective on the Closing Date and so long as the
Purchaser's Directors constitute a majority of the
Board, no amendment of this Agreement by which the
Company is to be bound shall be effective unless
approved by a majority of the members of the Board
who are not Purchaser's Directors."
SECTION 2. Counterparts. This Amendment may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 3. Governing Law. This Amendment shall be
-------------
governed by, and construed in accordance with, the laws of
the State of New York, applicable to contracts executed in
and to be performed entirely within that state.
IN WITNESS WHEREOF, each of the Purchaser and the
Company has caused this Amendment to be executed as of the
date first written above by their respective officers
thereunto duly authorized.
REN CORPORATION-USA
By
--------------------
Name:
Title:
COBE LABORATORIES, INC.
By
--------------------
Name:
Title:
<PAGE>
EXHIBIT B
---------
CONTENTS OF OPINIONS OF
LATHAM & WATKINS AND/OR
WYATT, TARRANT, COMBS, GILBERT & MILOM
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Tennessee and
has the requisite corporate power and authority to own, lease
and operate its properties and carry on its business in all
material respects as presently owned or conducted. The
Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned,
leased or operated by it, or the nature of its activities
makes such qualification or licensing necessary, except those
jurisdictions, if any, in which the failure to be so duly
qualified or licensed and in good standing would not, taken
as a whole, have a Material Adverse Effect.
2. The Company is not in violation of any of the provisions
of the Charter of Incorporation or By-Laws, except where such
violation would not, individually or in the aggregate, have a
Material Adverse Effect.
3. The Company has all necessary corporate power and
authority to execute and deliver the Agreement and to perform
its obligations and to consummate the transactions
contemplated thereunder. The execution, delivery and
performance of the Agreement by the Company have been duly
and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of the Company are
necessary to authorize the Agreement or to consummate the
transactions contemplated thereunder.
4. (a) The execution and delivery of the Agreement by the
Company do not, and the performance of the Agreement
(including, without limitation, the consummation of the
transactions contemplated thereunder) will not, (i) conflict
with or violate the Charter of Incorporation or By-Laws, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company, or by which its
or any of its properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an
<PAGE>
B-2
event which with notice or lapse of time or both would become
a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the
properties or assets of the Company which would have a
Material Adverse Effect, taken as a whole, pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, insurance policy or other instrument or
obligation, and which note, bond, mortgage, indenture,
contract, agreement, license, permit, insurance policy or
other instrument or obligation to which the Company is a
party, or by which the Company or its properties are bound or
affected.
(b) The execution and delivery of the Agreement by the
Company do not, and the performance of the Agreement by the
Company (including, without limitation, the consummation of
the transactions thereunder) will not require any consent,
approval, authorization or permit of, or filing (other than
filings, if any, required on Form 8-K with the SEC and the
HSR Act) with or notification to, any governmental or
regulatory authority, on the part of the Company.
5. Following the consummation of the transactions
thereunder, all the Shares subject to issuance pursuant to
the Agreement, upon such issuance against payment for such
Shares as contemplated by the Agreement shall (i) be duly
authorized, validly issued, fully paid and nonassessable,
(ii) not be subject to any Encumbrances and (iii) such Shares
shall have accorded to them voting rights.
6. The Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery hereof by the Purchaser, and payment
for the Shares as contemplated by the Agreement, constitutes
the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors' rights generally and by the availability of
equitable remedies.
The following assumptions shall be made:
1. Reliance upon representations and warranties of the
Company and upon certificates of certain public officials;
<PAGE>
B-3
2. Authenticity of all documents submitted to us as copies,
genuineness of all signatures, and conformity to the
originals of all documents submitted to counsel as copies;
3. Due authorization, execution and delivery of the
Agreement by the Purchaser;
4. Compliance by the Company, the Purchaser and any
Affiliate of either the Company or the Purchaser with the
covenants, representations, warranties and agreements
made, and to be performed by them pursuant to the
Agreement.
<PAGE>
AMENDMENT NO. 4
TO THE
MAY 11, 1991 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 4, dated as of April 26, 1994 (this "Amendment"),
to the Stock Purchase Agreement dated as of May 11, 1991, as amended by
Amendment No. 1 dated May 24, 1991, Amendment No. 2 dated March 17, 1992, and
Amendment No. 3 dated as of October 1, 1992 (as so amended, the "Purchase
--------
Agreement"; capitalized terms used and not defined herein being used herein
- ---------
as defined in the Purchase Agreement), between REN CORPORATION-USA, a Tennessee
corporation (the "Company"), and COBE LABORATORIES, INC., a Colorado corporation
-------
(the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered into a Stock
Purchase Agreement dated as of May 11, 1991; and
WHEREAS, the Company and the Purchaser have determined that it is
in their mutual interests to further amend the Purchase Agreement as hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements and understandings hereinafter set forth, the Purchaser and
the Company agree as follows:
SECTION 1. Amendments to the Purchase Agreement. The Purchase
------------------------------------
Agreement is, effective as of the date hereof, hereby amended as follows:
(a) New defined terms shall be added to Section 1.01,
immediately following the definition of "Amendment No. 3", to read as follows:
"'Amendment No. 4' means the Amendment No. 4, dated as of
----------------
April 26 , 1994, to this Agreement between the Company and the
Purchaser."
(b) The defined term "Purchase Agreement" shall be restated in
full to read as follows:
"Purchase Agreement" means this Agreement, as amended by
------------------
Amendment No. 1, Amendment No. 2, Amendment No. 3 and Amendment No. 4."
(c) Sections 5.08 shall be restated in full to read as follows:
"(a)(i) The Company agrees, from and after the date of
this Amendment No. 4 (the "Effective Date"), that the number of
--------------
directors on the Board will be that number that is determined
from time to time in accordance with the bylaws
<PAGE>
of the Company; that in each election of directors of the Company, the
Purchaser shall have the right to cause the Company to include as nominees to
serve as members of the Board that number of persons designated by the Purchaser
so that the number of all such persons so designated by the Purchaser from time
to time constitute a majority of the members of the Board (each such nominee
after being duly elected and qualified to be a director of the Company and each
director serving on the Board on the Effective Date who was so designated by the
Purchaser being a "Purchaser's Director"); and that such persons shall be
--------------------
nominated by the Company.
(ii) From and after the date of this Amendment No. 4, Purchaser's
Directors shall constitute a majority of the members of each of the Executive
and Compensation Committees and one half of the members of the Audit Committee.
(b)(i) From and after the date of this Amendment No. 4, whenever the
number of directors on the Board is increased, the number of Purchaser's
Directors will be increased, if necessary, to the smallest number of directors
necessary to maintain a majority of Purchaser's Directors on the Board. Each
additional Purchaser's Director nominated to the Board will be designated as a
member of the class of directors (as such term is used in the bylaws of the
Company) which has the fewest Purchaser's Directors prior to such designation.
If more than one class of directors is eligible for the designation, the
designation will be made to the last class among such classes to stand for
election. If more than one Purchasers's Director is nominated to the Board as
a result of any increase in the number of Purchaser's Directors, the additional
Purchaser's Directors will be designated as a member of a class in sequence
applying the procedure set forth in this Section 5.08(b)(i).
(ii) From and after the date of this Amendment No. 4, whenever the
number of directors on the Board is decreased, the number of Purchaser's
Directors will be decreased, if necessary, to the smallest number of directors
necessary to maintain a majority of Purchaser's Directors on the Board and the
number of seats in each class designated to be filled by Purchaser's Directors
will be adjusted so that the number of Purchaser's Directors in each class is
as nearly equal as is possible.
(c) If the Board, in the exercise of its fiduciary duties, reasonably
shall determine that any person designated by the Purchaser to be a nominee to
the Board pursuant to this Section 5.08 is not qualified to serve on the Board
or any committee specified in subsection (a)(ii) of this Section 5.08, the
Purchaser shall have the opportunity to specify one or more additional designees
who shall be so included as a nominee, subject to the reasonable determination
by the Board, in the exercise of its fiduciary duties, that any such additional
designee is qualified to serve on the Board or such committee. The Board shall
recommend to the
<PAGE>
stockholders of the Company for election the designees of the Purchaser who are
nominated by the Company to serve as members of the Board.
(d) In the event that a vacancy is created on the Board at any time by
the death, disability, retirement, resignation or removal (with or without
cause) of a Purchaser's Director, the Purchaser shall have the right to select
a nominee to fill such vacancy. If the remaining Board members, in the exercise
of their fiduciary duties, reasonably shall determine that such nominee is not
qualified to serve on the Board and the committees specified in subsection
(a)(ii) of this Section 5.08 for which such person has been designated to serve
upon by the Purchaser, the Purchaser shall have the opportunity to select one or
more additional nominees. Subject to the qualification set forth in the
immediately preceding sentence, the remaining members of the Board shall elect
to the Board to fill such vacancy any such nominee of the Purchaser.
SECTION 2. Counterparts. This Amendment may be executed in one
------------
or more counterparts, and by the different parties hereto in separate
counterpart, each of which when executed shall be deemed to be an original, but
all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the Purchaser and the Company has
caused this Amendment to be executed as of the date first written above by their
respective officers thereunto duly authorized.
REN CORPORATION-USA
By: /s/
-------------------------
Name:
Title: President/CEO
COBE LABORATORIES, INC.
By: /s/
-------------------------
Name:
Title: President
================================================================================
STOCK PURCHASE AGREEMENT
between
COBE LABORATORIES, INC.
and
REN CORPORATION-USA
Dated as of February 9, 1992
================================================================================
<PAGE>
TABLE OF CONTENTS
----------------
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01 Definitions ................................. 1
ARTICLE II
PURCHASE AND SALE OF SHARES;
CLOSING
2.01 Authorization, Purchase and
Sale of Shares ........................... 4
2.02 Closing .................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification;
Subsidiaries .............................. 5
3.02 Charter of Incorporation and By-Laws ........ 5
3.03 Capitalization .............................. 6
3.04 Authority Relative to This Agreement ........ 6
3.05 No Conflict; Required Filings and
Consents .................................. 7
3.06 Common Stock ................................ 8
3.07 SEC Filings; Financial Statements ........... 8
3.08 Private Offering ............................ 9
3.09 Brokers ..................................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
4.01 Corporate Organization ...................... 10
4.02 Authority Relative to This Agreement ........ 10
4.03 No Conflict; Required Filings and Consents... 11
4.04 Funds ....................................... 11
4.05 Securities Act .............................. 11
4.06 Brokers ..................................... 12
<PAGE>
(ii)
Section Page
- ------- ----
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Conduct of Business by the Company
Pending the Closing ....................... 13
5.02 Regulatory and Other Authorizations ......... 13
5.03 Access to Information ....................... 13
5.04 Notification of Certain Matters ............. 14
5.05 Further Action; Reasonable Efforts .......... 14
5.06 Public Announcements ........................ 14
5.07 Legend ...................................... 14
ARTICLE VI
CONDITIONS TO THE CLOSING
6.01 Conditions to Obligations of the Purchaser.. 15
6.02 Conditions to Obligations of the Company.... 17
ARTICLE VII
INDEMNIFICATION
7.01 Survival of Representations and Warranties... 18
7.02 Indemnification by the Company .............. 18
7.03 Indemnification by the Purchaser ............ 18
7.04 Materiality ................................. 19
7.05 Time Period; Dollar Threshold ............... 19
7.06 Notice and Defense .......................... 19
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination ................................. 20
8.02 Effect of Termination ....................... 21
8.03 Amendment ................................... 21
8.04 Waiver ...................................... 21
<PAGE>
(iii)
ARTICLE IX
GENERAL PROVISIONS
Section Page
- ------- ----
9.01 Notices .................................... 22
9.02 Entire Agreement; Assignment ............... 23
9.03 Parties in Interest ........................ 23
9.04 Governing Law .............................. 23
9.05 Headings ................................... 23
9.06 Counterparts ............................... 23
9.07 Specific Performance ....................... 23
EXHIBIT A Form of Amendment No. 2 to
the May 11, 1991 Stock Purchase Agreement
EXHIBIT B Contents of Opinion of Wyatt, Tarrant, Combs,
Gibert & Milan
DISCLOSURE SCHEDULE
<PAGE>
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of February
---------
9, 1992, between REN CORPORATION-USA, a Tennessee corporation (the "Company"),
-------
and COBE LABORATORIES, INC., a Colorado corporation (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to authorize, issue and sell to the
Purchaser, and the Purchaser desires to purchase from the Company, the Shares
(as hereinafter defined).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01. Definitions. As used in this
-----------
Agreement, the following terms shall have the following meanings:
"Affiliate" of a Person means a Person that, directly or
---------
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
"Amendment No. 2" means the Amendment No. 2 to the Stock Purchase
---------------
Agreement, dated as of May 11, 1991, as amended by Amendment No. 1, dated May
24, 1991, between the Company and the Purchaser, substantially in the form of
Exhibit A hereto.
"Bankruptcy Proceeding" has the meaning specified in Section
---------------------
6.01(e).
"Board" means the Board of Directors of the Company.
-----
"Business Day" means any day other than a Saturday, Sunday or
------------
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, Eastern Standard Time.
"By-Laws" means the Restated By-Laws of the Company, as amended
-------
through the date hereof.
<PAGE>
2
"Charter of Incorporation" means the Restated Charter of
------------------------
Incorporation of the Company, as amended through the date hereof.
"Closing" means the completion of the transactions specified
-------
herein relating to the purchase and sale of the Shares, as contemplated by
Section 2.01 hereof.
"Closing Date" means the date on which the Closing shall occur.
------------
"Common Stock" means the common shares of the Company, no par
------------
value.
"Company" means REN Corporation-USA, a Tennessee corporation.
-------
"Company Loss" has the meaning specified in Section 7.03.
------------
"control" (including the terms "controlled by" and "under common
------- ------------- ------------
control with") means the possession, directly or indirectly, or as trustee or
- ------------
executor, of the power to direct or cause the direction of the management and/or
policies of a Person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement, or otherwise.
"December Balance Sheet" means the balance sheet, dated as of
----------------------
December 31, 1991, included in the December Financial Statements.
"December Financial Statements" has the meaning specified in
-----------------------------
Section 3.07(c).
"Disclosure Schedule" means the Disclosure Schedule, dated as of
-------------------
the date hereof, delivered to the Purchaser by the Company and forming a part of
this Agreement.
"Encumbrance" means any security interest, pledge, mortgage, lien
-----------
(including environmental liens), charge, adverse claim or restriction of any
kind, including, without limitation, any restriction on the use, voting,
transfer, receipt of income or other exercise of any attributes of ownership,
but excluding such Encumbrances which, taken as a whole, would not have a
Material Adverse Effect.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, together with the rules and regulations promulgated thereunder.
<PAGE>
3
"First Union Loan Agreement" means the amended and restated loan
--------------------------
agreement, dated as of March 18, 1990, between the Company and First Union
National Bank of North Carolina, a national banking association under the laws
of the United States, as such agreement has been amended, supplemented, restated
or otherwise modified from time to time, together with any notes, security
pledge, guaranty or other ancillary agreements executed pursuant thereto.
"GAAP" means U.S. generally accepted accounting principles and
----
practices in effect from time to time, applied consistently throughout the
periods involved.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
-------
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Liabilities" means any and all debts, liabilities and
-----------
obligations, whether accrued or fixed, absolute or contingent, mature or
unmatured, or determined or determinable, including, without limitation, those
arising under any law, rule, regulation or order by a governmental
authority, and those arising under any contract, agreement, commitment or
undertaking.
"Loss" has the meaning specified in Section 7.03.
----
"Material Adverse Effect" means any circumstance, change, event,
-----------------------
transaction, loss, failure, effect or other occurrence that is, or is reasonably
likely to be, materially adverse to the business, operations, properties
(including intangible properties), condition (financial or otherwise), assets,
Liabilities, results of operations or prospects of the Company and its
Subsidiaries taken as a whole.
"Person" means an individual, corporation, partnership,
------
association, trust, joint venture, unincorporated organization, other entity or
group (as defined in Section 13(d)(3) of the Exchange Act).
"Purchase Price" has the meaning specified in Section 2.01.
--------------
"Purchaser Loss" has the meaning specified in Section 7.02.
--------------
"SEC" means the Securities and Exchange Commission.
---
"SEC Reports" means all forms, reports and documents required to
-----------
be filed by the Company with the SEC since November 28, 1989, including, without
limitation, (i) the
<PAGE>
4
Company's Annual Reports on Form 10-K for the fiscal years ended December 31,
1989 and 1990 and (ii) all other reports or registrations filed by the Company
with the SEC since November 28, 1989.
"Securities Act" means the Securities Act of 1933, as amended,
--------------
together with the rules and regulations promulgated thereunder.
"Shares" has the meaning specified in Section 2.01.
------
"Subsidiary" or "Subsidiaries" means any corporation,
---------- ------------
partnership, joint venture or other legal entity, of which the Company or any
other Person, as the case may be (either alone or through or together with any
other Subsidiary), owns, directly or indirectly, 50 percent or more of the stock
or other equity interests, and the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
------------------------------------
SECTION 2.01. Authorization, Purchase and Sale of Shares. Upon
------------------------------------------
the terms and subject to the conditions set forth herein, at the Closing, the
Company shall authorize, issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company, 1,170,732 shares of Common Stock (such shares
of Common Stock being herein the "Shares") for an aggregate purchase price of
------
$12,000,003 (the "Purchase Price").
