<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
ATRION CORPORATION
(Name of Issuer)
ATRION CORPORATION
(Name of Person(s) Filing Statement)
COMMON STOCK, $.10 PAR VALUE
(Title of Class of Securities)
049904105
(Cusip Number of Class of Securities)
EMILE A. BATTAT
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ATRION CORPORATION
ONE ALLENTOWN PARKWAY
ALLEN, TEXAS 75002-4211
(972) 390-9800
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on behalf of the Person(s) Filing Statement)
Copies To:
B. G. MINISMAN, JR., ESQ.
BERKOWITZ, LEFKOVITS, ISOM & KUSHNER
1600 SOUTHTRUST TOWER
BIRMINGHAM, ALABAMA 35203
(205) 328-0480
November 17, 1999
(Date Tender Offer First Published, Sent or
Given to Security Holders)
CALCULATION OF FILING FEE*
Transaction Valuation: $7,200,000 Amount of Filing Fee: $1,440
* Calculated solely for the purpose of determining the filing fee, based upon
the purchase of 600,000 shares of Common Stock at the maximum tender offer price
per share of $12.00.
[ ] 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: [ N/A ] Filing Party: [ N/A ]
Form or Registration No.: [ N/A ] Date Filed: [ N/A ]
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ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the securities to which this Schedule 13E-4 relates
is Atrion Corporation, a Delaware corporation (the "Company"), and the address
of its principal executive office is One Allentown Parkway, Allen, Texas 75002.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
up to 600,000 shares (or such lesser number of shares as are validly tendered
and not withdrawn) of its common stock, par value $.10 per share (such shares,
together with the associated common stock purchase rights issued pursuant to the
Rights Agreement, dated as of February 1, 1990, as amended, between the Company
and American Stock Transfer & Trust Company as Rights Agent, are hereinafter
referred to as the "Shares"), at a price of $12.00 per Share in cash upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
November 17, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal which, as they may be amended from time to time, together constitute
the "Offer," copies of which are attached as Exhibit (a)(1) and (a)(2),
respectively, to this Schedule 13E-4. As of November 16, 1999, the Company had
issued and outstanding 2,440,129 Shares. The information set forth in
"Introduction," "Section 1. Number of Shares; Proration" and "Section 10.
Interests of Directors and Executive Officers; Transactions and Arrangements
Concerning Shares" of the Offer to Purchase is incorporated herein by reference.
(c) The information set forth in "Introduction" and the "Section 7.
Price Range of Shares; Dividends" of the Offer to Purchase is incorporated
herein by reference.
(d) Not applicable.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in "Section 8. Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
(a)-(j) The information set forth in "Introduction," "Section 2.
Purpose of the Offer; Certain Effects of the Offer," "Section 8. Source and
Amount of Funds," "Section 9. Certain Information Concerning the Company,"
"Section 10. Interests of Directors and Officers; Transactions and Arrangements
Concerning Shares" and "Section 11. Effects of the Offer on the Market for
Shares; Registration under the Exchange Act" of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
The information set forth in "Section 10. Interests of Directors and
Officers; Transactions and Arrangements Concerning Shares" of the Offer to
Purchase is incorporated herein by reference.
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ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE ISSUER'S SECURITIES.
The information set forth in "Introduction," "Section 2. Purpose of the
Offer; Certain Effects of the Offer," "Section 8. Source and Amount of Funds"
and "Section 10. Interests of Directors and Officers; Transactions and
Arrangements Concerning Shares" of the Offer to Purchase is incorporated herein
by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and "Section 15. Fees and
Expenses" of the Offer to Purchase is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a)-(b) The information set forth in "Section 9. Certain Information
Concerning the Company" of the Offer to Purchase is incorporated herein by
reference and the information set forth on pages 18 through 35 of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998, filed as
Exhibit (g)(1) hereto, and on pages 3 through 7 of the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1999, filed as Exhibit
(g)(2) hereto, is incorporated herein by reference.
ITEM 8. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) The information set forth in "Section 12. Certain Legal Matters;
Regulatory Approvals" of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in "Section 11. Effects of the Offer on
the Market for Shares; Registration under the Exchange Act" of the Offer to
Purchase is incorporated herein by reference.
(d) Not Applicable.
(e) The information set forth in the Offer to Purchase and Letter of
Transmittal, copies of which are attached hereto as Exhibit (a)(1) and (a)(2),
respectively, is incorporated herein by reference.
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Form of Offer to Purchase dated November 17, 1999.
(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6) Form of Press Release issued by the Company dated November 16, 1999.
(7) Form of Letter to Stockholders of the Company dated November 17, 1999,
from Emile A. Battat, Chairman, President and Chief Executive Officer.
(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) (1) Loan and Security Agreement dated November 12, 1999 among Atrion
Corporation, Atrion Medical Products, Inc., Halkey-Roberts Corporation,
Quest Medical, Inc., AlaTenn Pipeline Company, Inc., Atrion Leasing
Company, Inc. and Atrion International, Inc. and SouthTrust Bank,
National Association.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) (1) Audited Consolidated Financial Statements of the Company as of and
for the fiscal years ended December 31, 1997 and December 31, 1998
(incorporated by reference to pages 18 through 35 of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998).
(2) Unaudited Consolidated Financial Statements of the Company as of and
for the nine month periods ended September 30, 1998 and September 30,
1999 (incorporated by reference to pages 3 through 7 of the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1999).
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
ATRION CORPORATION
By: /s/ EMILE A. BATTAT
--------------------
Name: Emile A. Battat
Title: Chairman, President and Chief Executive Officer
Dated: November 17, 1999
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EXHIBIT INDEX
<TABLE>
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EXHIBIT
NO. DESCRIPTION
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(a) (1) Form of Offer to Purchase dated November 17, 1999.
(2) Form of Letter of Transmittal (including Certification of Taxpayer
Identification Number on Substitute Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees.
(6) Form of Press Release issued by the Company dated November 16, 1999.
(7) Form of Letter to Stockholders of the Company dated November 17, 1999,
from Emile A. Battat, Chairman, President and Chief Executive Officer.
(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b) (1) Loan and Security Agreement dated November 12, 1999 among Atrion
Corporation, Atrion Medical Products, Inc., Halkey-Roberts Corporation,
Quest Medical, Inc., AlaTenn Pipeline Company, Inc., Atrion Leasing
Company, Inc. and Atrion International, Inc. and SouthTrust Bank,
National Association.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) (1) Audited Consolidated Financial Statements of the Company as of and for
the fiscal years ended December 31, 1997 and December 31, 1998
(incorporated by reference to pages 18 through 35 of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31,
1998).
(2) Unaudited Consolidated Financial Statements of the Company as of and
for the nine month periods ended September 30, 1998 and September 30,
1999 (incorporated by reference to pages 3 through 7 of the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1999).
</TABLE>
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EXHIBIT (a)(1)
ATRION CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
600,000 SHARES OF ITS COMMON STOCK,
PAR VALUE $.10 PER SHARE,
AT A PURCHASE PRICE OF $12.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 15, 1999,
UNLESS THE OFFER IS EXTENDED.
----------------
Atrion Corporation, a Delaware corporation (the "Company"), hereby invites
its stockholders to tender up to 600,000 shares of its Common Stock, par value
$.10 per share (such shares, together with associated common stock purchase
rights issued pursuant to the Rights Agreement, dated as of February 1, 1990,
between the Company and American Stock Transfer & Trust Company as Rights Agent,
as amended, are hereinafter referred to as the "Shares"), to the Company at a
price of $12.00 per Share in cash, upon the terms and subject to the conditions
set forth herein and in the related Letter of Transmittal (which together
constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, pay the Purchase Price for all Shares validly tendered and not withdrawn,
upon the terms and subject to the conditions of the Offer, the procedure
pursuant to which Shares will be accepted for payment and the proration
provisions. Certificates representing Shares not purchased because of proration
will be returned at the Company's expense. The Company reserves the right, in
its sole discretion, to purchase more than 600,000 Shares pursuant to the Offer.
See Section 14. During the past 12 months, the Company has purchased a total of
761,516 Shares in two issuer tender offers and in open market and
privately-negotiated transactions. See Section 10.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE SECTION 6.
The Shares are listed and traded on The Nasdaq Stock Market ("Nasdaq")
under the symbol "ATRI." On November 15, 1999, the last full Nasdaq trading day
prior to the date of the announcement of the Offer, the closing per Share sales
price as reported by Nasdaq was $10.25 per Share. STOCKHOLDERS ARE URGED TO
OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 7.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER, NEITHER
THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO STOCKHOLDERS
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES. EACH STOCKHOLDER
MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE
OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. SEE SECTION 10.
The Date of this Offer to Purchase is November 17, 1999
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IMPORTANT
Any stockholder wishing to tender all or any part of his or her Shares
should either (a) complete and sign a Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
either mail or deliver it with any required signature guarantee or an Agent's
Message (as defined below) and any other required documents to American Stock
Transfer & Trust Company (the "Depositary"), and either mail or deliver the
stock certificates for such tendered Shares to the Depositary (with all such
other documents) or tender such Shares pursuant to the procedure for book-entry
delivery set forth in Section 3, or (b) request a broker, dealer, commercial
bank, trust company or other nominee to effect the transaction for such
stockholder. Stockholders having Shares registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact that
broker, dealer, commercial bank, trust company or other nominee if they desire
to tender their Shares. Any stockholder who desires to tender Shares and whose
certificates for such Shares cannot be delivered to the Depositary or who cannot
comply with the procedure for book-entry transfer or whose other required
documents cannot be delivered to the Depositary, in any case, by the expiration
of the Offer must tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3.
STOCKHOLDERS MUST COMPLETE THE LETTER OF TRANSMITTAL TO EFFECT A VALID
TENDER OF SHARES.
Additional copies of this Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be obtained from the Information Agent and will
be furnished at the Company's expense. Questions and requests for assistance may
be directed to the Information Agent at its address and telephone number set
forth on the back cover of this Offer to Purchase. Stockholders may also contact
their local broker, dealer, commercial bank, trust company or other nominee for
assistance concerning the Offer.
TABLE OF CONTENTS
<TABLE>
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PAGE
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SUMMARY...........................................................................................................3
INTRODUCTION......................................................................................................5
THE OFFER.........................................................................................................6
1. NUMBER OF SHARES; PRORATION.............................................................................6
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................7
3. PROCEDURES FOR TENDERING SHARES.........................................................................8
4. WITHDRAWAL RIGHTS......................................................................................11
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.......................................................12
6. CERTAIN CONDITIONS OF THE OFFER........................................................................13
7. PRICE RANGE OF SHARES; DIVIDENDS.......................................................................14
8. SOURCE AND AMOUNT OF FUNDS.............................................................................15
9. CERTAIN INFORMATION CONCERNING THE COMPANY.............................................................15
10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING SHARES...................19
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE ACT.....................20
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS............................................................20
13. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES..................................................21
14. EXTENSION OF OFFER; TERMINATION; AMENDMENT.............................................................23
15. FEES AND EXPENSES......................................................................................23
16. MISCELLANEOUS..........................................................................................24
</TABLE>
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SUMMARY
This general summary is solely for the convenience of the Company's
stockholders and is qualified in its entirety by reference to the full text and
more specific details in this Offer to Purchase and the related Letter of
Transmittal.
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Number of Shares to be Purchased.......... 600,000 Shares (or such lesser number of Shares as are validly tendered
pursuant to the Offer and not withdrawn).
Purchase Price............................ The Company will, upon the terms and subject to the conditions of the
Offer, purchase 600,000 Shares (or such lesser number of Shares as are
validly tendered and not withdrawn) pursuant to the Offer at a price of
$12.00 per Share net to the seller in cash (the "Purchase Price"). The
Company will pay the Purchase Price for all Shares validly tendered and
not withdrawn, upon the terms and subject to the conditions of the
Offer.
Conditions to the Offer................... The Offer is subject to certain conditions. See Section 6.
How to Tender Shares...................... See Section 3. Call the Information Agent or consult your broker for
assistance.
Brokerage Commissions..................... None.
Stock Transfer Tax........................ None, if payment is made to the registered holder.
Expiration and Proration Dates............ Wednesday, December 15, 1999, at 12:00 Midnight, New York City time, unless
the Offer is extended by the Company.
Proration................................. In the event that proration of tendered Shares is required, proration for
each stockholder tendering Shares, other than Odd Lot Holders, shall be based
on the ratio of the number of Shares tendered by such stockholder (and not
withdrawn prior to the Expiration Date) to the total number of Shares
tendered by all stockholders, other than Odd Lot Holders, (and not withdrawn
prior to the Expiration Date).
Odd Lots.................................. There will be no proration of Shares tendered by any stockholder owning
beneficially fewer than 100 Shares in the aggregate as of the close of
business on November 16, 1999 and as of the Expiration Date, who tenders
all such Shares prior to the Expiration Date and who checks the "Odd Lots"
box in the Letter of Transmittal. See Section 1.
Payment Date.............................. As soon as practicable after the expiration of the Offer.
Position of the Company and its
Directors................................. Neither the Company nor its Board of Directors makes any recommendation to
any stockholder as to whether to tender or refrain from tendering Shares. The
Company has been advised that none of its directors or executive officers
intends to tender any Shares pursuant to the Offer.
Withdrawal Rights......................... Tendered Shares may be withdrawn at any time prior to the expiration of
the Offer (12:00 Midnight, New York City time, on Wednesday
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December 15, 1999 or such later date to which the Offer is extended by the
Company) and, unless previously purchased, may also be withdrawn at any
time after 12:00 Midnight, New York City time, on Friday, January 14 ,
2000. See Section 4.
Prior Purchases of Common Stock........... During the past 12 months, the Company has purchased a total of
761,516 Shares in two issuer tender offers and in open market and
privately-negotiated transactions. See Section 10.
For Further Developments.................. Call the Information Agent or consult your broker.
</TABLE>
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER STOCKHOLDERS SHOULD TENDER OR
REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS
NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFER ON BEHALF OF THE COMPANY
OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED
LETTER OF TRANSMITTAL. DO NOT RELY ON ANY SUCH RECOMMENDATION OR ANY
SUCH INFORMATION OR REPRESENTATIONS, IF GIVEN OR MADE, AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
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TO THE HOLDERS OF COMMON STOCK OF ATRION CORPORATION:
INTRODUCTION
Atrion Corporation, a Delaware corporation (the "Company"), hereby invites
its stockholders to tender 600,000 shares of its common stock, par value $.10
per share (such shares, together with the associated common stock purchase
rights issued pursuant to the Rights Agreement, dated as of February 1, 1990, as
amended, between the Company and American Stock Transfer & Trust Company as
Rights Agent, are hereinafter referred to as the "Shares"), to the Company at a
price of $12.00 per Share, net to the seller in cash (the "Purchase Price"),
upon the terms and subject to the conditions set forth herein and in the related
Letter of Transmittal (which together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, purchase 600,000 Shares (or such lesser number of Shares as are validly
tendered and not withdrawn) for the Purchase Price pursuant to the Offer. The
Company will pay the Purchase Price for all Shares validly tendered and not
withdrawn, upon the terms and subject to the conditions of the Offer, the
procedure pursuant to which Shares will be accepted for payment and the
proration provisions. Certificates representing Shares not purchased because of
proration will be returned at the Company's expense. The Company reserves the
right, in its sole discretion, to purchase more than 600,000 Shares pursuant to
the Offer. See Section 14.
This Offer is not conditioned upon any minimum number of Shares being
tendered in the Offer. The Offer is, however, subject to certain other
conditions. See Section 6.
The Board of Directors of the Company has approved the Offer, however,
neither the Company nor its Board of Directors makes any recommendation to
stockholders as to whether to tender or refrain from tendering their Shares.
Each stockholder must make the decision whether to tender Shares and, if so, how
many Shares to tender. The Company has been advised that none of its directors
or executive officers intends to tender any Shares pursuant to the Offer. See
Section 10.
The Company's Board of Directors believes that the Offer is in the best
interests of the Company. The Offer affords those stockholders who desire
liquidity an opportunity to sell all or a portion of their Shares without the
usual transaction costs associated with open market sales. The Offer provides
stockholders the opportunity to sell their Shares at a price of $12.00 per share
in cash to the Company. Additionally, stockholders who determine not to accept
the Offer will increase their proportionate interest in the Company's equity,
and thus in the Company's future earnings and assets, subject to the Company's
right to issue additional Shares and other equity securities in the future.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 600,000 Shares (or such greater number of
Shares as the Company may elect to purchase) are validly tendered and not
withdrawn, the Company will purchase validly tendered and not withdrawn Shares
first from all Odd Lot Holders (as defined in Section 1) who validly tendered
all their Shares and who so certify in the appropriate place on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed Delivery, and then,
after the purchase of all of the foregoing Shares, all Shares tendered and not
withdrawn prior to the Expiration Date, on a pro rata basis (with appropriate
adjustments to avoid purchase of fractional Shares). See Section 1. All
certificates representing Shares not purchased pursuant to the Offer, including
Shares not purchased because of proration, will be returned at the Company's
expense to the stockholders who tendered such Shares.
The Purchase Price will be paid net to the tendering stockholder in cash
for all Shares purchased. Tendering stockholders will not be obligated to pay
brokerage commissions, solicitation fees or, subject to Instruction 6 of the
Letter of Transmittal, stock transfer taxes on the purchase of Shares by the
Company. HOWEVER, ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 THAT IS
INCLUDED WITH THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO REQUIRED UNITED STATES
FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE GROSS PROCEEDS PAYABLE TO
SUCH STOCKHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION 3. The
Company will pay all fees and expenses incurred in connection with the Offer by
American Stock Transfer & Trust Company which will act as the depositary for the
Offer (the "Depositary") and Georgeson Shareholder Communications Inc. which
will act as information agent for the Offer (the "Information Agent"). See
Section 15.
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As of November 16, 1999, the Company had issued and outstanding 2,440,129
Shares and had 286,550 Shares issuable on the exercise of stock options
exercisable within 60 days. The 600,000 Shares that the Company is offering to
purchase pursuant to the Offer represent approximately 25% of the outstanding
Shares. The Shares are listed and traded on The Nasdaq Stock Market ("Nasdaq")
under the symbol "ATRI." On November 15, 1999, the last full trading day before
the date of the announcement of the Offer, the closing per Share sales price as
reported by Nasdaq was $10.25 per share. STOCKHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 7.
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase 600,000 Shares or such lesser number of Shares as are validly tendered
(and not withdrawn in accordance with Section 4) prior to the Expiration Date
(as defined below) at a price of $12.00 per Share. The term "Expiration Date"
means 12:00 Midnight, New York City time, on Wednesday, December 15, 1999,
unless and until the Company, in its sole discretion, shall have extended the
period of time during which the Offer will remain open, in which event the term
"Expiration Date" shall refer to the latest time and date at which the Offer, as
so extended by the Company, shall expire. See Section 14 for a description of
the Company's right to extend, delay, terminate or amend the Offer. The Company
reserves the right, in its sole discretion, to purchase more than 600,000 Shares
pursuant to the Offer. In accordance with applicable regulations of the
Securities and Exchange Commission (the "Commission"), the Company may purchase
pursuant to the Offer an additional amount of Shares not to exceed 2% of the
outstanding Shares without amending or extending the Offer. See Section 14. In
the event of an over-subscription of the Offer as described below, Shares
tendered prior to the Expiration Date will be eligible for proration, except for
Odd Lots as explained below. The proration period also expires on the Expiration
Date.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE SECTION 6.
The Company will pay the Purchase Price for up to 600,000 Shares validly
tendered prior to the Expiration Date and not withdrawn, upon the terms and
subject to the conditions of the Offer, the procedure pursuant to which Shares
will be accepted for payment and the proration provisions. All Shares tendered
and not purchased pursuant to the Offer, including Shares not purchased because
of proration, will be returned to the tendering stockholders at the Company's
expense as promptly as practicable following the Expiration Date. The Company
reserves the right, in its sole discretion, to purchase more than 600,000 Shares
pursuant to the Offer. See Section 14.
PRIORITY OF PURCHASES. Upon the terms and subject to the conditions of the
Offer, if more than 600,000 Shares (or such greater number of Shares as the
Company may elect to purchase pursuant to the Offer) have been validly tendered
and not withdrawn, the Company will purchase validly tendered and not withdrawn
Shares on the basis set forth below:
(a) first, all Shares tendered and not withdrawn prior to the Expiration
Date by any Odd Lot Holder (as defined below) who:
(1) tenders all Shares beneficially owned by such Odd Lot Holder
(tenders of fewer than all Shares owned by such stockholder will
not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal and, if applicable, on the Notice of Guaranteed
Delivery; and
(b) second, after purchase of all of the foregoing Shares, all Shares
tendered and not withdrawn prior to the Expiration Date, on a pro rata
basis (with appropriate adjustments to avoid purchases of fractional
Shares) as described below.
ODD LOTS. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares validly tendered prior to the Expiration Date and not withdrawn by any
person who owned beneficially as of the close of business on November 16, 1999,
and continues to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares (and so certified in the appropriate place on the Letter
of Transmittal and, if applicable, on the Notice of Guaranteed Delivery)
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(an "Odd Lot Holder"). As set forth above, Odd Lots will be accepted for payment
before proration, if any, of the purchase of other tendered Shares. In order to
qualify for this preference, an Odd Lot Holder must tender all such Shares in
accordance with the procedures described in Section 3. This preference is not
available to partial tenders or to beneficial holders of an aggregate of 100 or
more Shares, even if such holders have separate accounts or certificates
representing fewer than 100 Shares. By accepting the Offer, an Odd Lot Holder
would not only avoid the payment of brokerage commissions but also would avoid
any applicable odd lot discounts in a sale of such holder's Shares. Any Odd Lot
Holder wishing to tender all of such stockholder's Shares should complete the
box captioned "Odd Lots" on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery.
The Company also reserves the right, but will not be obligated, to purchase
all Shares duly tendered by any stockholder who tendered all Shares owned
beneficially and who, as a result of proration, would then own beneficially an
aggregate of fewer than 100 Shares. If the Company exercises this right, it will
increase the number of Shares that it is offering to purchase by the number of
Shares purchased through the exercise of such right.
PRORATION. In the event that proration of tendered Shares is required, the
Company will determine the proration factor as soon as practicable following the
Expiration Date. Proration for each stockholder tendering Shares, other than Odd
Lot Holders, shall be based on the ratio of the number of Shares tendered by
such stockholder (and not withdrawn) to the total number of Shares tendered by
all stockholders, other than Odd Lot Holders, (and not withdrawn). Because of
the difficulty in determining the number of Shares properly tendered (including
Shares tendered by guaranteed delivery procedures, as described in Section 3)
and not withdrawn, and because of the odd lot procedure, the Company does not
expect that it will be able to announce the final proration factor and commence
payment for any Shares purchased pursuant to the Offer until approximately seven
Nasdaq trading days after the Expiration Date. The preliminary results of any
proration will be announced by press release as promptly as practicable after
the Expiration Date. Stockholders may obtain such preliminary information from
the Information Agent and may be able to obtain such information from their
brokers.
As described in Section 13, the number of Shares that the Company will
purchase from a stockholder may affect the United States federal income tax
consequences to the stockholder of such purchase and therefore may be relevant
to a stockholder's decision whether to tender Shares. The Letter of Transmittal
affords each tendering stockholder the opportunity to designate the order of
priority in which Shares tendered are to be purchased in the event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares and will be furnished to brokers, banks and similar
persons whose names, or the names of whose nominees, appear on the Company's
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.
2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT
CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THE MATTERS DISCUSSED
BELOW AS WELL AS THE FACTORS DESCRIBED IN THE COMPANY'S FILINGS WITH THE
COMMISSION.
Shares of the Company have consistently traded at prices significantly
below their book value, and the Board of Directors believes that the Shares are
currently undervalued. The Board of Directors believes that the purchase of
Shares is an attractive use of the Company's financial resources and that the
Offer is consistent with the Company's long-term corporate goal of increasing
stockholder value.
The purchase of Shares pursuant to the Offer will realign the capital
structure of the Company by increasing debt and reducing equity. As of September
30, 1999, the Company had borrowings of $6.0 million and total capitalization of
$52.6 for a debt to total capitalization ratio of 11.4%. If the Company
purchases 600,000 Shares pursuant to the Offer, this ratio will increase to
25.1%, which the Board of Directors believes is more in line with other
manufacturing companies.
In deciding to approve the Offer, the Board of Directors took into account
the expected financial impact of the Offer, including the increased interest
expense associated with the financing required to fund the Offer and the
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Company's debt to total capitalization ratio. The Company believes that its
cash, short-term investments and access to credit facilities following the
completion of the Offer, together with its anticipated cash flow from
operations, will be adequate for its needs in the foreseeable future.
The Offer allows those stockholders desiring to receive cash for all or a
portion of their Shares an opportunity to do so at a premium over the recent
trading prices for the Shares and without the usual transaction costs associated
with market sales. In addition, Odd Lot Holders who sell their Shares pursuant
to the Offer will not only avoid the payment of brokerage commissions but also
will avoid any applicable odd lot charges payable on a sale of their Shares. The
Offer also allows stockholders to sell a portion of their Shares while retaining
a continuing equity interest in the Company.
Stockholders who determine not to accept the Offer will increase their
proportionate interest in the Company's equity, and thus in the Company's future
earnings and assets, subject to the Company's right to issue additional Shares
and other equity securities in the future.
Shares that the Company acquires pursuant to the Offer will become
authorized Shares held in treasury and will be available for reissuance by the
Company without further stockholder action (except as may be required by
applicable law or the rules of Nasdaq or any securities exchange on which the
Shares are listed). Subject to applicable state laws and rules of Nasdaq, such
Shares could be issued without stockholder approval for, among other things,
acquisitions, the raising of additional capital for use in the Company's
business, stock dividends or in connection with stock option plans and other
plans, or a combination thereof.
During the past 12 months, the Company has purchased a total of 761,516
Shares in two issuer tender offers and in open market and privately-negotiated
transactions (see Section 10), and the Company may in the future purchase
additional Shares on the open market, in private transactions, through tender
offers or otherwise. Any such purchases may be on the same terms as, or on terms
that are more or less favorable to stockholders than, the terms of the Offer.
However, the Company has no present plans to conduct any issuer tender offers
after the expiration of the Offer, and, while the Company has a stock repurchase
program pursuant to which additional shares may be repurchased, the Company
currently has no specific plans to repurchase Shares pursuant to that program.
Rule 13e-4 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), generally prohibits the Company and its affiliates from
purchasing any Shares, other than pursuant to the Offer, until at least ten
business days after the expiration or termination of the Offer. Any possible
future purchases by the Company will depend on several factors including,
without limitation, the ability of the Company to make such purchases under its
financing agreements in effect at the time, the market price of the Shares, the
results of the Offer, the Company's business and financial position and general
economic and market conditions.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS
OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER. SEE
SECTION 10.
3. PROCEDURES FOR TENDERING SHARES.
PROPER TENDER OF SHARES. For Shares to be validly tendered pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) including any required signature guarantees
or an Agent's Message (as defined below) and any other documents required by the
Letter of Transmittal, must be received at or prior to 12:00 Midnight, New York
City time, on the Expiration Date by the Depositary at its address set forth on
the back cover of this Offer to Purchase or (b) the tendering stockholder must
comply with the guaranteed delivery procedure set forth below. In addition, Odd
Lot Holders who tender all such Shares must complete the box captioned "Odd
Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery, in order to qualify for the preferential treatment
available to Odd Lot Holders as set forth in Section 1.
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SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee is
required if (i) the Letter of Transmittal is signed by the registered holder(s)
of the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company (the "Book-Entry Transfer Facility")
whose name appears on a security position listing as the owner of the Shares)
tendered therewith and such holder(s) have not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal; or (ii) Shares are tendered for the
account of a member firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a commercial bank or
trust company (not a savings bank or a savings and loan association) having an
office, branch or agency in the United States (each such entity being
hereinafter referred to as an "Eligible Institution"). See Instruction 1 of the
Letter of Transmittal. In all other cases, all signatures on the Letter of
Transmittal must be guaranteed by an Eligible Institution. If a certificate for
Shares is registered in the name of a person other than the person executing a
Letter of Transmittal, or if payment is to be made, or Shares not purchased or
tendered are to be issued, to a person other than the registered holder, then
the certificate must be endorsed or accompanied by an appropriate stock power,
in either case signed exactly as the name of the registered holder appears on
the certificate or stock power guaranteed by an Eligible Institution.
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
certificates for such Shares (or a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at the Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION
AND RISK OF THE TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, THEN REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
BOOK-ENTRY DELIVERY. The Depositary will establish an account with respect
to the Shares for purposes of the Offer at the Book-Entry Transfer Facility
within two business days after the date of this Offer to Purchase, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing such
Facility to transfer Shares into the Depositary's account in accordance with
such Book-Entry Transfer Facility's procedures for transfer. Although delivery
of Shares may be effected through a book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, either (i) a properly completed and
duly executed Letter of Transmittal (or a manually signed facsimile thereof)
with any required signature guarantees or an Agent's Message, and any other
required documents must, in any case, be transmitted to and received by the
Depositary at its address set forth on the back cover of this Offer to Purchase
prior to the Expiration Date, or (ii) the guaranteed delivery procedure
described below must be followed. The confirmation of a book-entry transfer of
Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as "confirmation of a book-entry
transfer." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
confirmation of a book-entry transfer which states that such Book-Entry Transfer
Facility has received an express acknowledgment from the participant in such
Book-Entry Transfer Facility tendering the Shares that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against the participant.
GUARANTEED DELIVERY. Stockholders whose Share certificates are not
immediately available, who cannot deliver their Shares and all other required
documents to the Depositary or who cannot complete the procedure for delivery by
book-entry transfer prior to the Expiration Date must tender their Shares
pursuant to the guaranteed delivery procedure set forth in this Section 3.
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 provided by the Company (with any
required signature guarantees) must be received by the Depositary prior to the
Expiration Date, and (iii) the certificates for 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 the Book-Entry Transfer Facility of
all Shares delivered electronically, in each case together with a properly
completed and duly executed Letter of Transmittal (or
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facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three Nasdaq trading days
after the date the Depositary receives such Notice of Guaranteed Delivery.
UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING. Under the United
States federal income tax backup withholding rules, unless an exemption applies
under the applicable law and regulations, 31% of the gross proceeds payable to a
stockholder or other payee pursuant to the Offer must be withheld and remitted
to the United States Treasury, unless the stockholder or other payee provides
its taxpayer identification number (employer identification number or social
security number) to the Depositary and certifies that such number is correct.
Therefore, each tendering stockholder must complete and sign the Substitute Form
W-9 included as part of the Letter of Transmittal so as to provide the
information and certification necessary to avoid backup withholding, unless such
stockholder otherwise establishes to the satisfaction of the Depositary that it
is not subject to backup withholding. Certain stockholders (including, among
others, all corporations and certain foreign stockholders) are not subject to
these backup withholding requirements. To prevent possible erroneous backup
withholding, an exempt holder must enter its correct taxpayer identification
number in Part 1 of Substitute Form W-9, certify that such stockholder is not
subject to backup withholding in Part 2 of such form, and sign and date the
form. See the Guidelines for Certification of Taxpayer Identification Number of
Substitute Form W-9 enclosed with Letter of Transmittal for additional
instructions. In order for a foreign stockholder to qualify as an exempt
recipient, a foreign stockholder must submit an Internal Revenue Service ("IRS")
Form W-8 or a Substitute Form W-8, signed under penalties of perjury, attesting
to that stockholder's exempt status. Such statements may be obtained from the
Depositary. See Instruction 9 of the Letter of Transmittal. Stockholders are
urged to consult their own tax advisors regarding the application of United
States federal income tax withholding.
TO PREVENT UNITED STATES FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31%
OF THE GROSS PAYMENTS MADE TO STOCKHOLDERS FOR SHARES PURCHASED PURSUANT TO THE
OFFER, EACH STOCKHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH
WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH THE STOCKHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY COMPLETING THE
SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.
FOR A DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
TO TENDERING STOCKHOLDERS, SEE SECTION 13.
WITHHOLDING FOR FOREIGN STOCKHOLDERS. Even if a foreign stockholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold United States federal income taxes equal to 30% of the gross
payments payable to a foreign stockholder or its agent unless (A) the Depositary
determines that a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business
within the United States or (B) the foreign stockholder establishes to the
satisfaction of the Company and the Depositary that the sale of Shares by such
foreign stockholder pursuant to the Offer will qualify as a "sale or exchange,"
rather than as a distribution taxable as a dividend, for United States federal
income tax purposes (see Section 13 below). For this purpose, a foreign
stockholder is any stockholder that is not (i) a citizen or resident of the
United States, (ii) a corporation, partnership, or other entity created or
organized in or under the laws of the United States, any State or any political
subdivision thereof, (iii) an estate the income of which is subject to United
States federal income taxation regardless of the source of such income, or (iv)
a trust the administration of which a court within the United States is able to
exercise primary supervision and all substantial decisions of which one or more
United States persons have the authority to control. In order to obtain a
reduced rate of withholding pursuant to a tax treaty, a foreign stockholder must
deliver to the Depositary before the payment a properly completed and executed
IRS Form 1001. In order to obtain an exemption from withholding on the grounds
that the gross proceeds paid pursuant to the Offer are effectively connected
with the conduct of a trade or business within the United States, a foreign
stockholder must deliver to the Depositary a properly completed and executed IRS
Form 4224. The Depositary will determine a stockholder's status as a foreign
stockholder and eligibility for a reduced rate of, or exemption from,
withholding by reference to any outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate
that such reliance is not warranted. A foreign stockholder may be eligible to
obtain a refund of all or a portion of any tax withheld if such stockholder
meets the "complete redemption," "substantially disproportionate" or "not
essentially equivalent to a dividend" test described in Section 13 or is
otherwise able to establish that no tax or a reduced amount of tax is due. Each
foreign stockholder is urged to consult its tax
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advisor regarding the application of United States federal income tax
withholding, including eligibility for a withholding tax reduction or exemption,
and the refund procedure. See Instruction 10 of the Letter of Transmittal.
