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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
March 22, 1999
(Date Tender Offer First Published, Sent or
Given to Security Holders)
CALCULATION OF FILING FEE*
Transaction Valuation: $4,000,000 Amount of Filing Fee: $800
* Calculated solely for the purpose of determining the filing fee, based upon
the purchase of 400,000 shares of Common Stock at the maximum tender offer price
per share of $10.00.
[ ] 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 400,000 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and not withdrawn) of its Common Stock, par value $.10 per share (such shares,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 prices not greater than $10.00 nor less than
$8.00 net per Share in cash upon the terms and subject to the conditions set
forth in the Offer to Purchase dated March 22, 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 March 19,
1999, the Company had issued and outstanding 2,825,953 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.
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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.
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, 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.
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(a)(1) Form of Offer to Purchase dated March 22, 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 March 17, 1999.
(7) Form of Letter to Stockholders of the Company dated March 22, 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) Credit Agreement dated as of January 20, 1995 by AlaTenn Credit Corp.
and Compass Bank, as amended.
(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).
</TABLE>
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: March 22, 1999
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EXHIBIT INDEX
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<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
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(a)(1) Form of Offer to Purchase dated March 22, 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 March 17, 1999.
(7) Form of Letter to Stockholders of the Company dated March 22, 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) Credit Agreement dated as of January 20, 1995 by AlaTenn Credit Corp.
and Compass Bank, as amended.
(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).
</TABLE>
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EXHIBIT (a)(1)
ATRION CORPORATION
OFFER TO PURCHASE FOR CASH UP TO
400,000 SHARES OF ITS COMMON STOCK, PAR VALUE $.10 PER SHARE,
AT A PURCHASE PRICE NOT GREATER THAN $10.00
NOR LESS THAN $8.00 PER SHARE
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON TUESDAY, APRIL 20, 1999,
UNLESS THE OFFER IS EXTENDED.
--------------
Atrion Corporation, a Delaware corporation (the "Company"), hereby invites
its stockholders to tender up to 400,000 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
prices not greater than $10.00 nor less than $8.00 per Share in cash, as
specified by tendering shareholders, 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, determine the lowest single per Share price (not greater than $10.00 nor
less than $8.00 per Share), net to the seller in cash (the "Purchase Price"),
that will allow it to purchase 400,000 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 at prices at or
below the Purchase Price 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
tendered at prices in excess of the Purchase Price and not withdrawn and 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
400,000 Shares pursuant to the Offer. See Section 14.
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 March 16, 1999, the last full Nasdaq trading day
prior to announcement of the Offer, the closing per Share sales price as
reported by Nasdaq was $8.00 per Share. On March 19, 1999, the last full Nasdaq
trading day prior to the commencement of the Offer, the closing per Share sales
price as reported by Nasdaq was $9.375 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 AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE TENDERED. 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 March 22, 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, INCLUDING THE BOX
RELATING TO THE PRICE AT WHICH THEY ARE TENDERING SHARES, 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..................................................... 8
3. PROCEDURES FOR TENDERING SHARES........................................................................ 9
4. WITHDRAWAL RIGHTS...................................................................................... 13
5. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE....................................................... 13
6. CERTAIN CONDITIONS OF THE OFFER........................................................................ 14
7. PRICE RANGE OF SHARES; DIVIDENDS....................................................................... 16
8. SOURCE AND AMOUNT OF FUNDS............................................................................. 16
9. CERTAIN INFORMATION CONCERNING THE COMPANY............................................................. 17
10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING
SHARES................................................................................................ 21
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE EXCHANGE
ACT................................................................................................... 22
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS........................................................... 22
13. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES................................................. 23
14. EXTENSION OF OFFER; TERMINATION; AMENDMENT............................................................ 25
15. FEES AND EXPENSES..................................................................................... 26
16. MISCELLANEOUS......................................................................................... 26
</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.......... 400,000 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, determine the lowest single
per Share price (not greater than
$10.00 nor less than $8.00 per
Share) net to the seller in cash
(the "Purchase Price"), that will
allow it to purchase 400,000 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 at prices at or below the
Purchase Price and not withdrawn,
upon the terms and subject to the
conditions of the Offer. Each
stockholder desiring to tender
Shares must specify in the Letter of
Transmittal the minimum price (not
greater than $10.00 nor less than
$8.00 per Share) at which such
stockholder is willing to have his
or her Shares purchased by the
Company, except that any stockholder
owning beneficially fewer than 100
shares who does not wish to specify
a purchase price may so indicate in
the box captioned "Odd Lots" on the
Letter of Transmittal, in which case
such stockholder will be deemed to
have tendered at the Purchase Price.
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............ Tuesday, April 20, 1999, at
5:00 p.m., 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 at or below the
Purchase Price (and not withdrawn
prior to the Expiration Date) to the
total number of Shares tendered by
all stockholders, other than Odd Lot
Holders, at or below the Purchase
Price (and not withdrawn prior to
the Expiration Date).
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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
March 19, 1999 and as of the Expiration
Date, who tenders all such Shares at or
below the Purchase Price 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
(5:00 p.m., New York City time, on Tuesday,
April 20, 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 5:00 P.M., New
York City time, on Friday, May 14, 1999. See
Section 4.