--------------
SECTION 2.02. Closing. (a) The Closing of the purchase and sale
-------
shall take place within three Business Days of the satisfaction or waiver of the
conditions set forth herein, at the offices of Wyatt, Tarrant, Combs, Gilbert &
Milom, Suite 1350, Third National Bank Building, Nashville, Tennessee, or at
such other time and place as the Company and the Purchaser may mutually agree in
writing.
(b) At the Closing, the Company shall deliver or cause to be
delivered to the Purchaser: (i) stock certificates evidencing the Shares
registered in the name of the Purchaser (or its designee); (ii) the certificate
referred to in Section 6.01(a); (iii) the legal opinion referred to in Section
6.01(g); (iv) a receipt for the Purchase Price; and (v) such other documents as
the Purchaser shall reasonably request.
<PAGE>
5
(c) At the Closing, the Purchaser shall deliver to the Seller:
(i) the Purchase Price, by wire transfer, to an account or accounts designated
by the Company at least two Business Days prior to the Closing Date; (ii) the
certificate referred to in Section 6.02(a); (iii) a receipt for the
Shares; and (iv) such other documents as the Company shall reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Purchaser that:
SECTION 3.01. Organization and Qualification; Subsidiaries. The
--------------------------------------------
Company and each of its Subsidiaries are corporations duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation, and have the requisite corporate power and authority to own,
lease and operate their properties and carry on their businesses in all material
respects as presently owned or conducted. The Company and each of its
Subsidiaries are duly qualified or licensed as a foreign corporation to do
business, and are in good standing, in each jurisdiction where the character of
their properties owned, leased or operated by them, or the nature of their
activities, makes such qualification or licensing necessary, except those
jurisdictions, if any, in which the failure to be so duly qualified or licensed
and in good standing would not, taken as a whole, have a Material Adverse
Effect. Schedule 3.01 of the Disclosure Schedule sets forth a complete and
correct list of each of the Subsidiaries of the Company.
SECTION 3.02. Charter of Incorporation and By-Laws. The Company
------------------------------------
has heretofore furnished to the Purchaser a complete and correct copy of the
Charter of Incorporation and the By-Laws, each as amended to date, each
of which is in full force and effect. The Company is not in violation of any of
the provisions of the Charter of Incorporation or By-Laws, and its Subsidiaries
are not in violation of any of the provisions of their charters of
incorporation, by-laws or equivalent organizational documents, except where such
violation would not, taken as a whole, have a Material Adverse Effect.
<PAGE>
6
SECTION 3.03. Capitalization. (a) The authorized capital stock of
--------------
the Company consists of (x) 10,000,000 shares of Preferred Stock, of which none
is issued, outstanding or reserved for issuance, and (y) 60,000,000 shares of
Common Stock, of which (i) 11,210,737 shares of Common Stock are issued and
outstanding, (ii) 0 shares of Common Stock are held in the treasury of the
Company, (iii) an aggregate of 271,400 shares of Common Stock are subject to
outstanding options, and 481,125 shares are reserved for issuance, pursuant to
the Company's Stock Option Plan, (iv) an aggregate of 331,838 shares of Common
Stock are subject to outstanding promissory notes that are convertible into
shares of Common Stock, (v) 180,000 shares of Common Stock are held in escrow on
behalf of the Company and certain shareholders, in connection with a settlement
of a claim arising from an acquisition of a treatment center in Douglas,
Georgia, and (vi) an aggregate of 100,700 shares of Common Stock are subject to
outstanding warrants that are exercisable into shares of Common Stock.
(b) Except as set forth in this Section 3.03 or in Schedule
3.03(b) of the Disclosure Schedule, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which the
Company or any of its Subsidiaries is a party, or obligating the Company or
any of its Subsidiaries to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any of its Subsidiaries. Except as set
forth in Schedule 3.03(b) of the Disclosure Schedule, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any of the capital stock of the Company or any
Subsidiary or to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any Subsidiary or any other entity.
Each of the outstanding shares of capital stock of each of the Company's
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and is owned by the Company, directly or indirectly, free and clear of all
Encumbrances, except as set forth in Schedule 3.03(b) of the Disclosure
Schedule, and for any Encumbrances incurred pursuant to the First Union Loan
Agreement and Encumbrances for taxes not yet due and payable.
(c) Except as set forth on Schedule 3.03(c) of the Disclosure
Schedule, the Company is not party to any agreement granting registration rights
to any Person with respect to any equity or debt securities of the Company.
SECTION 3.04. Authority Relative to This Agreement. The Company
------------------------------------
has all necessary corporate power and authority to execute and deliver this
Agreement, to perform
<PAGE>
7
its obligations and to consummate the transactions contemplated hereunder. The
execution, delivery and performance of this Agreement by the Company have been
duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement. This
Agreement has been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery hereof by the Purchaser
and payment for the Shares as contemplated by this Agreement, constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms (except, in each such case, as
enforceability may be limited by bankruptcy, insolvency, reorganization and
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, and to the extent that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought).
SECTION 3.05. No Conflict; Required Filings and Consents.
------------------------------------------
(a) Assuming the satisfaction of the conditions set forth in Article VI hereof,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement (including, without limitation, the consummation
of the transactions contemplated hereunder) will not, (i) conflict with or
violate the Charter of Incorporation or By-Laws, (ii) conflict with or violate
the charters of incorporation or by-laws or equivalent organizational documents
of any of the Company's Subsidiaries, (iii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its Subsidiaries or by which the Company or any of its Subsidiaries respective
properties are bound or affected, or (iv) result in any breach of, or constitute
a default (or an event which, with notice or lapse of time or both, would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, insurance policy or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or by
which the Company or any of its Subsidiaries or its or any of their respective
properties are bound or affected, except, in the case of clauses (ii), (iii) and
(iv) above, for such conflicts which would not, taken as a whole, have a
Material Adverse Effect.
<PAGE>
8
(b) The execution and delivery of this Agreement by the Company
do not, and the performance of this Agreement by the Company (including, without
limitation, the consummation of the transactions hereunder) will not, require
any consent, approval, authorization or permit of, or filing (other than
filings, if any, required on Form 8-K with the SEC and pursuant to the HSR Act)
with, or notification to, any third party or any governmental or regulatory
authority, domestic or foreign, on the part of the Company or any of its
Subsidiaries.
SECTION 3.06. Common Stock. Assuming all conditions set forth in
------------
Article VI are satisfied, following the consummation of the transactions
hereunder, all of the Shares subject to issuance pursuant to this Agreement,
upon such issuance against payment for such Shares as contemplated by this
Agreement, shall (i) be duly authorized, validly issued, fully paid and
nonassessable and (ii) not be subject to any Encumbrances (other than those that
may be incurred by the Purchaser). The Shares shall have accorded to them full
voting rights. None of the Shares are "Control Shares", as such term is defined
in the Tennessee Business Corporation Act.
SECTION 3.07. SEC Filings; Financial Statements. (a) The Company
---------------------------------
has filed all forms, reports, statements and documents required to be filed with
the SEC since November 28, 1989, including, without limitation, the SEC Reports.
The SEC Reports (i) were each prepared in accordance with, and, at the time of
filing, complied in all material respects with, the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not, at the
time they were filed, 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 the light of the circumstances under which they
were made, not misleading. None of the Company's Subsidiaries is required to
file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in the SEC Reports has been
prepared in accordance with GAAP (except as may be indicated in the notes
thereto), and each presents fairly the consolidated financial position of the
Company and its consolidated Subsidiaries at the respective dates thereof and
the consolidated results of its operations and changes in cash flows for the
periods
<PAGE>
9
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments, which were not and are not
expected to be material in amount.
(c) Schedule 3.07(c) of the Disclosure Schedule hereto sets forth
the unaudited consolidated balance sheet of the Company and its Subsidiaries and
the unaudited statement of operations for the 12-month period ended December 31,
1991 (the "December Financial Statements"). The December Financial Statements
-----------------------------
have been prepared in accordance with GAAP and present fairly the financial
condition of the Company and its consolidated Subsidiaries as of December 31,
1991 and the consolidated results of its operations for the 12-month period
ended December 31, 1991, except that the December Financial Statements are
subject to normal or recurring year-end adjustments, which are not expected to
be material in amount.
(d) Except as set forth in Schedule 3.07(d) of the Disclosure
Schedule hereto and as and to the extent set forth on the December Financial
Statements, neither the Company nor any of its Subsidiaries has any Liabilities,
including, without limitation, liabilities for taxes which would be
required to be reflected on a balance sheet, or in the notes thereto prepared in
accordance with GAAP, except for liabilities or obligations incurred in the
ordinary course of business since December 31, 1991 which would not, taken as a
whole, have a Material Adverse Effect.
SECTION 3.08. Private Offering. (a) Assuming the accuracy of the
----------------
representations and warranties of the Purchaser, the sale of the Shares
hereunder is exempt from the registration and prospectus delivery requirements
of the Securities Act.
(b) No form of general solicitation or general advertising
(including, without limitation, advertisements, articles, notices or other
communications published in any newspaper, magazine or other medium or broadcast
over television or radio, or any seminar or meeting whose attendees have been
invited by any general solicitation or general advertising) was used by the
Company or any other Person acting on behalf of the Company in respect of the
Shares or in connection with the offer and sale of the Shares.
<PAGE>
10
SECTION 3.09. Brokers. No broker, finder or investment banker is
-------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions hereunder based upon arrangements made by or on behalf of
the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Company that:
SECTION 4.01. Corporate Organization. The Purchaser is a
----------------------
corporation duly organized, validly existing and in good standing under the laws
of Colorado and has the requisite corporate power and authority and any
necessary governmental authority to own, operate or lease the properties that it
purports to own, operate or lease and to carry on its business as it is now
being conducted.
SECTION 4.02. Authority Relative to This Agreement. The Purchaser
------------------------------------
has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations and to consummate the transactions
contemplated hereunder. The execution and delivery of this Agreement by the
Purchaser and the purchase of the Shares as provided in Section 2.01 hereof by
the Purchaser hereunder have been duly and validly authorized by all necessary
corporate action of the Purchaser and no other corporate proceedings on the part
of the Purchaser are necessary to authorize this Agreement or the purchase of
the Shares by the Purchaser as contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms (except in each such case as enforceability may be
limited by bankruptcy, insolvency, reorganization and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and to
the extent that the remedy of specific performance and injunctive and other
forms of equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought),
<PAGE>
11
SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by the Purchaser do not, and the
performance of this Agreement by the Purchaser will not, (i) conflict with or
violate the articles of incorporation or by-laws or equivalent organizational
documents of the Purchaser, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Purchaser or by which it
or its properties are bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the property or assets of the Purchaser pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Purchaser is a
party or by which the Purchaser or any of its properties is bound or affected,
except, in the case of this clause (iii) and clause (ii) above, for any such
breaches, defaults or other occurrences which would not, individually or in the
aggregate, have a material adverse effect on the business, operations,
properties (including intangible properties), condition (financial or
otherwise), assets or liabilities of the Purchaser.
(b) The execution and delivery of this Agreement by the Purchaser
do not, and the performance of this Agreement by the Purchaser (including,
without limitation, the consummation of the transactions hereunder) will not,
require any consent, approval, authorization or permit of, or filing (other
than a filing pursuant to the HSR Act) with or notification to, any third party
or any governmental or regulatory authority, domestic or foreign.
SECTION 4.04. Funds. The Purchaser has and, immediately prior to
-----
the Closing, will have the funds necessary to consummate the purchase of the
Shares hereunder.
SECTION 4.05. Securities Act. The Shares purchased by the
--------------
Purchaser pursuant to this Agreement are being acquired for investment only and
not with a view to any sale or distribution (within the meaning of the
Securities Act) of the Shares or any part thereof. The Purchaser agrees at all
times to sell or otherwise dispose of all or any part of the Shares so acquired
by the Purchaser (and any securities issued in exchange therefor) only pursuant
to a registration, or exemption therefrom, under the Securities Act and in
<PAGE>
12
compliance with applicable state securities laws. The Purchaser will take any
steps necessary to insure that any purchaser will agree not to sell or otherwise
dispose of Shares except in compliance with the requirements contained in the
preceding sentence. The Purchaser is an "accredited investor" within the meaning
of Rule 501 promulgated under the Securities Act and has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of an investment in the Shares. The Purchaser has received all
the information it deems material to its evaluation of the business, assets,
liabilities, financial condition and results of operations of the Company and
all the information it has requested from the Company and considers necessary or
appropriate for deciding whether to purchase the Shares. The Purchaser has the
ability to bear the economic risks of the Purchaser's prospective investment and
the Purchaser is able, without materially impairing its financial
condition, to hold the Shares for an indefinite period of time and to suffer
complete loss on its investment. The Purchaser understands and has fully
considered for purposes of this investment the risks of this investment and
understands that: (i) this investment is suitable only for an investor who is
able to bear the economic consequences of losing his or its entire investment;
(2) the Shares represent an extremely speculative investment which involves a
high degree of risk of loss; (3) there are substantial restrictions on the
transferability of the Shares and, accordingly, it may not be possible for the
Purchaser to liquidate his or its investment in the Shares in case of emergency;
and (4) there have been no representations as to the possible future value, if
any, of the Shares.
The Purchaser understands and acknowledges that the sale of the
Shares pursuant to this Agreement will not be registered under the Securities
Act on the grounds that the offering and sale of securities contemplated by this
Agreement are exempt from registration pursuant to Section 4(2) of the
Securities Act, and that the Company's reliance upon such exemption is
predicated in part upon the Purchaser's representations set forth in this
Agreement.
SECTION 4.06. Brokers. No broker, finder or investment banker is
-------
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions hereunder based upon arrangements made by or on behalf of
the Purchaser.
<PAGE>
13
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Conduct of Business by the Company Pending the
----------------------------------------------
Closing. Except as contemplated by this Agreement, the Company covenants and
- -------
agrees that, during the period between the date of this Agreement and through
and including the Closing Date, unless the Purchaser shall otherwise agree in
writing, the businesses of the Company and its Subsidiaries shall be conducted
only in, and the Company and its Subsidiaries shall not take any action except
in, the ordinary course of business and in a manner consistent with past
practice.
SECTION 5.02. Regulatory and Other Authorizations. Each party
-----------------------------------
hereto will use its reasonable best efforts to obtain all authorizations,
consents, orders and approvals of all third parties and of all federal, state
and local regulatory bodies and officials that may be or become necessary for
its execution and delivery of, and the performance of its obligations pursuant
to, this Agreement and will cooperate fully with the other party in promptly
seeking to obtain all such authorizations, consents, orders and approvals. Each
party hereto agrees to make, or cause its "ultimate parent entity" (as such term
is defined in the HSR Act) to make, an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the transactions
contemplated hereby within ten Business Days of the date hereof. The parties
hereto will not take any action that will have the effect of delaying, impairing
or impeding the receipt of any required approvals.
SECTION 5.03 Access to Information. (a) From the date hereof to
---------------------
the Closing Date, the Company shall, and shall cause its Subsidiaries, officers,
directors, employees, auditors and other agents to, afford the officers,
employees, auditors and other agents of the Purchaser reasonable access at all
reasonable times to its officers, employees, agents, properties, offices, plants
and other facilities and to all books and records, and shall furnish the
Purchaser with all financial, operating and other data and information with
respect to the business and properties of the Company as the Purchaser, through
its officers, employees or agents, may reasonably request. The Purchaser agrees
to maintain the strict confidentiality of such data and information and not to
disclose such data to any third party.
<PAGE>
14
(b) No investigation pursuant to this Section 5.03 shall affect
any representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 5.04. Notification of Certain Matters. The Company shall
-------------------------------
give prompt notice to the Purchaser, and the Purchaser shall give prompt notice
to the Company, of (i) the occurrence, or non-occurrence, of any event the
occurrence, or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of the Company or the Purchaser, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that the delivery
-------- -------
of any notice pursuant to this Section 5.04 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
SECTION 5.05. Further Action; Reasonable Efforts. Upon the terms
----------------------------------
and subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all appropriate 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 hereunder.
SECTION 5.06. Public Announcements. The Purchaser and the Company
--------------------
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated
hereunder and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be, and to the extent,
required by law or any listing agreement with the National Association of
Securities Dealers.
SECTION 5.07. Legend. The Purchaser agrees that all certificates
------
representing the Shares issued pursuant to this Agreement shall bear the
following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR SECURITIES LAWS OF ANY
STATE AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREUNDER. THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT (IN CERTAIN CIRCUMSTANCES) TO A RIGHT OF FIRST OFFER AS SET
FORTH IN THE STOCK PURCHASE AGREEMENT DATED AS OF MAY 11, 1991, AS
AMENDED, BETWEEN THE COMPANY AND COBE LABORATORIES, INC."
<PAGE>
15
ARTICLE VI
CONDITIONS TO THE CLOSING
-------------------------
SECTION 6.01. Conditions to Obligations of the Purchaser. The
------------------------------------------
obligations of the Purchaser to effect the Closing shall be subject to the prior
fulfillment of each of the following conditions:
(a) Representations and Warranties; Agreements and Covenants.
--------------------------------------------------------
Except for changes permitted or contemplated hereby or consented to by
the Purchaser and except for matters waived or consented to by the
Purchaser pursuant to Section 8.04, (i) the representations and
warranties of the Company contained in this Agreement which are
qualified as to materiality shall be true in all respects and all other
representatives and warranties shall be true and correct in all
material respects on and as of the Closing, with the same force and
effect as if made as of the Closing, (ii) all the agreements contained
in this Agreement to be performed or complied with by the Company, at
or before the Closing, shall have been performed or complied with in
all material respects and (iii) the Purchaser shall have received a
certificate of the Company, signed by the Chief Executive Officer
thereof, as to the fulfillment of the conditions set forth in the
foregoing clauses (i) and (ii).