DETERMINATION OF VALIDITY; REJECTION OF SHARES; WAIVER OF DEFECTS; NO
OBLIGATION TO GIVE NOTICE OF DEFECTS. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payments for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular stockholder. No tender of
Shares will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering stockholder or waived by the
Company. None of the Company, the Depositary, the Information Agent or any other
person shall be obligated to give notice of any defects or irregularities in
tenders, nor shall any of them incur any liability for failure to give any such
notice.
TENDERING STOCKHOLDER'S REPRESENTATION AND WARRANTY; COMPANY'S ACCEPTANCE
CONSTITUTES AN AGREEMENT. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering stockholder's acceptance of the
terms and conditions of the Offer, as well as the tendering stockholder's
representation and warranty to the Company that (a) such stockholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the tender of such
Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender Shares for such person's own account unless,
at the time of tender and at the end of the proration period or period during
which Shares are accepted by lot (including any extensions thereof), the person
so tendering (i) has a net long position equal to or greater than the amount of
(x) Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will deliver or cause to be delivered
such Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
stockholder and the Company upon the terms and conditions of the Offer.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL, MUST
BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY. ANY SUCH DOCUMENTS
DELIVERED TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE
WILL NOT BE DEEMED TO BE VALIDLY TENDERED.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 Midnight New York City time, on Friday, January 14,
2000.
For a withdrawal to be effective, a notice of withdrawal must be in
written, telegraphic or facsimile transmission form and must be received in a
timely manner by the Depositary at its address set forth on the back cover of
this Offer to Purchase. Any such notice of withdrawal must specify the name of
the tendering stockholder, the name of the registered holder (if different from
that of the person who tendered such Shares), the number of Shares tendered and
the number of Shares to be withdrawn. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering stockholder must also
submit the serial numbers shown on the particular certificates for Shares to be
withdrawn and the signature on the notice of withdrawal must be guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution). If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in Section 3, the notice of withdrawal also must
specify the name and the number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
procedures of such facility. All questions as to the form and validity
(including time of receipt) of notices of withdrawal will be determined by the
Company, in its sole discretion, which determination shall be final and binding.
None of the Company, the Depositary, the Information
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Agent or any other person shall be obligated to give notice of any defects or
irregularities in any notice of withdrawal nor shall any of them incur liability
for failure to give any such notice.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter
be deemed not tendered for purposes of the Offer unless such withdrawn Shares
are validly retendered prior to the Expiration Date by again following one of
the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or
is unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in this Section 4.
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company will accept for payment
and pay for (and thereby purchase) Shares validly tendered and not withdrawn
prior to the Expiration Date. For purposes of the Offer, the Company will be
deemed to have accepted for payment (and therefore purchased) Shares that are
tendered and not withdrawn (subject to the proration provisions of the Offer)
only when, as and if it gives oral or written notice to the Depositary of its
acceptance of such Shares for payment pursuant to the Offer. In accordance with
applicable regulations of the Commission, the Company may purchase pursuant to
the Offer an additional amount of Shares not to exceed 2% of the outstanding
Shares without amending or extending the Offer. If (i) the Company increases or
decreases the price to be paid for the Shares or the number of Shares being
sought in the Offer and, in the event of an increase in the number of Shares
being sought, such increase exceeds 2% of the outstanding Shares, and (ii) the
Offer is scheduled to expire at any time earlier than the tenth business day
from, and including, the date that notice of such increase or decrease is first
published, sent or given in the manner specified in Section 14, the Offer will
be extended until the expiration of such period of ten business days.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay for all of the Shares accepted for payment pursuant to the
Offer as soon as practicable after the Expiration Date. In all cases, payment
for Shares tendered and accepted for payment pursuant to the Offer will be made
promptly (subject to possible delay in the event of proration) but only after
timely receipt by the Depositary of certificates for Shares (or of a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility), a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof) and any
other required documents.
The Company will pay for Shares purchased pursuant to the Offer by
depositing the aggregate Purchase Price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payment
from the Company and transmitting payment to the tendering stockholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately seven Nasdaq trading days after the Expiration
Date. Certificates for all Shares tendered and not purchased, including Shares
not purchased due to proration, will be returned (or, in the case of Shares
tendered by book-entry transfer, such Shares will be credited to the account
maintained with the Book-Entry Transfer Facility by the participant therein who
so delivered such Shares) to the tendering stockholder as promptly as
practicable after the Expiration Date without expense to the tendering
stockholders. Under no circumstances will interest on the Purchase Price be paid
by the Company by reason of any delay in making payment. In addition, if certain
events occur, the Company may not be obligated to purchase Shares pursuant to
the Offer. See Section 6.
The Company will pay or cause to be paid all stock transfer taxes, if any,
payable on the transfer to it of Shares purchased pursuant to the Offer. If,
however, payment of the Purchase Price is to be made to, or (in the
circumstances permitted by the Offer) if unpurchased Shares are to be registered
in the name of, any person other than the registered holder(s), or if tendered
certificates are registered in the name of any person other than the person(s)
signing the Letter of Transmittal, the amount of all stock transfer taxes, if
any (whether imposed on the registered holder(s) or such other
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person or otherwise) payable on account of the transfer to such person will be
deducted from the Purchase Price unless satisfactory evidence of the payment of
the stock transfer taxes, or exemption therefrom, is submitted. See Instruction
6 of the Letter of Transmittal.
THE COMPANY MAY BE REQUIRED TO WITHHOLD AND REMIT TO THE IRS 31% OF THE
GROSS PROCEEDS PAID TO ANY TENDERING STOCKHOLDER OR OTHER PAYEE WHO FAILS TO
COMPLETE FULLY, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. SEE SECTION 3. SEE SECTION 13 REGARDING
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES FOR FOREIGN STOCKHOLDERS.
6. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after November 17, 1999 and on or
prior to the Expiration Date any of the following events shall have occurred (or
shall have been determined by the Company to have occurred) that, in the
Company's judgment (regardless of the circumstances giving rise thereto,
including any action or omission to act by the Company), makes it inadvisable to
proceed with the Offer or with such acceptance for payment or payment:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency, authority or tribunal or any other person, domestic or foreign, before
any court, authority, agency or tribunal that directly or indirectly (i)
challenges the making of the Offer, the acquisition of some or all of the Shares
pursuant to the Offer or otherwise relates in any manner to the Offer, or (ii)
in the Company's reasonable judgment, could materially and adversely affect the
business, condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially impair
in any way the contemplated future conduct of the business of the Company or any
of its subsidiaries or materially impair the contemplated benefits of the Offer
to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered, amended,
enforced or deemed to be applicable to the Offer or the Company or any of its
subsidiaries, by any court or any authority, agency or tribunal that, in the
Company's reasonable judgment, would or might directly or indirectly: (i) make
the acceptance for payment of, or payment for, some or all of the Shares illegal
or otherwise restrict or prohibit consummation of the Offer or otherwise relates
in any manner to the Offer; (ii) delay or restrict the ability of the Company,
or render the Company unable, to accept for payment or pay for some or all of
the Shares; (iii) materially impair the contemplated benefits of the Offer to
the Company; or (iv) materially and adversely affect the business, condition
(financial or other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way the
contemplated future conduct of the business of the Company or any of its
subsidiaries;
(c) there shall have occurred: (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market; (ii) the declaration of any banking moratorium or
any suspension of payments in respect of banks in the United States (whether or
not mandatory); (iii) the commencement of a war, armed hostilities or other
international or national crisis directly or indirectly involving the United
States; (iv) any limitation (whether or not mandatory) by any governmental,
regulatory or administrative agency or authority on, or any event that, in the
Company's reasonable judgment, might effect, the extension of credit by banks or
other lending institutions in the United States; (v) any significant decrease in
the market price of the Shares or in the market prices of equity securities
generally or any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole judgment of
the Company, have a material adverse effect on the business, condition
(financial or otherwise), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or on the trading in the Shares; (vi) in the
case of any of the foregoing existing at the time of the commencement of the
Offer, a material acceleration or worsening thereof; or (vii) any decline in
either the Dow Jones Industrial Average or the Standard and Poor's Index of 500
Industrial Companies by an amount in excess of 10% measured from the close of
business on November 17, 1999;
13
<PAGE> 14
(d) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger or acquisition proposal for the Company,
shall have been proposed, announced or made by another person or shall have been
publicly disclosed, or any person or group shall have filed a Notification and
Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
reflecting an intent to acquire the Company or any of its Shares, or the Company
shall have learned that any person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire
beneficial ownership of more than 5% of the outstanding Shares, or any new group
shall have been formed that beneficially owns more than 5% of the outstanding
Shares; or
(e) any change or changes shall have occurred, be pending or threatened or
be proposed, which have affected or could affect the business, scope, condition
(financial or other), assets, income, level of indebtedness, operations,
prospects, stock ownership or capital structure of the Company or its
subsidiaries which, in the Company's reasonable judgment, is or may be material
to the Company or its subsidiaries.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, and may be waived by
the Company, in whole or in part, at any time and from time to time in its sole
discretion. The Company's failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Company concerning the events described above
will be final and binding on all parties.
7. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on Nasdaq. The following table sets forth,
for the periods indicated, the high and low closing per Share sales prices as
reported by Nasdaq (rounded to the nearest $.01):
<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PER SHARE
----- ----- ---------
<S> <C> <C> <C>
1997:
1st Quarter ..................................... 16.50 11.00 .20
2nd Quarter ..................................... 16.25 11.63 .20
3rd Quarter ..................................... 16.63 13.25 .10
4th Quarter ..................................... 15.31 13.00 .10
1998:
1st Quarter ..................................... 13.75 10.88 0
2nd Quarter ..................................... 11.44 8.81 0
3rd Quarter ..................................... 9.44 7.63 0
4th Quarter ..................................... 9.00 6.25 0
1999:
1st Quarter ..................................... 9.63 7.38 0
2nd Quarter ..................................... 10.13 8.81 0
3rd Quarter ..................................... 11.00 8.50 0
4th Quarter (through November 15, 1999) ......... 10.25 8.75 0
</TABLE>
On November 15, 1999, the last full Nasdaq trading day prior to the date of
the announcement of the Offer, the closing per Share sales price as reported by
Nasdaq was $10.25. THE COMPANY URGES STOCKHOLDERS TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
The Company has not paid cash dividends since 1997. The Company's dividend
policy will be reviewed by the Board of Directors at such future times as may be
appropriate in light of relevant factors at such times. The Company does not
expect to pay cash dividends in the foreseeable future.
14
<PAGE> 15
8. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 600,000 Shares pursuant to the Offer,
the Company expects that the total amount required to purchase Shares pursuant
to the Offer and to pay related taxes, fees and expenses will be approximately
$7,250,000, which the Company expects to obtain from its general corporate funds
and from borrowings under the Company's $18,500,000 credit facility ("Credit
Facility") with SouthTrust Bank, National Association. Under the terms of the
Credit Facility, the Company and certain of its subsidiaries have a credit line
which is secured by inventory, equipment and accounts receivable. At the
Company's option, and subject to certain conditions, the amount that can be
borrowed under the Credit Facility may be increased to $25,000,000 upon the
lender's determination that it has adequate security or upon the Company's grant
of such additional security as the lender deems reasonably necessary. The term
of the Credit Facility expires on November 11, 2002; however, at any time during
the term, the Company may convert any or all outstanding amounts under the
facility to a term loan with a maturity of two years. The Credit Facility
contains numerous covenants, representations and events of default typical of
credit facilities of this size and nature. The Company's ability to borrow funds
under the Credit Facility is contingent on meeting certain financial covenants
in the Credit Facility. Loans under the Credit Facility bear interest at a
varying rate equal to the 30, 60 or 90 day LIBOR rate, as selected by the
Company, plus from 1% to 1.75%. As of November 16, 1999, the Company was in
compliance with all covenants, and the purchase of Shares pursuant to the Offer
will not result in the Company being in violation of any of such covenants. The
Company intends to repay borrowings under the Credit Facility through cash flow
from operations or through refinancing of such indebtedness at a later date.
9. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company designs, develops, manufactures, markets, sells and distributes
medical products and components. The Company's operations are conducted through
three medical products subsidiaries, Quest Medical, Inc., Atrion Medical
Products, Inc. and Halkey-Roberts Corporation. In addition, the Company has a
subsidiary which operates a small gaseous oxygen pipeline and a subsidiary which
is engaged in leasing activities. The Company's executive offices are located at
One Allentown Parkway, Allen, Texas 75002, and its telephone number is (972)
390-9800.
The foregoing description of the Company's business is qualified in its
entirety by the more detailed discussion contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, in its Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999, and
September 30, 1999 and in its other filings made with the Commission under the
Exchange Act.
The Company is continuing to develop a strategy to adapt certain
technology of one of its subsidiaries to the delivery and control of protective
drugs during the reperfusion of clotted arteries in cardiac catheterization
laboratories. The Company believes that the adaptation of such technology for
that purpose would require significant upfront expenditures and is not currently
planning to undertake the implementation of such a program unless it is able to
structure a partnership or similar arrangement in which another party would bear
all or a substantial part of the costs of adapting the technology. The Company
is exploring the opportunities for such partnership or arrangement, but there is
no assurance that the Company will enter into any such relationship. The Company
is presently unable to determine whether the technology can be cost-effectively
adapted to the delivery and control of protective drugs during clotted artery
reperfusion, the terms of the partnership or arrangement, if any, under which
such program would be conducted, or the cost to the Company of such a program,
if undertaken.
The Company anticipates that the term of the Rights Agreement, dated as
of February 1, 1990, between the Company and American Stock Transfer & Trust
Company as Rights Agent, as amended, which without further action by the Board
of Directors will expire on February 1, 2000, will be extended prior to that
date for an as-yet-undetermined period. Under the Rights Agreement, the Rights,
which are not presently exercisable and do not have any voting powers, represent
the right of the Company's stockholders to purchase at a substantial discount,
upon the occurrence of certain events, shares of common stock of the Company or
an acquiring Company involved in a business combination with the Company.
15
<PAGE> 16
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION. Set forth below is
certain summary historical consolidated financial information of the Company and
its subsidiaries. The historical financial information (other than the ratio of
earnings to fixed charges and book value per common share, has been derived from
the consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 and from the unaudited
consolidated financial statements included in the Company's Quarterly Reports on
Form 10-Q for the periods ended September 30, 1999 and September 30, 1998,
respectively, which have been prepared on a basis substantially consistent with
the audited financial statements and reflect, in the opinion of management, all
adjustments necessary to a fair presentation of the financial position and
results of operations for such periods. The results for the nine months ended
September 30, 1999 are not necessarily indicative of the results for the full
year. The information presented below should be read in conjunction with the
Company's consolidated financial statements and notes thereto incorporated
herein by reference. More comprehensive financial information is included in
such financial statements, and the financial information which follows is
qualified in its entirety by reference to such financial statements, related
notes and the audit report contained therein, copies of which may be obtained as
set forth below under the caption "ADDITIONAL INFORMATION."
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT RATIOS AND PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED FISCAL YEAR ENDED
--------------------- -----------------------
9/30/99 9/30/98 12/31/98 12/31/97
------- ------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales 37,759 33,108 43,397 30,277
Income (Loss) From Continuing Operations 1,668 1,262 1,478 (2,045)
Income from Discontinued Operations -- -- -- 1,923
Gain on Disposal of Discontinued Operations 165 -- 662 17,292
Net Income 1,833 1,262 2,140 17,170
Earnings (Loss) per Basic Share:
Continuing Operations 0.63 0.39 0.46 (0.63)
Discontinued Operations -- -- -- 0.60
Gain on Disposal of Discontinued Operations 0.06 -- 0.21 5.36
------ ------ ------ -------
0.69 0.39 0.67 5.33
Earnings (Loss) per Diluted Share:
Continuing Operations 0.62 0.39 0.46 (0.63)
Discontinued Operations -- -- -- 0.60
Gain on Disposal of Discontinued Operations 0.06 -- 0.21 5.36
------ ------ ------ -------
0.68 0.39 0.67 5.33
Basic Shares Outstanding 2,657 3,212 3,203 3,224
Diluted Shares Outstanding 2,697 3,216 3,210 3,224
Ratio of Earnings to Fixed Charges 8.4x 16.7x 14.4x -6.8x (1)
BALANCE SHEET AND OTHER DATA:
Working Capital 14,264 18,827 18,707 33,593
Total Assets 65,124 61,924 60,415 60,942
Total Debt 5,981 203 203 656
Shareholders' Equity 46,597 50,782 4,369 49,986
Dividends per Share -- -- -- 0.60
Book Value per Common Share 18.83 15.86 16.66 15.42
</TABLE>
NOTE TO SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(1) The amount of deficiency in earnings to achieve a one-to-one coverage
was $3,328,000.
16
<PAGE> 17
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION. The following
summary unaudited consolidated pro forma financial information gives effect to
the purchase of Shares pursuant to the Offer, and the payment of related taxes,
fees and expenses, based on the assumptions described in the Notes to Summary
Unaudited Consolidated Pro Forma Financial Information below, as if such
transactions had occurred on the first day of each of the periods presented,
with respect to operating statement data, and on September 30, 1999 and on
December 31, 1998, with respect to balance sheet data. The summary unaudited
consolidated pro forma financial information should be read in conjunction with
the summary historical consolidated financial information incorporated herein by
reference and does not purport to be indicative of the results that would
actually have been obtained, or results that may be obtained in the future, or
the financial condition that would have resulted, if the purchase of the Shares
pursuant to the Offer, and the payment of related taxes, fees and expenses, had
been completed at the dates indicated.
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION (1)
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
September 30, 1999 December 31, 1998
-------------------------------------- --------------------------------------
Proforma Proforma
Historical Adjustments Proforma Historical Adjustments Proforma
---------- ----------- -------- ---------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues 37,759 37,759 43,397 43,397
Cost of Goods Sold 22,662 22,662 26,937 26,937
------ ----- ------- ------- ----- ------
Gross Profit 15,097 15,097 16,460 16,460
Operating Expenses 12,629 12,629 14,881 14,881
------ ----- ------- ------- ----- ------
Operating Income 2,468 2,468 1,579 1,579
Other Income and Expenses:
Interest Income(Expense), Net (147) (326) (473) 577 (392) 185
Other Income 10 10 57 57
------ ----- ------- ------- ----- ------
Income from Continuing Operations
Before Provision For Income Taxes 2,331 (326) 2,005 2,213 (392) 1,821
Provision for Income Taxes (663) 111 (552) (735) 133 (602)
------ ----- ------- ------- ----- ------
Income From Continuing Operations 1,668 (215) 1,453 1,478 (259) 1,219
Gain on Disposal of Discontinued
Operations 165 165 662 662
------ ----- ------- ------- ----- ------
Net Income 1,833 (215) 1,618 2,140 (259) 1,881
====== ===== ======= ======= ===== =======
Earnings per Basic Share:
Continuing Operations 0.63 0.08 0.71 0.46 0.01 0.47
Gain on Disposal of Discontinued
Operations 0.06 0.02 0.08 0.21 0.04 0.25
------ ----- ------- ------- ----- ------
0.69 0.10 0.79 0.67 0.05 0.72
Earnings per Diluted Share:
Continuing Operations 0.62 0.07 0.69 0.46 0.01 0.47
Gain on Disposal of Discontinued
Operations 0.06 0.02 0.08 0.21 0.04 0.25
------ ----- ------- ------- ----- ------
0.68 0.09 0.77 0.67 0.05 0.72
Dividends per Share -- -- -- --
Ratio of Earnings to Fixed Charges (2) 8.4x 4.1x 14.4x 4.3x
Basic Shares Outstanding 2,657 (600) 2,057 3,203 (600) 2,603
Diluted Shares Outstanding 2,697 (600) 2,097 3,210 (600) 2,610
</TABLE>
17
<PAGE> 18
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION (CONT.) (1)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED TWELVE MONTHS ENDED
September 30, 1999 December 31, 1998
--------------------------------- -----------------------------------
--------------------------------- -----------------------------------
Proforma Proforma
Historical Adjustments Proforma Historical Adjustments Proforma
---------- ----------- -------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
ASSETS
Current Assets:
Cash & Cash Equivalents 231 231 5,635 5,635
Accounts Receivable 8,658 8,658 7,278 7,278
Inventories 9,533 9,533 8,568 8,568
Prepayments 1,047 1,047 1,358 1,358
------- ------- ------- -------
Total Current Assets 19,469 19,469 22,839 22,839
Property, Plant, &
Equipment:
Original cost 33,029 33,029 22,315 22,315
Less Accumulated Depreciation (7,159) (7,159) (4,921) (4,921)
------- ------- ------- -------
Total PP&E 25,870 25,870 17,394 17,394
Deferred Charges:
Patents, net 3,391 3,391 3,620 3,620
Goodwill, net 13,539 13,539 13,986 13,986
Other 2,855 2,855 2,576 2,576
------- ------- ------- -------
Total Deferred Charges 19,785 19,785 20,182 20,182
TOTAL ASSETS 65,124 65,124 60,415 60,415
======= ======= ======= =======
LIABILITIES AND
STOCKHOLDER'S EQUITY
Current Liabilities:
Curr. Maturities of LTD -- -- 203 203
Accounts Payable and
Accrued Liabilities 5,205 5,205 3,929 3,929
------- ----- ------- ------- ------- -------
Total Current Liabilities 5,205 5,205 4,132 4,132
Long Term Debt, less
Current Maturities 5,981 7,250 13,231 -- 7,250 7,250
Other Noncurrent Liabilities 7,341 7,341 6,914 6,914
Stockholder's Equity:
Common Shares 342 342 342 342
Paid-in Capital 6,403 6,403 6,394 6,394
Retained Earnings 48,653 48,653 46,821 46,821
Treasury Shares (8,801) (7,250) (16,051) (4,188) (7,250) (11,438)
------- ----- ------- ------- ------ -------
Total Stockholder's Equity 46,597 (7,250) 39,347 49,369 (7,250) 42,119
TOTAL EQUITY &
LIABILITIES 65,124 65,124 60,415 60,415
======= ======= ======= ====== ====== ======
Book Value per Common Share 18.83 21.00 16.66 17.82
Tangible Book Value per
Common Share 11.99 11.96 10.72 10.37
</TABLE>
NOTES TO SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION
(1) The following assumptions were made in presenting the summary unaudited
consolidated pro forma financial information:
(a) The information assumes that 600,000 shares are repurchased and
recorded as Treasury Shares at $12.00 per Share.
18
<PAGE> 19
(b) Expenses directly related to the Offer are assumed to be $50,000
and have been charged against Treasury Shares.
(c) The information assumes a reduction in interest income in 1998 at
an assumed rate of 5.4% (which approximates the rate at which
interest was earned on invested funds during the period presented)
on Company funds used to purchase the Shares under, and pay the
expenses of, the Offer.
(d) The information assumes an increase in interest expense in 1999 at
an assumed rate of 6.0% (which approximates the rate at which
interest was paid on borrowed funds during the period presented)
on funds borrowed to purchase the Shares under, and pay the
expenses of, the Offer.
(e) The assumed income tax rate applicable to pro forma adjustments is
34% which is consistent with the rate for each of the respective
historical periods.
(2) The pro forma ratio of earnings to fixed charges was computed by
dividing the sum of (i) income from continuing operations before taxes
and (ii) fixed charges by the sum of (i) interest expense and (ii)
estimated interest within rental expenses.
ADDITIONAL INFORMATION. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning the Company's directors and officers, their remuneration, 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 can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 2120, Washington,
D.C. 20549; at its regional offices located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, New York, New York
10048. Copies of such material may also be obtained by mail, upon payment of the
Commission's customary charges, from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains a Web site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.
10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING SHARES.
As of November 16, 1999, the Company had issued and outstanding 2,440,129
Shares and had 286,550 Shares issuable on the exercise of stock options
exercisable within 60 days. The 600,000 Shares that the Company is offering to
purchase represent approximately 25% of the Shares then outstanding. As of
November 16, 1999, the Company's directors and executive officers as a group (9
persons) beneficially owned (including 207,350 shares issuable on the exercise
of options exercisable within 60 days) an aggregate of 530,834 Shares
representing approximately 19.5% of the outstanding Shares (including Shares
issuable on the exercise of options exercisable within 60 days).
If the Company purchases 600,000 Shares pursuant to the Offer, the
Company's executive officers and directors as a group would own beneficially
(including Shares issuable on the exercise of options exercisable within 60
days) approximately 25% of the outstanding Shares immediately after the Offer
(including Shares issuable on the exercise of options exercisable within 60
days).
The Company has been advised that none of its directors or executive
officers intends to tender any Shares pursuant to the Offer.
Neither the Company, nor any subsidiary of the Company nor, to the best of
the Company's knowledge, any of the Company's directors or executive officers,
nor any affiliates of any of the foregoing, had any transactions in the Shares
during the 40 business days prior to the date hereof except that the Company
purchased 33,900 Shares at a price of $9.25 per Share in two block trades on
Nasdaq on October 11, 1999.
On November 16, 1998, the Company commenced an issuer tender offer (the
"First Tender Offer") pursuant to which the Company invited its stockholders to
tender up to 500,000 Shares at prices not greater than $9.00 nor less than $7.00
per Share in cash, as specified by the tendering stockholders. The First Tender
Offer expired on December 15, 1998. On December 22, 1998, the Company purchased
a total of 239,092 Shares at a price of $9.00 per share pursuant to the First
Tender Offer.
19
<PAGE> 20
On March 3, 1999, the Company purchased 136,600 Shares at a price of
$7.75 per Share in a block trade on Nasdaq.
On March 22, 1999, the Company commenced an issuer tender offer (the
"Second Tender Offer") pursuant to which the Company invited its stockholders to
tender up to 400,000 Shares at prices not greater than $10.00 nor less than
$8.00 per Share in cash, as specified by tendering stockholders. The Second
Tender Offer expired on April 23, 1999. On April 30, 1999 the Company purchased
a total of 301,524 Shares at a price of $10.00 per share pursuant to the Second
Tender Offer.
On May 17, 1999 the Company purchased 50,400 Shares at a price of $10.00
per Share in two privately-negotiated transactions pursuant to a settlement
reached between the Company and The Atrion Stockholder Committee regarding the
solicitation of proxies for the Company's 1999 annual meeting of stockholders.
Except for outstanding options to purchase Shares granted from time to time
to certain employees (including executive officers) of the Company and to
outside directors on certain fixed dates pursuant to the Company's stock option
plans and options to purchase Shares granted to clinical advisors of a Company
subsidiary and except as otherwise described herein, neither the Company nor, to
the best of the Company's knowledge, any of its affiliates, directors or
executive officers is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer with respect to any securities of the Company including, but not limited
to, any contract, arrangement, understanding or relationship concerning the
transfer or the voting of any such securities, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or the
giving or withholding of proxies, consents or authorizations.
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise be traded publicly and will reduce the
number of stockholders. Nevertheless, the Company believes that there will still
be a sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares
and, based on the published guidelines of Nasdaq, continued listing of the
Company's securities on Nasdaq.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. The Company
believes that, following the purchase of Shares pursuant to the Offer, the
Shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
Shares the Company acquires pursuant to the Offer will be retained as
treasury stock by the Company (unless and until the Company determines to retire
such Shares) and will be available for the Company to issue without further
stockholder action (except as required by applicable law and rules of Nasdaq or
any securities exchange on which Shares are listed) for purposes including, but
not limited to, the acquisition of other businesses, the raising of additional
capital for use in the Company's business and the satisfaction of obligations
under existing or future stock option and employee benefit plans. The Company
has no current plans for issuance of the Shares repurchased pursuant to the
Offer.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and the Commission and comply with the Commission's proxy rules in connection
with meetings of the Company's stockholders. The Company believes that its
purchase of Shares pursuant to the Offer will not result in the Shares becoming
eligible for deregistration under the Exchange Act.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit that appears
to be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by any government or governmental, administrative or regulatory
authority or agency,
20
<PAGE> 21
domestic or foreign, that would be required for the acquisition or ownership of
Shares by the Company as contemplated herein. Should any such approval or other
action be required, the Company presently contemplates that such approval or
other action will be sought. The Company is unable to predict whether it may
determine that it is required to delay the acceptance for payment of or payment
for Shares tendered pursuant to the Offering pending the outcome of any such
matter. There can be no assurance that any such approval or other action, if
needed, would be obtained or would be obtained without substantial conditions or
that the failure to obtain any such approval or other action might not result in
adverse consequences to the Company's business. The Company's obligations under
the Offer to accept for payment and pay for Shares are subject to certain
conditions. See Section 6.
13. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following summary describes certain United States federal income tax
consequences relevant to the Offer. The discussion contained in this summary is
based upon the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), existing and proposed United States Treasury regulations promulgated
thereunder, administrative pronouncements and judicial decisions, changes to
which could materially affect the tax consequences described herein and could be
made on a retroactive basis.
This summary discusses only Shares held as capital assets, within the
meaning of Section 1221 of the Code, and does not address all of the tax
consequences that may be relevant to particular stockholders in light of their
personal circumstances, or to certain types of stockholders (such as certain
financial institutions, dealers in securities or commodities, insurance
companies, tax-exempt organizations or persons who hold Shares as a position in
a "straddle" or as part of a "hedging" or "conversion" or "constructive sale"
transaction for United States federal income tax purposes). In particular, the
discussion of the consequences of an exchange of Shares for cash pursuant to the
Offer applies only to a United States stockholder (herein, a "Holder"). For
purposes of this summary, a "United States stockholder" is a beneficial owner of
the Shares who is (i) a citizen or resident of the United States, (ii) a
corporation, partnership or other entity created or organized in or under the
laws of the United States, any State or any political subdivision thereof, (iii)
an estate the income of which is subject to United States federal income
taxation regardless of source, or (iv) a trust the administration of which a
court within the United States is able to exercise primary supervision and all
substantial decisions of which one or more United States persons have the
authority to control. This discussion does not address the tax consequences to
foreign stockholders who will be subject to United States federal income tax on
a net basis on the proceeds of their exchange of Shares pursuant to the Offer
because such income is effectively connected with the conduct of a trade or
business within the United States. Such stockholders are generally subject to
tax in a manner similar to United States stockholders; however, certain special
rules apply. Foreign stockholders who are not subject to United States federal
income tax on a net basis should see Section 3 for a discussion of the
applicable United States withholding tax rules and the potential for obtaining a
refund of all or a portion of the tax withheld. This summary does not apply to
foreign stockholders who hold, actually or constructively, more than 5% of the
stock of the Company. Any such stockholder is strongly advised to consult its
own tax advisor. This summary may not be applicable with respect to Shares
acquired as compensation (including Shares acquired upon the exercise of options
or which were or are subject to forfeiture restrictions). This summary also does
not address the state, local or foreign tax consequences of participating in the
Offer. Each Holder of Shares should consult such Holder's tax advisor as to the
particular consequences to it of participation in the Offer.
CONSEQUENCES TO TENDERING HOLDERS OF EXCHANGE OF SHARES FOR CASH PURSUANT
TO THE OFFER. An exchange of Shares for cash pursuant to the Offer by a Holder
will be a taxable transaction for United States federal income tax purposes. As
a consequence of the exchange, the Holder will, depending on such Holder's
particular circumstances, be treated either as recognizing gain or loss from the
disposition of the Shares or as receiving a dividend distribution from the
Company. In general, if a Holder does not exercise control over the affairs of
the Company and all Shares actually or constructively owned by such Holder under
the applicable attribution rules are tendered and exchanged for cash in the
Offer, the Holder should be treated as recognizing gain or loss from the
disposition of Shares.
Under Section 302 of the Code, a Holder will recognize gain or loss on an
exchange of Shares for cash if the exchange (i) results in a "complete
termination" of all such Holder's equity interest in the Company, (ii) results
in a "substantially disproportionate" redemption with respect to such Holder or
(iii) is "not essentially equivalent to a dividend" with respect to the Holder.
In applying each of the Section 302 tests, a Holder must take into account not
only Shares actually owned by the Holder but also Shares owned by certain
related individuals and entities that are constructively owned by such Holder
pursuant to Section 318 of the Code.
21
<PAGE> 22
A Holder that exchanges all Shares actually or constructively owned by such
Holder for cash pursuant to the Offer will be regarded as having completely
terminated such Holder's equity interest in the Company. An exchange of Shares
for cash will be a "substantially disproportionate" redemption with respect to a
Holder if the percentage of the then outstanding Shares owned by such Holder
immediately after the exchange is less than 80% of the percentage of the Shares
owned by such Holder immediately before the exchange. If an exchange of Shares
for cash fails to satisfy the "substantially disproportionate" test, the Holder
may nonetheless satisfy the "not essentially equivalent to a dividend" test. A
Holder who wishes to satisfy (or avoid) the "not essentially equivalent to a
dividend" test is urged to consult such Holder's tax advisor because this test
will be met only if the reduction in such Holder's proportionate interest in the
Company constitutes a "meaningful reduction" given such Holder's particular
facts and circumstances. The IRS has indicated in published rulings that any
reduction in the percentage interest of a stockholder whose relative stock
interest in a publicly held corporation is minimal (an interest of less than 1%
should satisfy this requirement) and who exercises no control over corporate
affairs should constitute such a "meaningful reduction." There is some authority
that if a Holder sells Shares to persons other than the Company at or about the
time such Holder also sells shares to the Company pursuant to the Offer, and the
various sales effected by the Holder are part of an overall plan to reduce or
terminate such Holder's proportionate interest in the Company, then the sales to
persons other than the Company may, for United States federal income tax
purposes, be integrated with the Holder's sale of Shares pursuant to the Offer
and, if integrated, may be taken into account in determining whether the Holder
satisfies any of the three tests described above. A Holder should consult his
tax advisor regarding the treatment of other exchanges of Shares for cash which
may be integrated with such Holder's sale of Shares to the Company pursuant to
the Offer.