(b) No Cessation Order. No order, ruling or determination
------------------
having the effect of halting the trading of the Common Stock shall have
been issued or made by the SEC or other regulatory authority and be
continuing and no proceedings for that purpose shall have been
instituted and be pending.
(c) Litigation. There shall have been no order or preliminary
----------
or permanent injunction entered in any action or proceeding before any
federal, state or foreign court or governmental, administrative or
regulatory authority or agency, or no other action taken or threatened,
or statute, rule, regulation, legislation, interpretation, judgment or
order enacted, entered, enforced, promulgated, amended, issued or
deemed applicable to the Purchaser, the Company or any Subsidiary or
Affiliate of the Purchaser, by any federal, state or foreign
legislative body, court, government or governmental, administrative or
regulatory authority or agency which
<PAGE>
16
shall have remained in effect and which shall have had the effect of:
(i) making illegal, materially delaying or otherwise directly or
indirectly restraining or prohibiting the consummation of the
transactions hereunder; (ii) prohibiting or materially limiting the
ownership of the Shares; (iii) imposing material limitations on the
ability of the Purchaser to exercise full rights of ownership
of any of the Shares, including, without limitation, the right to vote
any shares of Common Stock; or (iv) requiring divestiture by the
Purchaser of any Shares.
(d) Calamities. There shall not have occurred and be continuing
----------
(i) any general suspension of, or limitation on prices for or trading
in, securities on any United States securities exchange, {ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any limitation (whether or
not mandatory) by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, or other event
that materially adversely affects the ability of the Purchaser to
purchase the Shares hereunder, or (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
involving the United States or Sweden.
(e) Bankruptcy; Insolvency; Etc. No proceeding shall have been
----------------------------
instituted or consented to by or against the Company seeking to
adjudicate it bankrupt or insolvent, or seeking liquidation, winding-
up, reorganization, arrangement, adjustment, protection, relief, or
composition of its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry
of an order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or any substantial part of
its property (each such action being a "Bankruptcy Proceeding"), and
---------------------
the Company shall not have taken any corporate action to authorize any
Bankruptcy Proceeding.
(f) No Material Adverse Effect. No fact, event or condition
--------------------------
(financial or otherwise) shall have occurred with respect to the
Company or any of its Subsidiaries having, individually or in the
aggregate, a Material Adverse Effect.
<PAGE>
17
(g) Opinion. The Purchaser shall have received an opinion from
-------
Wyatt, Tarrant, Combs, Gibert & Milan substantially to the effect of
Exhibit B hereto.
(h) Amendment No. 2. Amendment No. 2 shall have been executed
---------------
and delivered by the Company.
(i) HSR Act. Any waiting period (and any extension thereof)
-------
under the HSR Act applicable to the purchase of the Shares contemplated
hereby shall have expired or shall have been terminated.
SECTION 6.02. Conditions to Obligations of the Company. The
----------------------------------------
obligations of the Company to effect the Closing shall be subject to the prior
fulfillment of each of the following conditions:
(a) Representations and Warranties. (i) The representations and
------------------------------
warranties of the Purchaser contained in this Agreement and in any
certificates or agreements of the Purchaser delivered pursuant hereto
shall be true and correct in all material respects on and as of the
Closing, with the same force and effect as if made as of the Closing,
(ii) all the agreements contained in this Agreement and in any
certificates or agreements of the Purchaser delivered pursuant hereto
to be performed or complied with by the Purchaser, at or before
the Closing, shall have been performed or complied with in all material
respects and (iii) the Company shall have received a certificate of the
Purchaser, signed by a duly authorized officer thereof, as to the
fulfillment of the conditions set forth in the foregoing clauses (i)
and (ii).
(b) Litigation. There shall have been no order or preliminary
----------
or permanent injunction entered in any action or proceeding before any
federal, state or foreign court or governmental, administrative or
regulatory authority or agency by any federal, state or foreign
legislative body, court, government or governmental, administrative or
regulatory authority or agency which shall have remained in effect and
which shall have had the effect of making illegal the consummation of
any of the transactions hereunder.
<PAGE>
18
(c) HSR Act. Any waiting period (and any extension thereof)
-------
under the HSR Act applicable to the purchase of the Shares contemplated
hereby shall have expired or shall have been terminated.
ARTICLE VII
INDEMNIFICATION
SECTION 7.01. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Company in Article III shall survive the
Closing until the date 15 months from the Closing Date. Neither the period of
survival nor the liability of any party with respect to the parties'
representations and warranties shall be reduced by any investigation made at any
time by or on behalf of any party.
SECTION 7.02. Indemnification by the Company. The Purchaser, and
------------------------------
its Affiliates, officers, directors, employees, agents, successors and assigns,
shall be indemnified and held harmless by the Company for any and all
Liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, legal costs and
expenses) actually suffered or incurred by them (hereinafter, a "Purchaser
---------
Loss"), arising out of or resulting from:
- ----
(a) the breach of any representation or warranty made by the
Company contained herein or in any document delivered by the Company
hereunder at the Closing; or
(b) the breach of any covenant or agreement by the Company
contained herein.
SECTION 7.03. Indemnification by the Purchaser. The Company, and
--------------------------------
its Affiliates, officers, directors, employees, agents, successors and assigns,
shall be indemnified and held harmless by the Purchaser for any and all
Liabilities, losses, damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, legal costs and
expenses) actually suffered or incurred by them (hereinafter, a "Company Loss"
------------
and, together with a Purchaser Loss, a "Loss"), arising out of or resulting
----
from:
<PAGE>
19
(a) the breach of any representation or warranty made by the
Purchaser contained herein or in any document delivered by the
Purchaser hereunder at the Closing; or
(b) the breach of any covenant or agreement by the Purchaser
contained herein.
SECTION 7.04. Materiality. Notwithstanding anything in this
-----------
Agreement to the contrary, for purposes of application of the indemnity
provisions of this Article VII, the amount of any Purchaser Loss or Company Loss
arising from the breach of such representation, warranty, covenant or agreement
shall be the entire amount of any such Loss actually incurred by the party being
indemnified hereunder as a result of such breach and not just that portion of
such Loss that exceeds the relevant level of materiality.
SECTION 7.05. Time Period; Dollar Threshold. (a) The
-----------------------------
indemnification obligations of the Company and the Purchaser under this Article
VII shall continue for the same period of survival specified in Section 7.01 for
each such representation and warranty and shall terminate with the expiration of
the 15 month survival period for each such representation and warranty. Any
claim or demand against the Company or the Purchaser which is pending or
asserted at or prior to the expiration of any survival period may continue to be
asserted and indemnified against.
(b) Neither the Company nor the Purchaser shall be entitled to
indemnification under this Article VII unless and until the aggregate amount of
the claims against the other party exceeds $1,000,000. If the aggregate amount
of such claims against either party exceeds $1,000,000, then that party may
claim indemnification for the entire aggregate amount of such claims.
(c) The provisions of this Article VII shall be the sole and
exclusive remedy (other than injunctive relief) of the Company or the Purchaser
(regardless of against whom asserted) for the matters subject to
indemnification.
SECTION 7.06. Notice and Defense. Each party shall within 30
------------------
days of learning of any asserted liability or damage claimed to give rise to
indemnification hereunder notify the party obligated to indemnify it hereof in
writing; provided, however, that the failure of the indemnified party to so
-------- -------
notify the indemnifying party shall not relieve the indemnifying party of its
obligations hereunder unless, and
<PAGE>
20
only to the extent that, such failure to notify prejudices the indemnifying
party. Thereafter, the indemnifying party shall have, at its election, the right
to compromise or defend any such matter at its sole cost and expense through
counsel chosen by it. If the indemnifying party so undertakes to compromise and
defend, the indemnifying party shall notify the other party of its intention to
do so. The indemnifying party must defend such matter diligently or the
indemnified party may assume control of the defense of such matter. Each party
agrees in all cases to cooperate with the defending party and its counsel in the
compromise of or defending of any such liabilities or claims. The defending
party and the nondefending party may be represented by the same counsel unless
such representation would be inappropriate due to actual or potential differing
interests between them. In addition, the nondefending party shall at all times
be entitled to monitor such defense through the appointment of counsel of its
own choosing, at its own cost and expense.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 8.01. Termination. (a) This Agreement may be terminated
-----------
and the transactions contemplated hereby may be abandoned at any time prior to
the Closing Date:
(i) By mutual written consent duly authorized by the Boards of
Directors of the Company and the Purchaser; or
(ii) By the Purchaser, if (A) (1) any Person, other than the
Purchaser, shall have acquired, or shall have been granted any option or
right, conditional or otherwise, to acquire beneficial ownership of 20%
or more of the outstanding shares of the Company's Common Stock, or (2)
any group (other than a group including the Purchaser) shall have been
formed which beneficially owns 20% or more of the outstanding shares of
the Company's Common Stock; or (B) the Company shall have entered into
an agreement with a third party with respect to any acquisition or
purchase of all or a substantial portion of the assets of, or any equity
interest in, the Company or any of its Subsidiaries or any business
combination with the Company or any of its Subsidiaries by such third
party; or
<PAGE>
21
(iii) By the Purchaser or the Company, if any court of competent
jurisdiction in the United States or other United States governmental
authority shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting any of the
transactions hereunder and such order, decree, ruling or other action
shall have become final and nonappealable; or
(iv) By the Purchaser or the Company, if the Closing shall not
have occurred by April 30, 1992 or such later date as the Company and
the Purchaser shall hereafter agree; provided, however, that the right
-------- -------
to terminate this Agreement under this Section 8.01(a)(iv) shall not be
available to any party whose willful failure to fulfill any material
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Closing to occur on or before such date.
(b) This Agreement shall terminate (without any action or notice
(in writing or otherwise) by any of the parties hereto) if any Bankruptcy
Proceeding shall have been instituted or consented to by or against the Company.
SECTION 8.02. Effect of Termination. In the event of the
---------------------
termination of this Agreement pursuant to Section 8.01, this Agreement shall
forthwith become void and have no effect and there shall be no liability on the
part of any party hereto or its Affiliates, directors, officers or
shareholders; provided, however, that nothing herein shall relieve any party
-------- -------
from liability for any breach hereof prior to such termination.
SECTION 8.03. Amendment. This Agreement may be amended by the
---------
parties hereto by action taken by or on behalf of the Company and the Purchaser
at any time prior to the Closing Date. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. At any time prior to the Closing Date,
------
either party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any inaccuracies
in the representations and warranties contained herein or in any document
delivered pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party to be bound
<PAGE>
22
thereby. The failure of either party to assert any of its rights hereunder shall
not constitute a waiver of any such rights.
ARTICLE IX
GENERAL PROVISIONS
------------------
SECTION 9.01. Notices. All notices, requests, claims, demands and
-------
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to the Purchaser:
Cobe Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Mats Wahlstrom
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Peter D. Lyons, Esq.
(b) if to the Company:
REN Corporation-USA
6820 Charlotte Pike
Nashville, Tennessee 37209
Attention: Jerome S. Tannenbaum, M.D., C.E.O.
with a copy to:
Wyatt, Tarrant, Combs, Gilbert & Milom
Suite 1350
Third National Bank Building
Nashville, Tennessee 37219
Attention: Ralph Levy, Esq.
<PAGE>
23
SECTION 9.02. Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, between the parties with respect to the subject matter hereof. This
Agreement shall not be assigned by operation of law or otherwise, except that
the Purchaser may assign all or any of its rights and obligations hereunder to
any wholly owned Subsidiary of Gambro Aktiebolag, the owner of all the
outstanding capital stock of the Purchaser, upon the execution of a written
instrument whereby such assignee agrees to assume all of the Purchaser's
obligations hereunder and be bound by all the terms and conditions of this
Agreement; provided that no such assignment shall relieve the Purchaser of its
--------
obligations hereunder if such assignee does not perform such obligations.
SECTION 9.03. Parties in Interest. This Agreement shall be
-------------------
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 9.04. Governing Law. This Agreement shall be governed
-------------
by, and construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.05. Headings. The descriptive headings contained in
--------
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.06. Counterparts. This Agreement may be executed in
------------
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
SECTION 9.07. Specific Performance. The parties hereto agree
--------------------
that irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the
<PAGE>
24
terms hereof, in addition to any other remedy at law or equity.
IN WITNESS WHEREOF, the Purchaser and the Company have each
caused this Agreement to be executed by its duly authorized officer as of the
date first written above.
COBE LABORATORIES, INC.
By
------------------------------
Name: Mats Wohlstrom
Title: President
REN CORPORATION-USA
By
------------------------------
Name: Jerome S. Tannenbaum
Title: Chief Executive Officer
<PAGE>
EXHIBIT A
---------
FORM OF AMENDMENT NO. 2 TO THE
MAY 11, 1991 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 2, dated as of __________, 1992 (this "Amendment")
---------
to the Stock Purchase Agreement, dated as of May 11, 1991, as amended by
Amendment No. 1, dated as of May 24, 1991, between REN CORPORATION-USA, a
Tennessee corporation (the "Company") and COBE LABORATORIES, INC., a Colorado
-------
corporation (the "Purchaser").
---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered into as of
May 11, 1991 a Stock Purchase Agreement (the "Purchase Agreement"; capitalized
------------------
terms used and not defined herein being used herein as defined in the Purchase
Agreement);
WHEREAS, the Company and the Purchaser entered into on May 24,
1991 an Amendment No. 1 to the Purchase Agreement; and
WHEREAS, the Company and the Purchaser have determined that it is
in their mutual interests to further amend the Purchase Agreement as hereinafter
set forth.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and understandings hereinafter set forth, the Purchaser and the
Company agree as follows:
SECTION 1. Amendments to the Purchase Agreement. The Purchase
------------------------------------
Agreement is, effective as of the date hereof, hereby amended as follows:
(a) New defined terms shall be added to Section 1.01,
immediately following the definition of "Affiliate", to read as
follows:
"'Amendment No. 1' means the Amendment No. 1, dated May 24,
---------------
1991, to this Agreement between the Company and the Purchaser.
'Amendment No. 2' means the Amendment No. 2, dated _______,
---------------
1992, to this Agreement between the Company and the Purchaser."
(b) The defined term "Purchase Agreement" shall be restated in
full to read as follows:
<PAGE>
"'Purchase Agreement' means this Agreement, as amended by
------------------
Amendment No. 1 and Amendment No. 2."
(c) Sections 5.08(a) and (b) shall be restated in full to read as
follows:
"(a) The Company agrees, effective upon the Closing Date, to
decrease the size of the Board to seven directors and to appoint to the
Board two persons designated by the Purchaser (members of the Board
designated by the Purchaser pursuant to this Section 5.08 are referred
to as the "Purchaser's Directors"), one with his original term expiring
---------------------
at the Company's 1992 annual stockholders' meeting and the other with
his original term expiring at the Company's 1993 annual stockholders'
meeting. Without the prior written consent of the Purchaser, the
Company, acting through the Board, shall not increase the size of the
Board beyond seven members.
(b) Effective on the Closing Date and so long as the Purchaser
owns at least 20% of the issued and outstanding Common Stock, the
Purchaser shall have the right to request that the Company include (x)
one person designated by the Purchaser as a nominee to serve as a member
of the "Class Three Directors" (as such term is used in the By-Laws;
provided that for purposes of this Agreement, such term shall be further
--------
defined to be that class of directors of the Board whose term next
expires at the 1992 annual stockholders' meeting) of the Board and (y)
one person designated by the Purchaser to serve as a member of the
"Class One Directors" (as such term is used in the By-Laws; provided
--------
that for purposes of this Agreement, such term shall be further defined
to be that class of directors of the Board whose term next expires at
the 1993 annual stockholders' meeting) of the Board, and such persons
shall be nominated by the Company. In the event the Purchaser owns 15%
or more but less than 20% of the issued and outstanding Common Stock,
the Purchaser shall have the right to request that the Company include
one person designated by the Purchaser as a nominee to serve as a member
of either the Class Three Directors or the Class One Directors of the
Board, and such person shall be nominated by the Company. If the Board,
in the exercise of its fiduciary duties, reasonably shall determine that
any person designated by the Purchaser to be a nominee to the Board
pursuant to this Section 5.08
<PAGE>
3
is not qualified to serve on the Board and each of the committees
specified in subsection (d) of this Section 5.08, the Purchaser shall
have the opportunity to specify one or more additional designees who
shall be so included as a nominee subject to the reasonable
determination by the Board, in the exercise of their fiduciary duties,
that any such additional designee is not qualified to serve on the Board
and each of the committees specified in this Section 5.08. The Board
shall recommend to the stockholders of the Company for election the
designees of the Purchaser who are nominated by the Company to serve as
members of the Board. In the event that a vacancy is created on the
Board at any time by the death, disability, retirement, resignation or
removal (with or without cause) of a Purchaser's Director, the Purchaser
shall have the right to select a nominee to fill such vacancy. If the
remaining Board members, in the exercise of their fiduciary duties,
reasonably shall determine that such nominee is not qualified to serve
on the Board and each of the committees specified in subsection (d) of
this Section 5.08, the Purchaser shall have the opportunity to select
one or more additional nominees. Subject to the qualification set forth
in the immediately preceding sentence, the remaining members of the
Board shall elect to the Board to fill such vacancy any such nominee of
the Purchaser."
(d) The second sentence of Section 5.10(b) shall be restated in full to
read as follows:
"The Purchaser shall have the option to purchase from the Company
additional shares of Common Stock to the extent necessary to permit the
Purchaser to maintain 30% of the issued and outstanding shares of Common
Stock and 30% of the Total Voting Power."