If a Holder is treated as recognizing gain or loss from the disposition of
Shares for cash, such gain or loss will be equal to the difference between the
amount of cash received and such Holder's tax basis in the Shares exchanged
therefor. Any such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the holding period of the Shares exceeds one
year as of the date of the exchange. Any long-term capital gain recognized by
Holders that are individuals, estates or trusts will be taxable at a maximum
rate of 20% if the holding period of the Shares exceeds 12 months. However, any
short-term capital gain recognized by Holders that are individuals, estates or
trusts and any long-term or short-term capital gain recognized by Holders that
are corporations will be taxable at regular income tax rates.
If a Holder is not treated under the Section 302 tests as recognizing gain
or loss on an exchange of Shares for cash, the entire amount of cash received by
such Holder in such exchange will be treated as a dividend to the extent of the
Company's current and accumulated earnings and profits as determined for United
States federal income tax purposes. Such a dividend will be includible in the
Holder's gross income as ordinary income in its entirety, without reduction for
the tax basis of the Shares exchanged, and no loss will be recognized. The
Holder's tax basis in the Shares exchanged, however, will be added to such
Holder's tax basis in the remaining Shares that the Holder owns. To the extent
that cash received in exchange for Shares is treated as a dividend to a
corporate Holder, (i) it will be eligible for a dividends-received deduction
(subject to applicable limitations) and (ii) it will be subject to the
"extraordinary dividend" provisions of the Code. A corporate Holder should
consult its tax advisor concerning the availability of the dividends-received
deduction and the application of the "extraordinary dividend" provisions of the
Code.
The Company cannot presently determine whether or the extent to which the
Offer will be oversubscribed. If the Offer is oversubscribed, proration of
tenders pursuant to the Offer will cause the Company to accept fewer shares than
are tendered. Therefore, a Holder can be given no assurance that a sufficient
number of such Holder's Shares will be purchased pursuant to the Offer to ensure
that such purchase will be treated as a sale or exchange, rather than as a
dividend, for United States federal income tax purposes pursuant to the rules
discussed above.
CONSEQUENCES TO STOCKHOLDERS WHO DO NOT TENDER PURSUANT TO THE OFFER.
Stockholders who do not accept the Company's Offer to tender their Shares will
not incur any tax liability as a result of the consummation of the Offer.
See Section 3 with respect to the application of United States federal
income tax withholding to payments made to foreign stockholders and backup
withholding.
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. EACH STOCKHOLDER IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO IT OF THE OFFER, INCLUDING THE
APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
22
<PAGE> 23
14. EXTENSION OF OFFER; TERMINATION; AMENDMENT.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 6 shall have occurred or shall be deemed by the Company to
have occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. The Company also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of the
conditions specified in Section 6 hereof by giving oral or written notice of
such termination or postponement to the Depositary and making a public
announcement thereof. The Company's reservation of the right to delay payment
for Shares which it has accepted for payment is limited by Rule 13e-4(f)(5)
promulgated under the Exchange Act, which requires that the Company must pay the
consideration offered or return the Shares tendered promptly after termination
or withdrawal of a tender offer. Subject to compliance with applicable law, the
Company further reserves the right, in its sole discretion, and regardless of
whether any of the events set forth in Section 6 shall have occurred or shall be
deemed by the Company to have occurred, to amend the Offer in any respect
(including, without limitation, by decreasing or increasing the consideration
offered in the Offer to holders of Shares or by decreasing or increasing the
number of Shares being sought in the Offer). Amendments to the Offer may be made
at any time and from time to time effected by public announcement thereof, such
announcement, in the case of an extension, to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the last previously scheduled
or announced Expiration Date. Any public announcement made pursuant to the Offer
will be disseminated promptly to stockholders in a manner reasonably designed to
inform stockholders of such change. Without limiting the manner in which the
Company may choose to make a public announcement, except as required by
applicable law, the Company shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by making a
release to the Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the Offer or information concerning the Offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
Shares or the number of Shares being sought in the Offer and, in the event of an
increase in the number of Shares being sought, such increase exceeds 2% of the
outstanding Shares, and (ii) the Offer is scheduled to expire at any time
earlier than the tenth business day from, and including, the date that notice of
an increase or decrease is first published, sent or given in the manner
specified in this Section 14, the Offer will then be extended until the
expiration of such ten business days.
15. FEES AND EXPENSES.
The Company has retained American Stock Transfer & Trust Company to act as
Depositary and Georgeson Shareholder Communications Inc. to act as Information
Agent in connection with the Offer. The Information Agent may contact
stockholders by mail, telephone, telegraph and personal interviews and may
request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to beneficial owners. The Information Agent and the
Depositary will receive reasonable and customary compensation for their services
as such, will be reimbursed by the Company for certain reasonable out-of-pocket
expenses and will be indemnified against certain liabilities in connection with
the Offer, including certain liabilities under the federal securities laws.
Neither the Information Agent nor the Depositary has been retained to make
solicitations or recommendations in connection with the Offer.
The Company will not pay fees or commissions to any broker, dealer or other
person for soliciting tenders of Shares pursuant to the Offer. The Company will,
however, upon request through the Information Agent, reimburse brokers, dealers
and commercial banks for customary mailing and handling expenses incurred by
such persons in forwarding the Offer and related materials to the beneficial
owners of Shares held by any such person as a nominee or in a fiduciary
capacity. No broker, dealer, commercial bank or trust company has been
authorized to act as the agent of the Company for purposes of the Offer.
23
<PAGE> 24
The Company will pay or cause to be paid all stock transfer taxes, if any,
on its purchase of Shares except as otherwise provided in Instruction 6 in the
Letter of Transmittal.
16. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on the Company's behalf
by one or more registered brokers or dealers license under the laws of such
jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 9 with respect to information
concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY IN CONNECTION WITH THE OFFER OTHER THAN
THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE RELATED LETTER OF
TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY.
ATRION CORPORATION
November 17, 1999
24
<PAGE> 25
Facsimile copies of the Letter of Transmittal will be accepted from
Eligible Institutions. The Letter of Transmittal and certificates for Shares and
any other required documents should be sent or delivered by each stockholder or
his or her broker, dealer, commercial bank, trust company or other nominee to
the Depositary at its address set forth below.
The Depositary for the Offer is:
American Stock Transfer & Trust Company
40 Wall Street
46th Floor
New York, New York 10005
By Facsimile Transmission: (718) 234-5001
(for Eligible Institutions only)
Banks and Brokers Call: (718) 921-8200
All Others Call Toll Free: (800) 937-5449
Additional copies of the Offer to Purchase, the Letter of Transmittal or
other tender offer materials may be obtained from the Information Agent and will
be furnished at the Company's expense. Questions and requests for assistance may
be directed to the Information Agent as set forth below. Stockholders may also
contact their local broker, dealer, commercial bank, trust company or other
nominee for assistance concerning the Offer.
The Information Agent for the Offer is:
Georgeson Shareholder Communications Inc.
17 State Street
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll Free: (800) 223-2064
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO
TENDER SHARES OF COMMON STOCK
OF
ATRION CORPORATION
PURSUANT TO THE OFFER TO PURCHASE
DATED NOVEMBER 17, 1999
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 15, 1999,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, New York 10005
By Facsimile Transmission: (718) 234-5001
(for Eligible Institutions only)
Confirm by Telephone: (800) 937-5499
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, INCLUDING THE
ACCOMPANYING INSTRUCTIONS, CAREFULLY BEFORE CHECKING ANY BOX BELOW.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER NUMBER
CERTIFICATE OF SHARES OF SHARES
NUMBER(S)(1) REPRESENTED BY TENDERED (2)
CERTIFICATE(S)
---------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
---------------------------------------------------
TOTAL SHARES
---------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
Indicate in this box the order (by certificate number) in which Shares are to be
purchased in the event of proration.(3) (Attach additional signed list if
necessary.) See Instruction 13.
1st:_______ 2nd:_______ 3rd:_______ 4th:_______ 5th:_______
(1) Need not be completed by stockholders tendering Shares by book-entry
transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares
represented by each Share certificate delivered to the Depositary are
being tendered hereby. See Instruction 4.
(3) If you do not designate an order, then in the event less than all
Shares tendered are purchased due to proration, Shares will be selected
for purchase by the Depositary. See Instruction 13.
<PAGE> 2
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT
BE FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY.
DELIVERIES TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE VALID
DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be used only if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3 of the Offer to Purchase (as defined below).
Stockholders whose Share certificates are not immediately available, who
cannot deliver certificates and any other documents required to the Depositary
by the Expiration Date (as defined in the Offer to Purchase), or who cannot
complete the procedure for book-entry transfer prior to the Expiration Date must
tender their Shares using the guaranteed delivery procedure set forth in Section
3 of the Offer to Purchase. See Instruction 2.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution:_____________________________________________
Account No:________________________________________________________________
Transaction Code No:_______________________________________________________
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):___________________________________________
Date of Execution of Notice of Guaranteed Delivery:________________________
Name of Institution that Guaranteed Delivery:______________________________
If delivery is by book-entry transfer:
Name of Tendering Institution:_________________________________________
Account No:____________________________________________________________
Transaction Code No:_______________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
2
<PAGE> 3
Ladies and Gentlemen:
The undersigned hereby tenders to Atrion Corporation, a Delaware
corporation (the "Company"), the above-described shares of its common stock, par
value $.10 per share (such shares, together with associated common stock
purchase rights issued pursuant to the Rights Agreement, dated as of February 1,
1990, between the Company and American Stock Transfer & Trust Company as Rights
Agent, as amended, are hereinafter referred to as the "Shares"), at $12.00 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer to Purchase dated November 17, 1999 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to all the Shares that are being tendered hereby or
orders the registration of such Shares tendered by book-entry transfer that are
purchased pursuant to the Offer to or upon the order of the Company and hereby
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to:
(i) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by the Book-Entry
Transfer Facility, together, in any such case, with all
accompanying evidences of transfer and authenticity, to or
upon the order of the Company upon receipt by the Depositary,
as the undersigned's agent, of the Purchase Price (as defined
below) with respect to such Shares;
(ii) present certificates for such Shares for cancellation and
transfer on the books of the Company; and
(iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with
the terms of the Offer.
The undersigned hereby represents and warrants to the Company that the
undersigned has full power and authority to tender, sell, assign and transfer
the Shares tendered hereby and that, when and to the extent the same are
accepted for payment by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and the same will not be subject to
any adverse claims. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Depositary or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Shares tendered
hereby.
The undersigned represents and warrants to the Company that the undersigned
has read and agrees to all of the terms of the Offer. All authority herein
conferred or agreed to be conferred shall not be affected by and shall survive
the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned. Except as stated in the Offer, this
tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
Instructions will constitute the undersigned's acceptance of the terms and
conditions of the Offer, as well as the undersigned's representation and
warranty to the Company that (i) the undersigned has a net long position in the
Shares or equivalent securities being tendered within
3
<PAGE> 4
the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and (ii) the tender of such Shares complies
with Rule 14e-4 of the Exchange Act. The Company's acceptance for payment of
Shares tendered pursuant to the Offer will constitute a binding agreement
between the undersigned and the Company upon the terms and subject to the
conditions of the Offer.
The names and addresses of the registered holders should be printed, if
they are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificate numbers, the number of
Shares represented by such certificates, the number of Shares that the
undersigned wishes to tender should be indicated in the appropriate boxes on
this Letter of Transmittal.
The undersigned understands that the Company will, upon the terms and
subject to the conditions of the Offer and at a price of $12.00 per Share net to
the seller in cash (the "Purchase Price"), purchase 600,000 Shares (or such
lesser number of Shares as are validly tendered and not withdrawn) pursuant to
the Offer. The undersigned understands that the Company will pay the Purchase
Price for all Shares validly tendered and not withdrawn, upon the terms and
subject to the conditions of the Offer, the procedure pursuant to which Shares
will be accepted for payment and the proration provisions. Certificates
representing Shares not purchased because of proration will be returned at the
Company's expense. See Section 1 of the Offer to Purchase.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the Purchase Price of any Shares purchased, and
return any Shares not tendered or not purchased, in the name(s) of the
undersigned (and, in the case of Shares tendered by book-entry transfer, by
credit to the account at the Book-Entry Transfer Facility). Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the Purchase Price of any Shares purchased and any certificates for Shares
not tendered or not purchased (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). In
the event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the Purchase Price of
any Shares purchased and return any Shares not tendered or not purchased in the
name(s) of, and mail such check and any certificates to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from the
name of the registered holder(s) thereof if the Company does not accept for
payment any of the Shares so tendered.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
4
<PAGE> 5
ODD LOTS
(SEE INSTRUCTION 8)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person who owned beneficially as of the close of business on
November 16, 1999, and who continues to own beneficially as of the Expiration
Date, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[ ] owned beneficially as of the close of business on November 16, 1999, and
continues to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares, all of which are being tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and (ii) believes, based upon representations
made to it by each such beneficial owner, that such beneficial owner owned
beneficially as of the close of business on November 16, 1999, and
continues to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares and is tendering all of such Shares.
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6, AND 7) (SEE INSTRUCTIONS 5 AND 7)
- --------------------------------------------------------------------------------------------------------------------
To be completed ONLY if the check for the To be completed ONLY if the check for the Purchase
aggregate Purchase Price of Shares purchased and Price of Shares purchased and/or certificates Shares
certificates for Shares not tendered or not not tendered or not purchased are to be mailed to
purchased are to be issued in the name of someone someone other than the undersigned or to the
other than the undersigned. undersigned at an address other than that shown
below the undersigned's signature(s)
Issue [ ] check and/or [ ] certificate(s) to:
Issue [ ] check and/or [ ] certificate(s) to:
Name(s):__________________________________________
Name(s):___________________________________________
__________________________________________________
(PLEASE PRINT) ___________________________________________________
(PLEASE PRINT)
Address:__________________________________________
Address:___________________________________________
__________________________________________________
(INCLUDE ZIP CODE) ___________________________________________________
(INCLUDE ZIP CODE)
__________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.) ___________________________________________________
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
__________________________________________________
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER) ___________________________________________________
If special payment instructions are being given, (BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER)
please remember to have your signature guaranteed.
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
IMPORTANT
PLEASE SIGN HERE
(To be completed by all Stockholders)
Signature(s) of stockholder(s):_________________________________________________
________________________________________________________________________________
Dated:__________________________________, 1999
Name(s):________________________________________________________________________
(PLEASE PRINT)
Capacity (Full Title):__________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No.:____________________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
certificate(s) or on a security position listing or by 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 set forth full title and see Instruction 5.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Firm Name:______________________________________________________________________
(PLEASE PRINT)
Authorized Signature:___________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone Number:_________________________________________________
Dated:__________________________________, 1999
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm that is an Eligible Institution (as defined below),
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 herewith and such holder(s)
have not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal, or (ii)
such Shares are tendered for the account of a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company (not a savings bank or
savings and loan association) having an office, branch or agency in the United
States (each such entity, an "Eligible Institution"). See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be used either if Share
certificates are to be forwarded herewith or if delivery of Shares is to be made
by book-entry transfer pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at the
Book-Entry Transfer Facility of all Shares delivered electronically, as well as
a properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at its address set forth on the
front page of this Letter of Transmittal prior to the Expiration Date. If
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 Shares and all other required documents to the Depositary
or who cannot complete the procedure for delivery by book-entry transfer prior
to the Expiration Date must tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 3 of 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 provided by the Company (with any required
signature guarantees) must be received by the Depositary prior to the Expiration
Date; and (iii) the certificates for 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 the Book-Entry Transfer Facility of all Shares
delivered electronically, in each case together with 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 within three trading days on The Nasdaq Stock Market after the date
the Depositary receives such Notice of Guaranteed Delivery, all as provided in
Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION 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, PROPERTY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative or contingent tenders will be accepted. By executing this
Letter of Transmittal (or facsimile thereof), the tendering stockholder waives
any right to receive any notice of the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and the number of Shares should be listed on a separate
signed schedule and attached to this Letter of Transmittal.
7
<PAGE> 8
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate delivered
to the Depositary are to be tendered, fill in the number of Shares that are to
be tendered in the box entitled "Number of Shares Tendered." In such case, a new
certificate for the remainder of the Shares represented by the old certificate
will be sent to the person(s) signing this Letter of Transmittal, unless
otherwise provided in the "Special Payment Instructions" or "Special Delivery
Instructions" boxes on this Letter of Transmittal, as promptly as practicable
following the expiration or termination of the Offer. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON 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 signatures(s) must correspond with the name(s) as written
on the face of the certificates without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are held 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 different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of such Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the Purchase Price is to be made to, or Shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s), in which case the 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 certificates. Signatures on any such certificates or stock
powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates 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 certificate(s). Signature(s) on any such
certificates or stock powers must be guaranteed by an Eligible Institution. See
Instruction 1.
If this Letter of Transmittal or any 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
the Company of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any 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 aggregate Purchase
Price is to be made to, or Shares not tendered or not purchased are to be
registered in the name of, any person other than the registered holder(s), or if
tendered Shares are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person or
otherwise) payable on account of the transfer to such person will be deducted
from the Purchase Price unless satisfactory evidence of the payment of such
taxes, or exemption therefrom, is submitted. See Section 5 of the Offer to
Purchase. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO
AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED
HEREBY.
8
<PAGE> 9
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the Purchase
Price of any Shares tendered hereby is to be issued in the name of, or any
Shares not tendered or not purchased are to be returned to, a person other than
the person(s) signing this Letter of Transmittal, or if the check or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to an
address other than that shown above in the box captioned "Description of Shares
Tendered," then the boxes captioned "Special Payment Instructions" and "Special
Delivery Instructions" on this Letter of Transmittal should be completed.
Stockholders tendering Shares by book-entry transfer will have any Shares not
accepted for payment returned by crediting the account maintained by such
stockholder at the Book-Entry Transfer Facility from which such transfer was
made.
8. ODD LOTS. As described in Section 1 of the Offer to Purchase, if fewer
than all Shares validly tendered and not withdrawn prior to the Expiration Date
are to be purchased, the Shares purchased first will consist of all Shares
tendered by any stockholder who owned beneficially as of the close of business
on November 16, 1999, and continues to own beneficially as of the Expiration
Date, an aggregate of fewer than 100 Shares and who validly tendered all such
Shares. Partial tenders of Shares will not qualify for this preference and this
preference will not be available unless the box captioned "Odd Lots" in this
Letter of Transmittal and the Notice of Guaranteed Delivery, if any, is
completed.
9. SUBSTITUTE FORM W-9 AND FORM W-8. Under the United States federal income
tax backup withholding rules, unless an exemption applies under the applicable
law and regulations, 31% of the gross proceeds payable to a stockholder or other
payee pursuant to the Offer must be withheld and remitted to the United States
Treasury, unless the stockholder or other payee provides such person's taxpayer
identification number (employer identification number or social security number)
to the Depositary and certifies that such number is correct. Therefore, each
tendering stockholder must complete and sign the Substitute Form W-9 included as
part of this Letter of Transmittal so as to provide the information and
certification necessary to avoid backup withholding, unless such stockholder
otherwise establishes to the satisfaction of the Depositary that it is not
subject to backup withholding. Certain stockholders (including, among others,
all corporations and certain foreign stockholders) are not subject to these
backup withholding requirements. To prevent possible erroneous backup
withholding, an exempt holder must enter its correct taxpayer identification
number in Part 1 of Substitute Form W-9, certify that such stockholder is not
subject to backup withholding in Part 2 of such form, and sign and date the
form. See the enclosed Guidelines for Certification of Taxpayer Identification
Number or Substitute Form W-9 for additional instructions. In order for a
foreign stockholder to qualify as an exempt recipient, a foreign stockholder
must submit an Internal Revenue Service ("IRS") Form W-8 or a Substitute Form
W-8, signed under penalties of perjury, attesting to that stockholder's exempt
status. Form W-8 may be obtained from the Depositary.
10. WITHHOLDING ON FOREIGN STOCKHOLDERS. Even if a foreign stockholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold United States federal income taxes equal to 30% of the gross
payments payable to a foreign stockholder or its agent unless (A) the Depositary
determines that a reduced rate of withholding is available pursuant to a tax
treaty or that an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States or (B) the foreign stockholder establishes to the satisfaction
of the Company and the Depositary that the sale of Shares by such foreign
stockholder pursuant to the Offer will qualify as a "sale or exchange," rather
than as a distribution taxable as a dividend, for United States federal income
tax purposes (see Section 13 of the Offer to Purchase). For this purpose, a
foreign stockholder is any stockholder that is not (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States, any State or any political
subdivision thereof, (iii) an estate, the income of which is subject to United
States federal income taxation regardless of the source of such income or (iv) a
trust the administration of which a court within the United States is able to
exercise primary supervision and all substantial decisions of which one or more
United States persons
9
<PAGE> 10
have the authority to control. In order to obtain a reduced rate of withholding
pursuant to a tax treaty, a foreign stockholder must deliver to the Depositary a
properly completed IRS Form 1001. In order to obtain an exemption from
withholding on the grounds that the gross proceeds paid pursuant to the Offer
are effectively connected with the conduct of a trade or business within the
United States, a foreign stockholder must deliver to the Depositary a properly
completed IRS Form 4224. The Depositary will determine a stockholder's status as
a foreign stockholder and eligibility for a reduced rate of, or an exemption
from, withholding by reference to outstanding certificates or statements
concerning eligibility for a reduced rate of, or exemption from, withholding
(e.g., IRS Form 1001 or IRS Form 4224) unless facts and circumstances indicate
that such reliance is not warranted. A foreign stockholder may be eligible to
obtain a refund of all or a portion of any tax withheld if such stockholder
meets the "complete redemption," "substantially disproportionate" or "not
essentially equivalent to a dividend" test described in Section 13 of the Offer
to Purchase or is otherwise able to establish that no tax or a reduced amount of
tax is due. Each foreign stockholder is urged to consult its tax advisor
regarding the application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and refund
procedures.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent at its address and
telephone number below. Requests for additional copies of the Offer to Purchase,
this Letter of Transmittal or other tender offer materials may be directed to
the Information Agent, and such copies will be furnished promptly at the
Company's expense. Stockholders may also contact their local broker, dealer,
commercial bank or trust company for documents relating to, or assistance
concerning, the Offer.
12. IRREGULARITIES. All questions as to the number of Shares to be accepted
and the validity, form, eligibility (including time of receipt) and acceptance
for payment of any tender of Shares will be determined by the Company, in its
sole discretion, which determination shall be final and binding on all parties.
The Company reserves the absolute right to reject any or all tenders it
determines not to be in proper form or the acceptance of or payment for which
may, in the opinion of the Company's counsel, be unlawful. The Company also
reserves the absolute right to waive any of the conditions of the Offer and any
defect or irregularity in the tender of any particular Shares or any particular
stockholder. No tender of Shares will be deemed to be validly made until all
defects or irregularities have been cured or waived. None of the Company, the
Depositary, the Information Agent or any other person is or will be obligated to
give notice of any defects or irregularities in tenders, and none of them will
incur any liability for failure to give any such notice.
13. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, stockholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase may
have an effect on the United States federal income tax classification of any
gain or loss on the Shares purchased. See Sections 1 and 13 of the Offer to
Purchase.
14. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES. Any stockholder
whose certificates have been mutilated, lost, stolen or destroyed should contact
the Company's transfer agent, American Stock Transfer & Trust Company (the
"Transfer Agent"), at 40 Wall Street, 46th Floor, New York, New York 10005 for
further instructions as soon as possible. In the event of a mutilated, lost,
stolen or destroyed certificate, certain procedures will be required to be
completed before this Letter of Transmittal can be processed. Because these
procedures may take a substantial amount of time to complete, notice of any
mutilated, lost, stolen or destroyed certificate should be provided to the
Transfer Agent as soon as possible.
10
<PAGE> 11
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF) TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, OR THE NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR TO THE EXPIRATION
DATE. STOCKHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED SUBSTITUTE FORM W-9 WITH
THEIR LETTER OF TRANSMITTAL.
11
<PAGE> 12
TO BE COMPLETED BY ALL TENDERING REGISTERED HOLDERS OF SECURITIES
PAYOR'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
REQUEST FOR TAXPAYER
SUBSTITUTE IDENTIFICATION NUMBER AND CERTIFICATION GIVE FORM TO THE
REQUESTER. DO NOT
FORM W9 SEND TO THE IRS.
DEPARTMENT OF THE
TREASURY
INTERNAL REVENUE SERVICE
</TABLE>
PART 1 TAXPAYER IDENTIFICATION NUMBER (TIN)
<TABLE>
<S> <C>
Enter your TIN in the appropriate box. For individuals, this is
your social security number (SSN). However, if you are a Social Security Number
resident alien and you do not have and are not eligible to get a
SSN, your TIN is your IRS individual taxpayer identification ______________________________________
number. For other entities, it is your employer identification
number (EIN). If you do not have a number, see OBTAINING A OR
NUMBER ON PAGE 2 OF THE GUIDELINES.
NOTE: If the account is in more than one name, see the chart on Employee identification number
page 1 of the Guidelines for guidance on whose
number to enter. ______________________________________
</TABLE>
PART 2 - 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 because: (A) I am exempt from backup
withholding, or (B) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (C) the IRS has notified me
that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS. - You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding because
you have failed to report all interest and dividends on your tax return. For
real estate transactions, item 2 does not apply. For mortgage interest paid,
acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA), and generally,
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN. (See the enclosed
Guidelines)
SIGNATURE -_________________________________ DATE -_______________________
PART 3 - AWAITING TIN [ ]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and that I mailed or delivered an application to
receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a taxpayer identification number to the payor within 60 days, the payor
is required to withhold 31% of all reportable payments made to me thereafter
until I provide a number.
SIGNATURE -_________________________________ DATE -_______________________
12
<PAGE> 13
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON SHAREHOLDER COMMUNICATIONS INC.
17 State Street
New York, New York 10004
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, New York 10005
BANKS AND BROKERS CALL: (718) 921-8200
ALL OTHERS CALL TOLL-FREE: (800) 937-5449
<PAGE> 1
EXHIBIT (a)(3)
ATRION CORPORATION
NOTICE OF GUARANTEED DELIVERY
OF SHARES OF COMMON STOCK
This form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if certificates for the shares of common
stock of Atrion Corporation are not immediately available, if the procedure for
book-entry transfer cannot be completed on a timely basis, or if time will not
permit all other documents required by the Letter of Transmittal to be delivered
to the Depositary (as defined below) prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase defined below). Such form may be delivered by
hand or transmitted by mail or overnight courier, or (for Eligible Institutions
only) by facsimile transmission, to the Depositary. See Section 3 of the Offer
to Purchase. THE ELIGIBLE INSTITUTION WHICH COMPLETES THIS FORM MUST COMMUNICATE
THE GUARANTEE TO THE DEPOSITARY AND MUST DELIVER THE LETTER OF TRANSMITTAL AND
CERTIFICATES FOR SHARES TO THE DEPOSITARY WITHIN THE TIME SHOWN HEREIN. FAILURE
TO DO SO COULD RESULT IN A FINANCIAL LOSS TO SUCH ELIGIBLE INSTITUTION.
The Depositary for the Offer is:
American Stock Transfer & Trust Company
40 Wall Street, 46th Floor
New York, New York 10005
By Facsimile Transmission: (718) 234-5001
(for Eligible Institutions only)
Banks and Brokers call: (718) 921-8200
All others call toll-free: (800) 937-5449
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to Atrion Corporation, a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Offer to Purchase dated November 17, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal (which together constitute the
"Offer"), receipt of which is hereby acknowledged, the number of shares of
common stock, par value $.10 per share (such shares, together with associated
common stock purchase rights issued pursuant to the Rights Agreement, dated as
of February 1, 1990, as amended, between the Company and American Stock Transfer
& Trust Company as Rights Agent, are hereinafter referred to as the "Shares"),
of the Company listed below, pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
- --------------------------------------------------- -------------------------------------------------------
Number of Shares
-------------------------------------------------------
Signature(s)
- ---------------------------------------------------
Certificate Nos.: (if available) -------------------------------------------------------
-------------------------------------------------------
If shares will be tendered by book entry transfer: Name(s) (Please Print)
- --------------------------------------------------- -------------------------------------------------------
Name of Tendering Institution Area Code/Telephone Number
-------------------------------------------------------
-------------------------------------------------------
- --------------------------------------------------- -------------------------------------------------------
Account No. at The Depository Trust Company Address(es)
Dated:
--------------------------------------------- -------------------------------------------------------
Area Code/Telephone Number
</TABLE>
ODD LOTS
(SEE INSTRUCTION 8)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person who owned beneficially as of the close of business on
November 16, 1999, and who continues to own beneficially as of the Expiration
Date, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[ ] owned beneficially as of the close of business on November 16, 1999, and
continues to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares, all of which are being tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect to
which it is the record owner, and (ii) believes, based upon representations
made to it by each such beneficial owner, that such beneficial owner owned
beneficially as of the close of business on November 16, 1999, and
continues to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares and is tendering all of such Shares.
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company (not a savings bank or savings and loan
association) having an office, branch or agency in the United States hereby
guarantees: (i) that the above-named person(s) has a net long position in the
Shares being tendered within the meaning of Rule 14e-4 promulgated under the
Securities Exchange Act of 1934, as amended; (ii) that such tender of Shares
complies with Rule 14e-4; and (iii) to deliver to the Depositary at its address
set forth above certificate(s) for the Shares tendered hereby, in proper form
for transfer, or a confirmation of the book-entry transfer of the Shares
tendered hereby into the Depositary's account at The Depository Trust Company,
in each case together with a properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof), with any required signature guarantee(s)
and any other required documents, all within three trading days on The Nasdaq
Stock Market after the Depositary receives this Notice.
<TABLE>
<S> <C>
____________________________________________ ____________________________________________
Name of Firm Authorized Signature
____________________________________________ ____________________________________________
____________________________________________ Name (Please Print)
Address
____________________________________________ ____________________________________________
City, State, Zip Code Title
____________________________________________
Area Code and Telephone Number
Dated:
______________________________________
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS FORM.
YOUR SHARE CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL.
3
<PAGE> 1
EXHIBIT (a)(4)
ATRION CORPORATION
OFFER TO PURCHASE FOR CASH
UP TO 600,000 SHARES OF ITS COMMON STOCK
AT
A PURCHASE PRICE OF $12.00 PER SHARE
------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 15,
1999, UNLESS THE OFFER IS EXTENDED.
------------------------------------------------------------------------
November 17, 1999
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees:
We are enclosing the material listed below relating to the offer of Atrion
Corporation, a Delaware corporation (the "Company"), to purchase up to 600,000
shares of its common stock, par value $.10 per share (such shares together with
associated common stock purchase rights issued pursuant to the Rights Agreement,
dated as of February 1, 1990, as amended, between the Company and American Stock
Transfer & Trust Company as Rights Agent, are hereinafter referred to as the
"Shares"), at a price of $12.00 per Share, net to the seller in cash (the
"Purchase Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase dated November 17, 1999 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which together constitute the "Offer").
The Company will, upon the terms and subject to the conditions of the
Offer, purchase 600,000 Shares (or such lesser number of Shares as are validly
tendered and not withdrawn) pursuant to the Offer. The Company will pay the
Purchase Price for all Shares validly tendered upon the terms and subject to the
conditions of the Offer, the procedure pursuant to which Shares will be accepted
for payment and the proration provisions. Certificates representing Shares not
purchased because of proration will be returned at the Company's expense. The
Company reserves the right, in its sole discretion, to purchase more than
600,000 Shares pursuant to the Offer.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6 OF THE OFFER TO PURCHASE.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. The Company will, upon request, reimburse you for
reasonable and customary handling and mailing expenses incurred by you in
forwarding any of the enclosed materials to your clients.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, we are enclosing
the following documents:
1. The Offer to Purchase;
2. The Letter of Transmittal for your use and for the
information of your clients;
3. A letter to stockholders of the Company from Emile A.
Battat, Chairman, President and Chief Executive Officer;
4. The Notice of Guaranteed Delivery to be used to
accept the Offer if the Shares and all other required documents cannot
be delivered to the Depositary by the Expiration Date (each as defined
in the Offer to Purchase);
5. A letter that 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 for obtaining such clients' instructions with
regard to the Offer; and
6. Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information
relating to United States federal income tax backup withholding.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 15, 1999, UNLESS THE OFFER IS
EXTENDED.
The Company will not pay any fees or commissions to any broker, dealer or
other person for soliciting tenders of Shares pursuant to the Offer. The Company
will, upon request, reimburse you for reasonable and customary handling and
mailing expenses incurred by you in forwarding materials relating to the Offer
to your customers. The Company will pay all stock transfer taxes applicable to
its purchase of Shares pursuant to the Offer, subject to Instruction 6 of the
Letter of Transmittal.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer, all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in the Offer to Purchase, if more than 600,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer) have been validly tendered and not withdrawn prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) the Company will accept
Shares for purchase in the following order of priority: (i) all Shares validly
tendered and not withdrawn prior to the Expiration Date by any stockholder who
owned beneficially as of the close of business on November 16, 1999, and who
continues to own beneficially as of the Expiration Date, an aggregate of fewer
than 100 Shares and who validly tenders all of such Shares (partial tenders will
not qualify for this preference) and completes the box captioned "Odd Lots" in
the Letter of Transmittal and, if applicable, the Notice of Guaranteed Delivery;
and (ii) after purchase of all of the foregoing Shares, all other Shares validly
tendered and not withdrawn prior to the Expiration Date on a pro rata basis.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER SHARES OR REFRAIN FROM TENDERING THEIR
SHARES. EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER
2
<PAGE> 3
SHARES AND, IF SO, HOW MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT
NONE OF ITS DIRECTORS OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES
PURSUANT TO THE OFFER.
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone number set forth on the back cover of the
enclosed Offer to Purchase. Additional copies of the enclosed materials may be
requested from the Information Agent.
Very truly yours,
Atrion Corporation
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS THE AGENT OF THE COMPANY, THE INFORMATION AGENT OR THE
DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
EXHIBIT (a)(5)
ATRION CORPORATION
OFFER TO PURCHASE FOR CASH
UP TO 600,000 SHARES OF ITS COMMON STOCK
AT
A PURCHASE PRICE OF $12.00 PER SHARE
- -----------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT.,
NEW YORK CITY TIME, ON WEDNESDAY, DECEMBER 15, 1999, UNLESS THE OFFER
IS EXTENDED.
- -----------------------------------------------------------------------------
November 17, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated November
17, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal
(which together constitute the "Offer") setting forth an offer by Atrion
Corporation, a Delaware corporation (the "Company"), to purchase up to 600,000
shares of its common stock, par value $.10 per share (such shares, together
with associated common stock purchase rights issued pursuant to the Rights
Agreement, dated as of February 1, 1990, as amended, between the Company and
American Stock Transfer & Trust Company as Rights Agent, are hereinafter
referred to as the "Shares"), at a price of $12.00 per Share, net to the seller
in cash, upon the terms and subject to the conditions of the Offer. Also
enclosed herewith is certain other material related to the Offer.
The Company will, upon the terms and subject to the conditions of the
Offer, at a price of $12.00 per Share, net to the seller in cash (the "Purchase
Price"), purchase 600,000 Shares (or such lesser number of Shares as are
validly tendered and not withdrawn) pursuant to the Offer. The Company will pay
the Purchase Price for all Shares validly tendered and not withdrawn, upon the
terms and subject to the conditions of the Offer, the procedure pursuant to
which Shares will be accepted for payment and the proration provisions.
Certificates representing Shares not purchased because of proration will be
returned at the Company's expense. The Company reserves the right, in its sole
discretion, to purchase more than 600,000 Shares pursuant to the Offer. See
Section 1 of the Offer to Purchase.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
SECTION 6 OF THE OFFER TO PURCHASE.
We are the holder of record of Shares held for your account. As such, 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 us to tender 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 to Purchase and the Letter of Transmittal.
Your attention is invited to the following:
<PAGE> 2
(1) You may tender Shares at a price of $12.00 per Share, as indicated
in the attached Instruction Form, net to you in cash.
(2) The Offer is for a maximum of 600,000 Shares, constituting
approximately 25% of the total Shares outstanding as of November 16, 1999.
The Offer is subject to certain conditions set forth in Section 6 of the
Offer to Purchase.
(3) The Offer, proration period and withdrawal rights will expire at
12:00 Midnight, New York City time, on Wednesday, December 15, 1999,
unless the Offer is extended. Your instructions to us should be forwarded
to us in ample time to permit us to submit a tender on your behalf.
(4) As described in the Offer to Purchase, if at the expiration of the
Offer, more than 600,000 Shares (or such greater number of Shares as the
Company may elect to purchase pursuant to the Offer) have been validly
tendered and not withdrawn, the Company will purchase Shares in the
following order of priority:
(a) all Shares validly tendered and not withdrawn prior to the
Expiration Date by any stockholder who owned beneficially as of the
close of business on November 16, 1999, and who continues to own
beneficially as of the Expiration Date, an aggregate of fewer than 100
Shares and who validly tenders all of such Shares (partial tenders
will not qualify for this preference) and completes the box captioned
"Odd Lots" in the Letter of Transmittal and, if applicable, the Notice
of Guaranteed Delivery; and
(b) after purchase of all the foregoing Shares, all other Shares
validly tendered and not withdrawn prior to the Expiration Date, on a
pro rata basis (with appropriate adjustments to avoid purchase of
fractional shares). See Section 1 of the Offer to Purchase for a
discussion of proration.
(5) Tendering stockholders who are registered holders will not be
obligated to pay any brokerage commissions, solicitation fees or, subject
to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the
Company's purchase of Shares pursuant to the Offer. However, a tendering
stockholder who holds Shares through a broker, dealer or custodian may be
required by such entity to pay a service charge or other fee.
(6) If you owned beneficially as of the close of business on November
16, 1999, and continue to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares and you instruct us to tender on your
behalf all such Shares prior to the Expiration Date and check the box
captioned "Odd Lots" in the Instruction Form, all such Shares will be
accepted for purchase before proration, if any, of the other tendered
Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE OFFER. HOWEVER,
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
STOCKHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH STOCKHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS
OR EXECUTIVE OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
If you wish to have us tender any or all of your Shares held by us for
your account upon the terms and subject to the conditions set forth in the
Offer to Purchase, please so instruct us by completing, executing and returning
to us the attached Instruction Form. An envelope to return your instructions to
us is enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise specified on the Instruction Form.
YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO
SUBMIT A TENDER ON YOUR BEHALF BY THE EXPIRATION DATE OF THE OFFER.
The Offer is being made to all holders of Shares. The Company is not aware
of any jurisdiction where the making of the Offer is not in compliance with
applicable law. If the Company becomes aware of any
2
<PAGE> 3
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction
the securities or blue sky laws of which require the Offer to be made by a
licensed broker or dealer, the Offer is being made on the Company's behalf by
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
3
<PAGE> 4
INSTRUCTION FORM
WITH RESPECT TO OFFER TO PURCHASE FOR CASH
UP TO 600,000 SHARES OF COMMON STOCK
OF ATRION CORPORATION
AT A PURCHASE PRICE OF $12.00 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated November 17, 1999, and the related Letter of
Transmittal (which together constitute the "Offer"), in connection with the
Offer by Atrion Corporation (the "Company") to purchase up to 600,000 shares of
its common stock, par value $.10 per share (such shares, together with
associated common stock purchase rights issued pursuant to the Rights
Agreement, dated as of February 1, 1990, as amended, between the Company and
American Stock Transfer & Trust Company as Rights Agent, are hereinafter
referred to as the "Shares"), at a price of $12.00 per Share, net to the
undersigned in cash upon the terms and subject to the terms and conditions of
the Offer.
This will instruct you to tender to the Company 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 of the Offer.
[ ] By checking this box, all Shares held by us for your account will be
tendered.
If fewer than all Shares held by us for your account are to be tendered,
please check the following box and indicate below the aggregate number of
Shares to be tendered by us. [ ]*
________________ SHARES
* Unless otherwise indicated, it will be assumed that all Shares held by
us for your account are to be tendered.
ODD LOTS
(SEE INSTRUCTION 8)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person who owned beneficially as of the close of business on
November 16, 1999, and who continues to own beneficially as of the Expiration
Date, an aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[ ] owned beneficially as of the close of business on November 16, 1999, and
continues to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares, all of which are being tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect
to which it is the record owner, and (ii) believes, based upon
representations made to it by each such beneficial owner, that such
beneficial owner owned beneficially as of the close of business on
November 16, 1999, and continues to own beneficially as of the Expiration
Date, an aggregate of fewer than 100 Shares and is tendering all of such
Shares.
4
<PAGE> 5
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE ELECTION AND RISK OF THE
TENDERING STOCKHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERTY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
<TABLE>
<CAPTION>
SIGN HERE:
<S> <C>
Date:___________________________, 1999 _________________________________________________
_________________________________________________
Signature(s)
________________________________________
Area Code and Telephone Number Name
_____________________________________________
________________________________________ Address
Taxpayer Identification or __________________________________________
Social Security Number _________________________________________________
_________________________________________________
Taxpayer Identification or Social Security Number
</TABLE>
5
<PAGE> 1
EXHIBIT (a)(6)
ATRION CORPORATION
ONE ALLENTOWN PARKWAY
ALLEN, TEXAS 75002
ATRION
NEWS RELEASE
FOR IMMEDIATE RELEASE
ATRION CORPORATION TO COMMENCE TENDER OFFER
FOR UP TO 600,000 SHARES OF ITS COMMON STOCK
ALLEN, Texas (November 16, 1999) - Atrion Corporation (Nasdaq/NM-ATRI)
announced today that it plans to commence an issuer tender offer to purchase
for cash up to 600,000 shares of its issued and outstanding common stock, par
value $.10 per share. The tender offer is expected to begin on Wednesday,
November 17, 1999 and to expire, unless extended, at 12:00 Midnight, New York
City time, on Wednesday, December 15, 1999.
Terms of the tender offer, which are described more fully in the Offer to
Purchase and Letter of Transmittal, invite the Company's stockholders to tender
up to 600,000 shares of the Company's common stock to the Company at a price of
$12.00 per share. The offer is subject to certain conditions. The Company will,
subject to the terms and conditions of the offer, purchase 600,000 shares (or
such lesser number of shares as are validly tendered and not withdrawn)
pursuant to the offer. Shares tendered and not purchased because of proration
will be returned at the Company's expense. The Company reserves the right, in
its sole discretion, to purchase more than 600,000 shares pursuant to the
offer.
Emile A. Battat, Chairman of Atrion, said "We believe that our stock
continues to be undervalued and that a repurchase of our stock is consistent
with our goal of maximizing shareholder value. At the same time, our offer
provides those who wish to sell shares an opportunity to do so at a premium
over the recent trading prices for our stock."
The Depositary is American Stock Transfer & Trust Company and the
Information Agent is Georgeson Shareholder Communications Inc. The Offer to
Purchase, Letter of Transmittal and related documents will be mailed to
stockholders of record and will also be made available for distribution to
beneficial owners of the Company's common stock. Additional copies may be
obtained from Georgeson Shareholder Communications Inc., 17 State Street, New
York, New York 10004. Telephone: (800) 223-2064.
Atrion Corporation designs, develops, manufactures, sells and distributes
medical products and components to markets worldwide.
Contact: Jeffery Strickland
Vice President and Chief Financial Officer
(972) 390-9800
- END -
<PAGE> 1
EXHIBIT (a)(7)
ATRION CORPORATION
One Allentown Pkwy.
Allen, TX 75002-4211
Tel 972-390-9800
Fax 972-390-9687
[ATRION LOGO]
November 17, 1999
Dear Stockholder:
We are pleased to inform you that Atrion Corporation is offering to
purchase up to 600,000 shares of its common stock from its stockholders through
a tender offer at a price of $12.00 per share.
The Offer, which has commenced today, is explained in detail in the
enclosed Offer to Purchase and Letter of Transmittal. If you wish to tender
your shares, instructions on how to tender shares are provided in the enclosed
materials. I encourage you to read these materials carefully before making any
decision with respect to the Offer. Neither the Company nor its Board of
Directors makes any recommendation to any stockholder whether to tender any or
all shares.
Please note that the Offer is scheduled to expire at 12:00 Midnight,
New York City time, on Wednesday, December 15, 1999, unless extended by the
Company. Questions regarding the Offer should be directed to Georgeson
Shareholder Communications Inc., the Information Agent for the Offer, at 17
State Street, New York, New York 10004, at the telephone number set forth in the
enclosed materials.
Sincerely,
/s/ Emile A. Battat
Emile A. Battat
Chairman, President and Chief
Executive Officer
<PAGE> 1
EXHIBIT (a)(8)
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR.
- --Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
FOR THIS TYPE GIVE THE SOCIAL SECURITY
OF ACCOUNT: NUMBER OF:
<S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the account
(joint account) or, if combined funds, any one of the
individual on the account(1)
3. Husband and wife The actual owner of the account
(joint account) or, if joint funds, either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift
to Minors Act)
5. Adult and minor The adult or, if the minor is the
(joint account) only contributor, the minor(1)
6. Account in the name The ward, minor, or
of guardian or committee incompetent person(3)
for a designated ward,
minor, or incompetent
person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also trustee)
b. So-called trust The actual owner(1)
account that is not
a legal or valid trust
under State law
<CAPTION>
FOR THIS TYPE GIVE THE SOCIAL SECURITY
OF ACCOUNT: NUMBER OF:
<S> <C>
8. Sole proprietorship The owner(4)
account
9. The valid trust, estate, The legal entity (Do not furnish
or pension trust the trust identifying number
of the personal representatives
or trustee unless the legal entity
itself is not designated in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable The organization
or educational
12. Partnership account The partnership
held in the name of
the business
13. Association, club, or The organization
other tax-exempt
organization
14. The broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on the account has a social security number, that
person's number must be listed.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: IF NO NAME IS CIRCLED WHEN THERE IS MORE THAN ONE NAME, THE NUMBER WILL
BE CONSIDERED TO BE THAT OF THE FIRST NAME LISTED.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the Internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
- - A futures commission merchant registered with the Commodity Futures
Trading Commission.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - A middleman known in the investment community as a nominee or who is
listed in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- - A trust exempt from tax under section 664 or described in section 4947.
- - An entity registered at all times under the Investment Company Act of
1940.
- - A foreign central bank of issue.
PAYMENTS EXEMPT FROM BACKUP WITHHOLDING
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. However, if you
pay $600 or more in interest in the course of your trade or business to a
payee, you must report the payment. Backup withholding applies to the
reportable payment if the payee has not provided a TIN or has provided an
incorrect TIN.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYOR, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYOR. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments that are not subject to information reporting are also not
subject to backup withholding. For details, see the regulations under sections
6041, 6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICE. Section 6109 requires most recipients of dividend,
interest, or other payments to give Taxpayer Identification Numbers to Payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payors must be given the numbers whether or not
recipients are required to file tax returns. Payors must generally withhold 31%
of taxable interest, dividend, and certain other payments to a Payee who does
not furnish a Taxpayer Identification Number to a Payor. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. If you fail
to furnish your Taxpayer Identification Number to a Payor, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
(4) 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.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE
<PAGE> 1
EXHIBIT (b)(1)
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement") is
entered into on this 12th day of November, 1999, between and AMONG ATRION
CORPORATION, a Delaware corporation ("Atrion"), ATRION MEDICAL PRODUCTS, INC.,
an Alabama corporation ("AMI"), HALKEY-ROBERTS CORPORATION, a Florida
corporation ("Halkey-Roberts"), QUEST MEDICAL, INC., a Texas corporation
("Quest"), ALATENN PIPELINE COMPANY, INC., an Alabama corporation ("AlaTenn"),
ATRION LEASING COMPANY, INC., an Alabama corporation ("ALI"), and ATRION
INTERNATIONAL, INC., a U.S. Virgin Islands corporation ("AII") (individually, a
"Borrower," and collectively, the "Borrowers") and SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking association (the "Lender").
R E C I T A L S:
WHEREAS, Borrowers have requested that Lender extend a credit
facility to the Borrowers in the maximum principal amount of up to Eighteen
Million Five Hundred Thousand Dollars ($18,500,000) on the terms provided
herein, and Lender has agreed to extend such credit facility as provided
herein, subject to the terms and conditions hereof.
NOW, THEREFORE, in consideration of the above Recitals and
the agreements contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS, ACCOUNTING PRINCIPLES, UCC TERMS
1.1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings unless the context hereof shall
otherwise indicate:
"ACCOUNT DEBTOR" means any Person who is or may become
obligated to a Borrower for the payment of an account.
"ACCOUNTS" means all accounts, accounts receivable, chattel
paper, leases, promissory notes, contracts for receipt of money, conditional
sales contracts, and evidences of indebtedness of or owing to any Borrower for
Inventory sold or services rendered, whether now existing or hereafter arising,
together with the proceeds of any insurance covering the Collateral, and the
return of unearned insurance premiums. The term "Accounts" shall specifically
exclude general intangibles of any Borrower, and shall further specifically
exclude all of AlaTenn's right, title, and interest in, to, and under that
certain Gaseous Oxygen Pipeline Agreement dated February 8, 1995 between
AlaTenn and Air Products and Chemicals, Inc., as amended by instrument dated
April 1, 1996, as the same may hereafter be further modified or amended, or any
substitution or replacement thereof.
"ADVANCE" means any principal amount of the Line of Credit
Loan advanced hereunder and remaining outstanding at any time.
<PAGE> 2
"AFFILIATE" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such Person.
A Person shall be deemed to control another Person if the controlling Person
owns 10% or more of any class of voting securities (or other ownership
interests) of the controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or policies of the
controlled Person, whether through ownership of common stock, by contract or
otherwise.
"AGREEMENT" means this Loan and Security Agreement among
Borrowers and Lender, as the same may hereafter be amended, revised,
supplemented, or extended.
"APPLICABLE LAWS" means all laws, rules and regulations
applicable to the Person, conduct, transaction, covenant or Loan Document in
question, including, but not limited to, all applicable common law and
equitable principles; all provisions of all applicable state and federal
constitutions, statutes, rules, regulations and order of governmental bodies;
and all orders, judgments and decrees of all courts and arbitrators of binding
arbitration.
"AUTHORIZED OFFICER" means any of the President, Secretary,
Treasurer, Assistant Secretary or Assistant Treasurer of any Borrower, acting
singly.
"BASE RATE" means the rate of interest designated
periodically by Lender as its Base Rate. The Base Rate is not necessarily the
lowest interest rate charged by Lender.
"BUSINESS DAY" means any day other than a Saturday, a Sunday,
a day on which dealings in U.S. Dollars are not carried on in the London
interbank market, or a day on which Lender is authorized or required to be
closed for business.
"CHANGE IN CONTROL" means the acquisition by any Person, or
two or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under the
Securities Exchange Act of 1934) of 30% or more of the outstanding shares of
voting stock of Atrion.
"CLOSING DATE" means the date of this Agreement.
"COLLATERAL" means, collectively, all Accounts, Equipment,
and Inventory, the other property and interests described in Section 6.1 hereof
and elsewhere in the Loan Documents as Collateral, and all Proceeds thereof,
all whether now owned or hereafter acquired, and including replacements,
additions, accessions, substitutions, and products, and all other property
which is or hereafter may become subject to a Lien in favor of Lender as
security for any of the Loan Obligations.
"COMPLIANCE CERTIFICATE" means the certificate to be
submitted to Lender pursuant to Section 5.1(c) hereof.
"CONSOLIDATED CURRENT MATURITIES" means that portion of
long-term debt and that portion of any capitalized leases which are due within
twelve (12) months of the date of calculation,
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<PAGE> 3
as determined on a consolidated basis in accordance with GAAP (provided,
however, that Lender agrees that it will exclude from the definition of
Consolidated Current Maturities any payments due and payable under the Line of
Credit Note and any "balloon" payments due and payable under any Term Notes).
"CONSOLIDATED FIXED CHARGE COVERAGE" means a ratio in which
the first number is the sum of the Consolidated Net Income of the Group for the
12-month period preceding the date of calculation, plus the interest and lease
expenses of the Group for such period, plus the sum of non-cash expenses or
allowances for such period (including, without limitation, amortization or
write-down of intangible assets, depreciation, depletion, and deferred taxes
and expenses), and the second number is the sum of the Consolidated Current
Maturities of the Group as of that date, plus the interest, lease, rental, and
capitalized interest expenses for the 12-month period preceding the date of
calculation.
"CONSOLIDATED LIABILITIES" means all Liabilities (including
capital lease obligations) of the Group that are shown on the Group's financial
statements on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period of
calculation, the net income of the Group as shown on the Group's consolidated
financial statement calculated on a consolidated basis in accordance with GAAP
(exclusive of non-recurring items).
"CONSOLIDATED TANGIBLE NET WORTH" means the amount of
consolidated tangible net worth of the Group as shown on the Group's
consolidated financial statements, determined in accordance with GAAP
(excluding patents and goodwill).
"CREDIT FACILITY" means the credit facility established by
the Lender for the Borrowers' benefit pursuant to this Agreement, which shall
consist of (i) the Line of Credit Loan, (ii) the Term Loans, and (iii) the
Letters of Credit; the sum of (i), (ii), and (iii) shall not exceed, in the
aggregate, the principal sum of $18,500,000 at any one time, except as
otherwise specifically provided in Section 2.17 hereof.
"DEFAULT" means the occurrence or existence of any event
which, but for the giving of notice or expiration of time or both, would
constitute an Event of Default.
"DEFAULT RATE" means a rate per annum equal to 2% above the
interest rate otherwise in effect on any Loan hereunder.
"EQUIPMENT" means all equipment of whatever kind or nature
now owned or hereafter acquired by any Borrower, including, without limitation,
manufacturing tools and equipment and office furniture and equipment, but
specifically excluding the oxygen pipeline which is owned by AlaTenn and
equipment related to such pipeline and appurtenances owned by AlaTenn, and
further excluding vehicles or any kind of equipment which is certificated with
a certificate of title.
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<PAGE> 4
"ERISA" means the Employment Retirement Income Security Act
of 1974, as the same may be amended, supplemented or modified from time to
time.
"ERISA AFFILIATE" means any Person that is a member of the
Group, or under common control with any Borrower, within the meaning of Section
414 of the Code.
"ERISA EVENT" means (i) the occurrence with respect to a Plan
of a Reportable Event, within the meaning of Section 4034 of ERISA, unless the
30-day notice requirement with respect thereto has been waived by the PBGC;
(ii) the provision by the administrator of any Plan of a notice of intent to
terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (iii) the cessation of operations at a facility of the Borrower or any
ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA;
(iv) the withdrawal by the Borrower or an ERISA Affiliate from a Multiple
Employer Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (v) the conditions set forth in Section
302(f)(1)(A) and (B) of ERISA upon the creation of a lien upon property or
rights to property of the Borrower or any ERISA Affiliate for failure to make a
required payment to a Plan are satisfied; (vi) the adoption of an amendment to
a Plan requiring the provision of security to such Plan, pursuant to Section
307 of ERISA; or (vii) the institution by the PBGC of proceedings to terminate
a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that constitutes grounds for the
termination of, or the appointment of a trustee to administer, a Plan.
"EVENT OF DEFAULT" means any one of the events enumerated in
Section 7 hereof.
"EXHIBIT" means an Exhibit to this Agreement, unless the
context refers to another document, and each such Exhibit shall be deemed a
part of this Agreement to the same extent as if it were set forth in its
entirety wherever reference is made thereto.
"EXTENSION NOTICE" has the meaning set forth in Section
2.13(a)(i) hereof.
"EXTENSION TERM" has the meaning set forth in Section 2.13(a)
hereof.
"FACILITY FEE" has the meaning set forth in Section 2.10
hereof.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession. Unless otherwise specified herein, all accounting
terms used herein or in any other Loan Document shall be interpreted, and all
accounting determinations and computations hereunder or thereunder shall be
made in accordance with GAAP as in effect on the Closing Date and all financial
statements required to be delivered hereunder or thereunder shall be prepared
in accordance with GAAP as in effect on the date of, or for the period covered
by, such financial statements; provided, however, that interim financial
statements shall be unaudited and subject to normal year end adjustments.
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<PAGE> 5
"GOVERNMENTAL AUTHORITY" means the federal government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GROUP" means the Borrowers and any Subsidiary subsequently
formed or acquired after the Closing Date.
"GUARANTEED OBLIGATIONS" of a Person means all guaranties,
endorsements, assumptions and other contingent obligations with respect to, or
to purchase or to otherwise pay or acquire, indebtedness of others.
"INDEMNITEES" shall have the meaning set forth in Section
8.1. hereof.
"INSUFFICIENCY" means, with respect to any Plan, the amount,
if any, of its unfunded benefit liabilities as defined in Section 4001(a)(18)
of ERISA.
"INVENTORY" means all inventory of whatever kind or nature of
any Borrower, now owned or hereafter acquired by such Borrower, and wherever
located, including, without limitation, all goods held for sale or lease or
furnished or to be furnished under contracts, and any raw materials, goods in
transit, work in process or finished goods, supplies, returned or repossessed
goods.
"LIABILITIES" means all liabilities and obligations of
Borrowers to pay money.
"LIBOR" means a per annum rate of interest equal to the
"London Interbank Offered Rate (LIBOR)" for the LIBOR Interest Period, as
quoted by Telerate (or if such rate is not available from Telerate, then from
such other sources as Lender may reasonably select in accordance with the terms
hereof).
"LIBOR INTEREST PERIOD" means, alternatively, a thirty (30),
sixty (60), or ninety (90) day LIBOR period, as shall be designated by
Borrowers in a Rate Election Notice. The LIBOR Interest Period so designated by
Borrowers will be used by Lender in determining the applicable LIBOR Rate, and
shall determine the period during which such LIBOR Rate shall remain in effect,
all as provided herein. For purposes of calculating the applicable LIBOR Rate,
each LIBOR Interest Period shall be deemed to commence on the monthly payment
date when the selected LIBOR Rate takes effect, and the LIBOR Rate so
calculated shall terminate and expire one (1) day prior to the next succeeding
monthly payment date nearest in time to the date upon which the then applicable
LIBOR Interest Period is to expire; provided that if any LIBOR Interest Period
would otherwise end on a day which is not a Business Day, that LIBOR Interest
Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such LIBOR Interest Period beyond the
Termination Date, in which event such LIBOR Interest Period shall end on the
immediately preceding Business Day.
"LIBOR RATE" means, if elected by Borrowers in a Rate
Election Notice, a variable per annum rate of interest which shall accrue on
the outstanding principal balance of the Loans during the applicable LIBOR
Interest Period, and which shall be equal to the sum of the LIBOR in
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<PAGE> 6
effect on the first day of the Borrowers' selected LIBOR Interest Period, plus
the Margin specified in the Pricing Matrix attached hereto as Exhibit A.
"LICENSE" means any license, certificate of authority, permit
or other authorization required to be obtained from a Governmental Authority in
connection with the operation, ownership or transaction of the business of any
member of the Group.
"LIEN" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
"LINE OF CREDIT NOTE" means the Line of Credit Note, in
substantially the form of Exhibit B to this Agreement, made by Borrowers to
evidence Borrowers' joint and several obligation to repay the Line of Credit
Loan, as the same may hereafter be renewed, modified, amended, or replaced.
"LINE OF CREDIT LOAN" means that portion of the Credit
Facility which is available to the Borrowers as a revolving line of credit
pursuant to which the Borrowers may borrow, repay, reborrow, and prepay without
penalty Advances, and which such Line of Credit Loan shall be in the maximum
principal amount of $18,500,000 LESS the outstanding principal balance of any
Advances which have been converted to Term Loans pursuant to Section 2.6 hereof
and further less the face amount of all Letters of Credit issued by Lender for
Borrowers' account pursuant to Section 2.14 hereof.
"LOAN" or "LOANS" means, individually or collectively, as the
context may require, the Line of Credit Loan and the Term Loans.
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Line of Credit Note, any and all Term Notes hereafter executed and delivered by
Borrowers, all UCC-1 financing statements, certificates, and other instruments
executed and delivered to Lender at any time as security for the Loan
Obligations, and any and all other agreements, instruments, and documents
heretofore, now, or hereafter executed by any Borrower and delivered to the
Lender in respect to the transactions contemplated by this Agreement.
"LOAN OBLIGATIONS" means all Advances, debts, liabilities,
obligations, covenants and duties owing, arising, due or payable from Borrowers
to Lender of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under this Agreement, the Line
of Credit Note, the Term Notes, or any of the other Loan Documents, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however evidenced or acquired, and shall include
obligations for reimbursement of amounts drawn under any Letters of Credit
which may be issued by the Lender as described in Section 2.14 hereof. The term
includes, without limitation, all interest, charges, expenses, fees, attorneys'
fees and any other sums chargeable to Borrowers under any of the Loan
Documents.
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<PAGE> 7
"MARGIN" means the rate spread applicable to a LIBOR Rate in
effect from time to time hereunder, which shall be determined using the Pricing
Matrix attached hereto as Exhibit A.
"MATERIAL ADVERSE EFFECT" means with respect to the Group, an
effect, resulting from any occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental investigation or
proceeding), which: (a) is materially adverse to the consolidated financial
condition of the Group; or (b) materially impairs the ability of the Borrowers
to make any payment or perform any other material obligation required under
this Agreement or any other Loan Document; provided that unless otherwise
specified, references to any Material Adverse Effect shall mean any effect with
respect to the Group taken as a whole; it being understood that for all
purposes of the Loan Documents, the consummation of the transactions
contemplated in the Loan Documents shall not constitute a Material Adverse
Effect.
"MULTIEMPLOYER PLAN" has the meaning set forth in Section
4001(a)(3) of ERISA.
"NOTES" means, collectively, the Line of Credit Note and the
Term Notes.
"OVERADVANCE" has the meaning set forth in Section 2.1(b)
hereof.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERMITTED LIENS" means:
(a) Liens to secure the cost of acquisition or rental by
any member of the Group of additional assets, or the
refinancing thereof, provided, however, that any
such Lien shall be confined solely to the Property
acquired or refinanced and shall not exceed the cost
thereof;
(b) Liens for taxes, assessments, or other governmental
charges not yet due or which are being contested in
good faith by appropriate action promptly initiated
and diligently conducted, if the Group shall have
made any reserve therefor required by GAAP;
(c) Liens of landlords, vendors, carriers, warehousemen,
mechanics, contractors, laborers, and materialmen
arising by law in the ordinary course of business
for sums not yet due or being contested in good
faith by appropriate action promptly initiated and
diligently conducted, if Group shall have made any
reserve therefor required by GAAP;
(d) Pledges or deposits made in the ordinary course of
business in connection with worker's compensation,
unemployment insurance, and other similar laws;
(e) Inchoate Liens arising under ERISA to secure the
contingent liability of any member of the Group;
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<PAGE> 8
(f) Liens with respect to debt referred to or reflected
in the Group's June 30, 1999 consolidated financial
statements;
(g) Liens securing debt of Subsidiaries of any member of
the Group provided that such Subsidiary, or
substantially all of its assets, are acquired
subsequent to the date hereof and such debt exists
as of the date of the acquisition;
(h) Liens respecting Project Financing provided that
such liens are limited to the assets of the subject
project;
(i) Liens created after the date hereof which cover
assets expressly released by Lender; and
(j) Margin stock (as defined in Regulation U).
"PERSON" means any individual, corporation, partnership,
association, limited liability company, joint-stock company, trust,
unincorporated organization, joint venture, court, or governmental or political
subdivision or agency thereof.
"PLAN" means a Single Employer Pension Plan or a Multiple
Employer Pension Plan.
"PROCEEDS" means all proceeds (including proceeds of
insurance and condemnation) from the sale, exchange, transfer, collection,
loss, damage, disposition, substitution, or replacement of any of the
Collateral.
"PROJECT FINANCING" means any financing obtained by any
member of the Group which is non-recourse as to all members of the Group, which
financing does not include any Group members' equity interest in the project so
financed.
"PROHIBITED TRANSACTION" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1986.
"PROPERTY" of a Person means any and all property, whether
real, personal, tangible, intangible or mixed, of such Person, or other assets
owned, leased or operated by such Person.
"RATE ELECTION NOTICE" means the written rate election in the
form attached as Exhibits C-1 or C-2 hereto, pursuant to which the Borrowers
shall designate a LIBOR Interest Period as the effective interest period for
purposes of calculating the LIBOR Rate to be in effect with respect to either
the Line of Credit Loan or a Term Loan (as applicable).
"REGULATION U" means Regulation U of the Board of Governors
of the Federal Reserve System as from time to time in effect and any successor
or other regulation or official interpretation of said Board of Governors
relating to the extension of credit by banks for the purpose of purchasing or
carrying margin stocks applicable to member banks of the Federal Reserve
System.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(b) of ERISA.
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<PAGE> 9
"SINGLE EMPLOYER PLAN" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (i) is maintained for employees
of the Borrower or an ERISA Affiliate and no Person other than the Borrower and
its ERISA Affiliates or (ii) was so maintained and with respect to which the
Borrower or an ERISA Affiliate could have liability under Section 4069 of ERISA
in the event such plan has been or were to be terminated.
"SOLVENT," as to any Person, means such Person (i) owns
property, real, personal, and mixed, whose aggregate fair market value is
greater than the amount required to pay all of such Person's Liabilities and
(ii) is able to pay all of its Liabilities as such Liabilities mature and (iii)
has capital sufficient to carry on its business and transactions.
"SPECIAL COLLECTION ACCOUNT" shall have the meaning set forth
in Section 6.3(b) hereto.
"SUBSIDIARY" means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by any Borrower or by one or
more members of the Group, or (ii) any partnership, association, joint venture
or similar business organization more than 50% of the ownership interests
having ordinary voting power of which shall at the time be so owned or
controlled.
"SUBSTANTIAL PORTION" means, with respect to the Property of
the Group, (i) Property that represents more than 20% of the consolidated
assets of the Group as would be shown in the consolidated financial statements
of the Group as at the beginning of the month in which such determination is
made, or (ii) is responsible for more than 20% of the Consolidated Net Income
of the Group as reflected in the Group's most recent annual financial
statements delivered to Lender.
"TERM LOANS" means Advances which have been converted to term
obligations pursuant to Section 2.6 hereof.
"TERM NOTES" means the promissory notes which must be
executed and delivered by the Borrowers to the Lender upon the conversion of
any Advance to a Term Loan, and which shall be in the form attached as Exhibit
D hereto.
"TERMINATION DATE" means November 12, 2002, or such earlier
date on which the obligations of the Lender to make Advances hereunder are
terminated pursuant to the terms of this Agreement or such subsequent date or
dates to which the availability of Advances hereunder is extended pursuant to
the express terms of this Agreement.
1.2. GAAP. All accounting terms used herein shall be construed in
accordance with GAAP.