SECTION 2. Counterparts. This Amendment may be executed in one or
------------
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 3. Governing Law. This Amendment shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed in that State.
<PAGE>
4
IN WITNESS WHEREOF, each of the Purchaser and the Company has
caused this Amendment to be executed as of the date first written above by their
respective officers thereunto duly authorized.
REN CORPORATION-USA
By
------------------------
Name:
Title:
COBE LABORATORIES, INC.
By
------------------------
Name:
Title:
<PAGE>
EXHIBIT B
---------
CONTENTS OF OPINION OF
WYATT, TARRANT, COMBS, GIBERT & MILAN
1. The Company is a corporation duly organized, validly existing and in good
standing under the laws of Tennessee and has the requisite corporate power and
authority to own, lease and operate its properties and carry on its business in
all material respects as presently owned or conducted. The Company is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it, or the nature of its activities makes such
qualification or licensing necessary, except those jurisdictions, if any, in
which the failure to be so duly qualified or licensed and in good standing would
not, taken as a whole, have a Material Adverse Effect.
2. The Company is not in violation of any of the provisions of the Charter of
Incorporation or By-Laws, except where such violation would not, individually or
in the aggregate, have a Material Adverse Effect.
3. The Company has all necessary corporate power and authority to execute and
deliver the Agreement and to perform its obligations and to consummate the
transactions contemplated thereunder. The execution, delivery and performance of
the Agreement by the Company have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize the Agreement or to consummate the
transactions contemplated thereunder.
4. (a) The execution and delivery of the Agreement by the Company do not, and
the performance of the Agreement (including, without limitation, the
consummation of the transactions contemplated thereunder) will not, (i) conflict
with or violate the Charter of Incorporation or By-Laws, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to the
Company, or by which its or any of its properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an
<PAGE>
2
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company which would have a Material Adverse
Effect, taken as a whole, pursuant to any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, insurance policy or other
instrument or obligation, and which note, bond, mortgage, indenture, contract,
agreement, license, permit, insurance policy or other instrument or obligation
to which the Company is a party, or by which the Company or its properties are
bound or affected.
(b) The execution and delivery of the Agreement by the Company do not, and the
performance of the Agreement by the Company (including, without limitation, the
consummation of the transactions thereunder) will not require any consent,
approval, authorization or permit of, or filing (other than filings, if any,
required on Form 8-K with the SEC and the HSR Act) with or notification to, any
governmental or regulatory authority, domestic or foreign, on the part of the
Company.
5. Following the consummation of the transactions thereunder, all the Shares
subject to issuance pursuant to the Agreement, upon such issuance against
payment for such Shares as contemplated by the Agreement shall (i) be duly
authorized, validly issued, fully paid and nonassessable, (ii) not be subject to
any Encumbrances and (iii) such Shares shall have accorded to them voting
rights.
6. The Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery hereof by
the Purchaser, and payment for the Shares as contemplated by the Agreement,
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting creditors' rights generally and by the availability of equitable
remedies.
The following assumptions shall be made:
1. Reliance upon representations and warranties of the Company and upon
certificates of certain public officials;
<PAGE>
3
2. Authenticity of all documents submitted to us as copies, genuineness of all
signatures, and conformity to the originals of all documents submitted to
counsel as copies;
3. Due authorization, execution and delivery of the Agreement by the
Purchaser;
4. Neither the Purchaser nor any Affiliate of the Purchaser has acquired any
shares of Voting Securities other than the Shares during the 90 day period
prior to the Closing, and neither the Purchaser nor any Affiliate of the
Purchaser will acquire any shares of Voting Securities other than the
Shares during a period of 90 days after the Closing; and
5. Compliance by the Company, the Purchaser and any Affiliate of either the
Company or the Purchaser with the covenants, representations, warranties
and agreements made, and to be performed by them pursuant to the Agreement.
<PAGE>
EXECUTION COPY
AMENDMENT NO. 1 TO THE
FEBRUARY 9, 1992 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 1, dated as of March 17, 1992 (this "Amendment") to
---------
the Stock Purchase Agreement, dated as of February 9, 1992 between REN
CORPORATION-USA, a Tennessee corporation (the "Company"), and COBE LABORATORIES,
-------
INC., a Colorado corporation (the "Purchaser").
---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered into as of
February 9, 1992 a Stock Purchase Agreement (the "1992 Purchase Agreement";
-----------------------
capitalized terms used and not defined herein being used herein as defined in
the 1992 Purchase Agreement); and
WHEREAS, the Company and the Purchaser have determined that it
is in their mutual interests to amend the 1992 Purchase Agreement as hereinafter
set forth.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements and understandings hereinafter set forth, the Purchaser and the
Company agree as follows:
SECTION 1. Amendments to the 1992 Purchase Agreement. The 1992
-----------------------------------------
Purchase Agreement is, effective as of the date hereof, hereby amended as
follows:
(a) Section 3.03(a) shall be restated in full to
read as follows:
"(a) The authorized capital stock of the Company consists
of (x) 10,000,000 shares of Preferred Stock, of which none
is issued, outstanding or reserved for issuance, and (y)
60,000,000 shares of Common Stock, of which (i) 11,722,575
shares of Common Stock are issued and outstanding, (ii)
0 shares of Common Stock are held in the treasury of the
Company, (iii) an aggregate of 271,400 shares of Common Stock
are subject to outstanding options, and 481,125 shares are
reserved for issuance, pursuant to the Company's Stock
Option Plan, (iv) an aggregate of 331,838 shares of Common
Stock are subject to outstanding promissory notes that are
convertible into shares of Common Stock, and (v) an aggregate
of 100,700 shares of Common Stock are subject to outstanding
warrants that are exercisable into shares of Common Stock. Of
the 11,722,575 shares of Common Stock that are issued and
<PAGE>
outstanding, 180,000 shares are held in escrow on behalf of the
Company and certain shareholders, in connection with a settlement
of a claim arising from an acquisition of a treatment center in
Douglas, Georgia."
(b) The second sentence of Section 5.02 shall be restated in full
to read as follows:
"Each party hereto agrees to make, or cause its 'ultimate parent
entity' (as such term is defined in the HSR Act) to make, an
appropriate filing of a Notification and Report Form pursuant
to the HSR Act as soon as reasonably practicable after the date
hereof."
SECTION 2. Counterparts. This Amendment may be executed in one
------------
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original,
but all of which taken together shall constitute one and the same agreement.
SECTION 3. Governing Law. This Amendment shall be governed by,
-------------
and construed in accordance with, the laws of the State of New York applicable
to contracts executed in and to be performed in that State.
IN WITNESS WHEREOF, each of the Purchaser and the Company has
caused this Amendment to be executed as of the date first written above by their
respective officers thereunto duly authorized.
REN CORPORATION-USA
By /s/ Jerome S. Tannebaum
------------------------------
Name: Jerome S. Tannebaum
Title: Chief Executive Officer
COBE LABORATORIES INC.
BY /s/ Ronald F. Plusk
--------------------------
Name: Ronald F. Plusk
Title: Vice President
and Chief Financial
Officer
[CONFORMED COPY]
================================================================================
STOCK PURCHASE AGREEMENT
between
COBE LABORATORIES, INC.
and
REN CORPORATION-USA
Dated as of July 2, 1992
================================================================================
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
DEFINITIONS
1.01 Definitions ................................ 1
ARTICLE II
PURCHASE AND SALE OF SHARES;
CLOSING
2.01 Authorization, Purchase and
Sale of Shares ......................... 4
2.02 Closing ................................... 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification;
Subsidiaries ................... ......... 5
3.02 Charter of Incorporation and By-Laws, Etc. 6
3.03 Capitalization ............................. 6
3.04 Authority Relative to this Agreement ....... 7
3.05 No Conflict; Required Filings and
Consents ................................. 8
3.06 Common Stock ............................... 8
3.07 SEC Filings; Financial Statements .......... 9
3.08 Private Offering ........................... 10
3.09 Standstill Agreement ....................... 10
3.10 Brokers .................................... 10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE PURCHASER
4.01 Corporate Organization ..................... 10
4.02 Authority Relative to this Agreement ....... 11
4.03 No Conflict; Required Filings and Consents.. 11
4.04 Funds ...................................... 12
4.05 Securities Act ............................. 12
4.06 Brokers .................................... 13
<PAGE>
(ii)
ARTICLE V
ADDITIONAL AGREEMENTS
5.01 Conduct of Business by the Company
Pending the Closing ..................... 13
5.02 Regulatory and Other Authorizations ........ 13
5.03 Access to Information ...................... 14
5.04 Notification of Certain Matters ............ 14
5.05 Further Action; Reasonable Efforts ......... 14
5.06 Public Announcements ....................... 14
5.07 Legend ..................................... 15
5.08 Shareholder Approval ....................... 15
5.09 No Solicitation; Third Party
Negotiations ............................ 15
5.10 Termination of Right of First Offer
Agreement ............................... 16
ARTICLE VI
CONDITIONS TO THE CLOSING
6.01 Conditions to Obligations of the Purchaser . 17
6.02 Conditions to Obligations of the Company ... 19
ARTICLE VII
INDEMNIFICATION
7.01 Survival of Representations and Warranties.. 20
7.02 Indemnification by the Company ............. 20
7.03 Indemnification by the Purchaser ........... 20
7.04 Materiality ................................ 21
7.05 Time Period; Dollar Threshold .............. 21
7.06 Notice and Defense ......................... 21
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination ................................ 22
8.02 Effect of Termination ...................... 23
8.03 Amendment .................................. 23
8.04 Waiver ..................................... 24
8.04 Disinterested Directors .................... 24
<PAGE>
(iii)
Section Page
- ------- ----
ARTICLE IX
GENERAL PROVISIONS
9.01 Notices ................................... 24
9.02 Entire Agreement; Assignment .............. 25
9.03 Parties in Interest ....................... 25
9.04 Governing Law ............................. 25
9.05 Headings .................................. 26
9.06 Counterparts .............................. 26
9.07 Specific Performance ...................... 26
EXHIBIT A Form of Amendment No. 3 to the May 11, 1991 Stock
Purchase Agreement
EXHIBIT B Contents of Opinions
DISCLOSURE SCHEDULE
<PAGE>
STOCK PURCHASE AGREEMENT (this "Agreement"), dated
---------
as of July 2, 1992, between REN CORPORATION-USA, a Tennessee
corporation (the "Company"), and COBE LABORATORIES, INC., a
-------
Colorado corporation (the "Purchaser").
---------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company desires to authorize, issue and
sell to the Purchaser, and the Purchaser desires to purchase
from the Company, the Shares (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and
the mutual covenants and agreements hereinafter set forth,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
SECTION 1.01. Definitions. As used in this
Agreement, the following terms shall have the following meanings:
"Acquisition Proposal" has the meaning specified in
--------------------
Section 5.09(b).
"Affiliate" means, with respect to any specified
---------
Person, any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled
by, or is under common control with, such specified Person.
"Amendment No. 3" means the Amendment No. 3 to the
---------------
Stock Purchase Agreement, dated as of May 11, 1991, as
amended by Amendment No. 1, dated May 24, 1991, and by
Amendment No. 2, dated March 17, 1992, between the Company
and the Purchaser, substantially in the form of Exhibit A
hereto.
"Bankruptcy Proceeding" has the meaning specified in
---------------------
Section 6.01(e).
"Board" means the Board of Directors of the Company.
-----
"Business Day" means any day other than a Saturday,
------------
Sunday or federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, Eastern Standard Time.
<PAGE>
2
"By-Laws" means the Restated By-Laws of the Company,
-------
as amended through the date hereof.
"Charter of Incorporation" means the Restated
------------------------
Charter of Incorporation of the Company, as amended through
the date hereof.
"Closing" means the completion of the transactions
-------
specified herein relating to the purchase and sale of the
Shares, as contemplated by Section 2.01 hereof.
"Closing Date" means the date on which the Closing
------------
shall occur.
"Common Stock" means the common shares of the
------------
Company, no par value.
"Company" has the meaning specified in the recitals
-------
to this Agreement.
"Company Loss" has the meaning specified in
------------
Section 7.03.
"control" (including the terms "controlled by" and
------- -------------
"under common control with") means the possession, directly
-------------------------
or indirectly, or as trustee or executor, of the power to
direct or cause the direction of the management and/or
policies of a Person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement, or
otherwise.
"Disclosure Schedule" means the Disclosure Schedule,
-------------------
dated as of the date hereof, delivered to the Purchaser by
the Company and forming a part of this Agreement.
"Encumbrance" means any security interest, pledge,
-----------
mortgage, lien (including environmental liens), charge,
adverse claim or restriction of any kind, including, without
limitation, any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of
ownership, but excluding such Encumbrances which, taken as a
whole, would not have a Material Adverse Effect.
"Exchange Act" means the Securities Exchange Act of
------------
1934, as amended, together with the rules and regulations
promulgated thereunder.
"First Union Loan Agreement" means the amended and
--------------------------
restated loan agreement, dated as of March 18, 1990, between
the Company and First Union National Bank of North Carolina,
<PAGE>
3
a national banking association under the laws of the United
States, as such agreement has been amended, supplemented,
restated or otherwise modified from time to time, together
with any notes, security pledge, guaranty or other ancillary
agreements executed pursuant thereto.
"GAAP" means United States generally accepted
----
accounting principles and practices in effect from time to
time, applied consistently throughout the periods involved.
"HSR Act" means the Hart-Scott-Rodino Antitrust
-------
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Liabilities" means any and all debts, liabilities
-----------
and obligations, whether accrued or fixed, absolute or
contingent, mature or unmatured, or determined or
determinable, including, without limitation, those arising
under any law, rule, regulation or order by a governmental
authority, and those arising under any contract, agreement,
commitment or undertaking.
"Loss" has the meaning specified in Section 7.03.
----
"March Financial Statements" has the meaning
--------------------------
specified in Section 3.07(c).
"Material Adverse Effect" means any circumstance,
-----------------------
change, event, transaction, loss, failure, effect or other
occurrence that is, or is reasonably likely to be, materially
adverse to the business, operations, properties (including
intangible properties), condition (financial or otherwise),
assets, Liabilities, results of operations or prospects of
the Company and its Subsidiaries taken as a whole.
"Person" means an individual, corporation,
------
partnership, association, trust, joint venture,
unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
"Purchase Price" has the meaning specified in
--------------
Section 2.01.
"Purchaser" has the meaning specified in the
---------
recitals to this Agreement.
"Purchaser Loss" has the meaning specified in
--------------
Section 7.02.
<PAGE>
4
"SEC" means the Securities and Exchange Commission.
---
"SEC Reports" means all forms, reports and documents
-----------
required to be filed by the Company with the SEC since
November 28, 1989, including, without limitation, (i) the
Company's Annual Reports on Form 10-K for the fiscal years
ended December 31, 1989, 1990 and 1991, (ii) the Company's
Quarterly Report or Form 10-Q for the fiscal quarter ended
March 31, 1992, (iii) all amendments to the Company's Reports
on Form 8 and (iv) all other reports or registrations filed
by the Company with the SEC since November 28, 1989.
"Securities Act" means the Securities Act of 1933,
--------------
as amended, together with the rules and regulations
promulgated thereunder.
"Shares" has the meaning specified in Section 2.01.
------
"Subsidiary" or "Subsidiaries" means any
---------- ------------
corporation, partnership, joint venture or other legal
entity, of which the Company or any other Person, as the case
may be (either alone or through or together with any other
Subsidiary), owns, directly or indirectly, 50 percent or more
of the stock or other equity interests, and the holders of
which are generally entitled to vote for the election of the
board of directors or other governing body of such
corporation or other legal entity.
"Third Party" has the meaning specified in
-----------
Section 5.09(b).
ARTICLE II
PURCHASE AND SALE OF SHARES; CLOSING
------------------------------------
SECTION 2.01. Authorization, Purchase and Sale of
-----------------------------------
Shares. Upon the terms and subject to the conditions set
- ------
forth herein, at the Closing, the Company shall authorize,
issue and sell to the Purchaser, and the Purchaser shall
purchase from the Company, 5,500,000 shares of Common Stock
(such shares of Common Stock being herein the "Shares") for a
------
purchase price equal to $9.75 per Share and an aggregate
purchase price of $53,625,000 (the "Purchase Price").
--------------
SECTION 2.02. Closing. (a) The Closing of the
-------
purchase and sale shall take place within three Business Days
of the satisfaction or waiver of the conditions set forth
herein, at the offices of Shearman & Sterling, 599 Lexington
<PAGE>
5
Avenue, New York, New York, or at such other time and place
as the Company and the Purchaser may mutually agree in
writing.
(b) At the Closing, the Company shall deliver or
cause to be delivered to the Purchaser: (i) stock
certificates evidencing the Shares registered in the name of
the Purchaser (or its designee); (ii) the certificate
referred to in Section 6.01(a); (iii) the legal opinion
referred to in Section 6.01(g); (iv) a receipt for the
Purchase Price; and (v) such other documents as the Purchaser
shall reasonably request.
(c) At the Closing, the Purchaser shall deliver to
the Seller: (i) the Purchase Price, by wire transfer, to an
account or accounts designated by the Company at least two
Business Days prior to the Closing Date; (ii) the certificate
referred to in Section 6.02(a); (iii) a receipt for the
Shares; and (iv) such other documents as the Company shall
reasonably request.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to the Purchaser
that:
SECTION 3.01. Organization and Qualification;
-------------------------------
Subsidiaries. The Company and each of its Subsidiaries are
- ------------
corporations duly organized, validly existing and in good
standing under the laws of their respective jurisdictions of
incorporation, and have the requisite corporate power and
authority to own, lease and operate their respective
properties and carry on their respective businesses in all
material respects as presently owned or conducted. The
Company and each of its Subsidiaries are duly qualified or
licensed as foreign corporations to do business, and are in
good standing, in each jurisdiction where the character of
their respective properties owned, leased or operated by
them, or the nature of their respective activities, makes
such qualification or licensing necessary, except those
jurisdictions, if any, in which the failure to be so duly
qualified or licensed and in good standing would not, taken
as a whole, have a Material Adverse Effect. Schedule 3.01 of
the Disclosure Schedule sets forth a complete and correct
list of each of the Subsidiaries of the Company.