1.3. INTERPRETATION. The terms "herein," "hereof," and "hereunder,"
and other words of similar import refer to this Agreement as a whole and not to
any particular section, paragraph or subdivision. Any pronouns used shall be
deemed to cover all genders. Whenever the singular or plural number is used
herein, it shall equally include the other. All references to statutes and
related
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<PAGE> 10
regulations shall include any amendments of same and any successor statutes and
regulations. All references to any instruments or agreements, including,
without limitation, references to any of the Loan Documents shall include any
and all modifications or amendments thereto and any and all extensions or
renewals thereof.
1.4. UNIFORM COMMERCIAL CODE. All other terms contained in this
Agreement, unless otherwise defined herein or unless the context otherwise
indicates, shall have the meanings provided for such terms in the Uniform
Commercial Code of the State of Alabama.
ARTICLE II
THE CREDIT FACILITY
2.1. LINE OF CREDIT LOAN.
(a) Subject to all terms set forth herein and until the
Termination Date, provided that no Event of Default exists hereunder, Lender
hereby establishes for the Borrowers' benefit, the Line of Credit Loan and
agrees to loan to Borrowers, when requested by Borrowers, principal amounts not
to exceed in the aggregate at any one time outstanding the amount of EIGHTEEN
MILLION FIVE HUNDRED THOUSAND DOLLARS ($18,500,000), LESS the outstanding
principal balance of any Advances which have been converted to Term Notes
pursuant to Section 2.6 hereof and further LESS the face amount of all Letters
of Credit issued by Lender for Borrowers' account pursuant to Section 2.14
hereof. Subject to the terms and conditions set forth in this Agreement,
Borrowers may borrow, repay and reborrow and prepay under the Line of Credit
Loan without penalty at any time prior to the Termination Date.
(b) If the outstanding principal amount of the Line of Credit
Loan at any time exceeds the maximum principal amount specified in Section
2.1(a) above (as the same may be increased pursuant to Section 2.17 hereof) (an
"OVERADVANCE"), Borrowers shall immediately pay Lender upon notice an amount
equal to such Overadvance as a payment on the principal amount of the Line of
Credit Loan. Without limiting the foregoing, which provision may be enforced by
Lender at any time and which provision, as well as the other provisions hereof,
may not under any circumstance be waived or altered by a course of dealing or
otherwise, insofar as Borrowers may request and Lender may be willing in its
sole and absolute discretion to make Overadvances, all Overadvances shall be
payable on demand, shall be secured by the Collateral and shall bear interest
as provided in this Agreement for Advances generally. Lender may in its sole
discretion honor any request for an Advance even though an Overadvance then
exists, or would exist with the making of such Advance, and without regard to
the existence of, and without waiving, any default or Event of Default.
(c) Each borrowing under the Line of Credit Loan shall be
effected by crediting the amount thereof to a checking account of Borrowers
maintained with Lender, or with another bank approved by the Lender.
2.2 INTEREST.
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<PAGE> 11
(a) Interest shall accrue on the principal amount of all
Advances outstanding at the end of each day from the respective dates such
principal amounts are advanced until paid (whether at stated maturity,
acceleration, or otherwise) at a variable rate per annum equal to the Base
Rate. Such rate shall be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of the Business Day that any such
change in the Base Rate becomes effective.
(b) Notwithstanding the provisions of Subsection 2.2 (a),
Borrowers may, at any time during the term of the Line of Credit Loan, elect a
LIBOR Rate for an applicable LIBOR Interest Period designated by Borrowers to
be the applicable rate accruing on all outstanding Advances, provided, however,
that all selected LIBOR Interest Periods (other than a LIBOR Interest Period
which may be elected on the Closing Date) must commence on a scheduled monthly
payment date hereunder. In such event, Borrowers shall exercise such election
by delivering to Lender a Rate Election Notice not more than ten (10) nor less
than three (3) days prior to the scheduled monthly payment date upon which the
selected LIBOR Rate is to take effect. In the event that Borrowers fail timely
to deliver to Lender a succeeding Rate Election Notice upon the expiration of
any applicable LIBOR Interest Period, the outstanding principal balance shall
continue to bear interest at the LIBOR Rate using the last elected LIBOR
Interest Period (such rate to be re-calculated by Lender using the Margin and
the then current LIBOR in effect) until a subsequent Rate Election Notice to
the contrary is received by Lender. Borrowers shall not be entitled to select
any LIBOR Interest Period which would extend beyond the expiration of the
Termination Date.
(c) Borrowers agree that, notwithstanding anything to the
contrary herein, if at any time Lender determines, in accordance with
reasonable and ordinary commercial standards, that its maintenance of any rate
based upon the LIBOR Rate would be in violation of any law, regulation,
guideline or order, Lender may so notify Borrowers in writing or by telephone,
and then Lender may suspend the availability of such rate and shall so advise
Borrowers promptly and shall offer to Borrowers an alternative index (to which
the applicable Margin as set forth in the Pricing Matrix attached hereto as
Exhibit A shall be added to calculate the applicable rate under the Notes) and
Borrowers shall have the option, within five (5) Business Days of receiving
such advice from Lender, to elect such alternative index (to which the
applicable margin as set forth in the Pricing Matrix attached hereto as Exhibit
A shall be added to calculate the applicable rate under the Notes), or an
applicable rate equal to the Base Rate, and unless and until Borrowers make
such election, the Base Rate will be the applicable rate under the Notes.
Borrowers further agree that, notwithstanding the fact that Borrowers may have
elected to base the interest rate applicable to the Loans upon Lender's cost of
funds in the Eurodollar market, Lender shall not be required actually to obtain
funds from such source at any time.
(d) Interest on each Advance shall accrue from and including
the date of such Advance to but excluding the date of any repayment thereof;
provided, however, that, if an Advance is repaid on the same day made, one (1)
day's interest shall be paid on such Advance.
(e) Interest shall be calculated on the basis of a 360-day
year by multiplying the principal sum by the applicable per annum rate,
multiplying the product thereof by the actual number of days elapsed, and
dividing the product so obtained by 360.
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<PAGE> 12
2.3. REQUESTS FOR ADVANCES.
(a) Advances, repayments, and reborrowings of the Line of
Credit Loan shall be made in accordance with a cash management system which
shall be evidenced by separate, standard documentation of the Bank. Pursuant to
such cash management system, Atrion will establish a "concentration account"
with Lender into which all of Borrowers' accounts will be swept daily, and from
which payments will be made to Borrowers to cover withdrawals from Borrowers'
accounts. At the close of each Business Day, any funds remaining in said
concentration account will be applied to Advances outstanding under the Line of
Credit Loan. At the end of each Business Day, any shortages in said
concentration account will be covered by Advances under the Line of Credit
Loan. If at the end of any Business Day, the funds in said concentration
account exceed sums outstanding under the Line of Credit Loan, such excess
amount shall be invested overnight in accordance with instructions from Atrion.
(b) Lender will permit telephonic requests for Advances and
electronic transmittal of instructions, authorizations, agreements or reports
to Lender by Borrowers. Unless Borrowers specifically direct Lender in writing
not to accept or act upon telephonic or electronic communications from
Borrowers, Lender shall have no liability to Borrowers for any loss or damage
suffered by Borrowers as a result of Lender's honoring of any requests,
execution of any instructions, authorizations or agreements or reliance on any
reports communicated to Lender telephonically or electronically and purporting
to have been sent to Lender by Borrowers and Lender shall have no duty to
verify the origin of any such communication or the authority of the person
sending it. Authorization shall be limited to designated Authorized
Representatives appointed by writing delivered by Borrowers to Lender.
2.4. PAYMENT OF ADVANCES.
(a) Accrued interest on all Advances shall be paid upon the
earliest of (1) the first day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month, (2) the
occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of the Loans, or (3) the Termination Date.
(b) If not sooner prepaid, the outstanding principal balance
of all Advances, together with accrued and unpaid interest thereon, will be due
and payable in full on the Termination Date.
(c) To the extent not otherwise being paid pursuant to the
cash management system set forth in Section 2.3(a) hereof, all sums paid to the
Lender by Borrowers hereunder shall be paid directly to the Lender in
immediately available funds no later than 2:00 P.M., Birmingham, Alabama time
on the date on which payment is due, except if such date is not a Business Day
such payment shall then be due on the first Business Day after such date, but
interest shall continue to accrue until the date payment is received. Any
payment received after 2:00 p.m. Birmingham, Alabama time shall be deemed to
have been received on the immediately following Business Day for all purposes,
including, without limitation, the accrual of interest on principal.
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<PAGE> 13
(d) Borrowers irrevocably waive the right, following the
occurrence of an Event of Default, to direct the application of any and all
payments and collections at any time or times hereafter received by Lender from
or on behalf of Borrowers or from any of the Collateral, and Borrowers do
hereby irrevocably agree that Lender shall have the continuing exclusive right,
following the occurrence of an Event of Default, to apply such payments and
collections received at any time or times hereafter by Lender or its agent
against the Loan Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records. As long
as no Event of Default has occurred and is continuing, Lender agrees that
payments received from Borrowers will be applied as set forth in the respective
Notes for which such payments are made.
2.5. PREPAYMENT. Borrowers shall have the right at any time and
from time to time to prepay all Advances comprising the outstanding principal
balance of the Loans, in whole or in part, without premium or penalty but with
accrued interest to the date of such prepayment on the amounts prepaid. Any
such prepayments shall be made to Lender in immediately available funds and,
with respect to Term Notes, shall be applied to the last of the installments to
mature. Any such prepayment shall not affect or vary the obligation of
Borrowers to pay any installment when due. Amounts prepaid under the Term Notes
may not be re-borrowed.
2.6. TERM LOANS.
(a) From time to time prior to the Termination Date,
Borrowers may convert portions of an outstanding Advance to a Term Loan
provided that (i) such Term Loans must be in increments of $100,000, (ii)
Borrowers must execute and deliver to Lender a Term Note evidencing such Term
Loan, and (iii) no Default or Event of Default shall then exist under the
Credit Facility.
(b) The amount of availability under the Line of Credit Loan
will be reduced automatically by the outstanding principal amount of all Term
Loans. As the principal balance of any Term Loan is reduced, the maximum amount
of credit availability under the Line of Credit Loan shall be increased by the
amount of such reduction unless the Borrowers have paid a Term Loan in full and
have requested a corresponding reduction in credit availability under the
Credit Facility.
(c) The Term Loans shall: (i) have terms of two (2) years,
(ii) be payable in equal monthly installments of principal plus interest based
on an amortization schedule of one hundred and twenty (120) months with a
balloon payment due at maturity, (iii) bear interest at a variable rate of
interest equal to twenty-five (25) basis points (.25%) in excess of the
interest rate in effect from time to time on the Line of Credit Loan, (iv) be
secured by the Collateral and the Loan Documents, (v) be prepayable in whole or
in part without premium or penalty (but prepayments may not be re-borrowed),
and (vi) otherwise be subject to the remaining terms and conditions of this
Agreement.
2.7. LATE CHARGE. Borrowers will pay to Lender a late charge equal
to five percent (5%) of any payment of the Loans not received by Lender within
ten (10) days after the due date thereof, with the exception of any payment due
upon maturity. Collection or acceptance by Lender of such late charge shall not
constitute a waiver of any remedies of Lender provided herein or in any other
Loan Document.
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2.8. DEFAULT RATE OF INTEREST. Upon the occurrence and during the
continuation of an Event of Default, the principal amount of all Loans shall
bear interest at the Default Rate. Borrowers acknowledge and agree that the
provisions herein and in the Notes relating to the Default Rate represent a
fair and reasonable estimate by Borrowers and Lender of a fair average
compensation for the loss that may be sustained by Lender due to the failure of
Borrowers to make timely payments with respect to the Loan Obligations and for
the cost and expenses that may be incurred by Lender by reason of the
occurrence of an Event of Default, the parties recognizing that the damages
caused by such extra administrative expenses and loss of the use of funds is
impracticable or extremely difficult to ascertain or estimate. Interest at the
Default Rate shall be paid without prejudice to the rights of Lender to collect
any other amounts provided to be paid hereunder.
2.9. USE OF ADVANCES. All Advances will be used for working capital
needs and to provide funds for general corporate purposes of the Borrowers and
for no other purpose.
2.10. LINE OF CREDIT INCREASE FEE. In consideration of Lender's
commitment to increase the Line of Credit Loan in accordance with the terms and
conditions of Section 2.17 hereof, Borrowers shall pay to Lender a fee of Seven
Thousand Five Hundred Dollars ($7,500), which shall be deemed fully earned and
due and payable on the Closing Date.
2.11. NON-USE FEE. Borrowers shall also pay to the Lender upon
submission of an invoice, a non-use fee equal to the applicable basis points
(per annum) specified on the Pricing Matrix attached as Exhibit A on the daily
unborrowed portion of the Credit Facility (excluding, however, the face amount
of any issued Letters of Credit which are outstanding) from the Closing Date to
and including the Termination Date, payable in arrears on the first (1st) day
of each January, April, July and October hereafter and on the Termination Date.
All accrued non-use fees shall be payable on the effective date of any
termination of the obligations of the Lender to make Advances hereunder.
2.12. TERM. This Agreement shall remain in force and effect until
all Advances under the Line of Credit Loan and all Term Loans, and any renewals
or extensions, and all interest thereon and costs provided for herein with
regard to any of them have been indefeasibly paid or satisfied in full, and
until the Lender has no further obligation to make Advances to Borrowers
hereunder. In the event that the Borrowers desire to terminate the Line of
Credit Loan prior to the Termination Date, Borrowers may advise Lender in
writing of such intention and shall thereupon release in writing the Lender
from any further obligations to make Advances hereunder, whereupon Lender shall
have no further obligation to make Advances hereunder to the Borrowers. The
indemnities provided for in Section 8.1 shall survive the payment in full of
the Loan Obligations and the termination of this Agreement.
2.13. EXTENSIONS.
(a) Borrowers may request an option to extend the Termination
Date for additional periods of one (1) or two (2) years (at Borrowers' option)
each (each, an "EXTENSION TERM") beyond the Termination Date or beyond the
maturity of any subsequent Extension Term which may be granted by the Lender,
subject to the following conditions:
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(i) Borrowers shall submit to Lender a written
request for such extension and, in the event the Borrowers
wish to lower the amount of credit available hereunder,
Borrowers shall specify such lower amount (the "EXTENSION
NOTICE"); and
(ii) The Extension Notice shall be accompanied by a
Compliance Certificate, together with a copy of the most
recent unaudited consolidated and consolidating financial
statements of the Group; and
(iii) As disclosed by such Compliance Certificate,
the financial information which accompanies same, and such
other information as may be available to Lender, there shall
exist no Default or Event of Default.
(b) Within sixty (60) days following receipt of the Extension
Notice, Lender shall notify Borrowers in writing whether or not Lender is
willing, based on its normal credit underwriting procedures, to offer the
Extension Term on terms substantially similar to the terms hereof, subject to
adjustment of financial covenants as stated in such writing. It is acknowledged
and agreed that Lender has no obligation to grant any request for an Extension
Term. If the Lender grants any Extension Term pursuant to this Section, the
Borrowers may exercise such option to extend by satisfaction of the following
conditions:
(i) Between thirty (30) and sixty (60) days prior to
the Termination Date (or, if applicable, the termination date
of any Extension Term), Borrowers shall submit to Lender a
written notice of their intent to exercise such Extension
Term, which such notice shall be accompanied by a Compliance
Certificate, together with the most recent unaudited
consolidated and consolidating financial statements of the
Group.
(ii) Any amendments or modifications of this
Agreement, as appropriate to place in effect the conditions
imposed by Lender pursuant to Section 2.13(b), shall have
been executed by Borrowers and Lender.
(iii) As disclosed by the subject Compliance
Certificate and the accompanying financial statements and
other information as may be available to Lender, there shall
exist no Default or Event of Default under this Agreement, as
modified pursuant to Subsection 2.13(b)(ii) above.
2.14. LETTERS OF CREDIT. Provided that all conditions for Advances
shall have been and remain fully satisfied and Borrowers otherwise would at
such time be eligible for an Advance, Lender shall issue upon Borrowers'
request and for Borrowers' account Letters of Credit, in form and substance
acceptable to Lender, with the aggregate face amount of Letters of Credit
issued reducing the credit availability under the Line of Credit Loan,
provided, however, that the aggregate amount of Letters of Credit outstanding
at any one time may not exceed the sum of $3,000,000. Lender's obligation to
issue any such Letter of Credit shall be conditioned upon (i) Borrowers'
payment of a one percent (1 %) Letter of Credit issuance fee and Lender's other
customary Letter of Credit charges, and (ii) Borrowers' execution of such
promissory notes, letter of credit applications, reimbursement agreements,
collateral documents and other documents as Lender shall request in connection
therewith, all in form and substance acceptable to Lender.
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2.15. USURY PROVISIONS. In no event shall the amount of interest
due or payable hereunder or pursuant to any of the Loan Documents exceed the
maximum rate of interest allowed by applicable law, and in the event any such
payment is inadvertently paid by Borrowers or inadvertently received by Lender,
then such excess sum shall be credited as a payment of principal. It is the
express intent hereof that Borrowers not pay and Lender not receive, directly
or indirectly, interest in excess of that which may be legally paid by
Borrowers under applicable law.
2.16. BORROWERS.
(a) Borrowers are jointly and severally liable for the
payment and performance of all Loan Obligations.
(b) Any Subsidiary hereafter formed shall, at its option, be
entitled to the benefits of this Agreement and, in such event, shall be a joint
and several co-borrower of the Loans, and shall grant to Lender a security
interest in such Subsidiaries' Accounts, Inventory, Equipment, and other
personal property described in Section 6.1 hereof as Collateral as security for
the Loan Obligations. In such event, such Subsidiary and the Borrowers shall be
required to execute such documentation as Lender shall require in order to
effect the addition of such Subsidiary as a member of the Group and a
"Borrower" hereunder and under each of the other Loan Documents, and to effect
the granting of the security interest in such Subsidiary's Collateral.
2.17. INCREASE TO AMOUNT OF LINE OF CREDIT LOAN. At any time prior
to the Termination Date (as the same may be extended as provided in Section
2.13 hereof), Borrowers shall have the option of requesting that the principal
amount of the Line of Credit Loan be increased to up to Twenty-Five Million
Dollars ($25,000,000). Provided that (i) no Default or Event of Default has
occurred and is continuing, and (ii) collateral which is acceptable to the
Lender in Lender's reasonable discretion is provided to secure such increased
Line of Credit Loan amount (which such collateral may consist of only the
Collateral described herein, if such is acceptable to Lender in Lender's
reasonable discretion, or Lender may, in its reasonable discretion, require
additional collateral to the Collateral described herein to secure increased
Line of Credit Loan amount), Lender agrees that the Line of Credit Loan will be
increased to such requested amount (but in no event may the aggregate principal
amount outstanding under the Line of Credit Loan, Term Loans, and reimbursement
obligations under Letters of Credit exceed Twenty-Five Million Dollars
($25,000,000) in the aggregate. Borrowers shall be responsible for all
reasonable costs incurred by the Lender in connection with the preparation of
necessary documentation to evidence and secure such additional loan, including,
without limitation, reasonable attorneys fees of Lender's counsel. Borrowers
shall provide to Lender those "due diligence" items required by Lender with
respect to the additional collateral posted pursuant to this Section 2.17 that
Lender would customarily require for similar collateral, which must be in form
and content reasonably acceptable to the Lender.
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ARTICLE III
CONDITIONS PRECEDENT
3.1. INITIAL ADVANCE. The Lender shall not be required to make the
initial Advance hereunder unless the Borrowers have furnished to the Lender:
(i) Certificate of corporate existence and qualification for each
Borrower from applicable jurisdictions.
(ii) Copies, certified by an Authorized Officer of each Borrower,
of its certificate of incorporation, together with all
amendments thereto, and by-laws and Board of Directors'
resolutions (and resolutions of other bodies, if any are
deemed necessary by counsel for Lender) authorizing the
execution of the Loan Documents.
(iii) An incumbency certificate, executed by an Authorized Officer
of each Borrower, which shall identify by name and title and
bear the signature of the officers of such Borrower
authorized to sign the Loan Documents and to make borrowings
hereunder, upon which certificate the Lender shall be
entitled to rely until informed in writing by such Borrower
of any change.
(iv) A certificate, signed by an Authorized Officer of each
Borrower, stating that on the date of the initial Advance
hereunder, no Default or Event of Default has occurred and is
continuing.
(v) A written opinion of each Borrower's counsel, addressed to
the Lender in form and content reasonably acceptable to the
Lender.
(vi) This Agreement, together with the Line of Credit Note and
such other documents or instruments reasonably required by
Lender, including UCC-1 Financing Statements, each of which
shall be duly executed by the applicable Borrower.
(vii) A duly completed Compliance Certificate as of the Closing
Date.
(viii) Payment of all reasonable costs and expenses incurred by
Lender in connection with the negotiation, preparation,
execution, delivery, filing, and recordation of this
Agreement and all other Loan Documents, including, without
limitation, fees and expenses of Lender's counsel, and
recording and filing fees and taxes.
(ix) Reports from all appropriate filing offices indicating that
there are no Liens against the Collateral except Permitted
Liens.
(x) Disbursement authorizations, draw requests, and other
documents and writings as Lender shall have requested
evidencing Borrowers' request for disbursement of funds.
(xi) Such other documents as Lender or its counsel may have
reasonably requested.
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3.2. EACH ADVANCE. The Lender shall not be required to make any
Advance, unless on the applicable date such Advance is to be made:
(i) There exists no Default or Event of Default.
(ii) The representations and warranties contained in Article IV
(other than Section 4.5), as the same may be supplemented
from time to time in accordance with the provisions of
Section 5.1(c) below, are true and correct as of the date of
such Advance.
Each request for an Advance shall constitute a representation and
warranty by the Borrowers that the conditions contained in Section 3.2(i) and
(ii) have been satisfied. Lender may require a duly completed Compliance
Certificate as a condition to making an Advance.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Borrowers (and each of them) make the following representations and
warranties to Lender as of the date hereof, which such representations and
warranties shall survive until the Loan Obligations are indefeasibly satisfied
in full.
4.1. CORPORATE EXISTENCE AND STANDING. Each Borrower is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite authority to
conduct its business in each jurisdiction in which its business is conducted.
4.2. AUTHORIZATION AND VALIDITY. Each Borrower has the corporate
power and authority and legal right to execute and deliver the Loan Documents
and to perform its obligations thereunder. The execution and delivery by each
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings of such
Borrower, and the Loan Documents constitute legal, valid and binding
obligations of such Borrower enforceable against such Borrower in accordance
with their terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally.
4.3. NO CONFLICT; GOVERNMENT CONSENT. Neither the execution and
delivery by the Borrowers of the Loan Documents, nor the consummation of the
transactions provided for therein, nor compliance with the provisions thereof,
will violate any law, rule, regulation, order, writ, judgment, injunction,
decree or award binding on the Borrowers or any Borrower's certificate or
articles of incorporation or by-laws or the provisions of any indenture,
instrument or agreement to which such Borrower is a party or is subject, or by
which it, or its Property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any Lien in, of or on
the Property of such Borrower pursuant to the terms of any such indenture,
instrument or agreement, other than such violations, conflicts or defaults
which, individually or in the aggregate, could not
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reasonably be expected to have a Material Adverse Effect. No order, consent,
approval, license, authorization, or validation of, or filing, recording or
registration with, or exemption by, any Governmental Authority is required to
authorize, or is required in connection with the execution, delivery and
performance of, or the legality, validity, binding effect or enforceability of,
any of the Loan Documents.
4.4. FINANCIAL STATEMENTS. The December 31, 1998 consolidated
financial statements of the Group heretofore delivered to the Lender were
prepared in accordance with GAAP in effect on the date such statements were
prepared and present fairly the consolidated financial condition and operations
of the Group at such date.
4.5. MATERIAL ADVERSE CHANGE. Since December 31, 1998, there has
been no change in the business, Property, financial condition or results of
operations of the Group which would have a Material Adverse Effect.
4.6. TAXES. Each Borrower has filed all United States federal tax
returns and all other tax returns required to be filed and have paid all taxes
due pursuant to said returns or pursuant to any assessment received by such
Borrower except such taxes, if any, as are being contested in good faith and as
to which, in the good faith judgment of such Borrower, adequate reserves have
been provided and except for those returns with respect to which the failure to
file would have no material adverse effect. The charges, accruals and reserves
on the books of any Borrower with respect to any taxes or other governmental
charges are adequate in the good faith judgment of such Borrower.
4.7. LITIGATION AND GUARANTEED OBLIGATIONS. There is no litigation,
arbitration, governmental investigation, pending or inquiry pending or, to the
knowledge of any of their officers, threatened against or affecting any
Borrower which could reasonably be expected to have a Material Adverse Effect.
No Borrower has any material Guaranteed Obligations not provided for or
disclosed in the financial statements referred to in Section 4.4.
4.8. ERISA. Each Plan complies in all material respects with all
applicable requirements of law and regulations, and no ERISA Event has occurred
or is reasonably expected to occur with respect to any Plan. No Insufficiency
exists with respect to any Plan. None of the Borrowers nor any ERISA Affiliate
is required to contribute to or has ever had a liability to a Multiemployer
Plan.
4.9. ACCURACY OF INFORMATION. Neither any verbal statements made by
any Borrower's President or Secretary/Treasurer nor any written information,
exhibit or report furnished by or on behalf of such Borrower to the Lender in
connection with the negotiation of, or compliance with, the Loan Documents
contained any material misstatement of fact or purposely omitted to state a
material fact.
4.10. MATERIAL AGREEMENTS. No Borrower is a party to any agreement
or instrument or subject to any charter or other corporate restriction that
could reasonably be expected to have a Material Adverse Effect. No Borrower is
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement to which it is
a party, which default could reasonably be expected to have a Material Adverse
Effect. No Borrower is in default in the performance, observance or fulfillment
of any of the obligations, covenants or
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conditions contained in any agreement or instrument evidencing or governing
indebtedness.
4.11. COMPLIANCE WITH LAWS. Each Borrower has complied with all
applicable statutes, rules, regulations, orders and restrictions of any
Governmental Authority having jurisdiction over the conduct of its respective
businesses or the ownership of its respective Property, except where the
failure so to comply could not reasonably be expected to have a Material
Adverse Effect. No Borrower has received any notice to the effect that its
operations are not in compliance with any of the requirements of applicable
federal, state and local environmental, health and safety statutes and
regulations or the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which noncompliance or
remedial action could reasonably be expected to have a Material Adverse Effect.
4.12. INVESTMENT COMPANY ACT. No Borrower is an "investment company"
nor a company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
4.13. LICENSES. Each Borrower holds all necessary Licenses, and is
authorized to transact business, in each jurisdiction wherein it transacts any
business. No such License is the subject of a proceeding for suspension or
revocation, there is no sustainable basis for such suspension or revocation,
and to the Borrowers' knowledge, no such suspension or revocation has been
threatened by any Governmental Authority.
4.14. SOLVENCY. The total assets of the Group exceed its total
liabilities, and the Group is capable of paying the debts of the Group as and
when they become due.
4.15. TITLE TO COLLATERAL. Except for the security interest granted
herein and the Permitted Liens, each Borrower is, or as to Collateral to be
acquired after the date hereof will be, the sole owner of its Collateral free
from any adverse Liens, security interests, or other encumbrances. Each
Borrower shall defend its Collateral against all claims and demands of all
other parties who at any time claim any interest in such Collateral.
4.16. PLACES OF BUSINESS. Atrion's chief executive office is
located at One Allentown Parkway, Allen, Texas 75002, and Atrion has not
changed the location of such chief executive office within the last five (5)
years except that it has previously been located at 1426 Curt Francis Road,
Arab, Alabama 35016 and at 3230 Second Street, Muscle Shoals, Alabama 35661.
The Borrowers' principal places of business are at the locations listed on
Exhibit E to this Agreement. Except as indicated on Exhibit E, the real estate
constituting each said location is owned by a Borrower. With respect to the
locations located in Costa Mesa, California, Birmingham, Alabama, and St.
Petersburg, Florida, Exhibit E sets forth the name and address of the landlord
for such locations and the remaining term of the lease for such locations.
Borrowers have separately furnished to Lender true and correct copies of the
lease agreements for the premises located in Birmingham, Alabama and St.
Petersburg, Florida, and have furnished to Lender a true and correct copy of
the lease extension agreement for Costa Mesa, California.
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4.17. BORROWERS' NAMES. No Borrower has changed its name or been
known by any other name within the last five (5) years or has been the
surviving corporation in a merger effected within the last five (5) years,
except as set forth on Exhibit F.
4.18. SUBSIDIARIES. AMI, Halkey-Roberts, QMI, AlaTenn, ALI, and AII
are the sole Subsidiaries of Atrion. There are no Subsidiaries of AMI,
Halkey-Roberts, QMI, AlaTenn, ALI, and AII.
4.19. TRADE NAMES. No Borrower uses a fictitious or trade name in
the conduct of its business, except as listed on Exhibit H hereto.
4.20. REPRESENTATIONS TRUE. No representation or warranty by the
Borrowers contained herein or in any certificate or other document furnished by
the Borrowers pursuant hereto contains any untrue statement of material fact or
omits to state a material fact necessary to make such representation or
warranty not misleading in light of the circumstances under which it was made.
ARTICLE V
COVENANTS
Borrowers (and each of them) agree and covenant that until the Loan
Obligations have been paid in full and Lender has no further obligation to make
Advances under the Line of Credit Loan, Borrowers (and each of them) will
comply with the following covenants:
5.1. FINANCIAL REPORTING. The Group will maintain a system of
accounting established and administered in accordance with GAAP and will cause
Atrion to furnish to the Lender, on behalf of the Borrowers, the following
reports:
(a) Annual Reports. Within one hundred twenty (120) days
after the close of each fiscal year, the audited consolidated financial
statements of the Group as at the end of such year, setting forth the audited
consolidated balance sheet, as at the end of such year, and the audited
consolidated statement of income, statement of cash flows and statement of
retained earnings for such year, setting forth in each case in comparative form
the corresponding figures for the preceding fiscal year, accompanied by the
report of the Group's independent certified public accountants and by an
unaudited consolidating balance sheet and unaudited consolidating statement of
income of the Group duly certified by Atrion's chief financial officer as being
correct reflections of the information used for the audited consolidated
financial statements. The report pertaining to the financial statements
required by this Section shall be the unqualified opinion of a firm of
independent certified public accountants of national standing or of a firm of
independent certified public accountants otherwise acceptable to the Lender
(provided that the unqualified status of such opinion may be waived at the
Lender's discretion upon written request of Atrion); and
(b) Quarterly and Year to Date Reports. Within sixty (60)
days after the end of each calendar quarter and fiscal year, the unaudited
consolidated and consolidating balance sheets of the Group as of the end of
such quarter or fiscal year and the related unaudited consolidated and
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consolidating statements of income and the consolidated statement of cash flows
for such quarter and fiscal year to date, all certified by an Authorized
Officer of Atrion; and
(c) Compliance Certificate. Together with the financial
statements required hereunder, a Compliance Certificate in the form attached as
Exhibit G hereto with all information completed and signed by an Authorized
Officer of Atrion showing the calculations necessary to determine compliance
with the financial covenants contained herein and stating that no Default or
Event of Default exists, or if any Default or Event of Default exists, stating
the nature and status thereof, and confirming that all of the representations
and warranties contained in Article IV hereof remain true and correct as of
such date (as they may be supplemented from time to time in accordance with the
terms hereof), or, if any such representation and warranty is no longer true
and correct, an updated representation and warranty which is accurate to such
date; and
(d) ERISA Insufficiency. In the event an Insufficiency
exists, within two hundred and seventy (270) days after the close of each
fiscal year, a statement of the Insufficiency with respect to each Plan,
certified as correct by an actuary enrolled under ERISA; and
(e) ERISA Plans. Promptly upon the request of the Lender,
copies of all the most recent material reports and notices in connection with
Plans that any Borrower or any Subsidiary is required to file under ERISA with
the Internal Revenue Service or the PBGC or the U.S. Department of Labor, or
which the Borrowers or any Subsidiary receives from such Governmental
Authorities; and
(f) Violation of Law. As soon as possible and in any event
within ten (10) days after receipt by any Borrower, a copy of any notice
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by any member of the Group, which could reasonably be
expected to have a Material Adverse Effect; and
(g) SEC Filings. Promptly upon the filing thereof, copies of
all Forms 10Q, 10K and 8K (other than earnings press releases) and any
registration statements that any member of the Group files with the Securities
and Exchange Commission; and
(h) Other Information. Such other information (including,
without limitation, non-financial information) as the Lender may from time to
time reasonably request.
5.2. USE OF PROCEEDS. Each Borrower will use the proceeds of the
Advances only for working capital needs and to provide funds for general
corporate purposes of the Group and for no other purpose.
5.3. NOTICE OF CERTAIN EVENTS. Atrion will give prompt notice in
writing to the Lender of (i) the occurrence of any Default or Event of Default
and of any other development, financial or otherwise, that could reasonably be
expected to have a Material Adverse Effect, (ii) the receipt of any notice from
any Governmental Authority of the expiration without renewal, revocation or
suspension of, or the institution of any proceedings to revoke or suspend, any
License now or hereafter held by any Group member which is required to conduct
business in compliance with all applicable laws and regulations, other than
such expiration, revocation or suspension that, individually or in the
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aggregate, could not reasonably be expected to have a Material Adverse Effect,
(iii) the receipt of any notice from any Governmental Authority of the
institution of any disciplinary proceedings against or with respect to any
Borrower or the issuance of any order, the taking of any action or any request
for an extraordinary audit for cause by any Governmental Authority which, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect or (iv) any judicial or administrative order limiting or controlling the
business of any member of the Group which has been issued or adopted and which
could reasonably be expected to have a Material Adverse Effect.