<PAGE>
6
SECTION 3.02. Charter of Incorporation and By-Laws,
-------------------------------------
Etc. The Company has heretofore furnished to the Purchaser a
- ---
complete and correct copy of the Charter of Incorporation and
the By-Laws, each as amended to date, each of which is in
full force and effect. The Company is not in violation of
any of the provisions of the Charter of Incorporation or
By-Laws, and its Subsidiaries are not in violation of any of
the provisions of their charters, by-laws or equivalent
organizational documents, except where such violation would
not, taken as a whole, have a Material Adverse Effect.
SECTION 3.03. Capitalization. (a) As of the date
--------------
hereof and immediately prior to the Closing, the authorized
capital stock of the Company consists of (i) 10,000,000
shares of Preferred Stock, of which none are issued,
outstanding or reserved for issuance, and (ii) 60,000,000
shares of Common Stock, of which (A) 13,016,332 shares of
Common Stock are issued and outstanding, (B) no shares of
Common Stock are held in the treasury of the Company, (C) an
aggregate of 478,575 shares of Common Stock are subject to
outstanding options, and 750,000 shares are reserved for
issuance, pursuant to the Company's Stock Option Plan, (D) an
aggregate of 296,838 shares of Common Stock are subject to
outstanding promissory notes that are convertible into shares
of Common Stock, (E) 300,000 shares of Common Stock are held
in escrow on behalf of the Company and certain shareholders
in connection with a settlement of a claim arising from an
acquisition of a treatment center in Douglas, Georgia, and
(F) an aggregate of 33,000 shares of Common Stock are subject
to outstanding warrants that are exercisable for shares of
Common Stock.
(b) As of the time of the Closing, the authorized
capital stock of the Company will consist of (i) 10,000,000
shares of Preferred Stock, of which none is issued,
outstanding or reserved for issuance, and (ii) 60,000,000
shares of Common Stock, of which (A) 18,516,332 shares of
Common Stock are issued and outstanding, (B) no shares of
Common Stock are held in the treasury of the Company, (C) an
aggregate of 478,575 shares of Common Stock are subject to
outstanding options, and 750,000 shares are reserved for
issuance, pursuant to the Company's Stock Option Plan, (D) an
aggregate of 296,838 shares of Common Stock are subject to
outstanding promissory notes that are convertible into shares
of Common Stock, (E) 300,000 shares of Common Stock are held
in escrow on behalf of the Company and certain shareholders
in connection with a settlement of a claim arising from an
acquisition of a treatment center in Douglas, Georgia, and
(F) an aggregate of 33,000 shares of Common Stock are subject
<PAGE>
7
to outstanding warrants that are exercisable for shares of
Common Stock.
(c) Except as set forth in this Section 3.03 or in
Schedule 3.03(c)(i) of the Disclosure Schedule, there are no
options, warrants or other rights, agreements, arrangements
or commitments of any character to which the Company or any
of its Subsidiaries is a party, or obligating the Company or
any of its Subsidiaries to issue or sell any shares of
capital stock of, or other equity interests in, the Company
or any of its Subsidiaries. Except as set forth in Schedule
3.03(c)(ii) of the Disclosure Schedule, there are no
outstanding contractual obligations of the Company or any of
its Subsidiaries to repurchase, redeem or otherwise acquire
any of the capital stock of the Company or any Subsidiary or
to provide funds to or make any investment (in the form of a
loan, capital contribution or otherwise) in any Subsidiary or
any other entity. Each of the outstanding shares of capital
stock of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and
is owned by the Company, directly or indirectly, free and
clear of all Encumbrances, except as set forth in
Schedule 3.03(c)(iii) of the Disclosure Schedule, and for any
Encumbrances incurred pursuant to the First Union Loan
Agreement and Encumbrances for taxes not yet due and payable.
(d) Except as set forth on Schedule 3.03(d) of the
Disclosure Schedule, the Company is not party to any
agreement granting registration rights to any Person with
respect to any equity or debt securities of the Company.
SECTION 3.04. Authority Relative to this
--------------------------
Agreement. The Company has all necessary corporate power and
- ---------
authority to execute and deliver this Agreement, to perform
its obligations and to consummate the transactions
contemplated hereunder. The execution, delivery and
performance of this Agreement by the Company have been duly
and validly authorized by all necessary corporate action, and
no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement. This Agreement
has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and
delivery hereof by the Purchaser and payment for the Shares
as contemplated by this Agreement, constitutes the legal,
valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms (except, in
each such case, as enforceability may be limited by
bankruptcy, insolvency, reorganization and other similar laws
now or hereafter in effect relating to or affecting
<PAGE>
8
creditors' rights generally, and to the extent that the
remedy of specific performance and injunctive and other forms
of equitable relief are subject to certain equitable defenses
and to the discretion of the court before which any
proceeding therefor may be brought).
SECTION 3.05. No Conflict; Required Filings and
---------------------------------
Consents. (a) The execution and delivery of this Agreement
--------
by the Company do not, and the performance of this Agreement
(including, without limitation, the consummation of the
transactions contemplated hereunder) will not, (i) conflict
with or violate the Charter of Incorporation or By-Laws,
(ii) conflict with or violate the charters of incorporation
or by-laws or equivalent organizational documents of any of
the Company's Subsidiaries, (iii) conflict with or violate
any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its Subsidiaries or by
which the Company or any of its Subsidiaries or its or any of
their respective properties are bound or affected, or
(iv) result in any breach of, or constitute a default (or an
event which, with notice or lapse of time or both, would
become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
insurance policy or other instrument or obligation to which
the Company or any of its Subsidiaries is a party, or by
which the Company or any of its Subsidiaries or its or any of
their respective properties are bound or affected, except, in
the case of clauses (ii), (iii) and (iv) above, for such
conflicts which would not, taken as a whole, have a Material
Adverse Effect.
(b) The execution and delivery of this Agreement by
the Company do not, and the performance of this Agreement by
the Company (including, without limitation, the consummation
of the transactions hereunder) will not, require any consent,
approval, authorization or permit of, or filing (other than
filings, if any, required on Form 8-K with the SEC and
pursuant to the HSR Act) with, or notification to, any third
party or any governmental or regulatory authority, domestic
or foreign, on the part of the Company or any of its
Subsidiaries.
SECTION 3.06. Common Stock. Following the
------------
consummation of the transactions hereunder, (a) all of the
Shares subject to issuance pursuant to this Agreement, upon
such issuance against payment for such Shares as contemplated
<PAGE>
9
by this Agreement shall, (i) be duly authorized, validly
issued, fully paid and nonassessable and (ii) not be subject
to any Encumbrances, (b) the Shares shall have accorded to
them full voting rights and (c) none of the Shares shall be
"Control Shares", as such term is defined in the Tennessee
Business Corporation Act.
SECTION 3.07. SEC Filings; Financial Statements.
---------------------------------
(a) The Company has filed all forms, reports, statements and
documents required to be filed with the SEC since
November 28, 1989, including, without limitation, the SEC
Reports. The SEC Reports, as amended, (i) were each prepared
in accordance with, and, at the time of filing, complied in
all material respects with, the requirements of the
Securities Act or the Exchange Act, as the case may be, and
(ii) did not, at the time they were filed, 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 the light of the circumstances
under which they were made, not misleading. None of the
Company's Subsidiaries is required to file any forms, reports
or other documents with the SEC
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto)
contained in the SEC Reports has been prepared in accordance
with GAAP (except as may be indicated in the notes thereto),
and each presents fairly the consolidated financial position
of the Company and its consolidated Subsidiaries at the
respective dates thereof and the consolidated results of its
operations and changes in cash flows for the periods
indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring
year-end adjustments, which were not and are not expected to
be material in amount.
(c) The quarterly report for the fiscal quarter
ended March 31, 1992 on Form 10-Q filed with the SEC sets
forth the unaudited consolidated balance sheet of the Company
and its Subsidiaries and the unaudited statement of
operations for the three-month period ended March 31, 1992
(the "March Financial Statements"). The March Financial
--------------------------
Statements have been prepared in accordance with GAAP and
present fairly the financial condition of the Company and its
consolidated Subsidiaries as of March 31, 1991 and the
consolidated results of its operations for the three-month
period ended March 31, 1991, except that the March Financial
Statements are subject to normal or recurring year-end
adjustments, which are not expected to be material in amount.
(d) Except as set forth in Schedule 3.07(d) of the
Disclosure Schedule hereto and as and to the extent set forth
<PAGE>
10
on the March Financial Statements, neither the Company nor
any of its Subsidiaries has any Liabilities, including,
without limitation, liabilities for taxes which would be
required to be reflected on a balance sheet, or in the notes
thereto prepared in accordance with GAAP, except for
liabilities or obligations incurred in the ordinary course of
business since March 31, 1991 which would not, taken as a
whole, have a Material Adverse Effect.
SECTION 3.08. Private Offering. (a) Assuming the
----------------
accuracy of the representations and warranties of the
Purchaser, the sale of the Shares hereunder is exempt from
the registration and prospectus delivery requirements of the
Securities Act.
(b) No form of general solicitation or general
advertising (including, without limitation, advertisements,
articles, notices or other communications published in any
newspaper, magazine or other medium or broadcast over
television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or
general advertising) was used by the Company or any other
Person acting on behalf of the Company in respect of the
Shares or in connection with the offer and sale of the Shares.
SECTION 3.09. Standstill Agreement. The Company
--------------------
agrees and acknowledges that this Agreement and the
transactions to be effected pursuant hereto shall not give
rise to a breach under Section 5.11 of the Stock Purchase
Agreement dated as of May 11, 1991, as amended, between the
Company and the Purchaser.
SECTION 3.10. Brokers. No broker, finder or
-------
investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions
hereunder based upon arrangements made by or on behalf of the
Company other than fees payable Kidder, Peabody & Co.
Incorporated and Morgan Keegan & Company, Inc. in connection
with the transactions contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
-----------------------------------------------
The Purchaser represents and warrants to the Company
that:
SECTION 4.01. Corporate Organization. The
----------------------
Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of Colorado and has the
<PAGE>
11
requisite corporate power and authority and any necessary
governmental authority to own, operate or lease the
properties that it purports to own, operate or lease and to
carry on its business as it is now being conducted.
SECTION 4.02. Authority Relative to this
--------------------------
Agreement. The Purchaser has all necessary corporate power
- ---------
and authority to execute and deliver this Agreement and to
perform its obligations and to consummate the transactions
contemplated hereunder. The execution and delivery of this
Agreement by the Purchaser and the purchase of the Shares as
provided in Section 2.01 hereof by the Purchaser hereunder
have been duly and validly authorized by all necessary
corporate action of the Purchaser and no other corporate
proceedings on the part of the Purchaser are necessary to
authorize this Agreement or the purchase of the Shares by the
Purchaser as contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Purchaser and,
assuming the due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation
of the Purchaser enforceable against the Purchaser in
accordance with its terms (except in each such case as
enforceability may be limited by bankruptcy, insolvency,
reorganization and other similar laws now or hereafter in
effect relating to or affecting creditors' rights generally
and to the extent that the remedy of specific performance and
injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought).
SECTION 4.03. No Conflict; Required Filings and
---------------------------------
Consents. (a) The execution and delivery of this Agreement
- --------
by the Purchaser do not, and the performance of this
Agreement by the Purchaser will not, (i) conflict with or
violate the articles of incorporation or by-laws or
equivalent organizational documents of the Purchaser, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Purchaser or by which it
or its properties are bound or affected, or (iii) result in
any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default)
under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the property or
assets of the Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which
the Purchaser is a party or by which the Purchaser or any of
its properties are bound or affected, except, in the case of
this clause (iii) and clause (ii) above, for any such
breaches, defaults or other occurrences which would not,
<PAGE>
12
individually or in the aggregate, have a material adverse
effect on the business, operations, properties (including
intangible properties), condition (financial or otherwise),
assets or liabilities of the Purchaser.
(b) The execution and delivery of this Agreement by
the Purchaser do not, and the performance of this Agreement
by the Purchaser (including, without limitation, the
consummation of the transactions hereunder) will not, require
any consent, approval, authorization or permit of, or filing
(other than a filing pursuant to the HSR Act) with or
notification to, any third party or any governmental or
regulatory authority, domestic or foreign.
SECTION 4.04. Funds. The Purchaser has, and
-----
immediately prior to the Closing will have, the funds
necessary to consummate the purchase of the Shares hereunder.
SECTION 4.05. Securities Act. The Shares purchased
--------------
by the Purchaser pursuant to this Agreement are being
acquired for investment only and not with a view to any sale
or distribution (within the meaning of the Securities Act) of
the Shares or any part thereof. The Purchaser agrees at all
times to sell or otherwise dispose of all or any part of the
Shares so acquired by the Purchaser (and any securities
issued in exchange therefor) only pursuant to a registration,
or exemption therefrom, under the Securities Act and in
compliance with applicable state securities laws. The
Purchaser will take any steps necessary to ensure that any
purchaser will agree not to sell or otherwise dispose of
Shares except in compliance with the requirements contained
in the preceding sentence. The Purchaser is an "accredited
investor" within the meaning of Rule 501 promulgated under
the Securities Act and has such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of an investment in the Shares. The
Purchaser has received all the information it deems material
to its evaluation of the business, assets, liabilities,
financial condition and results of operations of the Company
and all the information it has requested from the Company and
considers necessary or appropriate for deciding whether to
purchase the Shares. The Purchaser has the ability to bear
the economic risks of the Purchaser's prospective investment
and the Purchaser is able, without materially impairing its
financial condition, to hold the Shares for an indefinite
period of time and to suffer complete loss on its
investment. The Purchaser understands and has fully
considered for purposes of this investment the risks of this
investment and understands that: (i) this investment is
suitable only for an investor who is able to bear the
economic consequences of losing his or its entire investment;
<PAGE>
13
(ii) the Shares represent an extremely speculative investment
which involves a high degree of risk of loss; (iii) there are
substantial restrictions on the transferability of the Shares
and, accordingly, it may not be possible for the Purchaser to
liquidate his or its investment in the Shares in case of
emergency; and (iv) there have been no representations as to
the possible future value, if any, of the Shares.
The Purchaser understands and acknowledges that the
sale of the Shares pursuant to this Agreement will not be
registered under the Securities Act on the grounds that the
offering and sale of securities contemplated by this
Agreement are exempt from registration pursuant to Section
4(2) of the Securities Act, and that the Company's reliance
upon such exemption is predicated in part upon the
Purchaser's representations set forth in this Agreement.
SECTION 4.06. Brokers. No broker, finder or
-------
investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions
hereunder based upon arrangements made by or on behalf of the
Purchaser.
ARTICLE V
ADDITIONAL AGREEMENTS
---------------------
SECTION 5.01. Conduct of Business by the Company
----------------------------------
Pending the Closing. Except as contemplated by this
- -------------------
Agreement, the Company covenants and agrees that, during the
period between the date of this Agreement and through and
including the Closing Date, unless the Purchaser shall
otherwise agree in writing, the businesses of the Company and
its Subsidiaries shall be conducted only in, and the Company
and its Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with
past practice.
SECTION 5.02. Regulatory and Other Authorizations.
-----------------------------------
Each party hereto will use its reasonable best efforts to
obtain all authorizations, consents, orders and approvals of
all third parties and of all federal, state and local
regulatory bodies and officials that may be or become
necessary for its execution and delivery of, and the
performance of its obligations pursuant to, this Agreement
and will cooperate fully with the other party in promptly
seeking to obtain all such authorizations, consents, orders
and approvals. Each party hereto agrees to make, or cause
its "ultimate parent entity" (as such term is defined in the
<PAGE>
14
HSR Act) to make, an appropriate filing of a Notification and
Report Form pursuant to the HSR Act with respect to the
transactions contemplated hereby within ten Business Days of
the date hereof. The parties hereto will not take any action
that will have the effect of delaying, impairing or impeding
the receipt of any required approvals.
SECTION 5.03 Access to Information. (a) From the
---------------------
date hereof to the Closing Date, the Company shall, and shall
cause its Subsidiaries, officers, directors, employees,
auditors and other agents to, afford the officers, employees,
auditors and other agents of the Purchaser reasonable access
at all reasonable times to its officers, employees, agents,
properties, offices, plants and other facilities and to all
books and records, and shall furnish the Purchaser with all
financial, operating and other data and information with
respect to the business and properties of the Company as the
Purchaser, through its officers, employees or agents, may
reasonably request. The Purchaser agrees to maintain the
strict confidentiality of such data and information and not
to disclose such data to any third party.
(b) No investigation pursuant to this Section 5.03
shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties
hereto.
SECTION 5.04. Notification of Certain Matters. The
-------------------------------
Company shall give prompt notice to the Purchaser, and the
Purchaser shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would be likely to cause any
representation or warranty contained in this Agreement to be
untrue or inaccurate and (ii) any failure of the Company or
the Purchaser, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the
-------- -------
delivery of any notice pursuant to this Section 5.04 shall
not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 5.05. Further Action; Reasonable Efforts.