5.4. CONDUCT OF BUSINESS. Each Borrower will do all things
necessary to remain duly incorporated, validly existing and in good standing as
a domestic corporation in its jurisdiction of incorporation and maintain all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted.
5.5. TAXES. Each Borrower will pay when due all taxes, assessments
and governmental charges and levies upon it or its income, profits or Property,
except those that are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves have been set aside.
5.6. INSURANCE. Each Borrower will maintain, with financially
sound and reputable insurance companies, insurance on all or substantially all
of its Property in such amounts and covering such risks, and with such risk
retention or self-insurance, as is consistent with sound business practice for
Persons in substantially the same industry as such Borrower, and each Borrower
will furnish to Lender upon request full information as to the insurance
carried and any applicable risk retention or self-insurance.
5.7. COMPLIANCE WITH LAWS. Each Borrower will comply with all laws,
rules, regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject, except where the failure to so comply could not
reasonably be expected to have a Material Adverse Effect.
5.8. MAINTENANCE OF PROPERTIES. Each Borrower will do all things
reasonably necessary to maintain, preserve, protect and keep its Property in
good repair, working order and condition and make all reasonably necessary
repairs, renewals and replacements for the conduct of its business.
5.9. INSPECTION. Each Borrower will permit the Lender to inspect
any of the Property, corporate books and financial records of such Borrower, to
examine and make copies of the books or accounts and other financial records of
such Borrower, and to discuss the affairs, finances and accounts of such
Borrower with, and to be advised as to the same by, its Presidents and
financial officers at such reasonable times and intervals as the Lender may
designate.
5.10. MERGER. No Borrower will merge or consolidate with or into any
other Person, except that (i) a member of the Group may merge with a Borrower
or a wholly-owned subsidiary, and (ii) any Borrower and any member of the Group
may merge with any other Person provided that (a) such Borrower or such member
of the Group shall be the continuing or surviving corporation and, after giving
effect to such merger, no Default shall exist or (b) the surviving
corporation's tangible net worth shall exceed that of the merging corporation.
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5.11. SALE OF ASSETS. No Borrower will, nor will it permit any
member of the Group to, lease, sell or otherwise dispose of all or a
Substantial Portion of the Property of the Group to any other Person in any
single transaction or series of transactions within any 12-month period, except
for the sale of assets in the ordinary course of business or with the prior
written consent of Lender, not to be unreasonably withheld. In the event of a
sale which is permitted under this Section 5.11, Lender agrees that it will
release the applicable Collateral from the security interest granted to Lender
hereunder and, if such sale is of all or substantially all of a Borrower's
assets or its capital stock, Lender will release such Borrower from its
liabilities hereunder. No such release shall affect any Borrower or any
Collateral not specifically released in writing by Lender. Lender agrees to use
its best efforts to execute any releases described in this Section 5.11 within
ten (10) Business Days of Lender's receipt of a written request from Atrion for
such releases. Borrowers will be responsible for all costs incurred in
connection with the releases described in this Section 5.11, including, without
limitation, filing fees of UCC termination statements and reasonable attorneys
fees incurred by Lender's counsel in the preparation of such releases.
5.12. SALE AND LEASEBACK. No Borrower will, nor will it permit any
member of the Group in any single transaction or series of transactions within
any twelve (12) month period to, sell or transfer a Substantial Portion of its
Property in order concurrently or subsequently to lease as lessee such or
similar Property, other than in the ordinary course of business.
5.13. AFFILIATES. The Group will not enter, and will not permit any
member of the Group to enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
payments or transfer to, any Affiliate (other than a wholly-owned subsidiary)
except for (i) the loans by any Borrower to the members of the Group (ii) any
such transactions, payments or transfers with or to such Affiliates as are made
in the ordinary course of business and pursuant to the reasonable requirements
of the Borrowers' or such Subsidiary's business and upon fair and reasonable
terms no less favorable to the Borrowers or such Subsidiary than the Borrower
or such Subsidiary would obtain in a comparable arms-length transaction and
(iii) any such other transactions, payments or transfers with or to such
Affiliates as could not reasonably be expected to have a Material Adverse
Effect.
5.14. COMPLIANCE WITH ERISA. No member of the Group will (i)
terminate, or permit any ERISA Affiliate to terminate, any Plan so as to result
in any material liability of such Borrower or an ERISA Affiliate to the PBGC;
(ii) permit to exist any occurrence of any Reportable Event (as defined in
Title IV of ERISA), or any other event or condition, that presents a material
risk of such a termination by the PBGC of any Plan so as to result in any
material liability of any Borrower or any ERISA Affiliate to the PBGC; (iii) be
an "employer" (as defined in Section 3(5) of ERISA), or permit any ERISA
Affiliate to be an "employer," required to contribute to any Multiemployer
Plan; or (iv) fail to comply in any material respect with any laws or
regulations applicable to any Plan.
5.15. COLLECTION OF ACCOUNTS. Each Borrower will diligently pursue
collection of all amounts due to such Borrower by others, including Affiliates,
provided that such Borrower may elect to waive or defer or write off Accounts
in the ordinary course of business.
5.16. LEASES.
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(a) Upon the occurrence of any Event of Default and following
Lender's written demand therefor, each Borrower will provide Lender with copies
of all agreements between such Borrower and any landlord or warehouseman which
owns any premises at which any Inventory or other Collateral which equals or
exceeds $50,000 in value, may, from time to time, be kept.
(b) With respect to the Property located at 11600 Ninth
Street, St. Petersburg, Florida, which Halkey-Roberts currently leases from HRC
Properties, Inc., Borrowers covenant and agree to use their best efforts to
obtain a landlord's lien waiver in form and content reasonably acceptable to
Lender for such Property in the event that either (i) such property is sold to
another entity and said lease assigned to a new landlord or (ii) Halkey-Roberts
enters into any negotiations with HRC Properties, Inc. to make any material
changes to the terms of said lease (e.g., extension of current termination date
of May 31, 2006, adjustments in rent, etc.). Lender agrees that it is waiving
the requirements of landlord's lien waivers with respect to all other
Properties which are designated on Exhibit E as being a leased Property, and
that it is requesting that the Borrowers use their best efforts to obtain a
lien waiver with respect to the St. Petersburg, Florida Property only upon the
occurrence of the two events described in this subsection.
5.17. FINANCIAL COVENANTS. The Group will achieve and maintain
compliance with the following financial covenants, and within sixty (60) days
of the end of each calendar quarter will provide evidence to Lender of the
achievement thereof by delivery of the Compliance Certificate described in
Section 5.18:
(a) A Consolidated Net Income, calculated based upon the
preceding twelve (12) months, of not less than $1,000,000;
(b) A Consolidated Tangible Net Worth of not less than
$18,800,000 for the period commencing on the Closing Date and ending March 31,
2000; commencing with the quarter ending June 30, 2000, and for each quarter
thereafter during the term hereof, such minimum Consolidated Tangible Net Worth
will be increased by $125,000 per quarter, and the Group shall maintain
compliance with such increased amounts;
(c) A ratio of Consolidated Liabilities to Consolidated
Tangible Net Worth not exceeding 2.0 to 1.0; and
(d) A Consolidated Fixed Charge Coverage ratio of not less
than 1.75 to 1.0.
5.18. MAINTENANCE OF INVENTORY. Each Borrower will cause its
Inventory to be maintained and preserved in good condition, repair and working
order.
5.19. RECORDS OF ACCOUNTS. Each Borrower will maintain all records,
including records pertaining to Accounts, at the chief executive office of the
applicable Borrower as set forth in this Agreement.
5.20. SUBSIDIARIES. Atrion will advise Lender in writing as to the
formation of any Subsidiary, and, if such Subsidiary becomes a Borrower under
this Agreement, will furnish to Lender
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copies of the organizational documents for such Subsidiary as specified in
Section 3.1 (a) (ii) and (iii) hereof, together with the opinion specified in
Section 3.1(a)(v) hereof as to such Subsidiary.
ARTICLE VI
SECURITY AGREEMENT
6.1. GRANT OF SECURITY INTEREST. As security for (i) the full and
prompt payment when due of all of the Loan Obligations and (ii) the timely
fulfillment, discharge, compliance and performance of all the Loan Obligations,
as the case may be, Borrowers hereby convey, transfer, grant and assign unto
the Lender and Lender's successors and assigns, a collateral assignment of,
security title to, and a security interest in all of Borrowers' respective
rights, titles, and interests in and to the following property whether now
owned or hereafter acquired and wherever located, and including all
replacements, additions, accessions, substitutions, and Proceeds:
(1) All of Borrowers' Accounts;
(2) All of Borrowers' Inventory;
(3) All of Borrowers' Equipment;
(4) All of Proceeds and products, as the case may be, of
Borrowers' Accounts, Equipment, and Inventory;
(5) All accessions to, substitutions for and all
replacements, products and cash and non-cash proceeds of (a) through (d) above,
including, without limitation, proceeds of and unearned premiums with respect
to insurance policies insuring any of the Collateral; and
(6) All books and records (including, without limitation,
customer lists, credit files, magnetic, digital and laser tapes and disks,
electronic and computer storage media, computer programs, print-outs, and other
computer materials and records) of Borrowers pertaining to any of (a) through
(e) above.
6.2. SALE OF INVENTORY. Until the occurrence of Event of Default
and the written declaration thereof by the Lender or until the Termination
Date, whichever occurs first, Borrowers may use and dispose of the Inventory in
the ordinary course of business where such is not inconsistent with this
Agreement.
6.3. CERTAIN MATTERS PERTAINING TO ACCOUNTS.
(a) Each Borrower will (i) keep its chief place of business
and chief executive office and all records concerning Accounts and all
originals of chattel paper which constitute Accounts at its chief executive
office or principal place of business as specified on Exhibit E hereto, and
(ii) keep adequate records concerning the Accounts and hold and preserve its
records
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concerning the Accounts and permit representatives of the Lender at any
time during normal business hours to inspect and make copies of and abstracts
from such records.
(b) At the Lender's request following the occurrence of an
Event of Default and the written declaration thereof by Lender, each Borrower
shall open a special collection account (the "SPECIAL COLLECTION ACCOUNT") with
Lender, or with another bank designated by Lender, in which all funds received
by Borrowers from sales of Inventory, all refunds of taxes, all remittances by
Account Debtors, all Lender wire transfers from Account Debtors, and all other
proceeds of Collateral, shall be deposited no later than the next regular
Business Day following receipt thereof. The Lender (or its designee) shall have
the exclusive right to withdraw or debit funds from the Special Collection
Account which may be accomplished by any directive signed by any officer of the
Lender or any officer of another Lender designated by Lender. At least weekly
and more often if the Lender so elects, the collected balance in the Special
Collection Account shall be withdrawn by Lender (or its designee) and applied
to the Loan Obligations.
(c) At any time following the occurrence of an Event of
Default and the written declaration thereof by Lender, Lender shall have the
right to notify the Account Debtors obligated on any or all of the Accounts to
make payment thereof directly to Lender (or its designee) and to take control
of all proceeds of any such Accounts. Borrowers, if requested by Lender, shall
stamp or cause to be stamped on each Account item in legible letters "Pledged
to SouthTrust Bank of Alabama, National Association" and shall turn over
physical possession of the Accounts to Lender (or to Lender's designee).
Borrowers (and each of them) authorize Lender to sign and endorse such
Borrower's name upon any check, draft, money order, or other form of payment of
any Account item and to sign and endorse satisfactions and releases of Account
items in such Borrower's name. The costs of such collection and enforcement,
including reasonable attorney's fees and out-of-pocket expenses and all other
expenses and liabilities resulting therefrom, shall be borne solely by
Borrowers whether the same are incurred by the Lender or Borrowers. At the
request of the Lender, Borrowers shall upon receipt of all checks, drafts, cash
and other remittances in payment or on account of the Accounts deposit the same
in the Special Collection Account referred to in Section 7.3(b) hereof. The
funds in the Special Collection Account shall be held by the Lender (or its
designee) as security for all Loan Obligations. Said proceeds shall be
deposited in precisely the form received, except for the endorsement of any
Borrower where necessary to permit collection of items, which endorsement
Borrowers agree to make, and which the Lender is also hereby authorized to make
on Borrowers' behalf. Pending such deposit, Borrowers agree that they will not
commingle any such checks, drafts, cash and other remittances with any of
Borrowers' funds or property, but will hold them separate and apart therefrom
and upon an express trust for the Lender until deposit thereof is made in the
Special Collection Account. The Lender may, in accordance with the provisions
of this Agreement, apply the whole or any part of the collected funds on
deposit in the Special Collection Account against the principal and/or interest
of the Line of Credit Loan or other Loan Obligations, the order and method of
such application to be at the discretion of the Lender. Any portion of said
funds on deposit in the Special Collection Account which Lender elects not to
so apply may, at the Lender's election, be paid over by the Lender to
Borrowers; provided, however, that if at any time the Lender grants to
Borrowers the right to retain the proceeds of the Accounts for Borrowers' use,
or if at any time Lender elects to pay funds
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on deposit in the Special Collection Account to Borrowers, such right to retain
and use proceeds or payment from the Special Collection Account shall be deemed
to be continuing new value for the security interest attaching hereunder on all
after-acquired property.
6.4. VERIFICATION OF ACCOUNTS. Whether or not an Event of Default
has occurred, any of Lender's officers, authorized representatives, employees
or agents shall have the right, at any time or times hereafter, in the name of
Lender or in any trade or fictitious name selected by Lender, or in the name of
any designee of Lender or Borrowers, to verify the validity, amount or any
other matter relating to any Accounts by mail, telephone, telegraph, or
otherwise; provided, however, that as long as no Event of Default has been
occurred and been declared in writing by the Lender, Lender agrees that it
shall limit any such verification to consultation with the Borrowers or their
professional advisors and will not contact any Account Debtors directly.
Borrowers shall cooperate fully with Lender in an effort to facilitate and
promptly conclude any such verification process.
6.5. LOCK BOX ACCOUNT. At the request of Lender, following the
occurrence of an Event of Default and the written declaration by Lender,
Borrowers (and each of them) agree to acquire at their expense a post office
box in the City of Birmingham, Alabama, to which the Lender and its designees
alone shall have access. The Borrowers (and each of them) agree to give notice
to all of their Account Debtors to mail payments due to such Borrower to such
post office box. The Borrowers agree that the Lender, or its designees, may
open such post office box, may receive, open and dispose of all mail addressed
to the Borrowers at such post office box, and may deposit any payments
contained in such mail in the Special Collection Account. The Borrowers agree
to give all required instructions to the U.S. Postal Service authorities to
enable the Lender or its designees to attain access to such post office box.
Borrowers agree that they will not attempt to remove any mail from such post
office box, and agree to execute such additional agreements as the Lender may
reasonably require in connection with such post office box. Borrowers agree to
instruct all of their Account Debtors which make any payments on the Accounts
by bank wire to wire such payments to the Special Collection Account.
6.6. ACCOUNTS EVIDENCED BY INSTRUMENTS. If any of Borrowers'
Accounts are or should become evidenced by promissory notes, trade acceptances,
chattel paper, chattel mortgages, conditional sales contracts, or other
instruments, Borrowers will immediately deliver same to Lender following
Lender's demand therefor (which shall be given only if an Event of Default
shall have occurred and been declared in writing by the Lender), endorsed or
assigned with recourse to the Lender's order and, regardless of the form of
such endorsement or assignment, Borrowers hereby waive presentment, demand,
notice of dishonor, protest and notice of protest and all other notices with
respect thereto.
6.7. LEASE OF RECORDS. Borrowers hereby lease to the Lender, and
the Lender hires from Borrowers, for a term which shall be effective so long as
the Loan Obligations secured hereby are owing to the Lender by Borrowers and
until the Lender has no further obligation under the Agreement, all of
Borrowers' present and future books of Accounts, computer printouts, magnetic,
digital and laser tapes and disks, computer and electronic storage media,
computer software programs, trial balance records, ledgers and cabinets in
which they are located, reflected or maintained, in any way relating to the
Collateral, and all present and future supporting evidence and
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documents relating thereto in the form of written applications, credit
information, account cards, payment records, trial balances, correspondence,
delivery receipts, certificates and the like, as well as the past and current
information stored in computer software programs for and on Borrowers' behalf
by third parties. Borrowers, if requested by Lender, agree to legend all of the
foregoing to indicate the lease thereof to the Lender. If an Event of Default
occurs and an Event of Default is declared in writing by Lender, then, in
addition to all of the other rights and remedies of the Lender herein, the
Lender will have the right forthwith or at any time thereafter to remove from
Borrowers' premises all of the foregoing and keep and retain the same in
Lender's possession until the Loan Obligations secured hereby shall have been
fully paid and discharged and the Lender has no further obligation under the
Agreement. The provisions of this Section shall not be deemed to diminish or
contravene the security interest of the Lender in Collateral, but shall be
deemed to be in addition to any rights the Lender may have with respect to the
Borrowers' grant of a security interest in such Collateral to Lender.
6.8. LICENSE OF RIGHTS. To the extent permitted by applicable law
and not otherwise expressly disallowed under bona fide agreements between any
of the Borrowers and third parties, Lender is hereby granted a license or other
right, following the occurrence of an Event of Default and the written
declaration thereof by Lender, to use, without charge, Borrowers' labels,
patents, copyrights, rights of use of any name, trade secrets, tradenames,
trademarks and advertising matter or any property of a similar nature as it
pertains solely and strictly to the Collateral, in advertising for sale and in
selling any Collateral, and Borrowers' rights under all licenses and all
franchise agreements shall inure to Lender's benefit.
6.9. ATTORNEY-IN-FACT. Borrowers (and each of them) hereby
irrevocably designate, make, constitute and appoint Lender (and all Persons
designated by Lender) as Borrowers' true and lawful attorney (and
agent-in-fact) and Lender, or Lender's agent, may, upon the occurrence of an
Event of Default and the written declaration thereof by Lender, without notice
to Borrowers and in either Borrowers' (or any of their or Lender's name, but at
the cost and expense of Borrowers):
(a) At such time or times hereafter as Lender or said agent,
in its sole discretion, may determine, endorse Borrowers' (or any one
of their) names on any checks, notes, acceptances, drafts, money
orders or any other evidence of payment or proceeds of the Collateral
which come into the possession of Lender or under Lender's control;
and
(b) At such time or times as Lender or its agent in its sole
discretion may determine: (i) demand payment of the Accounts from the
Account Debtors, enforce payment of the Accounts by legal proceedings
or otherwise, and generally exercise all of Borrowers' rights and
remedies with respect to the collection of the Accounts; (ii) settle,
adjust, compromise, discharge or release any of the Accounts or other
Collateral; (iii) sell or collect any of the Accounts or other
Collateral upon such terms, and for such amounts and at such time or
times as Lender deems advisable; (iv) take possession, in any manner,
of any item of payment or proceeds relating to any Collateral and
apply the same to the Loan Obligations; (v) prepare, file and sign
Borrowers' names to a proof of claim in bankruptcy or similar document
against any Account Debtor or to any notice of lien, assignment or
satisfaction of lien or similar document in connection with any of the
Collateral; (vi) receive, open and dispose of all mail addressed to
Borrowers and to notify postal authorities to change the
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address for delivery thereof to such address as Lender may designate;
(vii) endorse the name of Borrowers upon any of the items of payment
or proceeds relating to any Collateral and deposit the same to the
account of Lender or any other Lender on account of the Loan
Obligations; (viii) endorse the name of Borrowers upon any chattel
paper, document, instrument, invoice, freight bill, bill of lading or
similar document or agreement relating to the Accounts, Inventory and
any other Collateral; (ix) use Borrowers' stationery and sign the name
of Borrowers to verifications of the Accounts and notices thereof to
Account Debtors; (x) use the information recorded on or contained in
any data processing equipment and computer hardware and software
relating to the Accounts, Inventory, and any other Collateral and to
which Borrowers has access; (xi) make and adjust claims under policies
of insurance; and (xii) for and in the name of Borrowers to give
instructions and direct any Lender or financial institution in which
proceeds of the Collateral are deposited to turn over said proceeds to
Lender; and (xiii) do all other acts and things necessary, in Lender's
determination, to fulfill Borrowers' obligations under this Agreement.
6.10. WAIVERS. Borrowers hereby release and waive any and all
actions, claims, causes of action, demands and suits which it may ever have
against the Lender as a result of any possession, collection, settlement,
compromise or sale by Lender of any of the Accounts upon the occurrence and the
written declaration of an Event of Default hereunder, notwithstanding the
effect of such possession, collection, settlement, compromise or sale upon the
businesses of Borrowers. Said waiver shall include all causes of action and
claims which may result from the exercise of the power of attorney conferred
upon Lender in Section 6.9. The failure at any time or times hereafter to
require strict performance by Borrowers of any of the provisions, warranties,
terms and conditions contained in this Agreement or any other agreement,
document or instrument now or hereafter executed by Borrowers, and delivered to
the Lender, shall not waive, affect, or diminish any right of the Lender
thereafter to demand strict compliance and performance therewith and with
respect to any other provisions, warranties, terms and conditions contained in
such agreements, documents or instruments, and any waiver of default shall not
waive or affect any other default, whether prior or subsequent thereto, and
whether the same are of a different type. None of the warranties, conditions,
provisions and terms contained in the Agreement or any other agreement,
document or instrument now or hereafter executed by Borrowers and delivered to
the Lender shall be deemed to have been waived by any act or knowledge of the
Lender, its agents, representatives, officers or employees, but only by an
instrument in writing signed by an officer of the Lender and directed to the
Borrowers specifying such waiver.
6.11. UCC FINANCING STATEMENT. The Borrowers agree that a carbon,
photographic or other reproduction of this Agreement or of a signed financing
statement with respect to the Collateral shall be sufficient as a financing
statement and may be filed as such by the Lender.
6.12. FURTHER ASSURANCES Borrowers will at their expense, at any
time and from time to time, promptly execute and deliver all further
instruments and documents and take all further action that may be necessary or
desirable or that the Lender may reasonably request in order (i) to perfect and
protect the security interest created or purported to be created hereby; (ii)
to enable the Lender to exercise and enforce its rights and remedies hereunder
in respect of the Collateral; or (iii) to otherwise effect the purposes of this
Agreement, including, without limitation: (A) if requested by Lender, marking
conspicuously each chattel paper in the Collateral, and each of its
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records pertaining to the Collateral with a legend, in form and substance
satisfactory to the Lender, indicating that such chattel paper, or record is
subject to the security interest created hereby; (B) if any Collateral shall be
evidenced by a promissory note or other instrument or a negotiable document or
chattel paper, delivering and pledging such note, instrument or negotiable
document or chattel paper, duly indorsed, where appropriate, and accompanied by
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Lender; (C) executing and filing such financing or
continuation statements, or amendments thereto, as may be necessary or
desirable or that the Lender may request in order to perfect and preserve the
security interest purported to be created hereby; (D) if certificates of title
are now or hereafter issued or outstanding with respect to any of the
Collateral, by immediately causing the interest of Lender to be properly noted
thereon at Borrower's expense; and (E) furnishing to Lender from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Lender or its
designee may reasonably request, all in reasonable detail. Notwithstanding the
provisions of this Section 6.12, Lender has waived the requirement for
obtaining landlord's lien waivers except as expressly set forth in Section
5.16(b) hereof.
ARTICLE VII
EVENTS OF DEFAULT; REMEDIES.
7.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an "Event of Default" hereunder:
(a) Nonpayment of principal of any Loan when due, or
nonpayment of interest upon any Loan or of any Unused Fee or non-payment of any
other Loan Obligation under any of the Loan Documents within ten (10) days
after written notice from Lender to Borrowers that such Loan Obligation is due.
(b) The breach of any of the terms or provisions of Sections
5.2, 5.3, 5.10, 5.11, 5.12, and 5.17; or
(c) The breach of any of the terms or provisions of this
Agreement (other than as specified in subsections (a) and (b) hereof), and the
continuance of such breach for a period of thirty (30) days after written
notice thereof from Lender to Borrower; or
(d) Failure of any Borrower or any member of the Group to pay
when due any Liability, if the aggregate amount of all such Liability involved
exceeds $1,000,000; or any Liability of any Borrower or any Subsidiary shall be
declared to be due and payable or required to be prepaid (other than by a
regularly scheduled payment) prior to the stated maturity thereof due to any
failure to pay any amounts payable in respect of Liability, if the aggregate
amount of all such accelerated Liability involved exceeds $1,000,000; or any
Liability of the Borrower or any Subsidiary shall be declared to be due and
payable or required to be pre-paid (other than by a regularly scheduled
payment) prior to the stated maturity date thereof as a result of the
occurrence of any default arising from any circumstance or condition other than
the failure to pay, if the aggregate amount of Liability involved exceeds
$1,000,000, and such Liability shall not be paid in full within 3 days of such
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acceleration; or the Borrower or any of its Subsidiaries shall not pay, or
admit in writing its inability to pay, its debts generally as they become due;
or
(e) The filing by any Borrower or any member of the Group of
a voluntary petition in bankruptcy or the adjudication of any of the aforesaid
Persons as a bankrupt or insolvent, or the filing by any of the aforesaid
Persons of any petition or answer seeking or acquiescing in any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief for itself under any present or future federal, state or other statute,
law or regulation relating to bankruptcy, insolvency or other relief for
debtors, or if any of the aforesaid Persons should seek or consent to or
acquiesce in the appointment of any trustee, receiver or liquidator for itself
or of all or any substantial part of its property or of any or all of the
rents, revenues, issues, earnings, profits or income thereof, or the making of
any general assignment for the benefit of creditors or the admission in writing
by any of the aforesaid Persons of its inability to pay its debts generally as
they become due; or
(f) The entry by a court of competent jurisdiction of an
order, judgment, or decree approving a petition filed against any Borrower or
any member of the Group, which such petition seeks any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future federal, state or other statute, law or
regulation relating to bankruptcy, insolvency, or other relief for debtors,
which order, judgment or decree remains unvacated and unstayed for an aggregate
of sixty (60) days (whether or not consecutive) from the date of entry thereof,
or the appointment of any trustee, receiver or liquidator of any of the
aforesaid Persons or of all or any substantial part of its properties or of any
or all of the rents, revenues, issues, earnings, profits or income thereof
which appointment shall remain unvacated and unstayed for an aggregate of sixty
(60) days (whether or not consecutive); or
(g) Any certificate, statement, representation, warranty or
audit heretofore or hereafter furnished by or on behalf of any Borrower or any
member of the Group pursuant to or in connection with this Agreement or
otherwise (including, without limitation, representations and warranties
contained herein or in any Loan Documents) or as an inducement to Lender to
extend any credit to or to enter into this or any other agreement with any
Borrower or any member of the Group in connection with this Loan or other loans
now existing or hereafter created, proves to have been false in any material
respect at the time when the facts therein set forth were stated or certified,
or proves to have omitted any substantial contingent or unliquidated liability
or claim against any member of the Group or on the date of execution of this
Agreement there shall have been any materially adverse change in any of the
facts previously disclosed by any such certificate, statement, representation,
warranty or audit, which change shall not have been disclosed to Lender in
writing at or prior to the time of such execution; or
(h) Atrion shall fail within forty-five (45) days to pay,
bond or otherwise discharge any judgment or order for the payment of money in
excess of $1,000,000, which is not covered by insurance or stayed on appeal or
otherwise being appropriately contested in good faith; or
(i) Any ERISA Event shall have occurred; or
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<PAGE> 33
(j) Any Governmental Authority having jurisdiction shall
prohibit or limit the payment or distribution to the Borrowers of dividends,
principal or interest payments or management fees, if such prohibition or
limitation could reasonably be expected to have a Material Adverse Effect; or
(k) Atrion shall be the subject of any proceedings or
governmental investigation of any toxic or hazardous waste or substance into
the environment, or any violation of any federal, state or local environmental,
health or safety law or regulation, which, in any case, could reasonably be
expected to have a Material Adverse Effect; or
(l) Any Change in Control shall occur as to Atrion.
Notwithstanding anything in this Section, all requirements of notice shall be
deemed eliminated if Lender is prevented from giving such notice by bankruptcy
or other applicable law. The cure period, if any, shall then run from the
occurrence of the event or condition of Default rather than from the date of
notice.
7.2. REMEDIES. Upon the occurrence of any one or more of the
foregoing Events of Default, the Lender's obligation to make Advances shall
terminate automatically, and Lender may, at its option proceed to protect and
enforce its rights by suit in equity, action at law and/or the appropriate
proceeding either for specific performance of any covenant or condition
contained in the Line of Credit Agreement or in any Loan Document, and/or
declare the unpaid balance of the Loan Obligations together with all accrued
interest to be forthwith due and payable, and thereupon such balance shall
become so due and payable without presentation, protest or further demand or
notice of any kind, all of which are hereby expressly waived. Without
limitation of the foregoing, Lender may, at its election, do any one or more of
the following, all of which are hereby specifically authorized by the Borrowers
and are agreed by the Borrowers to be commercially reasonable and appropriate:
(a) Enter, with or without process of law, any premises where
the Collateral and records concerning the Collateral might be, and
without breach of the peace, and without charge or liability to the
Lender therefor, take possession of the Collateral and use or store it
on said premises or remove the Collateral to such other place or
places as the Lender deems convenient, all until completion of
enforcement by the Lender under the Uniform Commercial Code,
hereunder, under any other documentation and under other applicable
laws and in equity, of its collateral assignment of, security title to
and security interest in the Collateral and further, (A) place a
custodian in exclusive control thereof until completion of such
enforcement by the Lender, or until removal of the Collateral
therefrom by the Lender to such other place or places as the Lender
deems convenient, or (B) remain on said premises and use the same,
together with the materials, supplies, equipment, books and records
and other assets of the Borrowers pertaining to the Collateral or its
proceeds for the purpose of preserving, protecting, maintaining,
collecting and liquidating the Collateral, or (C) do both (A) and (B)
from time to time;
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<PAGE> 34
(b) Sell or otherwise dispose of the Collateral (in its then
condition or at the option of the Lender, after further processing or
preparation thereof, utilizing in connection therewith, without charge
to or liability of the Lender therefor, any of the assets of the
Borrowers pertaining to the Collateral or its proceeds) at public or
private sale (which sale the Lender may postpone from time to time by
announcement at the time and place of sale stated in the notice of
sale or by announcement at any adjourned sale), in lots or in bulk,
for cash or credit, with or without representations or warranties and
upon such other terms as the Lender in its sole discretion deems
advisable and the Lender may bid or become a purchaser in any such
sale, free from any right of redemption which is hereby expressly
waived by the Borrowers, and the Lender shall have the right at its
option to apply or credit the amount of all or any part of Loan
Obligations owing to the Lender against the purchase price bid by the
Lender at any such sale;
(c) Exercise any and all rights and remedies provided by this
Agreement, and by the Uniform Commercial Code to a secured party, as
well as under any other applicable state and federal laws; and
(d) Have the right to an immediate writ of possession,
without notice thereof and the Borrowers hereby specifically waive any
and all rights they may have to any notice and the posting of a bond
by the Lender prior to seizure by the Lender of the Collateral, or any
portion thereof; and/or
(e) Have the right to the appointment of a receiver for the
properties and assets of the Borrowers, and the Borrowers hereby
specifically consent to such right of the Lender and to such
appointments and waives: (A) any objection the Borrowers may have
thereto or (B) the right to have a bond or other security posted by
the Lender in connection therewith.
7.3. NOTIFICATION OF DISPOSITION. If any notification of intended
disposition of any of the Collateral is required by law, such notification
shall be deemed reasonably and properly given if personally delivered at least
five (5) days before such disposition, or sent by first class mail or certified
mail (return receipt requested), postage prepaid, at least ten (10) days before
such disposition.
7.4. ADJOURNMENT OF SALE. The Lender shall not be obligated to
conduct or conclude any previously advertised sale of the Collateral if it
shall determine not to do so. The Lender may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such sale
may, without further notice, be made at the time and place set forth in such
notice.
7.5. PROCEEDS. In case a sale of all or any part of the Collateral
is made on credit or for future delivery, the Collateral so sold may be
retained by the Lender until the sale price is paid by the purchaser or
purchasers thereof, but the Lender shall not incur any liability in case any
such purchaser or purchasers shall fail to take up and pay for the Collateral
so sold and, in case of any
34
<PAGE> 35
such failure, such Collateral may be sold again upon like notice. The Borrowers
shall be credited with the proceeds of any sale of the Collateral only when
such proceeds are actually received by the Lender.
7.6. ALLEGED VIOLATIONS. Borrowers shall give the Lender a written
statement of any claim or any alleged violation by Lender of the provisions of
Section 9-507 of the Uniform Commercial Code in the manner provided herein for
giving notices, within forty-eight (48) hours after any Borrower becomes aware
of the alleged violation, and the failure to do so shall be a bar to and waiver
of any claim on the part of the Borrower based upon such alleged violation.
7.7. ASSEMBLY OF COLLATERAL. Upon the occurrence of an Event of
Default, the Borrowers (and each of them) shall, if requested by the Lender,
cease the sale, lease, consumption and use of the Collateral and collection of
the Accounts, and assemble, at their expense, all of the Collateral and the
documents evidencing the Collateral and the books and records applicable
thereto, make them available to the Lender at each Borrower's place of business
and on the date requested and at the place designated, surrender possession of
the Collateral, the documents evidencing the Collateral and the books and
records to the Lender.
7.8. RIGHT OF SET-OFF. In addition to, and without limitation of,
any rights of the Lender under applicable law, if any Borrower becomes
insolvent, however evidenced, or any Event of Default occurs, any and all
deposits (including all account balances, whether provisional or final and
whether or not collected or available) and any other indebtedness at any time
held or owing by Lender to or for the credit or account of the Borrowers may be
offset and applied toward the payment of the Loan Obligations owing to Lender.
7.9. PRESERVATION OF RIGHTS. No delay or omission of the Lender to
exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
the Borrowers to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence. Any single or partial exercise of any
such right shall not preclude other or further exercise thereof or the exercise
of any other right, and no waiver, amendment or other variation of the terms,
conditions or provisions of the Loan Documents whatsoever shall be valid unless
in writing signed by the Lender, and then only to the extent in such writing
specifically set forth. All remedies contained in the Loan Documents or by law
afforded shall be cumulative, and all shall be available to the Lender until
the Loan Obligations have been paid in full.
7.10. DEFICIENCY. The Borrowers shall be jointly and severally
liable to the Lender for and shall pay on demand any deficiency which may
remain after any sale of the Collateral. The net cash proceeds resulting from
the sale or other disposition of the Collateral shall be applied, first, to the
reasonable expenses considering all aspects of the transaction (including
reasonable attorneys' fees and expenses) of taking, retaking, holding, storing,
processing and preparing for sale, selling, collecting and liquidating the
Collateral and all similar and attendant costs, and then to the satisfaction of
Loan Obligations (applicable as to particular Loan Obligations or against
principal or interest to be in the Lender's absolute discretion), and any
surplus remaining after all of Loan Obligations have been satisfied and paid in
full, will be remitted to the Borrowers or such
35
<PAGE> 36
other party who shall be entitled to such surplus, but only after deducting
therefrom Lender's reasonable expenses, including attorney's fees incurred in
determining the Person entitled to receive such surplus.
7.11. SECURITY INTEREST ABSOLUTE. All rights of the Lender, all
security interests and all obligations of the Borrowers hereunder shall be
absolute and unconditional irrespective of: (i) any lack of validity or
enforceability of any of Loan Documents; (ii) any change in the time, manner or
place of payment of, or in any other term in respect of, all or any of Loan
Obligations, or any other amendment or waiver of or consent to any departure
from any of Loan Documents; (iii) any increase in, addition to, exchange or
release of, or non-perfection of any lien on or security interest in, any other
collateral, or any release or amendment, modification, extension, renewal or
waiver of or consent to departure from any security document or guaranty for
all or any of Loan Obligations; (iv) any other circumstance which might
otherwise constitute a defense available to, or a discharge of, the Borrowers
in respect of the Loan Obligations, this Agreement or the other Loan Documents;
or (v) the absence of any action on the part of the Lender to obtain payment or
performance of Loan Obligations from the Borrowers.
ARTICLE VIII
MISCELLANEOUS
8.1. INDEMNIFICATION. Except to the extent caused by Lender's
negligence or willful misconduct, Borrowers jointly and severally agree to
defend, indemnify and hold harmless the Lender, its directors, officers,
employees, accountants, attorneys, and agents, and the participant lender
described in Section 8.7 hereof (the "INDEMNITEES") from and against any and
all claims, demands, judgments, damages, actions, causes of action, injuries,
orders, penalties, costs and expenses (including reasonable attorneys' fees and
costs of court) of any kind whatsoever arising out of or relating to any breach
or default by Borrowers or any other Person under this Agreement or any Loan
Document or the failure of Borrowers to observe, perform or discharge
Borrowers' duties hereunder or thereunder. Without limiting the generality of
the foregoing, Borrowers' obligation to indemnify Lender shall include
indemnity from any and all claims, demands, judgments, damages, actions, causes
of action, injuries, orders, penalties, costs and expenses arising out of or in
connection with the activities of the Borrowers, their predecessors in
interest, third parties who have trespassed on Borrowers' property, or parties
in a contractual relationship with Borrowers, whether or not occasioned wholly
or in part by any condition, accident or event caused by an act or omission of
the Indemnitees, which: (a) arise out of the actual, alleged or threatened
discharge, dispersal, release, storage, treatment, generation, disposal, or
escape of radioactive materials, radioactivity, pollutants or other toxic or
hazardous substances, including any solid, liquid, gaseous, or thermal irritant
or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals,
and waste (including materials to be recycled, reconditioned or reclaimed); or
(b) actually or allegedly arise out of the use, specification, or inclusion of
any product, material, or process containing chemicals or radioactive material,
the failure to detect the existence or proportion of chemicals or radioactive
material in the soil, air, surface water or groundwater, or the performance or
failure to perform the abatement of any pollution source or the replacement or
removal of any soil, water, surface water, or groundwater containing chemicals
or radioactive material; or (c) arises out of or relates to breach by Borrowers
of
36
<PAGE> 37
any environmental regulations. In addition, Borrowers will indemnify and hold
Lender harmless from and against any liability, claim, cost or expense incurred
by Lender or imposed against Lender for any stamp tax, intangible tax, or other
tax, fee or charge imposed by any governmental entity arising out of or
relating to the Notes or this Agreement or the transactions anticipated herein,
except to the extent such charges are caused by Lender's negligence or willful
misconduct.
8.2. COSTS AND EXPENSES. Borrowers shall bear all reasonable
expenses of Lender (including reasonable fees and expenses of its counsel, all
recording and filing fees, revenue stamps, and taxes) in connection with the
preparation, negotiation, execution, delivery, filing, and/or recordation of
this Agreement, the Notes, and any other Loan Documents, or otherwise incurred
in connection with the Loan Obligations. Borrowers agree to indemnify and save
Lender harmless against all broker's and finder's fees, if any. If, at any time
or times hereafter, including, without limitation, upon an Event of Default
hereunder, Lender employs counsel to advise or provide other representation
with respect to this Agreement, or to collect the balance of the Loan
Obligations, or to take any action in or with respect to any suit or proceeding
relating to this Agreement, or to protect, collect, or liquidate any of the
security for the Loan Obligations or attempt to enforce any security interest
or lien granted to Lender; then in any such events, all of the reasonable
attorneys' fees arising from such services and any expenses, costs, and charges
relating thereto shall be included within the Loan Obligations and shall be
payable on demand of Lender.
8.3. NO WAIVER. The failure at any time or times hereafter by
Lender to require strict performance by Borrowers of any of the provisions,
warranties, terms, and conditions contained in this Agreement or in any other
Loan Document, and delivered to Lender, shall not waive, affect, or diminish
any right of Lender thereafter to demand strict compliance and performance
therewith and with respect to any other provisions, warranties, terms, and
conditions contained in such agreements, documents, or instruments, and any
waiver of default shall not waive or affect any other default, whether prior or
subsequent thereto, and whether the same are of a different type. None of the
warranties, conditions, provisions, and terms contained in this Agreement or
any other Loan Document, and delivered to Lender shall be deemed to have been
waived by any act or knowledge of Lender, its agents, officers or employees,
but only by an instrument in writing signed by an officer of Lender and
directed to Borrowers specifying such waiver.
8.4. HEADINGS. The headings of the articles, sections, paragraphs,
and subdivisions of this Agreement are for convenience of reference only, are
not to be considered a part hereof, and shall not limit or otherwise affect any
of the terms hereof.
8.5. SURVIVAL OF COVENANTS. All covenants, agreements,
representations, and warranties made herein and in certificates or reports
delivered pursuant hereto shall be deemed to have been material and relied on
by Lender, notwithstanding any investigation made by or on behalf of Lender,
and shall survive the execution and delivery to Lender of this Agreement and
the other Loan Documents.
8.6. NOTICES. Any notice or other communication required or
permitted to be given by this Agreement or the other Loan Documents or by
applicable law shall be in writing and shall be deemed received (a) on the date
delivered, if sent by hand delivery (to the person or department if one is
specified below), (b) three (3) days following the date deposited in U.S. mail,
certified or registered,
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<PAGE> 38
with return receipt requested, or (c) one (1) day following the date deposited
with Federal Express or other national overnight carrier, and in each case
addressed as follows:
If to Borrowers:
Atrion Corporation
One Allentown Parkway
Allen, Texas 75002
Attn: Mr. Jeffery Strickland
If to Lender:
SouthTrust Bank, National Association
540 LBJ Freeway
Suite 1245
Dallas, Texas 75240
Attn: Mr. Steven W. Davis
Either party may change its address to another single address by notice given
as herein provided, except any change of address notice must be actually
received in order to be effective.
8.7. BENEFITS. All of the terms and provisions of this Agreement
shall bind and inure to the benefit of the parties hereto and their respective
successors and assigns. No Person other than Borrowers or Lender shall be
entitled to rely upon this Agreement or be entitled to the benefits of this
Agreement.
8.8. PARTICIPATION. Borrowers acknowledge that Lender may, at its
option, sell participation interests in, or assign all of its interest in, the
Loans. Borrowers agree with each present and future participant or owner of the
Loans that if an Event of Default should occur, each present and future
participant or owner shall have all of the rights and remedies of Lender with
respect to any deposit due from any participant to the Borrowers. The execution
by a participant of a participation agreement with Lender, and the execution by
the Borrowers of this Agreement, regardless of the order of execution, shall
evidence an agreement between Borrowers and said participant in accordance with
the terms of this Section.
8.9. SUPERSEDES PRIOR AGREEMENTS; COUNTERPARTS. This Agreement and
the Loan Documents referred to herein supersede and incorporate all
representations, promises, and statements, oral or written, made by Lender in
connection with the Loan. This Agreement may not be varied, altered, or amended
except by a written instrument executed by an authorized officer of the Lender.
This Agreement may be executed in any number of counterparts, each of which,
when executed and delivered, shall be an original, but such counterparts shall
together constitute one and the same instrument.
8.10. CONSTRUCTION OF PROVISIONS OF THIS AGREEMENT. Lender has not
agreed to make any loan other than those specifically described herein. All
requirements herein shall be deemed material to Lender. Except as specified
herein, all conditions and requirements must be satisfied by Borrowers
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<PAGE> 39
prior to the Closing Date. Whenever this Agreement refers to a matter being
"satisfactory" to Lender, subject to Lender's "approval" or "consent," at
Lender's "option," at Lender's "determination," "required" by Lender, at
Lender's "request," as Lender shall "deem necessary," or similar terminology,
it is deemed that each of the aforesaid shall be in the sole discretion of the
Lender, and if any term or condition requires Lender's approval, consent, or
satisfaction (the "Lender's Approval"), the Lender's Approval shall not be
implied, but shall be evidenced only by a written notice from Lender
specifically addressed to the particular requirement or condition and
expressing Lender's Approval.
8.11. CONTROLLING LAW. THE VALIDITY, INTERPRETATION, ENFORCEMENT AND
EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF ALABAMA. THE LENDER'S PRINCIPAL PLACE OF
BUSINESS IS LOCATED IN JEFFERSON COUNTY IN THE STATE OF ALABAMA, AND THE
BORROWERS AGREE THAT THE LOANS SHALL BE FUNDED FROM AND THIS AGREEMENT SHALL BE
HELD BY LENDER AT SUCH PRINCIPAL PLACE OF BUSINESS, AND THE HOLDING OF THIS
AGREEMENT BY LENDER THEREAT SHALL CONSTITUTE SUFFICIENT MINIMUM CONTACTS OF
BORROWERS WITH JEFFERSON COUNTY AND THE STATE OF ALABAMA FOR THE PURPOSE OF
CONFERRING JURISDICTION UPON THE FEDERAL AND STATE COURTS PRESIDING IN SUCH
COUNTY AND STATE.
8.12. WAIVER OF JURY TRIAL. BORROWERS HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY ON ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF OR IN ANY WAY PERTAINING OR RELATED TO LOAN OBLIGATION,
THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT, OR IN ANY WAY CONNECTED WITH OR
PERTAINING OR RELATED TO OR INCIDENTAL TO ANY DEALINGS OF LENDER AND BORROWERS
WITH RESPECT TO THE LOAN OBLIGATIONS, THIS AGREEMENT, AND ANY OTHER LOAN
DOCUMENT, OR IN CONNECTION WITH THE TRANSACTIONS RELATED HERETO OR CONTEMPLATED
HEREBY OR THE EXERCISE OF ANY PARTY'S RIGHTS AND REMEDIES WITH RESPECT TO THE
LOAN OBLIGATIONS, THIS AGREEMENT, OR OTHERWISE, OR THE CONDUCT OF THE
RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF THE FOREGOING CASES WHETHER NOW
EXISTING OR HEREAFTER ARISING AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE. BORROWERS ACKNOWLEDGE THAT LENDER MAY FILE A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED
AGREEMENT OF THE BORROWERS IRREVOCABLY TO WAIVE THEIR RIGHTS TO TRIAL BY JURY,
AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY
WHATSOEVER BETWEEN BORROWERS AND LENDER SHALL INSTEAD BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
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<PAGE> 40
IN WITNESS WHEREOF, Borrowers and Lender have caused this Agreement to be
executed by their respective duly authorized officers as of the date first
above written.
BORROWERS:
ATRION CORPORATION,
a Delaware corporation
BY: /s/ Jeffery Strickland
------------------------------
Its: Vice President
--------------------
ATRION MEDICAL PRODUCTS, INC.,
an Alabama corporation
BY: /s/ Jeffery Strickland
------------------------------
Its: Vice President
--------------------
HALKEY-ROBERTS CORPORATION,
a Florida corporation
BY: /s/ Jeffery Strickland
------------------------------
Its: Vice President
--------------------
QUEST MEDICAL, INC.,
a Texas corporation
BY: /s/ Jeffery Strickland
------------------------------
Its: Vice President
--------------------
ALATENN PIPELINE COMPANY, INC.,
an Alabama corporation
BY: /s/ Jeffery Strickland
------------------------------
Its: Vice President
--------------------
ATRION LEASING COMPANY, INC.,
an Alabama corporation
BY: /s/ Jeffery Strickland
------------------------------
Its: Vice President
--------------------
40
<PAGE> 41
ATRION INTERNATIONAL, INC.,
a U.S. Virgin Islands corporation
BY: /s/ Jeffery Strickland
------------------------------
Its: Vice President
--------------------
LENDER:
SOUTHTRUST BANK, NATIONAL
ASSOCIATION, a national banking
association
BY: /s/ Steven W. Davis
------------------------------
Its: Vice President
--------------------
41
<PAGE> 42
EXHIBIT A
PRICING MATRIX
<TABLE>
<CAPTION>
If the ratio of Total The Line of Credit The Unused Line The Term Loan
Liabilities/Tangible Loan Margin Fee Will Be: Margin Will Be:
Net Worth is: Will Be: ----------- ---------------
- ------------- --------
<S> <C> <C> <C>
Greater than 1.50 150 bps (1.50%) 75 bps (.75%) 175 bps (1.75%)
1.15 to 1.50 125 bps (1.25%) 50 bps (.50%) 150 bps (1.50%)
Less than 1.15 100 bps (1.00%) 25 bps (.25%) 125 bps (1.25%)
</TABLE>
Exhibit A-1
<PAGE> 43
EXHIBIT B
LINE OF CREDIT PROMISSORY NOTE
$18,500,000 Birmingham, Alabama
November 12, 1999
FOR VALUE RECEIVED, the undersigned, ATRION CORPORATION, a Delaware
corporation ("Atrion"), ATRION MEDICAL PRODUCTS, INC., an Alabama corporation
("AMI"), HALKEY-ROBERTS CORPORATION, a Florida corporation ("Halkey-Roberts"),
QUEST MEDICAL, INC., a Texas corporation ("Quest"), ALATENN PIPELINE COMPANY,
INC., an Alabama corporation ("AlaTenn"), ATRION LEASING COMPANY, INC., an
Alabama corporation ("ALI"), and ATRION INTERNATIONAL, INC., a U.S. Virgin
Islands corporation ("AII") (individually, a "Borrower," and collectively, the
"Borrowers") jointly and severally promise to pay to the order of SOUTHTRUST
BANK, NATIONAL ASSOCIATION, a national banking association ("Lender"), at the
main office of Lender or at such other place as the holder of this Note may
from time to time designate in writing, the principal sum of EIGHTEEN MILLION
FIVE HUNDRED THOUSAND DOLLARS ($18,500,000), or such lesser amount as may be
from time-to-time outstanding hereunder, together with interest on the unpaid
principal amount from time to time outstanding at the rate hereinafter set
forth, such principal and interest to be payable as set forth in this Note.
This Note is executed pursuant to a Loan and Security Agreement of
even date herewith among Borrowers and Lender (such Loan and Security
Agreement, as it may from time to time be further supplemented, modified and
amended, being referred to in this Note as the "Loan Agreement"; capitalized
terms used herein and not otherwise defined shall have the meanings set forth
in the Loan Agreement), pursuant to which the Lender has established for the
Borrowers' benefit the Credit Facility described therein. This Note evidences
that portion of the Credit Facility which constitutes the Line of Credit Loan.
1. DEFINED TERMS. As used herein, the following terms shall
have the following meanings:
"ADVANCE" means any principal amount advanced hereunder and
remaining outstanding at any time.
"BASE RATE" means the rate of interest designated
periodically by Lender as its Base Rate. The Base Rate is not necessarily the
lowest interest rate charged by Lender.
"BUSINESS DAY" means any day other than a Saturday, a Sunday,
a day on which dealings in U.S. Dollars are not carried on in the London
interbank market, or a day on which Lender is authorized or required to be
closed for business.
"DEFAULT" means the occurrence or existence of any event
which, but for the giving of notice or expiration of time or both, would
constitute an Event of Default.
"DEFAULT RATE" means a rate per annum equal to 2% above the
interest rate otherwise in effect on any Loan hereunder.
Exhibit B-1
<PAGE> 44
"EVENT OF DEFAULT" has the meaning set forth in Section 8
hereof.
"LIBOR" means a per annum rate of interest equal to the
"London Interbank Offered Rate (LIBOR)" for the LIBOR Interest Period, as
quoted by Telerate (or if such rate is not available from Telerate, then from
such other sources as Lender may reasonably select in accordance with the terms
hereof).
"LIBOR INTEREST PERIOD" means, alternatively, a thirty (30),
sixty (60), or ninety (90) day LIBOR period, as shall be designated by
Borrowers in a Rate Election Notice. The LIBOR Interest Period so designated by
Borrowers will be used by Lender in determining the applicable LIBOR Rate, and
shall determine the period during which such LIBOR Rate shall remain in effect,
all as provided herein. For purposes of calculating the applicable LIBOR Rate,
each LIBOR Interest Period shall be deemed to commence on the monthly payment
date when the selected LIBOR Rate takes effect, and the LIBOR Rate so
calculated shall terminate and expire one (1) day prior to the next succeeding
monthly payment date nearest in time to the date upon which the then applicable
LIBOR Interest Period is to expire; provided that if any LIBOR Interest Period
would otherwise end on a day which is not a Business Day, that LIBOR Interest
Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such LIBOR Interest Period beyond the
Termination Date, in which event such LIBOR Interest Period shall end on the
immediately preceding Business Day.
"LIBOR RATE" means, if elected by Borrowers in a Rate
Election Notice, a variable per annum rate of interest which shall accrue on
the outstanding principal balance during the applicable LIBOR Interest Period,
and which shall be equal to the sum of the LIBOR in effect on the first day of
the Borrowers' selected LIBOR Interest Period, plus the Margin specified in the
Pricing Matrix attached hereto as Exhibit A.
"LINE OF CREDIT LOAN" means that portion of the Credit
Facility evidenced hereby which is available to the Borrowers as a revolving
line of credit pursuant to which the Borrowers may borrow, repay, reborrow, and
prepay without penalty Advances, and which such Line of Credit Loan shall be in
the maximum principal amount of $18,500,000 LESS the outstanding principal
balance of any Advances which have been converted to Term Loans pursuant to
Section 2.6 of the Loan Agreement, and further LESS the face amount of all
Letters of Credit issued by Lender for Borrowers' account pursuant to Section
2.14 of the Loan Agreement.
"LOAN DOCUMENTS" means, collectively, this Note, the Loan
Agreement, any and all Term Notes hereafter executed and delivered by
Borrowers, all UCC-1 financing statements, certificates, and other instruments
executed and delivered to Lender at any time as security for the Loan
Obligations, and any and all other agreements, instruments, and documents
heretofore, now, or hereafter executed by any Borrower and delivered to the
Lender in respect to the transactions contemplated by the Loan Agreement
"LOAN OBLIGATIONS" means all Advances, debts, liabilities,
obligations, covenants and duties owing, arising, due or payable from Borrowers
to Lender of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under the Loan Agreement, this
Note, the Term Notes, or any of the other Loan Documents, whether direct or
indirect (including those acquired by assignment), absolute or contingent,
primary or secondary, due or to become due, now existing or hereafter arising
and however evidenced or acquired, and shall include obligations for
reimbursement of
Exhibit B-2
<PAGE> 45
amounts drawn under any Letters of Credit which may be issued by the Lender as
described in Section 2.14 of the Loan Agreement. The term includes, without
limitation, all interest, charges, expenses, fees, attorneys' fees and any
other sums chargeable to Borrowers under any of the Loan Documents.
"MARGIN" means the rate spread applicable to a LIBOR Rate in
effect from time to time hereunder, which shall be determined using the Pricing
Matrix attached hereto as Exhibit A.
"RATE ELECTION NOTICE" means the written rate election in the
form attached hereto as Exhibit B hereto, pursuant to which the Borrowers shall
designate a LIBOR Interest Period as the effective interest period for purposes
of calculating the LIBOR Rate to be in effect with respect to Advances.
"TERMINATION DATE" means November 12, 2002, or such earlier
date on which the obligations of the Lender to make Advances hereunder are
terminated pursuant to the terms of this Agreement or such subsequent date or
dates to which the availability of Advances hereunder is extended pursuant to
the provisions set forth in Section 2.13 of the Loan Agreement.
2. ADVANCES. The proceeds of this Note shall be advanced
in a series of Advances, in accordance with the terms and conditions and
procedures set forth in the Loan Agreement. Subject to the terms and conditions
set forth in this Note and in the Loan Agreement, Borrowers may borrow, repay
and reborrow and prepay Advances hereunder without penalty at any time prior to
the Termination Date.
3. INTEREST RATE.
(a) Interest shall accrue on the principal amount of all
Advances outstanding at the end of each day from the respective dates such
principal amounts are advanced until paid (whether at stated maturity,
acceleration, or otherwise) at a variable rate per annum equal to the Base
Rate. Such rate shall be increased or decreased, as the case may be, by an
amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of the Business Day that any such
change in the Base Rate becomes effective.
(b) Notwithstanding the provisions of Subsection 3(a),
Borrowers may, at any time during the term of the Line of Credit Loan, elect a
LIBOR Rate for an applicable LIBOR Interest Period designated by Borrowers to
be the applicable rate accruing on all outstanding Advances, provided, however,
that all selected LIBOR Interest Periods (other than a LIBOR Interest Period
which may be elected on the Closing Date) must commence on a scheduled monthly
payment date hereunder. In such event, Borrowers shall exercise such election
by delivering to Lender a Rate Election Notice not more than ten (10) nor less
than three (3) days prior to the scheduled monthly payment date upon which the
selected LIBOR Rate is to take effect. In the event that Borrowers fail timely
to deliver to Lender a succeeding Rate Election Notice upon the expiration of
any applicable LIBOR Interest Period, the outstanding principal balance shall
continue to bear interest at the LIBOR Rate using the last elected LIBOR
Interest Period (such rate to be re-calculated by Lender using the Margin and
the then current LIBOR in effect) until a subsequent Rate Election Notice to
the contrary is received by Lender. Borrowers shall not be entitled to select
any LIBOR Interest Period which would extend beyond the expiration of the
Termination Date.
(c) Borrowers agree that, notwithstanding anything to
the contrary herein, if at any time Lender determines, in accordance with
reasonable and ordinary commercial standards, that its maintenance
Exhibit B-3
<PAGE> 46
of any rate based upon the LIBOR Rate would be in violation of any law,
regulation, guideline or order, Lender may so notify Borrowers in writing or by
telephone, and then Lender may suspend the availability of such rate and shall
so advise Borrowers promptly and shall offer to Borrowers an alternative index
(to which the applicable Margin as set forth in the Pricing Matrix attached
hereto as Exhibit A shall be added to calculate the applicable rate accruing
hereunder) and Borrowers shall have the option, within five (5) Business Days
of receiving such advice from Lender, to elect such alternative index (to which
the applicable margin as set forth in the Pricing Matrix attached hereto as
Exhibit A shall be added to calculate the applicable rate accruing hereunder),
or an applicable rate equal to the Base Rate, and unless and until Borrowers
make such election, the Base Rate will be the applicable rate accruing
hereunder. Borrowers further agree that, notwithstanding the fact that
Borrowers may have elected to base the interest rate applicable to the Loans
upon Lender's cost of funds in the Eurodollar market, Lender shall not be
required actually to obtain funds from such source at any time.
(d) Interest on each Advance shall accrue from and
including the date of such Advance to but excluding the date of any repayment
thereof; provided, however, that, if an Advance is repaid on the same day made,
one (1) day's interest shall be paid on such Advance.
(e) Interest shall be calculated on the basis of a
360-day year by multiplying the principal sum by the applicable per annum rate,
multiplying the product thereof by the actual number of days elapsed, and
dividing the product so obtained by 360.
4. PAYMENT TERMS. The principal of and interest on this
Note are payable as follows:
(a) Accrued interest on all Advances shall be paid upon
the earliest of (1) the first day of each month (for the immediately preceding
month), computed through the last calendar day of the preceding month, (2) the
occurrence of an Event of Default in consequence of which Lender elects to
accelerate the maturity and payment of this Note, or (3) the Termination Date.
(b) If not sooner prepaid, the outstanding principal
balance of all Advances, together with accrued and unpaid interest thereon,
will be due and payable in full on the Termination Date.
(c) Except to the extent payments are being made pursuant
to the cash management system set forth in Section 2.3(a) of the Loan
Agreement, all sums paid to the Lender by Borrowers hereunder shall be paid
directly to the Lender in immediately available funds no later than 2:00 P.M.,
Birmingham, Alabama time on the date on which payment is due, except if such
date is not a Business Day such payment shall then be due on the first Business
Day after such date, but interest shall continue to accrue until the date
payment is received. Any payment received after 2:00 p.m. Birmingham, Alabama
time shall be deemed to have been received on the immediately following
Business Day for all purposes, including, without limitation, the accrual of
interest on principal.
(d) Borrowers irrevocably waive the right, following the
occurrence of an Event of Default, to direct the application of any and all
payments and collections at any time or times hereafter received by Lender from
or on behalf of Borrowers or from any of the Collateral, and Borrowers do
hereby irrevocably agree that Lender shall have the continuing exclusive right,
following the occurrence of an Event of Default, to apply such payments and
collections received at any time or times hereafter by Lender or its agent
against the Loan Obligations, in such manner as Lender may deem advisable,
notwithstanding
Exhibit B-4
<PAGE> 47
any entry by Lender upon any of its books and records. As long as no Event of
Default has occurred and is continuing, Lender agrees that payments received
from Borrowers will be applied as set forth in this Note.
5. PREPAYMENT. Borrowers shall have the right at any
time and from time to time to prepay all Advances comprising the outstanding
principal balance hereof, in whole or in part, without premium or penalty but
with accrued interest to the date of such prepayment on the amounts prepaid.
Any such prepayments shall be made to Lender in immediately available funds.
Any such prepayment shall not affect or vary the obligation of Borrowers to pay
any installment when due.
6. LATE CHARGES; INTEREST ON OVERDUE INSTALLMENTS;
COLLECTION COSTS.
(a) Borrowers will pay to Lender a late charge equal to
five percent (5%) of any payment not received by Lender within ten (10) days
after the due date thereof, with the exception of any payment due upon
maturity. Collection or acceptance by Lender of such late charge shall not
constitute a waiver of any rights or remedies of Lender provided herein or in
any other Loan Document.
(b) Upon the occurrence and during the continuation of
an Event of Default, the outstanding principal amount hereof shall bear
interest at the Default Rate. Borrowers acknowledge and agree that the
provisions herein relating to the Default Rate represent a fair and reasonable
estimate by Borrowers and Lender of a fair average compensation for the loss
that may be sustained by Lender due to the failure of Borrowers to make timely
payments with respect to the Loan Obligations and for the cost and expenses
that may be incurred by Lender by reason of the occurrence of an Event of
Default, the parties recognizing that the damages caused by such extra
administrative expenses and loss of the use of funds is impracticable or
extremely difficult to ascertain or estimate. Interest at the Default Rate
shall be paid without prejudice to the rights of Lender to collect any other
amounts provided to be paid hereunder
(c) Lender shall be entitled to recover all costs of
collecting, securing or attempting to collect or secure this Note, including,
without limitation, court costs and reasonable attorneys' fees, including
reasonable attorneys' fees in any appellate or bankruptcy proceedings.
7. SECURITY. This Note is secured by the Collateral.
Exhibit B-5
<PAGE> 48
8. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an "Event of Default" hereunder and under
each of the other Loan Documents:
(a) NONPAYMENT OF INDEBTEDNESS. Nonpayment of principal
or interest within ten (10) days after written notice from Lender to
Borrowers that such payments are due and payable.
(b) EVENT OF DEFAULT UNDER LOAN DOCUMENT. The occurrence
of any Event of Default (other than as specified in subsection (a)
above) under any other Loan Documents which is not cured within
applicable curative periods specified therein.
Notwithstanding anything in this Section, all requirements of notice shall be
deemed eliminated if Lender is prevented from giving such notice by bankruptcy
or other applicable law. The cure period, if any, shall then run from the
occurrence of the event or condition of Default rather than from the date of
notice.
9. USURY. In no event shall the amount of interest due
or payable hereunder or pursuant to any of the Loan Documents exceed the
maximum rate of interest allowed by applicable law, and in the event any such
payment is inadvertently paid by Borrowers or inadvertently received by Lender,
then such excess sum shall be credited as a payment of principal. It is the
express intent hereof that Borrowers not pay and Lender not receive, directly
or indirectly, interest in excess of that which may be legally paid by
Borrowers under applicable law.
10. RELATIONSHIP OF PARTIES. Borrowers and Lender agree
that the relationship between them shall be solely that of debtor and creditor.
Nothing contained in this Note or in any other Loan Document shall be deemed to
create a partnership, tenancy-in-common, joint tenancy, joint venture or
co-ownership by or between Borrowers and Lender. Lender (or any subsequent
holder hereof) shall not be in any way responsible or liable for debts, losses,
obligations or duties of Borrowers with respect to any collateral given as
security for this Note or otherwise. Borrowers, at all times consistent with
the terms and provisions of this Note and the Loan Documents, shall be free to
determine and follow their own policies and practices in the conduct of their
businesses.
11. MISCELLANEOUS.
(a) Borrowers agree that, as of the date hereof, there
are no defenses, equities, or setoffs with respect to the obligations set forth
herein.
(b) All amounts due hereunder shall be payable in lawful
money of the United States of America.
(c) With respect to the amounts due under this Note,
Borrowers waive the following to the fullest extent permitted by law:
(i) All rights of exemption of property from
levy or sale under execution or other process for the collection of
debts under the Constitution or laws of the United States or any state
thereof;
(ii) Demand, presentment, protest, notice of
dishonor, notice of non-payment, diligence in collection, and all
other requirements necessary to charge or hold the
Exhibit B-6
<PAGE> 49
Borrowers liable on any obligations hereunder; and
(iii) Receipt of any further notice from or
acknowledgment by Lender of any Collateral now or hereafter deposited
as security for the obligations hereunder.
(d) Section headings are inserted for convenience of
reference only and shall be disregarded in the interpretation of this Note.
(e) The provisions of this Note shall be construed
without regard to the party responsible for the drafting and preparation
hereof.
(f) Lender may, at its option, release any Collateral
given to secure the indebtedness evidenced hereby, or release any Borrower from
its obligations hereunder, and no such release shall impair the obligations of
any other Borrower not specifically released by Lender.
(g) Time is of the essence of this Note and the
performance of each of the covenants and agreements contained herein.
(h) Lender shall not by any act, delay, omission, or
otherwise be deemed to have waived any of its rights or remedies, and no waiver
of any kind shall be valid unless in writing and signed by Lender. All rights
and remedies of Lender under the terms of this Note, the other Loan Documents
and applicable statutes or rules of law, shall be cumulative and may be
exercised successively or concurrently.
(i) The obligations of Borrowers hereunder shall be
binding upon and enforceable against Borrowers and their respective successors
and assigns.
(j) Any provision in this Note which may be unenforceable
or invalid under any law shall be ineffective to the extent of such
unenforceability or invalidity without affecting the enforceability or validity
of any other provision hereof.
(k) The validity, interpretation, enforcement and effect
of this instrument shall be governed by, and construed in accordance with, the
laws of the State of Alabama.