----------------------------------
Upon the terms and subject to the conditions hereof, each of
the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all appropriate 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 hereunder.
SECTION 5.06. Public Announcements. The Purchaser
--------------------
and the Company shall consult with each other before issuing
<PAGE>
15
any press release or otherwise making any public statements
with respect to the transactions contemplated hereunder and
shall not issue any such press release or make any such
public statement prior to such consultation, except as may
be, and to the extent, required by law or any listing
agreement with the National Association of Securities
Dealers.
SECTION 5.07. Legend. The Purchaser agrees that
------
all certificates representing the Shares issued pursuant to
this Agreement shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
SECURITIES LAWS OF ANY STATE AND NEITHER THE SECURITIES
NOR ANY INTEREST THEREIN MAY BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREUNDER. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT (IN CERTAIN CIRCUMSTANCES) TO A
RIGHT OF FIRST OFFER AS SET FORTH IN THE STOCK PURCHASE
AGREEMENT DATED AS OF MAY 11, 1991, AS AMENDED, BETWEEN
THE COMPANY AND COBE LABORATORIES, INC."
SECTION 5.08. Shareholder Approval. The Company
--------------------
agrees to include in the proxy statement to be disseminated
to the shareholders of the Company prior to the next annual
meeting of the Company both (i) a proposal to amend the
By-Laws to opt out of the Tennessee Control Share Acquisition
Act, as amended, with respect to the appraisal of shares of
dissenting shareholders provisions of Section 48-35-309 of
such act and (ii) a proposal to confer voting rights to the
shares of Common Stock acquired by the Purchaser pursuant to
this Agreement or otherwise that would entitle the Purchaser
and its associates, immediately upon acquisition of such
shares, to exercise or direct the exercise of voting power of
the Company in the election of its directors equal to or in
excess of a majority of all such voting power. The Company
shall use its best efforts to solicit from the shareholders
of the Company eligible to vote on such proposals proxies in
favor of such proposals and shall take all other action
necessary or advisable to secure the vote of the shareholders
required to approve such proposals.
Section 5.09. No Solicitation; Third Party
----------------------------
Negotiations. (a) The Company agrees that between the date
- ------------
of this Agreement and the earlier of (i) the Closing and (ii)
the termination of this Agreement, neither the Company nor
any of its officers, directors, representatives or agents
will solicit, initiate, or encourage or, except as otherwise
provided pursuant to subsection 5.09(b), consider or accept
any other proposals or offers from any Person (i) relating to
any acquisition or purchase of all or any portion of the
<PAGE>
16
capital stock of the Company or any Subsidiary or any assets
of the Company or any Subsidiary, (ii) to enter into any
business combination with the Company or any Subsidiary or
(iii) to enter into any other extraordinary business
transaction involving or otherwise relating to the Company or
any Subsidiary.
(b) Notwithstanding the provisions of subsection
5.09(a), the Company may, in response to an unsolicited, bona
fide, financially superior offer with at least the same
evidence of financial ability to consummate and at least the
same degree of financial commitment as the Purchaser with
respect to the transactions contemplated hereby, furnish
information and access, with appropriate assurances of
confidentiality, and may participate in discussions and
negotiate with any Person who is not an Affiliate of the
Company or any of its officers, directors, representatives or
agents (a "Third Party") concerning a proposal for any
merger, sale of all or substantially all of the assets of the
Company or shares of the Company's capital stock or another
transaction involving the transfer of effective control of
the Company (an "Acquisition Proposal"), and consider and
accept an Acquisition Proposal, if the Board in its good
faith judgment after consultation with outside counsel,
concludes that its fiduciary duties require such action. In
the event of such determination by the Board, the Company may
direct its officers and other appropriate personnel to
cooperate with and be reasonably available to consult with
such Third Party; provided that (i) the Company shall
--------
promptly notify the Purchaser in writing of any Acquisition
Proposal (including, without limitation, each of any
successive Acquisition Proposals, inquiries or contacts) and
shall, in such notice, indicate the identity of the Third
Party and the material terms and conditions of any such
Acquisition Proposal, including, without limitation, price
and (ii) release the Purchaser from any and all restrictions
contained in Section 5.11 of the Stock Purchase Agreement
dated as of May 11, 1991, as amended, between the Company and
the Purchaser unless and until such time as (A) any entity
controlled by Investment AB Cardo consummates a transaction
to the exclusion of all Acquisition Proposals or (B) all
Acquisition Proposals are rejected, in such case of (A) or (B)
all restrictions contained in such Section 5.11 shall be
thereupon reinstated.
Section 5.10. Termination of Right of First Offer
-----------------------------------
Agreement. The Purchaser agrees that, upon completion of the
- ---------
Closing, the provisions of paragraph (a) of the Right of
First Offer Agreement, dated as of May 11, 1991, among Jerome
S. Tannenbaum, M.D., Mark S. Ginsburg, M.D. and the Purchaser
terminated and shall thereafter be null and void and of no
effect.
<PAGE>
17
ARTICLE VI
CONDITIONS TO THE CLOSING
-------------------------
SECTION 6.01. Conditions to Obligations of the
--------------------------------
Purchaser. The obligations of the Purchaser to effect the
- ---------
Closing shall be subject to the prior fulfillment of each of
the following conditions:
(a) Representations and Warranties; Agreements and
----------------------------------------------
Covenants. Except for changes permitted or contemplated
- ---------
hereby or consented to by the Purchaser and except for
matters waived or consented to by the Purchaser pursuant
to Section 8.04, (i) the representations and warranties
of the Company contained in this Agreement which are
qualified as to materiality shall be true in all respects
and all other representations and warranties shall be
true and correct in all material respects on and as of
the Closing, with the same force and effect as if made as
of the Closing, (ii) all the agreements contained in this
Agreement to be performed or complied with by the
Company, at or before the Closing, shall have been
performed or complied with in all material respects and
(iii) the Purchaser shall have received a certificate of
the Company, signed by the Chief Executive Officer
thereof, as to the fulfillment of the conditions set
forth in the foregoing clauses (i) and (ii).
(b) No Cessation Order. No order, ruling or
------------------
determination having the effect of halting the trading of
the Common Stock shall have been issued or made by the
SEC or other regulatory authority and be continuing and
no proceedings for that purpose shall have been
instituted and be pending.
(c) Litigation. There shall have been no order or
----------
preliminary or permanent injunction entered in any action
or proceeding before any federal, state or foreign court
or governmental, administrative or regulatory authority
or agency, or no other action taken or threatened, or
statute, rule, regulation, legislation, interpretation,
judgment or order enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to the
Purchaser, the Company or any Subsidiary or Affiliate of
the Purchaser, by any federal, state or foreign
legislative body, court, government or governmental,
administrative or regulatory authority or agency which
shall have remained in effect and which shall have had
the effect of: (i) making illegal, materially delaying
or otherwise directly or indirectly restraining or
<PAGE>
18
prohibiting the consummation of the transactions
hereunder; (ii) prohibiting or materially limiting the
ownership of the Shares; (iii) imposing material
limitations on the ability of the Purchaser to exercise
full rights of ownership of any of the Shares, including,
without limitation, the right to vote any shares of
Common Stock; or (iv) requiring divestiture by the
Purchaser of any Shares.
(d) Calamities. There shall not have occurred and
----------
be continuing (i) any general suspension of, or
limitation on prices for or trading in, securities on any
United States securities exchange, (ii) a declaration of
a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any
limitation (whether or not mandatory) by any government
or governmental, administrative or regulatory authority
or agency, domestic or foreign, or other event that
materially adversely affects the ability of the Purchaser
to purchase the Shares hereunder, or (iv) a commencement
of a war or armed hostilities or other national or
international calamity directly involving the United
States or Sweden.
(e) Bankruptcy; Insolvency; Etc. No proceeding
---------------------------
shall have been instituted or consented to by or against
the Company seeking to adjudicate it bankrupt or
insolvent, or seeking liquidation, winding-up,
reorganization, arrangement, adjustment, protection,
relief or composition of its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or
the appointment of a receiver, trustee, custodian or
other similar official for it or any substantial part of
its property (each such action being a "Bankruptcy
----------
Proceeding"), and the Company shall not have taken any
- ----------
corporate action to authorize any Bankruptcy Proceeding.
(f) No Material Adverse Effect. No fact, event or
--------------------------
condition (financial or otherwise) shall have occurred
with respect to the Company or any of its Subsidiaries
having, individually or in the aggregate, a Material
Adverse Effect.
(g) Opinion. The Purchaser shall have received
-------
opinions from Latham & Watkins and/or Wyatt, Tarrant,
Combs, Gilbert & Milom substantially to the effect of
Exhibit B hereto.
(h) Amendment No. 3. Amendment No. 3 shall have
---------------
been executed and delivered by the Company.
<PAGE>
19
(i) HSR Act. Any waiting period (and any extension
-------
thereof) under the HSR Act applicable to the purchase of
the Shares contemplated hereby shall have expired or
shall have been terminated.
(j) Shareholder Approval. Each of the proposals
--------------------
set forth in Section 5.08 of this Agreement shall have
been approved by the requisite holders of the outstanding
capital stock of the Company entitled to vote thereon.
(k) Resignation. Beth Tannenbaum shall have
-----------
resigned as Secretary of the Company and no longer serve
as the chief legal officer of the Company.
(1) Employment Agreements. The Purchaser shall be
---------------------
satisfied with the terms of the amendments to the
termination and option vesting provisions of the
employment agreements between the Company and Jerome S.
Tannenbaum, M.D. and Bradley S. Wear insofar as such
provisions relate to the "change of control" resulting
from the transaction contemplated by this Agreement.
SECTION 6.02. Conditions to Obligations of the
--------------------------------
Company. The obligations of the Company to effect the
- -------
Closing shall be subject to the prior fulfillment of each of
the following conditions:
(a) Representations and Warranties. (i) The
------------------------------
representations and warranties of the Purchaser contained
in this Agreement and in any certificates or agreements
of the Purchaser delivered pursuant hereto shall be true
and correct in all material respects on and as of the
Closing, with the same force and effect as if made as of
the Closing, (ii) all the agreements contained in this
Agreement and in any certificates or agreements of the
Purchaser delivered pursuant hereto to be performed or
complied with by the Purchaser, at or before the Closing,
shall have been performed or complied with in all
material respects and (iii) the Company shall have
received a certificate of the Purchaser, signed by a duly
authorized officer thereof, as to the fulfillment of the
conditions set forth in the foregoing clauses (i) and
(ii).
(b) Litigation. There shall have been no order or
----------
preliminary or permanent injunction entered in any action
or proceeding before any federal, state or foreign court
or governmental, administrative or regulatory authority
or agency by any federal, state or foreign legislative
body, court, government or governmental, administrative
or regulatory authority or agency which shall have
<PAGE>
20
remained in effect and which shall have had the effect of
making illegal the consummation of any of the
transactions hereunder.
(c) HSR Act. Any waiting period (and any extension
-------
thereof) under the HSR Act applicable to the purchase of
the Shares contemplated hereby shall have expired or
shall have been terminated.
ARTICLE VII
INDEMNIFICATION
---------------
SECTION 7.01. Survival of Representations and
-------------------------------
Warranties. The representations and warranties of the
- ----------
Company in Article III shall survive the Closing until the
date 15 months from the Closing Date. Neither the period of
survival nor the liability of any party with respect to the
parties' representations and warranties shall be reduced by
any investigation made at any time by or on behalf of any
party.
SECTION 7.02. Indemnification by the Company. The
------------------------------
Purchaser and its Affiliates, officers, directors, employees,
agents, successors and assigns shall be indemnified and held
harmless by the Company for any and all Liabilities, losses,
damages, claims, costs and expenses, interest, awards,
judgments and penalties (including, without limitation, legal
costs and expenses) actually suffered or incurred by them
(hereinafter, a "Purchaser Loss") arising out of or resulting
--------------
from:
(a) the breach of any representation or warranty
made by the Company contained herein or in any document
delivered by the Company hereunder at the Closing; or
(b) the breach of any covenant or agreement by the
Company contained herein.
SECTION 7.03. Indemnification by the Purchaser.
--------------------------------
The Company and its Affiliates, officers, directors,
employees, agents, successors and assigns shall be
indemnified and held harmless by the Purchaser for any and
all Liabilities, losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including, without
limitation, legal costs and expenses) actually suffered or
incurred by them (hereinafter, a "Company Loss" and, together
------------
with a Purchaser Loss, a "Loss") arising out of or resulting
----
from:
<PAGE>
21
(a) the breach of any representation or warranty
made by the Purchaser contained herein or in any document
delivered by the Purchaser hereunder at the Closing; or
(b) the breach of any covenant or agreement by the
Purchaser contained herein.
SECTION 7.04. Materiality. Notwithstanding
-----------
anything in this Agreement to the contrary, for purposes of
application of the indemnity provisions of this Article VII,
the amount of any Purchaser Loss or Company Loss arising from
the breach of such representation, warranty, covenant or
agreement shall be the entire amount of any such Loss
actually incurred by the party being indemnified hereunder as
a result of such breach and not just that portion of such
Loss that exceeds the relevant level of materiality.
SECTION 7.05. Time Period; Dollar Threshold.
-----------------------------
(a) The indemnification obligations of the Company and the
Purchaser under this Article VII shall continue for the same
period of survival specified in Section 7.01 for each such
representation and warranty and shall terminate with the
expiration of the 15 month survival period for each such
representation and warranty. Any claim or demand against the
Company or the Purchaser which is pending or asserted at or
prior to the expiration of any survival period may continue
to be asserted and indemnified against.
(b) Neither the Company nor the Purchaser shall be
entitled to indemnification under this Article VII unless and
until the aggregate amount of the claims against the other
party exceeds $1,000,000. If the aggregate amount of such
claims against either party exceeds $1,000,000, then that
party may claim indemnification for the entire aggregate
amount of such claims.
(c) The provisions of this Article VII shall be the
sole and exclusive remedy (other than injunctive relief) of
the Company or the Purchaser (regardless of against whom
asserted) for the matters subject to indemnification.
SECTION 7.06. Notice and Defense. Each party
------------------
shall, within 30 days of learning of any asserted liability
or damage claimed to give rise to indemnification hereunder,
notify the party obligated to indemnify it hereof in writing;
provided, however, that the failure of the indemnified party
- -------- -------
to so notify the indemnifying party shall not relieve the
indemnifying party of its obligations hereunder unless, and
only to the extent that, such failure to notify prejudices
the indemnifying party. Thereafter, the indemnifying party
shall have, at its election, the right to compromise or
<PAGE>
22
defend any such matter at its sole cost and expense through
counsel chosen by it. If the indemnifying party so
undertakes to compromise and defend, the indemnifying party
shall notify the other party of its intention to do so. The
indemnifying party must defend such matter diligently or the
indemnified party may assume control of the defense of such
matter. Each party agrees in all cases to cooperate with the
defending party and its counsel in the compromise of or
defending of any such liabilities or claims. The defending
party and the nondefending party may be represented by the
same counsel unless such representation would be
inappropriate due to actual or potential differing interests
between them. In addition, the nondefending party shall at
all times be entitled to monitor such defense through the
appointment of counsel of its own choosing, at its own cost
and expense.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
SECTION 8.01. Termination. (a) This Agreement may
-----------
be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing Date:
(i) By mutual written consent duly authorized by
the Boards of Directors of the Company and the Purchaser;
or
(ii) By the Purchaser, if (A) (1) any Person other
than the Purchaser shall have acquired, or shall have
been granted any option or right, conditional or
otherwise, to acquire, beneficial ownership of 20% or
more of the outstanding shares of the Company's Common
Stock, or (2) any group (other than a group including the
Purchaser) shall have been formed which beneficially owns
20% or more of the outstanding shares of the Company's
Common Stock; or (B) the Company shall have entered into
an agreement with a third party with respect to any
acquisition or purchase of all or a substantial portion
of the assets of, or any equity interest in, the Company
or any of its Subsidiaries or any business combination
with the Company or any of its Subsidiaries by such third
party; or
(iii) By the Purchaser or the Company, if any court
of competent jurisdiction in the United States or other
United States governmental authority shall have issued an
order, decree or ruling or taken any other action
<PAGE>
23
restraining, enjoining or otherwise prohibiting any of
the transactions hereunder and such order, decree, ruling
or other action shall have become final and
nonappealable; or
(iv) By the Purchaser or the Company, if the Closing
shall not have occurred by October 31, 1992 or such later
date as the Company and the Purchaser shall hereafter
agree; provided, however, that the right to terminate
-------- -------
this Agreement under this Section 8.01(a)(iv) shall not
be available to any party whose willful failure to fulfill
any material obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to
occur on or before such date; or
(v) By the Company, in connection the exercise by the
Board of its fiduciary duties pursuant to Section
5.09(b), in order to permit the Company to execute a
definitive agreement with a Third Party with respect to
an Acquisition Proposal; provided, that upon consummation
--------
of the transactions contemplated by such agreement by the
Company with the Third Party that is a direct competitor
of the Purchaser as of the date hereof, the Purchaser
shall be (i) unconditionally released by the Company from
any and all restrictions contained in Sections 5.12(a)
and 5.12(b) of the Stock Purchase Agreement dated as of
May 11, 1991, as amended, between the Company and the
Purchaser and (ii) released by the Company from any and
all restrictions contained in Section 5.15 of the Stock
Purchase Agreement dated as of May 11, 1991, as amended,
between the Company and the Purchaser except in the case
of the sale of Common Stock by the Purchaser to the Third
Party consummating such agreement.
(b) This Agreement shall terminate (without any
action or notice (in writing or otherwise) by any of the
parties hereto) if any Bankruptcy Proceeding shall have been
instituted or consented to by or against the Company.
SECTION 8.02. Effect of Termination. In the event
---------------------
of the termination of this Agreement pursuant to Section
8.01, this Agreement shall forthwith become void and have no
effect and there shall be no liability on the part of any
party hereto or its Affiliates, directors, officers or
shareholders; provided, however, that nothing herein shall
-------- -------
relieve any party from liability for any breach hereof prior
to such termination.
SECTION 8.03. Amendment. This Agreement may be
---------
amended by the parties hereto by action taken by or on behalf
of the Company and the Purchaser at any time prior to the
<PAGE>
24
Closing Date. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.04. Waiver. Either party hereto may (a)
------
extend the time for the performance of any of the obligations
or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c)
waive compliance with any of the agreements or conditions
contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the
party to be bound thereby. The failure of either party to
assert any of its rights hereunder shall not constitute a
waiver of any such rights.
SECTION 8.05. Disinterested Directors. Effective
-----------------------
on the Closing Date and so long as the Purchaser's Directors
(as such term is defined in Section 5.08 of the Stock
Purchase Agreement dated as of May 11, 1991, as amended,
between the Company and the Purchaser) constitute a majority
of the Board, no amendment or waiver of any provisions of
this Agreement by which the Company is to be bound shall be
effective unless approved by a majority of the members of the
Board who are not Purchaser's Directors.
ARTICLE IX
GENERAL PROVISIONS
------------------
SECTION 9.01. Notices. All notices, requests,
-------
claims, demands and other communications hereunder shall be
in writing and shall be given (and shall be deemed to have
been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or
certified mail (postage prepaid, return receipt requested) to
the respective parties at the following addresses (or at such
other address for a party as shall be specified by like
notice):
(a) if to the Purchaser:
Cobe Laboratories, Inc.
1185 Oak Street
Lakewood, Colorado 80215
Attention: Mats Wahlstrom
<PAGE>
25
with a copy
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Peter D. Lyons, Esq.
(b) if to the Company:
REN Corporation-USA
6820 Charlotte Pike
Nashville, Tennessee 37209
Attention: Jerome S. Tannenbaum, M.D., C.E.O.
with a copy
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal, Esq.
SECTION 9.02. Entire Agreement; Assignment. This
----------------------------
Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and
supersedes all prior agreements and undertakings, both
written and oral, between the parties with respect to the
subject matter hereof. This Agreement shall not be assigned
by operation of law or otherwise, except that the Purchaser
may assign all or any of its rights and obligations hereunder
to any wholly owned Subsidiary of Gambro Aktiebolag, the
owner of all the outstanding capital stock of the Purchaser,
upon the execution of a written instrument whereby such
assignee agrees to assume all of the Purchaser's obligations
hereunder and be bound by all the terms and conditions of
this Agreement; provided that no such assignment shall
--------
relieve the Purchaser of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 9.03. Parties in Interest. This Agreement
-------------------
shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person
any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.04. Governing Law. This Agreement shall
-------------
be governed by, and construed in accordance with, the laws of
the State of New York, applicable to contracts executed in
and to be performed entirely within that state.
<PAGE>
26
SECTION 9.05. Headings. The descriptive headings
--------
contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.06. Counterparts. This Agreement may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.07. Specific Performance. The parties
--------------------
hereto agree that irreparable damage would occur in the event
any of the provisions of this Agreement were not to be
performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or
equity.
IN WITNESS WHEREOF, the Purchaser and the Company
have each caused this Agreement to be executed by its duly
authorized officer as of the date first written above.
COBE LABORATORIES, INC.
By /s/Mats Wahlstrom
-----------------------
President
REN CORPORATION-USA
By /s/Jerome S. Tannenbaum
------------------------
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
EXHIBIT A
---------
FORM OF AMENDMENT NO. 3 TO THE
MAY 11, 1991 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 3, dated as of __________, 1992 (this
"Amendment"), to the Stock Purchase Agreement, dated as of
---------
May 11, 1991, as amended by Amendment No. 1, dated May 24,
1991, and Amendment No. 2, dated March 17, 1992, between REN
CORPORATION-USA, a Tennessee corporation (the "Company"), and
-------
COBE LABORATORIES, INC., a Colorado corporation (the
"Purchaser").
---------
W I T N E S S E T H:
-------------------
WHEREAS, the Company and the Purchaser have entered
into a Stock Purchase Agreement, dated as of May 11, 1991
(the "Purchase Agreement"; capitalized terms used and not
------------------
defined herein being used herein as defined in the Purchase
Agreement);
WHEREAS, the Company and the Purchaser have entered
into Amendment No. 1, dated as of May 24, 1991 to the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have entered
into Amendment No. 2, dated as of March 17, 1992 to the
Purchase Agreement; and
WHEREAS, the Company and the Purchaser have
determined that it is in their mutual interests to further
amend the Purchase Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements and understandings hereinafter set
forth, the Purchaser and the Company agree as follows:
SECTION 1. Amendments to the Purchase Agreement.
------------------------------------
The Purchase Agreement is, effective as of the date hereof,
hereby amended as follows:
(a) New defined terms shall be added to Section
1.01, immediately following the definition of
"Amendment No. 2", to read as follows:
"'Amendment No. 3' means the Amendment No. 3,
---------------
dated , 1992, to this Agreement between
----------------
the Company and the Purchaser."
(b) The defined term "Purchase Agreement" shall be
restated in full to read as follows:
<PAGE>
A-2
"'Purchase Agreement' means this Agreement, as
------------------
amended by Amendment No. 1, Amendment No. 2 and
Amendment No. 3."
(c) Sections 5.08 shall be restated in full to read
as follows:
"(a) The Company agrees, effective upon the
Closing Date (as defined in the Stock Purchase
Agreement dated as of July 2, 1992 between the
Company and the Purchaser), to increase the size of
the Board to nine directors and to appoint as
directors three persons designated by the Purchaser
(such three directors, together with the two members
of the Board previously designated by the Purchaser
being the 'Purchaser's Directors'), one such
---------------------
additional Purchaser's Director with his term
expiring at the Company's 1993 annual stockholders'
meeting and the other two additional Purchaser's
Directors with their term expiring at the Company's
1994 annual stockholders' meeting. Without the
prior written consent of the Purchaser, the Company,
acting through the Board, shall not change the size
of the Board.
(b) Effective on the Closing Date and so long
as the Purchaser owns a majority of the issued and
outstanding Common Stock, the Purchaser shall have
the right to request that the Company include (x)
two persons designated by the Purchaser as a nominee
to serve as a member of the `Class One Directors'
(as such term is used in the By-Laws; provided that
--------
for purposes of this Agreement, such term shall be
further defined to be that class of directors of the
Board whose term next expires at the 1993 annual
stockholders' meeting) of the Board, (y) two persons
designated by the Purchaser to serve as a member of
the 'Class Two Directors' (as such term is used in
the By-Laws; provided that for purposes of this
--------
Agreement, such term shall be further defined to be
that class of directors of the Board whose term next
expires at the 1994 annual stockholders' meeting) of
the Board and (z) one person designated by the
Purchaser to serve as a member of the 'Class Three
Directors' (as such term is used in the By-Laws;
provided that for purposes of this Agreement, such
--------
term shall be further defined to be that class of
directors of the Board whose term next expires at
the 1995 annual stockholders' meeting) of the
<PAGE>
A-3
Board, and such persons shall be nominated by the
Company. If the Board, in the exercise of its
fiduciary duties, reasonably shall determine that
any person designated by the Purchaser to be a
nominee to the Board pursuant to this Section 5.08
is not qualified to serve on the Board and the
committees specified in subsection (c) of this
Section 5.08 for which such person has been
designated to serve upon by the Purchaser, the
Purchaser shall have the opportunity to specify one
or more additional designees who shall be so
included as a nominee subject to the reasonable
determination by the Board, in the exercise of their
fiduciary duties, that any such additional designee
is qualified to serve on the Board and such
committees. The Board shall recommend to the
stockholders of the Company for election the
designees of the Purchaser who are nominated by the
Company to serve as members of the Board. In the
event that a vacancy is created on the Board at any
time by the death, disability, retirement,
resignation or removal (with or without cause) of a
Purchaser's Director, the Purchaser shall have the
right to select a nominee to fill such vacancy. If
the remaining Board members, in the exercise of
their fiduciary duties, reasonably shall determine
that such nominee is not qualified to serve on the
Board and the committees specified in subsection (c)
of this Section 5.08 for which such person has been
designated to serve upon by the Purchaser, the
Purchaser shall have the opportunity to select one
or more additional nominees. Subject to the
qualification set forth in the immediately preceding
sentence, the remaining members of the Board shall
elect to the Board to fill such vacancy any such
nominee of the Purchaser.
(c) Effective on the Closing Date and so long
as the Purchaser owns a majority of the issued and
outstanding Common Stock, the Company agrees to
place two of the Purchaser's Directors on each of
the Executive, Compensation and Human Resources
Committees, each of which is to consist of three
members and to place two of the Purchaser's
Directors on the Audit Committee, which is to
consist of four members."
(d) The second sentence of Section 5.10(b) shall be
restated in full to read as follows:
"The Purchaser shall have the option to purchase
from the Company additional shares of Common Stock
<PAGE>
A-4
to the extent necessary to permit the Purchaser to
maintain 50.1% of the issued and outstanding shares
of Common Stock and 50.1% of the Total Voting Power."
(e) Article VIII is amended by adding a new
Section 8.05 at the end thereof to read as follows:
"SECTION 8.05. Disinterested Directors.
-----------------------
Effective on the Closing Date and so long as the
Purchaser's Directors constitute a majority of the
Board, no amendment of this Agreement by which the
Company is to be bound shall be effective unless
approved by a majority of the members of the Board
who are not Purchaser's Directors."
SECTION 2. Counterparts. This Amendment may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 3. Governing Law. This Amendment shall be
-------------
governed by, and construed in accordance with, the laws of
the State of New York, applicable to contracts executed in
and to be performed entirely within that state.
IN WITNESS WHEREOF, each of the Purchaser and the
Company has caused this Amendment to be executed as of the
date first written above by their respective officers
thereunto duly authorized.
REN CORPORATION-USA
By
--------------------
Name:
Title:
COBE LABORATORIES, INC
By
--------------------
Name:
Title:
<PAGE>
EXHIBIT B
---------
CONTENTS OF OPINIONS OF
LATHAM & WATKINS AND/OR
WYATT, TARRANT, COMBS, GILBERT & MILOM
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of Tennessee and
has the requisite corporate power and authority to own, lease
and operate its properties and carry on its business in all
material respects as presently owned or conducted. The
Company is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned,
leased or operated by it, or the nature of its activities
makes such qualification or licensing necessary, except those
jurisdictions, if any, in which the failure to be so duly
qualified or licensed and in good standing would not, taken
as a whole, have a Material Adverse Effect.
2. The Company is not in violation of any of the provisions
of the Charter of Incorporation or By-Laws, except where such
violation would not, individually or in the aggregate, have a
Material Adverse Effect.
3. The Company has all necessary corporate power and
authority to execute and deliver the Agreement and to perform
its obligations and to consummate the transactions
contemplated thereunder. The execution, delivery and
performance of the Agreement by the Company have been duly
and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of the Company are
necessary to authorize the Agreement or to consummate the
transactions contemplated thereunder.
4. (a) The execution and delivery of the Agreement by the
Company do not, and the performance of the Agreement
(including, without limitation, the consummation of the
transactions contemplated thereunder) will not, (i) conflict
with or violate the Charter of Incorporation or By-Laws, (ii)
conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company, or by which its
or any of its properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an
<PAGE>
B-2
event which with notice or lapse of time or both would become
a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the
properties or assets of the Company which would have a
Material Adverse Effect, taken as a whole, pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, insurance policy or other instrument or
obligation, and which note, bond, mortgage, indenture,
contract, agreement, license, permit, insurance policy or
other instrument or obligation to which the Company is a
party, or by which the Company or its properties are bound or
affected.
(b) The execution and delivery of the Agreement by the
Company do not, and the performance of the Agreement by the
Company (including, without limitation, the consummation of
the transactions thereunder) will not require any consent,
approval, authorization or permit of, or filing (other than
filings, if any, required on Form 8-K with the SEC and the
HSR Act) with or notification to, any governmental or
regulatory authority, on the part of the Company.
5. Following the consummation of the transactions
thereunder, all the Shares subject to issuance pursuant to
the Agreement, upon such issuance against payment for such
Shares as contemplated by the Agreement shall (i) be duly
authorized, validly issued, fully paid and nonassessable,
(ii) not be subject to any Encumbrances and (iii) such Shares
shall have accorded to them voting rights.
6. The Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery hereof by the Purchaser, and payment
for the Shares as contemplated by the Agreement, constitutes
the legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting
creditors' rights generally and by the availability of
equitable remedies.
The following assumptions shall be made:
1. Reliance upon representations and warranties of the
Company and upon certificates of certain public officials;
<PAGE>
B-3
2. Authenticity of all documents submitted to us as copies,
genuineness of all signatures, and conformity to the
originals of all documents submitted to counsel as copies;
3. Due authorization, execution and delivery of the
Agreement by the Purchaser;
4. Compliance by the Company, the Purchaser and any
Affiliate of either the Company or the Purchaser with the
covenants, representations, warranties and agreements
made, and to be performed by them pursuant to the
Agreement.
<PAGE>
[EXECUTION COPY]
AMENDMENT NO. 1 TO THE
JULY 2, 1992 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 1, dated as of July 23, 1992 (this
"Amendment") to the Stock Purchase Agreement, dated as of
---------
July 2, 1992 between REN CORPORATION-USA, a Tennessee
corporation (the "Company"), and COBE LABORATORIES, INC., a
-------
Colorado corporation (the "Purchaser").
---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered
into as of July 2, 1992 a Stock Purchase Agreement (the
"Stock Purchase Agreement"; capitalized terms used and not
------------------------
defined herein being used herein as defined in the Stock
Purchase Agreement); and
WHEREAS, the Company and the Purchaser have
determined that it is in their mutual interests to amend the
Stock Purchase Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of the premises and
of the mutual agreements and understandings hereinafter set
forth, the Purchaser and the Company agree as follows:
SECTION 1. Amendment to the Stock Purchase
-------------------------------
Agreement. Section 6.02 of the Stock Purchase Agreement is,
- ---------
effective as of the date hereof, hereby amended as follows:
(a) By deleting the period at the end of
subsection 6.02(c) and inserting in lieu thereof a
semi-colon; and
(b) By adding a new subsection 6.02(d) at the end
of Section 6.02 to read as follows:
"(d) Shareholder Approval. Each of the
--------------------
proposals set forth in Section 5.08 of this
Agreement shall have been approved by the requisite
holders of the outstanding capital stock of the
Company entitled to vote thereon.".
SECTION 2. Counterparts. This Amendment may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 3. Governing Law. This Amendment shall be
-------------
governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and
to be performed in that State.
<PAGE>
2
IN WITNESS WHEREOF, each of the Purchaser and the
Company has caused this Amendment to be executed as of the
date first written above by their respective officers
thereunto duly authorized.
REN CORPORATION-USA
By
-------------------------
Name:
Title:
COBE LABORATORIES, INC.
By
-------------------------
Name:
Title:
<PAGE>
2
IN WITNESS WHEREOF, each of the Purchaser and the
Company has caused this Amendment to be executed as of the
date first written above by their respective officers
thereunto duly authorized.
REN CORPORATION-USA
By
-------------------------
Name:
Title:
COBE LABORATORIES, INC.
By /s/ HERBERT S. LAWSON
-------------------------
Name: HERBERT S. LAWSON
Title: VICE PRESIDENT
<PAGE>
AMENDMENT NO. 2 TO THE
JULY 2, 1992 STOCK PURCHASE AGREEMENT
AMENDMENT NO. 2, dated as of September 15, 1992
(this "Amendment") to the Stock Purchase Agreement, dated as
---------
of July 2, 1992, as amended, between REN CORPORATION-USA, a
Tennessee corporation (the "Company"), and COBE LABORATORIES,
-------
INC., a Colorado corporation (the "Purchaser").
---------
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Company and the Purchaser have entered
into a Stock Purchase Agreement dated as of July 2, 1992 (as
heretofore amended, the "Stock Purchase Agreement";
------------------------
capitalized terms used and not defined herein being used
herein as defined in the Stock Purchase Agreement);
WHEREAS, the Company and the Purchaser have entered
into Amendment No. 1 to the Stock Purchase Agreement dated as
of July 23, 1992; and
WHEREAS, the Company and the Purchaser have
determined that it is in their mutual interests to further
amend the Stock Purchase Agreement as hereinafter set forth.
NOW THEREFORE, in consideration of the premises and
of the mutual agreements and understandings hereinafter set
forth, the Purchaser and the Company agree as follows:
SECTION 1. Amendments to the Stock Purchase
--------------------------------
Agreement. Section 2.02 of the Stock Purchase Agreement is,
- ---------
effective as of the date hereof, hereby amended as follows:
(a) By deleting the word "within" in the second
line of subsection 2.02(a) and inserting in lieu thereof
the words "the later of (i)";
(b) By inserting after the word "herein," in the
fourth line of subsection 2.02(a) the words "and (ii)
October 1, 1992"; and
(c) By adding a new subsection 2.02(d) at the end
of Section 2.02 to read as follows:
"(d) For the purposes of subsections 2.02(b)
and (c) above, delivery of a document referred to
therein to Wyatt, Tarrant, Combs, Gilbert & Milom,
as Escrow Agent, under the Escrow Agreement dated
September 15, 1992 among the Purchaser, the Company
and Wyatt, Tarrant, Combs, Gilbert & Milom, as
<PAGE>
2
Escrow Agent, shall constitute delivery for the
purposes of subsections 2.02(b) and (c); provided
--------
that the delivery of such document has not been
withdrawn by the party executing such document
within the time and in the manner provided by such
Escrow Agreement."