(l) BORROWERS HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY ON
ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT
OF OR IN ANY WAY PERTAINING OR RELATED TO LOAN OBLIGATION, THIS NOTE, OR ANY
OTHER LOAN DOCUMENT, OR IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO
OR INCIDENTAL TO ANY DEALINGS OF LENDER AND BORROWERS WITH RESPECT TO THE LOAN
OBLIGATIONS, THIS NOTE, AND ANY OTHER LOAN DOCUMENT, OR IN CONNECTION WITH THE
TRANSACTIONS RELATED HERETO OR CONTEMPLATED HEREBY OR THE EXERCISE OF ANY
PARTY'S RIGHTS AND REMEDIES WITH RESPECT TO THE LOAN OBLIGATIONS, THIS NOTE, OR
OTHERWISE, OR THE CONDUCT OF THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF
THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWERS ACKNOWLEDGE THAT LENDER MAY
FILE A COPY OF THIS NOTE WITH ANY COURT
Exhibit B-7
<PAGE> 50
AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY, AND BARGAINED AGREEMENT OF THE
BORROWERS IRREVOCABLY TO WAIVE THEIR RIGHTS TO TRIAL BY JURY, AND THAT, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, ANY DISPUTE OR CONTROVERSY WHATSOEVER
BETWEEN BORROWERS AND LENDER SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
- * * * *
Exhibit B-8
<PAGE> 51
IN WITNESS WHEREOF, Borrowers have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
BORROWERS:
ATRION CORPORATION,
a Delaware corporation
BY:
------------------------------
Its:
--------------------
ATRION MEDICAL PRODUCTS, INC.,
an Alabama corporation
BY:
------------------------------
Its:
--------------------
HALKEY-ROBERTS CORPORATION,
a Florida corporation
BY:
------------------------------
Its:
--------------------
QUEST MEDICAL, INC.,
a Texas corporation
BY:
------------------------------
Its:
--------------------
ALATENN PIPELINE COMPANY, INC.,
an Alabama corporation
BY:
------------------------------
Its:
--------------------
ATRION LEASING COMPANY, INC.,
an Alabama corporation
BY:
------------------------------
Its:
--------------------
Exhibit B-9
<PAGE> 52
ATRION INTERNATIONAL, INC.,
a U.S. Virgin Islands corporation
BY:
------------------------------
Its:
--------------------
Exhibit B-10
<PAGE> 53
EXHIBIT A
PRICING MATRIX
<TABLE>
<CAPTION>
If the ratio of Consolidated
Liabilities/Consolidated The Margin
Tangible Net Worth is: Will Be:
---------------------- --------
<S> <C>
Greater than 1.50 150 bps (1.50%)
1.15 to 1.50 125 bps (1.25%)
Less than 1.15 100 bps (1.00%)
</TABLE>
Exhibit A-1
<PAGE> 54
EXHIBIT B
RATE ELECTION NOTICE
________________, ______
SouthTrust Bank, National Association
540 LBJ Freeway
Suite 1245
Dallas, Texas 75240
RE: $18,500,000 Line of Credit Promissory Note payable by Atrion
Corporation, Atrion Medical Products, Inc., Halkey-Roberts
Corporation, Quest Medical, Inc., AlaTenn Pipeline Company,
Inc., Atrion Leasing Company, Inc., and Atrion International,
Inc., as joint and several co-borrowers (collectively, the
"Borrowers") in favor of SouthTrust Bank, National
Association, dated November 12, 1999 (the "Note").
Gentlemen:
Please be advised that the following is the applicable LIBOR Interest
Period selected by Borrowers to accrue on the above-referenced Note.
30-day LIBOR
60-day LIBOR
90-day LIBOR
The undersigned hereby certifies to you that the ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth for the period ending
_________________ , and the corresponding Margin to be added to the LIBOR
applicable to the above selected LIBOR Interest Period, is as follows for the
selected LIBOR Interest Period:
Greater than 1.50, and the Margin is 150 basis points (1.50%)
1.15 to 1.50, and the Margin is 125 basis points (1.25%)
Less than 1.15, and the Margin is 100 basis points (1.00%)
This Rate Election Notice is delivered to you pursuant to that certain
Loan and Security Agreement dated November 12, 1999 among the Borrowers and the
Lender ("Loan Agreement"). All defined terms used herein without definition
shall have the meanings ascribed to them in the Loan Agreement.
ATRION CORPORATION,
a Delaware corporation,
on behalf of the Borrowers
BY:
----------------------------------------
Its:
--------------------------------
Exhibit B-1
<PAGE> 55
EXHIBIT C-1
RATE ELECTION NOTICE [FOR LINE OF CREDIT PROMISSORY NOTE]
________________, ______
SouthTrust Bank, National Association
540 LBJ Freeway
Suite 1245
Dallas, Texas 75240
RE: $18,500,000 Line of Credit Promissory Note payable by Atrion
Corporation, Atrion Medical Products, Inc., Halkey-Roberts
Corporation, Quest Medical, Inc., AlaTenn Pipeline Company,
Inc., Atrion Leasing Company, Inc., and Atrion International,
Inc., as joint and several co-borrowers (collectively, the
"Borrowers"), in favor of SouthTrust Bank, National
Association, dated November 12, 1999 (the "Note").
Gentlemen:
Please be advised that the following is the applicable LIBOR Interest
Period selected by Borrowers to accrue on the above-referenced Note.
30-day LIBOR
60-day LIBOR
90-day LIBOR
The undersigned hereby certifies to you that the ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth for the period ending __________,
and the corresponding Margin to be added to the LIBOR applicable to the above
selected LIBOR Interest Period, is as follows for the selected LIBOR Interest
Period:
Greater than 1.50, and the Margin is 150 basis points (1.50%)
1.15 to 1.50, and the Margin is 125 basis points (1.25%)
Less than 1.15, and the Margin is 100 basis points (1.00%)
This Rate Election Notice is delivered to you pursuant to that certain
Loan and Security Agreement dated November 12, 1999 among the Borrowers and the
Lender ("Loan Agreement"). All defined terms used herein without definition
shall have the meanings ascribed to them in the Loan Agreement.
ATRION CORPORATION,
a Delaware corporation,
on behalf of the Borrowers
BY:
----------------------------------------
Its:
--------------------------------
Exhibit C-1
<PAGE> 56
EXHIBIT C-2
RATE ELECTION NOTICE [FOR TERM NOTE]
________________, ______
SouthTrust Bank, National Association
540 LBJ Freeway
Suite 1245
Dallas, Texas 75240
RE: $__________ Term Loan Promissory Note payable by Atrion
Corporation, Atrion Medical Products, Inc., Halkey-Roberts
Corporation, Quest Medical, Inc., AlaTenn Pipeline Company,
Inc., Atrion Leasing Company, Inc., and Atrion International,
Inc., as joint and several co-borrowers (collectively, the
"Borrowers") in favor of SouthTrust Bank, National
Association, dated ____________________ (the "Note").
Gentlemen:
Please be advised that the following is the applicable LIBOR Interest
Period selected by Borrowers to accrue on the above-referenced Note.
30-day LIBOR
60-day LIBOR
90-day LIBOR
The undersigned hereby certifies to you that the ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth for the period ending _________,
and the corresponding Margin to be added to the LIBOR applicable to the above
selected LIBOR Interest Period, is as follows for the selected LIBOR Interest
Period:
Greater than 1.50, and the Margin is 175 basis points (1.75%)
1.15 to 1.50, and the Margin is 150 basis points (1.50%)
Less than 1.15, and the Margin is 125 basis points (1.25%)
This Rate Election Notice is delivered to you pursuant to that certain
Loan and Security Agreement dated November 12, 1999 among the Borrowers and the
Lender ("Loan Agreement"). All defined terms used herein without definition
shall have the meanings ascribed to them in the Loan Agreement.
ATRION CORPORATION,
a Delaware corporation,
on behalf of the Borrowers
BY:
----------------------------------------
Its:
--------------------------------
Exhibit C-2
<PAGE> 57
EXHIBIT D
TERM LOAN PROMISSORY NOTE
$_____________ Birmingham, Alabama
FOR VALUE RECEIVED, the undersigned, ATRION CORPORATION, a Delaware
corporation ("Atrion"), ATRION MEDICAL PRODUCTS, INC., an Alabama corporation
("AMI"), HALKEY-ROBERTS CORPORATION, a Florida corporation ("Halkey-Roberts"),
QUEST MEDICAL, INC., a Texas corporation ("Quest"), ALATENN PIPELINE COMPANY,
INC., an Alabama corporation ("AlaTenn"), ATRION LEASING COMPANY, INC., an
Alabama corporation ("ALI"), and ATRION INTERNATIONAL, INC., a U.S. Virgin
Islands corporation ("AII") (individually, a "Borrower," and collectively, the
"Borrowers") jointly and severally promise to pay to the order of SOUTHTRUST
BANK, NATIONAL ASSOCIATION, a national banking association ("Lender"), at the
main office of Lender or at such other place as the holder of this Note may
from time to time designate in writing, the principal sum of ________________
($_______________), together with interest on the unpaid principal amount from
time to time outstanding at the rate hereinafter set forth, such principal and
interest to be payable as set forth in this Note.
This Note is executed pursuant to a Loan and Security Agreement dated
as of November 12, 1999, among Borrowers and Lender (such Loan and Security
Agreement, as it may from time to time be further supplemented, modified and
amended, being referred to in this Note as the "Loan Agreement"; capitalized
terms used herein and not otherwise defined shall have the meanings set forth
in the Loan Agreement), pursuant to which the Lender has established for the
Borrowers' benefit the Credit Facility described therein. This Note constitutes
a Term Note pursuant to Section 2.6 of the Loan Agreement. The amount of
availability under the Line of Credit Loan is automatically reduced by the
outstanding principal balance of this Note. As the principal balance of this
Note is reduced, the maximum amount of credit available under the Line of
Credit Loan shall be increased by the amount of such reduction unless this Note
is paid in full and Borrowers have requested a corresponding reduction in
credit availability under the Line of Credit Loan.
1. DEFINED TERMS. As used herein, the following terms
shall have the following meanings:
"BASE RATE" means the rate of interest designated
periodically by Lender as its Base Rate. The Base Rate is not necessarily the
lowest interest rate charged by Lender.
"BUSINESS DAY" means any day other than a Saturday, a Sunday,
a day on which dealings in U.S. Dollars are not carried on in the London
interbank market, or a day on which Lender is authorized or required to be
closed for business.
"DEFAULT" means the occurrence or existence of any event
which, but for the giving of notice or expiration of time or both, would
constitute an Event of Default.
Exhibit D-2
<PAGE> 58
"DEFAULT RATE" means a rate per annum equal to 2% above the
interest rate otherwise in effect on any Loan hereunder.
"EVENT OF DEFAULT" has the meaning set forth in Section 8
hereof.
"LIBOR" means a per annum rate of interest equal to the
"London Interbank Offered Rate (LIBOR)" for the LIBOR Interest Period, as
quoted by Telerate (or if such rate is not available from Telerate, then from
such other sources as Lender may reasonably select in accordance with the terms
hereof).
"LIBOR INTEREST PERIOD" means, alternatively, a thirty (30),
sixty (60), or ninety (90) day LIBOR period, as shall be designated by
Borrowers in a Rate Election Notice. The LIBOR Interest Period so designated by
Borrowers will be used by Lender in determining the applicable LIBOR Rate, and
shall determine the period during which such LIBOR Rate shall remain in effect,
all as provided herein. For purposes of calculating the applicable LIBOR Rate,
each LIBOR Interest Period shall be deemed to commence on the monthly payment
date when the selected LIBOR Rate takes effect, and the LIBOR Rate so
calculated shall terminate and expire one (1) day prior to the next succeeding
monthly payment date nearest in time to the date upon which the then applicable
LIBOR Interest Period is to expire; provided that if any LIBOR Interest Period
would otherwise end on a day which is not a Business Day, that LIBOR Interest
Period shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such LIBOR Interest Period beyond the
Termination Date, in which event such LIBOR Interest Period shall end on the
immediately preceding Business Day.
"LIBOR RATE" means, if elected by Borrowers in a Rate
Election Notice, a variable per annum rate of interest which shall accrue on
the outstanding principal balance during the applicable LIBOR Interest Period,
and which shall be equal to the sum of the LIBOR in effect on the first day of
the Borrowers' selected LIBOR Interest Period, plus the Margin specified in the
Pricing Matrix attached hereto as Exhibit A.
"LOAN DOCUMENTS" means, collectively, this Note, the Loan
Agreement, the Line of Credit Note, any and all other Term Notes now or
hereafter executed and delivered by Borrowers, all UCC-1 financing statements,
certificates, and other instruments executed and delivered to Lender at any
time as security for the Loan Obligations, and any and all other agreements,
instruments, and documents heretofore, now, or hereafter executed by any
Borrower and delivered to the Lender in respect to the transactions
contemplated by the Loan Agreement.
"LOAN OBLIGATIONS" means all Advances, debts, liabilities,
obligations, covenants and duties owing, arising, due or payable from Borrowers
to Lender of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under the Loan Agreement, this
Note, the Line of Credit Note, any other Term Note now or hereafter executed by
a Borrower in favor of Lender, or any of the other Loan Documents, whether
direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however evidenced or acquired, and shall include
obligations for reimbursement of amounts drawn under any Letters of Credit
which may be issued by the Lender as described in Section 2.14 of the Loan
Agreement. The term includes, without limitation, all interest, charges,
expenses, fees, attorneys' fees and any other sums chargeable to Borrowers
under any of the Loan Documents.
Exhibit D-3
<PAGE> 59
"MARGIN" means the rate spread applicable to a LIBOR Rate in
effect from time to time hereunder, which shall be determined using the Pricing
Matrix attached hereto as Exhibit A.
"RATE ELECTION NOTICE" means the written rate election in the
form attached hereto as Exhibit B hereto, pursuant to which the Borrowers shall
designate a LIBOR Interest Period as the effective interest period for purposes
of calculating the LIBOR Rate.
12. INTEREST RATE.
(a) Interest shall accrue on the outstanding principal
balance at a variable rate per annum equal to the Base Rate plus one-fourth of
1% (1/4 of 1%). Such rate shall be increased or decreased, as the case may be,
by an amount equal to any increase or decrease in the Base Rate, with such
adjustments to be effective as of the opening of the Business Day that any such
change in the Base Rate becomes effective.
(b) Notwithstanding the provisions of Subsection 2(a),
Borrowers may, at any time during the term of the this Note, elect a LIBOR Rate
for an applicable LIBOR Interest Period designated by Borrowers to be the
applicable rate accruing on the outstanding principal balance hereof, provided,
however, that all selected LIBOR Interest Periods (other than a LIBOR Interest
Period which may be elected on the Closing Date) must commence on a scheduled
monthly payment date hereunder. In such event, Borrowers shall exercise such
election by delivering to Lender a Rate Election Notice not more than ten (10)
nor less than three (3) days prior to the scheduled monthly payment date upon
which the selected LIBOR Rate is to take effect. In the event that Borrowers
fail timely to deliver to Lender a succeeding Rate Election Notice upon the
expiration of any applicable LIBOR Interest Period, the outstanding principal
balance shall continue to bear interest at the LIBOR Rate using the last
elected LIBOR Interest Period (such rate to be re-calculated by Lender using
the Margin and the then current LIBOR in effect) until a subsequent Rate
Election Notice to the contrary is received by Lender. Borrowers shall not be
entitled to select any LIBOR Interest Period which would extend beyond the
maturity of this Note.
(c) Borrowers agree that, notwithstanding anything to
the contrary herein, if at any time Lender determines, in accordance with
reasonable and ordinary commercial standards, that its maintenance of any rate
based upon the LIBOR Rate would be in violation of any law, regulation,
guideline or order, Lender may so notify Borrowers in writing or by telephone,
and then Lender may suspend the availability of such rate and shall so advise
Borrowers promptly and shall offer to Borrowers an alternative index (to which
the applicable Margin as set forth in the Pricing Matrix attached hereto as
Exhibit A shall be added to calculate the applicable rate accruing hereunder)
and Borrowers shall have the option, within five (5) Business Days of receiving
such advice from Lender, to elect such alternative index (to which the
applicable margin as set forth in the Pricing Matrix attached hereto as Exhibit
A shall be added to calculate the applicable rate accruing hereunder), or an
applicable rate equal to the Base Rate, and unless and until Borrowers make
such election, the Base Rate will be the applicable rate accruing hereunder.
Borrowers further agree that, notwithstanding the fact that Borrowers may have
elected to base the interest rate applicable to the Loans upon Lender's cost of
funds in the Eurodollar market, Lender shall not be required actually to obtain
funds from such source at any time.
Exhibit D-4
<PAGE> 60
(d) Interest shall be calculated on the basis of a
360-day year by multiplying the principal sum by the applicable per annum rate,
multiplying the product thereof by the actual number of days elapsed, and
dividing the product so obtained by 360.
13. PAYMENT TERMS. The principal of and interest on this
Note are payable as follows:
(a) On ________ 1, ____, Borrowers shall pay to Lender
an installment of interest only based on the number of days from and including
the date of disbursement of the Note, to and including ____________________
[30/31], ____.
(b) On ________ 1, ______, and on the first (1st) day of
each calendar month thereafter, to and including _________ 1, _____, Borrowers
shall pay to Lender an installment of principal in the amount of
__________________ and ____/100 Dollars ($_________), plus accrued and unpaid
interest thereon.
(c) If not sooner prepaid, on ___________ 1, ________,
Borrowers shall pay to Lender the outstanding principal balance, together with
all accrued and unpaid interest thereon. A substantial principal payment will
be due and payable at maturity, since the monthly installments described in
subparagraph (b) are calculated on the basis of a ten (10) year amortization
schedule.
(d) Except to the extent payments are being made pursuant
to the cash management system set forth in Section 2.3(a) of the Loan
Agreement, all sums paid to the Lender by Borrowers hereunder shall be paid
directly to the Lender in immediately available funds no later than 2:00 P.M.,
Birmingham, Alabama time on the date on which payment is due, except if such
date is not a Business Day, such payment shall then be due on the first
Business Day after such date, but interest shall continue to accrue until the
date payment is received. Any payment received after 2:00 p.m. Birmingham,
Alabama time shall be deemed to have been received on the immediately following
Business Day for all purposes, including, without limitation, the accrual of
interest on principal.
(e) Borrowers irrevocably waive the right, following the
occurrence of an Event of Default, to direct the application of any and all
payments and collections at any time or times hereafter received by Lender from
or on behalf of Borrowers or from any of the Collateral, and Borrowers do
hereby irrevocably agree that Lender shall have the continuing exclusive right,
following the occurrence of an Event of Default, to apply such payments and
collections received at any time or times hereafter by Lender or its agent
against the Loan Obligations, in such manner as Lender may deem advisable,
notwithstanding any entry by Lender upon any of its books and records. As long
as no Event of Default has occurred and is continuing, Lender agrees that
payments received from Borrowers will be applied as set forth in this Note.
14. PREPAYMENT. Borrowers shall have the right at any
time and from time to time to prepay the outstanding principal balance hereof,
in whole or in part, without premium or penalty but with accrued interest to
the date of such prepayment on the amounts prepaid. Any such prepayments shall
be made to Lender in immediately available funds, and shall be applied to the
last installments to mature hereunder. Any such prepayment shall not affect or
vary the obligation of Borrowers to pay any installment when due. Amounts
prepaid may not be re-borrowed.
15. LATE CHARGES; INTEREST ON OVERDUE INSTALLMENTS;
COLLECTION COSTS.
Exhibit D-5
<PAGE> 61
(a) Borrowers will pay to Lender a late charge equal to
five percent (5%) of any payment not received by Lender within ten (10) days
after the due date thereof, with the exception of any payment due upon
maturity. Collection or acceptance by Lender of such late charge shall not
constitute a waiver of any rights or remedies of Lender provided herein or in
any other Loan Document.
(b) Upon the occurrence and during the continuation of
an Event of Default, the outstanding principal amount hereof shall bear
interest at the Default Rate. Borrowers acknowledge and agree that the
provisions herein relating to the Default Rate represent a fair and reasonable
estimate by Borrowers and Lender of a fair average compensation for the loss
that may be sustained by Lender due to the failure of Borrowers to make timely
payments with respect to the Loan Obligations and for the cost and expenses
that may be incurred by Lender by reason of the occurrence of an Event of
Default, the parties recognizing that the damages caused by such extra
administrative expenses and loss of the use of funds is impracticable or
extremely difficult to ascertain or estimate. Interest at the Default Rate
shall be paid without prejudice to the rights of Lender to collect any other
amounts provided to be paid hereunder
(c) Lender shall be entitled to recover all costs of
collecting, securing or attempting to collect or secure this Note, including,
without limitation, court costs and reasonable attorneys' fees, including
reasonable attorneys' fees in any appellate or bankruptcy proceedings.
16. SECURITY. This Note is secured by the Collateral.
17. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an "Event of Default" hereunder and under
each of the other Loan Documents:
(a) NONPAYMENT OF INDEBTEDNESS. Nonpayment of principal
or interest within ten (10) days after written notice from Lender to
Borrowers that such payments are due and payable.
(b) EVENT OF DEFAULT UNDER LOAN DOCUMENT. The occurrence
of any Event of Default (other than as specified in subsection (a)
above) under any other Loan Documents which is not cured within
applicable curative periods specified therein.
Notwithstanding anything in this Section, all requirements of notice shall be
deemed eliminated if Lender is prevented from giving such notice by bankruptcy
or other applicable law. The cure period, if any, shall then run from the
occurrence of the event or condition of Default rather than from the date of
notice.
18. USURY. In no event shall the amount of interest due
or payable hereunder or pursuant to any of the Loan Documents exceed the
maximum rate of interest allowed by applicable law, and in the event any such
payment is inadvertently paid by Borrowers or inadvertently received by Lender,
then such excess sum shall be credited as a payment of principal. It is the
express intent hereof that Borrowers not pay and Lender not receive, directly
or indirectly, interest in excess of that which may be legally paid by
Borrowers under applicable law.
19. RELATIONSHIP OF PARTIES. Borrowers and Lender agree
that the relationship between them shall be solely that of debtor and creditor.
Nothing contained in this Note or in any other Loan Document shall be deemed to
create a partnership, tenancy-in-common, joint tenancy, joint venture or co-
Exhibit D-6
<PAGE> 62
ownership by or between Borrowers and Lender. Lender (or any subsequent holder
hereof) shall not be in any way responsible or liable for debts, losses,
obligations or duties of Borrowers with respect to any Collateral given as
security for this Note or otherwise. Borrowers, at all times consistent with
the terms and provisions of this Note and the Loan Documents, shall be free to
determine and follow their own policies and practices in the conduct of their
businesses.
20. MISCELLANEOUS.
(a) Borrowers agree that, as of the date hereof, there
are no defenses, equities, or setoffs with respect to the obligations set forth
herein.
(b) All amounts due hereunder shall be payable in lawful
money of the United States of America.
(c) With respect to the amounts due under this Note,
Borrowers waive the following to the fullest extent permitted by law:
(i) All rights of exemption of property from
levy or sale under execution or other process for the collection of
debts under the Constitution or laws of the United States or any state
thereof;
(ii) Demand, presentment, protest, notice of
dishonor, notice of non-payment, diligence in collection, and all
other requirements necessary to charge or hold the Borrowers liable on
any obligations hereunder; and
(iii) Receipt of any further notice from or
acknowledgment by Lender of any Collateral now or hereafter deposited
as security for the obligations hereunder.
(d) Section headings are inserted for convenience of
reference only and shall be disregarded in the interpretation of this Note.
(e) The provisions of this Note shall be construed
without regard to the party responsible for the drafting and preparation
hereof.
(f) Lender may, at its option, release any Collateral
given to secure the indebtedness evidenced hereby, or release any Borrower from
its obligations hereunder, and no such release shall impair the obligations of
any other Borrower not specifically released by Lender.
(g) Time is of the essence of this Note and the
performance of each of the covenants and agreements contained herein.
(h) Lender shall not by any act, delay, omission, or
otherwise be deemed to have waived any of its rights or remedies, and no waiver
of any kind shall be valid unless in writing and signed by Lender. All rights
and remedies of Lender under the terms of this Note, the other Loan Documents,
and applicable statutes or rules of law, shall be cumulative and may be
exercised successively or concurrently.
Exhibit D-7
<PAGE> 63
(i) The obligations of Borrowers hereunder shall be
binding upon and enforceable against Borrowers and their respective successors
and assigns.
(j) Any provision in this Note which may be unenforceable
or invalid under any law shall be ineffective to the extent of such
unenforceability or invalidity without affecting the enforceability or validity
of any other provision hereof.
(k) The validity, interpretation, enforcement and effect
of this instrument shall be governed by, and construed in accordance with, the
laws of the State of Alabama.
(l) BORROWERS HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY ON
ANY CLAIM, COUNTERCLAIM, SETOFF, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT
OF OR IN ANY WAY PERTAINING OR RELATED TO LOAN OBLIGATION, THIS NOTE, OR ANY
OTHER LOAN DOCUMENT, OR IN ANY WAY CONNECTED WITH OR PERTAINING OR RELATED TO
OR INCIDENTAL TO ANY DEALINGS OF LENDER AND BORROWERS WITH RESPECT TO THE LOAN
OBLIGATIONS, THIS NOTE, AND ANY OTHER LOAN DOCUMENT, OR IN CONNECTION WITH THE
TRANSACTIONS RELATED HERETO OR CONTEMPLATED HEREBY OR THE EXERCISE OF ANY
PARTY'S RIGHTS AND REMEDIES WITH RESPECT TO THE LOAN OBLIGATIONS, THIS NOTE, OR
OTHERWISE, OR THE CONDUCT OF THE RELATIONSHIP OF THE PARTIES HERETO, IN ALL OF
THE FOREGOING CASES WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER
SOUNDING IN CONTRACT, TORT OR OTHERWISE. BORROWERS ACKNOWLEDGE THAT LENDER MAY
FILE A COPY OF THIS NOTE WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING,
VOLUNTARY, AND BARGAINED AGREEMENT OF THE BORROWERS IRREVOCABLY TO WAIVE THEIR
RIGHTS TO TRIAL BY JURY, AND THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
ANY DISPUTE OR CONTROVERSY WHATSOEVER BETWEEN BORROWERS AND LENDER SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
WITHOUT A JURY.
Exhibit D-8
<PAGE> 64
IN WITNESS WHEREOF, Borrowers have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
BORROWERS:
ATRION CORPORATION,
a Delaware corporation
BY:
------------------------------
Its:
--------------------
ATRION MEDICAL PRODUCTS, INC.,
an Alabama corporation
BY:
------------------------------
Its:
--------------------
HALKEY-ROBERTS CORPORATION,
a Florida corporation
BY:
------------------------------
Its:
--------------------
QUEST MEDICAL, INC.,
a Texas corporation
BY:
------------------------------
Its:
--------------------
ALATENN PIPELINE COMPANY, INC.,
an Alabama corporation
BY:
------------------------------
Its:
--------------------
ATRION LEASING COMPANY, INC.,
an Alabama corporation
BY:
------------------------------
Its:
--------------------
Exhibit D-9
<PAGE> 65
ATRION INTERNATIONAL, INC.,
a U.S. Virgin Islands corporation
BY:
------------------------------
Its:
--------------------
Exhibit D-10
<PAGE> 66
EXHIBIT A
PRICING MATRIX
<TABLE>
<CAPTION>
If the ratio of Consolidated
Liabilities/Consolidated The Margin
Tangible Net Worth is: Will Be:
---------------------- --------
<S> <C>
Greater than 1.50 175 bps (1.75%)
1.15 to 1.50 150 bps (1.50%)
Less than 1.15 125 bps (1.25%)
</TABLE>
Exhibit A-1
<PAGE> 67
EXHIBIT B
RATE ELECTION NOTICE
____________________, ______
SouthTrust Bank, National Association
540 LBJ Freeway
Suite 1245
Dallas, Texas 75240
RE: $__________ Term Loan Promissory Note payable by Atrion
Corporation, Atrion Medical Products, Inc., Halkey-Roberts
Corporation, Quest Medical, Inc., AlaTenn Pipeline Company,
Inc., Atrion Leasing Company, Inc., and Atrion International,
Inc., as joint and several co-borrowers (collectively, the
"Borrowers") in favor of SouthTrust Bank, National
Association, dated ____________________ (the "Note").
Gentlemen:
Please be advised that the following is the applicable LIBOR Interest
Period selected by Borrowers to accrue on the above-referenced Note.
30-day LIBOR
60-day LIBOR
90-day LIBOR
The undersigned hereby certifies to you that the ratio of Consolidated
Liabilities to Consolidated Tangible Net Worth for the period ending
__________ , and the corresponding Margin to be added to the LIBOR applicable
to the above selected LIBOR Interest Period, is as follows for the selected
LIBOR Interest Period:
Greater than 1.50, and the Margin is 175 basis points (1.75%)
1.15 to 1.50, and the Margin is 150 basis points (1.50%)
Less than 1.15, and the Margin is 125 basis points (1.25%)
This Rate Election Notice is delivered to you pursuant to that certain
Loan and Security Agreement dated November 12, 1999 among the Borrowers and the
Lender ("Loan Agreement"). All defined terms used herein without definition
shall have the meanings ascribed to them in the Loan Agreement.
ATRION CORPORATION,
a Delaware corporation
on behalf of the Borrowers
BY:
------------------------------
Its:
--------------------
Exhibit B-1
<PAGE> 68
EXHIBIT E
CHIEF EXECUTIVE OFFICES AND PRINCIPAL PLACES OF BUSINESS
Chief Executive Office for All Borrowers:
Atrion Corporation
One Allentown Parkway
Allen, Texas 75002
<TABLE>
<CAPTION>
Principal Places of Business for Each Borrower: Owned/Leased:
- ----------------------------------------------- -------------
<S> <C>
Atrion Corporation Owned
One Allentown Parkway
Allen, Texas 75002
Atrion Medical Products, Inc. Leased from First Capital Income Properties,
Suite 311 Ltd., Series VIII, pursuant to Lease dated
Brookwood Metroplex Two September 12, 1997, amended by First
Two Metroplex Drive Amendment dated Jan. 1, 1998 (term
Homewood, Alabama 35109 expired Jan. 31, 1998, month-to-month
lease thereafter)
Atrion Medical Products, Inc. Owned
1426 Curt Francis Road
Arab, Alabama 35016
Halkey-Roberts Corporation Leased from HRC Properties, Inc.
11600 9th Street Pursuant to Lease dated May 21, 1996
St. Petersburg, Florida 33716 (term expires May 31, 2006)
Quest Medical, Inc. Owned
One Allentown Parkway
Allen, Texas 75002
Quest Medical, Inc. Leased from TRICO-TCH, LTD., pursuant
2930 - G Grace Lane to Lease dated April 23, 1998, as subsequently
Costa Mesa, California 92626 extended (term expires May 31, 2000)
AlaTenn Pipeline Company, Inc. Owned
One Allentown Parkway
Allen, Texas 75002
Atrion Leasing Company, Inc. Owned
1426 Curt Francis Road
Arab, Alabama 35016
(Also, books and records located at:
One Allentown Parkway
Allen, Texas 75002
</TABLE>
Exhibit E-1
<PAGE> 69
<TABLE>
<S> <C>
Atrion International, Inc. Owned
One Allentown Parkway
Allen, Texas 75002
and
Suite 208
Citibank Building
Veteran's Drive
Charlotte Amalie
St. Thomas
U.S. Virgin Islands
</TABLE>
Exhibit E-2
<PAGE> 70
EXHIBIT F
PRIOR NAMES
1. Atrion Medical Products, Inc.: RIC Acquisition Corporation
changed its name to Ryder International Corporation.
Ryder Acquisition Corporation changed its name to Atrion
Medical Products, Inc.
Atrion Medical Products, Inc. merged with an into Ryder
International Corporation, with Ryder International
Corporation as the survivor.
In the merger, Ryder International Corporation changed its
name to Atrion Medical Products, Inc.
2. Quest Medical, Inc.: QMI Acquisition Corp.
QMI Medical, Inc.
3. AlaTenn Pipeline Company, Inc. and subsidiaries that merged into
AlaTenn Pipeline: AlaTenn Credit Corp., Central Gas Company,
Tennessee River Development Company, and Vulcan Oil & Gas Company
4. Atrion Leasing Company, Inc.: Warrior Basin Gas Company
Warrior Basin Leasing Company, Inc.
5. AlaTenn Resources, Inc., an Alabama corporation, changed its name
to ATRION Corporation.
ATRION Corporation merged with Atrion Corporation, a Delaware
corporation, and Atrion Corporation, a Delaware corporation, was the
survivor in such merger.
6. Halkey-Roberts Corporation merged with HRC Acquisition Holding Corp.
and Halkey-Roberts Corporation was the survivor.
Exhibit F-1
<PAGE> 71
EXHIBIT G
COMPLIANCE CERTIFICATE
SouthTrust Bank, National Association
540 LBJ Freeway
Suite 1245
Dallas, Texas 75240
RE: Loan and Security Agreement dated as of November 12, 1999
(together with amendments, if any, the "Loan Agreement")
between Atrion Corporation, Atrion Medical Products, Inc.,
Halkey-Roberts Corporation, Quest Medical, Inc., AlaTenn
Pipeline Company, Inc., Atrion Leasing Company, Inc., and
Atrion International, Inc., as Borrowers, and SouthTrust
Bank, National Association, as Lender (the "Loan Agreement";
all defined terms used in this Compliance Certificate shall
have the meanings ascribed to them in the Loan Agreement)
The undersigned officer of the Atrion Corporation does hereby certify that for
the quarterly financial period ending ___________________.
1. No Default or Event of Default has occurred or exists
except ___________________
2. The Consolidated Net Income for the Group, based upon the preceding
twelve (12) months through the end of such period, was:
Required: Not less than $1,000,000
Actual: _______________________________________
3. The Consolidated Tangible Net Worth for the Group through the end of
such period was:
Required: Not less than [$18,800,000 for quarter
ending March 31, 2000; increasing by
$125,000 per quarter thereafter]
Actual: _______________________________________
4. The ratio of Consolidated Liabilities to Consolidated Tangible Net
Worth through the end of such period was:
Required: Not more than 2.0 to 1.0
Actual: _______________________________________
5. The Consolidated Fixed Charge Coverage ratio through the end of such
period was:
Required: Not less than 1.75 to 1.0
Actual: _______________________________________
6. All representations and warranties contained in Article IV of the Loan
Agreement, as the same may have been supplemented from time to time in
accordance with the provisions of Section 5.1(c) of the Loan
Agreement, are true and correct as though given on the date hereof,
except____________________ .
Exhibit G-1
<PAGE> 72
7. The undersigned hereby certifies that all information provided herein
is true and correct.
ATRION CORPORATION
BY:
------------------------------------
Name: ------------------------------------
Title: ------------------------------------
Dated this the ______ day of ______________________, 199__.
Exhibit G-2
<PAGE> 73
EXHIBIT H
FICTITIOUS NAMES
BORROWER: FICTITIOUS NAME:
Quest Medical, Inc. American Omni
Exhibit H-1