SECTION 2. Satisfaction of Conditions. The Company
--------------------------
and the Purchaser hereby acknowledge that the conditions to
the Stock Purchase Agreement set forth in Article VI (other
than delivery of the Purchase Price) have been satisfied or
waived as of the date hereof.
SECTION 3. Counterparts. This Amendment may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement.
SECTION 4. Governing Law. This Amendment shall be
-------------
governed by, and construed in accordance with, the laws of
the State of New York applicable to contracts executed in and
to be performed in that State.
IN WITNESS WHEREOF, each of the Purchaser and the
Company has caused this Amendment to be executed as of the
date first written above by their respective officers
thereunto duly authorized.
REN CORPORATION-USA
By
-------------------------
Name:
Title:
COBE LABORATORIES, INC.
By
-------------------------
Name:
Title:
EMPLOYMENT AGREEMENT
--------------------
AGREEMENT dated as of July 14, 1993, by and between REN CORPORATION-USA, a
Tennessee corporation (the "Company" or "REN"), and Lawrence J. Centella (the
"Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company desires to employ the Executive as its President and
Chief Executive Officer, to manage its business and the Executive desires to
accept such employment.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, and for other good and valuable consideration, it is hereby agreed as
follows:
1. Employment and Term.
-------------------
The Company hereby employs the Executive as its President and Chief
Executive Officer for the period (the "Employment Period") commencing as of the
date of this Agreement and, unless sooner terminated as hereinafter provided,
ending on December 31, 1996. The Company shall have the option to extend the
term of this Agreement for an additional term of three years, which shall be
exercisable by delivering 150 days prior written notice to the Executive of the
Company's intention to exercise this option.
2. Duties.
------
(a) The Executive hereby accepts such employment and agrees to devote
his full business time and best efforts during normal business hours to the
affairs of the Company's business, provided that he shall at all times act and
perform his duties in a manner which is consistent with the best interests of
the Company. The Executive shall also perform such other duties, commensurate
with his position, as the Company's Board of Directors shall assign to him.
(b) The Executive agrees to comply with REN's policies governing
business conduct and confidential information as approved by the Company's Board
of Directors from time to time provided, that to any extent that this Agreement
is inconsistent therewith, this Agreement shall control.
(c) The Executive agrees that he shall not accept board positions or
other engagements without the prior approval of the Company's Board of
Directors.
<PAGE>
3. Compensation.
------------
During the Employment Period, the Company shall pay to the Executive:
(a) a base salary at the rate of $250,000 per year, payable in
accordance with REN's payroll practices for executive officers; and
(b) The Company shall enter into a nonqualified deferred compensation
agreement with the Executive, effective January 1, 1994, providing for the
deferral of Nine Thousand Dollars ($9,000) of the base salary otherwise payable
hereunder during calendar year 1994 for a period of ten years from the date of
said agreement. A copy of this agreement is attached hereto as Exhibit A; and
(c) commencing with the Company's fiscal year 1994, and for each
succeeding year or portion thereof during the Employment Period, a bonus
computed as follows:
(i) If the Company's actual consolidated return on capital employed
(the "Company's Return"), calculated by the Company in accordance with
generally accepted accounting principles consistently applied, exceeds
85% of the Company's budgeted return on capital employed (the "Company's
Budgeted Return"), as set forth in the Company's Annual Plan for such
year, the Executive shall be entitled to a bonus equal to: (1) $87,500
multiplied by a fraction equal to the percentage by which the Company's
Return exceeds 85% of the Company's Budgeted Return, divided by 15%,
provided however that in no event shall such bonus exceed $87,500; and
(2) if the Company's Return exceeds 100% of the Company's Budgeted
Return, then the Executive shall be entitled to an additional bonus
equal to $75,000 multiplied by a fraction having a numerator equal to
100 times the percentage by which the Company's Return exceeds the
Company's Budgeted Return and a denominator of 3, provided that in no
event shall such additional bonus exceed $75,000; and
(ii) For example, if the Company's Return equals 91.5% of the
Company's Budgeted Return, the bonus would equal $87,500 x 6.5/15 or
$37,916.67. If, instead the Company's Return equals 2.4% more than the
Company's Budgeted Return, the bonus would equal $87,500 plus $75,000 x
2.4/3 = $60,000, for a total bonus of $147,500.
-2-
<PAGE>
Notwithstanding the foregoing, the parties agree to review the Executive's
salary and bonus levels during the first quarter of 1994 and each year
thereafter and make such changes thereto, if any, as they shall mutually agree
upon.
4. Working Facilities; Expenses; Vacation. The Company shall furnish or
--------------------------------------
cause to be furnished to the Executive an office and such other facilities and
services as are suitable to his position and adequate for the performance of his
duties hereunder. Executive agrees to and shall undertake such travel as the
performance of the Executive's duties may require. The Company shall promptly
reimburse the Executive in accordance with the Company's customary travel and
expense reimbursement policies for all reasonable travel and other expenses
paid or incurred by the Executive in connection with the performance of
his duties hereunder. Each calendar year, the Executive shall be entitled to a
vacation with pay for a period of up to 25 business days, provided that
Executive may not carry over more than 10 vacation days from any year to a
succeeding year nor carry over such unused vacation for more than three years.
5. Additional Benefits; Options.
----------------------------
(a) In addition to all other rights of the Executive hereunder, and
except with respect to stock option plans or grants which shall be governed by
the provisions of Para. 5(b)-(f) below, the Executive shall be eligible during
the Employment Period to participate in and receive all other benefits from any
retirement, life insurance, disability or pension, profit-sharing, savings, cash
or other plan or plans or arrangements provided by REN for its executive
officers generally, each such benefit to be made available on the basis
applicable to REN's similarly situated executive officers, as the same may now
or hereafter exist and under the terms thereof as the same may be amended from
time to time. While employed hereunder the Company shall also reimburse
Executive for the $1,163.66 quarterly premium paid by him to New England
Variable Life Insurance Company for policy #Z040730, as and when paid by
Executive.
(b) The Company hereby grants to Executive the right to purchase from
REN, at Executive's option, 150,000 shares of the Company's common stock at a
price per share equal to the price per share of the Company's stock on December
2, 1993. The option shall vest and become exercisable at the rate of one fourth
of the optioned shares on July 14 of each of 1994, 1995, and 1996. In the event
the term of this Agreement is not renewed as permitted in Para. 1, vesting of
the remainder of the option shall be accelerated to December 30, 1996. If,
however, the term of this Agreement is renewed, vesting of the remainder of the
option shall occur on July 14, 1997.
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<PAGE>
(c) Provided that Executive is employed by the Company pursuant to
this Agreement on such date, the Company shall grant to Executive on each of
July 14, 1994 and July 14, 1995 the right to purchase from REN, at the
Executive's option, 25,000 shares of the Company's common stock at an exercise
price per share equal to the price of the Company's common stock on the date of
each such grant. Each such separate option shall vest at the rate of one fourth
of the optioned shares on each annual anniversary of the date such option was
granted, provided that the Executive is then employed by the Company.
(d) If this Agreement has been terminated by REN for cause or by
Executive without cause prior to the time when any option granted under this
Agreement is fully vested, such option shall vest proportionately to the date of
termination in any partial year and any remaining unvested portion of the
optioned shares shall terminate. If this Agreement is terminated by the Company
without cause, the option provided for in Para. 5(b) shall, without any further
action, immediately and fully vest.
(e) In the event that any person or entity, other than an affiliate
or direct or indirect subsidiary of Gambro AB, acquires more than fifty (50)
percent of the outstanding voting securities of the Company, then the option
provided for in Para. 5(b) shall, without any further action, immediately and
fully vest and the options provided for in Para. 5(c) shall, without any further
action, be deemed granted and shall immediately and fully vest.
(f) Options, to the extent vested, may be exercised at any time
provided that each option shall expire to the extent not previously exercised
ten (10) years from the date of grant.
(g) Options granted hereunder shall be "non-qualified" and governed
by the terms and conditions of the REN Non-Statutory Stock Option Plan of 1988,
as amended (the "Plan"). In the event that the Company determines that there
are insufficient shares of the Company's common stock authorized and reserved
for issuance pursuant to the Plan, then Executive agrees that the issuance of
shares of the Company's common stock to Executive upon exercise of vested
options granted hereunder may be deferred until such time as the Plan has been
amended and shares authorized for issuance by the Company.
6. Termination.
-----------
(a) If the Executive is unable to perform his duties hereunder by
reason of death, mental or physical illness or other incapacity or the Company
terminates the Executive's employment without cause, he or his estate, as the
case may be, shall be entitled to a severance benefit in lieu of all other
compensation, bonus, severance or other payments or benefits
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<PAGE>
arising in connection with his employment, equal to his base annual salary as of
the date of such termination for 12 months. Such severance benefit shall be
payable over such 12 month period. In the event that termination under this
paragraph 6(a) occurs during the fourth quarter of the Company's fiscal year the
Executive shall also be entitled to receive a bonus for that year, calculated in
accordance with paragraph 3(b) and prorated to the date of termination. Such
payments shall be in full satisfaction of all claims of the Executive against
the Company other than for his vested benefits under any of the Company's
benefit plans in which he is a participant and other than as specifically
provided in Para. 5(b)-(g) above. Executive's resignation shall not entitle
Executive to a severance benefit hereunder.
(b) Termination for "cause" shall be made by the Company upon 30 days
prior written notice to the Executive, which notice shall be authorized by the
Board of Directors of the Company. For all purposes hereof, "cause" shall
include without limitation: (i) the commission by the Executive of a material
act of dishonesty, or (ii) a material breach by the Executive of a provision of
Paragraphs 2, 7 or 8 of this Agreement which is not cured within 30 days after
delivery of notice thereof to the Executive, or (iii) a material violation of
any governmental law or regulation to which the Company is subject, (iv) a
willful failure to use the Executive's best efforts to comply with a reasonable
request of the Board of Directors of the Company which is not cured with 30 days
after delivery of notice thereof to the Executive, (v) habitual use of alcohol,
drugs or other substances, or (vi) the commission of acts which are determined
by the Board of Directors of the Company to constitute gross misconduct.
(c) In the event any amounts or other benefits are payable hereunder
to or for the Executive (or to his legal representatives) in respect of any
period following the termination of his employment hereunder, such amounts or
other benefits shall not be reduced in any manner by reason of any other
earnings, income or benefits of or to the Executive from any other sources.
7. Confidential Information.
------------------------
(a) The Company will provide the Executive with access to all
confidential information, including trade secrets and proprietary information
and processes and financial information (hereinafter referred to as the
"Confidential Information"), necessary for the performance of the Executive's
duties under this Agreement and such Confidential Information will be held by
the Executive as the Company's property. Upon termination of his employment
hereunder the Executive shall
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<PAGE>
return to the Company all of the Confidential Information and other property of
the Company and of any subsidiary and/or affiliated companies in his possession
or control.
(b) The Executive agrees that he will not use for his own benefit or
disclose to any other person or entity at any time (other than in the ordinary
course of the business of the Company) any of the Confidential Information
obtained by the Executive while employed by the Company, other than such
Confidential Information as is then in the public domain.
8. Non-Competition. The Executive agrees that during the period salary
---------------
payments are being made to him pursuant to Paragraph 3, and thereafter for a
period of one year or, if payments are being made pursuant to Para. 6(a), for
the one year period during which payments are being made pursuant to Para. 6(a),
he will not, directly or indirectly engage in competition, in the United States
or in any country in which the Company or its subsidiary or affiliated companies
conducts business, with any substantial part of the business which is conducted
by the Company or its subsidiary or affiliated companies as of the time of his
last receipt of such payments, provided, that ownership of not more than 1% of
the outstanding securities of any class of any corporation that are listed on a
national securities exchange or traded in the NASD National Market System shall
not be considered a breach of this Paragraph 8.
9. Arbitration. Any and all disputes which may arise under or in
-----------
connection with this Agreement shall be submitted to and settled by arbitration
in Nashville, in accordance with the Rules of the American Arbitration
Association. The arbitrator may, in his discretion, award legal fees and
expenses to the prevailing party. Any award shall constitute a final, non-
appealable judgment and may be entered as such by the clerk of any court having
jurisdiction.
10. Indemnification. The Company will indemnify the Executive to the same
---------------
extent as it indemnifies its executive officers generally. The Executive shall
be entitled to the full protection of any insurance policies which the Company
may elect to maintain generally for the benefit of its directors and officers,
against all costs, charges and expenses whatsoever incurred or sustained by him
or his legal representatives in connection with any action, suit or proceeding
to which he may be made a party by reason of his being or having been at any
time a director or officer of REN or any of its subsidiaries or affiliated
companies or by reason of any action at any time taken by him on behalf of REN
or any of its subsidiaries or affiliated companies.
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<PAGE>
11. Amendment. This Agreement may not be amended, waived, changed,
---------
modified or discharged except by an instrument in writing executed by or on
behalf of the party or parties against whom enforcement of such amendment,
waiver, change, modification or discharge is sought.
12. Notices. All notices, requests, demands and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or mailed, by certified mail, return receipt requested, as follows:
(a) To the Company or REN:
REN Corporation-USA
6820 Charlotte Pike
Nashville, Tennessee 37209
Attn: General Counsel
With a copy to: Chairman, REN Corporation USA
(b) To the Executive:
Lawrence J. Centella
549 Balsam Lane
Palatine, Illinois 60067
and/or to such other persons and addresses as any party shall have specified in
writing to the other by notice as aforesaid.
13. Assignability. In the event of any sale or other disposition of all
-------------
or a substantial part of the business of the Company, whether by sale of stock,
sale of assets, merger or otherwise, then the successors and assigns of such
business shall assume all of the Company's obligations under this Agreement in
respect of the Company, as the case may be, so that the Executive will continue
to have all of the benefits of this Agreement to the same extent that the
Executive would have, had the aforesaid sale not taken place. The Executive may
not assign, pledge or encumber his interest in this Agreement without the
written consent of the Company. This Agreement shall be binding upon, and shall
inure to the benefit of, the Executive's assigns, heirs, executors,
administrators and legal representatives. This Agreement shall be binding upon
and inure to the benefit of the Company, and its respective successors and
assigns.
14. Separability. In the event that any provision of this Agreement would
------------
be held to be invalid, prohibited or unenforceable in any jurisdiction for any
reason unless narrowed by construction, this Agreement shall, as to such
jurisdiction, be construed as if such invalid, prohibited or unenforceable
-7-
<PAGE>
provision had been more narrowly drawn so as not to be invalid, prohibited or
unenforceable in any jurisdiction for any reason. Such provision, as to such
jurisdiction, shall be ineffective to the extent of such invalidity, prohibition
or unenforceability, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
15. Integration. Except as otherwise expressly provided herein this
-----------
Agreement supersedes all other employment agreements between the Company and
Executive.
16. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Tennessee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
REN CORPORATION-USA
By _________________________________
THE EXECUTIVE:
/s/ Lawrence J. Centella
-----------------------------
Lawrence J. Centella
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EXHIBIT (c)(6)
[REN LOGO] REN CORPORATION-USA
JEROME S. TANNENBAUM, M.D., PH.D.
September 14, 1992 CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Personal and Confidential
Dr. Juha P. Kokko, M.D.
#4 Harris Glen, NW
Atlanta, GA 30327
Dear Juha,
I have reviewed the document of September 1, 1992, where in you have indicated
to the Dean of the Emory University School of Medicine of your intention to
serve as a part time consultant for REN Corporation - USA.
Because of your contacts on a National and International basis. I feel it is in
the best interest of REN to retain you as a consultant.
As a consultant to REN you will advise us of appropriate opportunities both in
the United States and abroad where REN might develop Dialysis Facilities offer
and/or Laboratory, Home Infusion and Computer Information Services to Dialysis
Providers. You will use your best efforts to promote REN's image to the
principals who would be involved in engaging REN in these various activities in
their home territory.
When these activities require personal travel on your part the direct expense of
the travel will be reimbursed on a fair and reasonable basis. Such travel will
require my prior approval if it is to be reimbursed.
In exchange for your time and expert consultation in these areas, REN - USA
shall pay you $4,000 monthly, payable in arrears. This compensation shall begin
in the month of October. We will prepare your check on or around the 25th of
each month during our normal payable cycle. You should expect your checks
within the first few days of each month for services rendered during the prior
month. At the end of the year, we will provide you with the 1099 Form to submit
with your Income Taxes. You will act strictly as an independent contractor in
this regard and will not be deemed as an employee at REN; accordingly you will
not be entitled to participate in the REN - USA 401K Profit Sharing, Stock
Option Plan, nor shall we hold taxes on the personnel income sent to you. This
arrangement can be terminated by either party on 90 days written notice.
6820 Charlotte Pike Nashville, TN 37209 615-353-4240
<PAGE>
It is understood by all parties that these consulting fees are for work outside
the Atlanta area. As we both know REN already has a 10 year agreement with Emory
University and my primary dealings since the development of that agreement have
been with Dr. Bill Mitch, Chairman of the Division of Nephrology at Emory.
Yours sincerely,
/s/ Jerome S.Tannenbaum, M.D.
Jerome S.Tannenbaum, M.D.
Chairman, President, Chief Executive Officer
JST:gt
(jst91492)