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 up to 400,000 shares of its common stock, par value
$.10 per share (hereinafter referred to as the "Shares"), to the Company at
prices not greater than $10.00 nor less than $8.00 per Share, as specified by
tendering stockholders, 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, determine the lowest single per Share price (not greater than $10.00 nor
less than $8.00 per Share), net to the seller in cash (the "Purchase Price"),
that will allow it to purchase 400,000 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 at prices at or
below the Purchase Price 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
tendered at prices in excess of the Purchase Price and not withdrawn and 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
400,000 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 AND THE PRICE OR PRICES AT WHICH
SHARES SHOULD BE TENDERED. 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 to 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 who are considering a sale of all or a
portion of their Shares the opportunity to determine the price or prices (not
greater than $10.00 nor less than $8.00 per Share) at which they are willing to
sell their Shares and, if any such Shares are purchased pursuant to the Offer,
to sell those Shares for cash to 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.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 400,000 Shares (or such greater number of
Shares as the Company may elect to purchase) are validly tendered at prices at
or below the Purchase Price 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 at or below the Purchase Price
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 at or below the Purchase
Price and not withdrawn prior to the Expiration Date, on a pro rata basis (with
appropriate
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adjustments to avoid purchase of fractional Shares). See Section 1. All
certificates representing Shares not purchased pursuant to the Offer, including
Shares tendered at prices greater than the Purchase Price and not withdrawn and
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 7 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 & Company Inc. which will act as
information agent for the Offer (the "Information Agent"). See Section 15.
As of March 19, 1999, the Company had issued and outstanding 2,825,953
Shares and had 237,200 Shares issuable on the exercise of stock options
exercisable within 60 days. The 400,000 Shares that the Company is offering to
purchase pursuant to the Offer represent approximately 14.2% of the outstanding
Shares. The Shares are listed and traded on The Nasdaq Stock Market ("Nasdaq")
under the symbol "ATRI." On March 16, 1999, the last full trading day before
announcement of the Offer, the closing per Share sales price as reported by
Nasdaq was $8.00 per share. On March 19, 1999, the last full Nasdaq trading day
prior to the commencement of the Offer, the closing per Share sales price as
reported by Nasdaq was $9.375 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 400,000 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 prices not greater than $10.00 nor less than $8.00 per
Share. The term "Expiration Date" means 5:00 P.M., New York City time, on
Tuesday, April 20, 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 400,000 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 at or below the Purchase Price 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.
In accordance with Instruction 5 of the Letter of Transmittal, stockholders
desiring to tender Shares must specify the price or prices (not greater than
$10.00 nor less than $8.00 per Share) at which they are willing to sell their
Shares to the Company, except for any stockholder owning beneficially fewer than
100 Shares who does not wish
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to specify a purchase price may so indicate in the box captioned "Odd Lots" on
the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery, in which case such stockholder will be deemed to have tendered at the
Purchase Price. As promptly as practicable following the Expiration Date, the
Company will, in its sole discretion, determine the Purchase Price that will
allow it to purchase 400,000 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, even if such Shares were tendered below the Purchase Price,
for all Shares validly tendered prior to the Expiration Date at or below the
Purchase Price 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 tendered at prices in excess of the
Purchase Price and not withdrawn and 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 400,000 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 400,000 Shares (or such greater number of Shares as the
Company may elect to purchase pursuant to the Offer) have been validly tendered
at prices at or below the Purchase Price 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 at a
price at or below the Purchase Price (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 at prices at or below the Purchase Price 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 at prices at or below the
Purchase Price and not withdrawn by any person who owned beneficially as of the
close of business on March 19, 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) (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 at or below the Purchase Price 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.
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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 at or below the Purchase Price (and not withdrawn) to the total
number of Shares tendered by all stockholders, other than Odd Lot Holders, at or
below the Purchase Price (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.
The Offer provides stockholders who are considering a sale of all or a
portion of their Shares with the opportunity to determine the price or prices
(not greater than $10.00 nor less than $8.00 per Share) at which they are
willing to sell their Shares and, subject to the terms and conditions of the
Offer, to sell those Shares for cash without the usual transaction costs
associated with market sales. In addition, stockholders owning fewer than 100
Shares whose Shares are purchased pursuant to the Offer not only will avoid the
payment of brokerage commissions but also will avoid any applicable odd lot
discounts 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 and may give Stockholders the opportunity to sell Shares at
prices greater than market prices prevailing prior to announcement of the Offer.
The Board of Directors believes that the Shares are undervalued at the
present time and that the purchase of Shares is an attractive use of the
Company's financial resources.
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
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<PAGE> 9
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.
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, 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 AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. 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 prior to 5:00 P.M., 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 ACCORDANCE WITH
INSTRUCTION 5 OF THE LETTER OF TRANSMITTAL, STOCKHOLDERS (EXCEPT ANY ODD LOT
HOLDER WHO DOES NOT WISH TO SPECIFY A PURCHASE PRICE MAY SO INDICATE IN THE BOX
CAPTIONED "ODD LOTS" ON THE LETTER OF TRANSMITTAL AND, IF APPLICABLE, ON THE
NOTICE OF GUARANTEED DELIVERY, IN WHICH CASE SUCH STOCKHOLDER WILL BE DEEMED TO
HAVE TENDERED AT THE PURCHASE PRICE) DESIRING TO TENDER SHARES PURSUANT TO THE
OFFER MUST PROPERLY INDICATE, IN THE SECTION CAPTIONED "PRICE (IN DOLLARS) PER
SHARE AT WHICH SHARES ARE BEING TENDERED" ON THE LETTER OF TRANSMITTAL, THE
PRICE (IN INCREMENTS OF $0.25) AT WHICH THEIR SHARES ARE BEING TENDERED.
Stockholders who desire to tender Shares at more than one price must complete a
separate Letter of Transmittal for each price at which Shares are tendered,
provided that the same Shares cannot be tendered (unless properly withdrawn
previously in accordance with the terms of the Offer) at more than one price. IN
ORDER TO VALIDLY TENDER SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN
THE APPROPRIATE SECTION ON EACH LETTER OF TRANSMITTAL.
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. Odd Lot
Holders who do not wish to specify a purchase price may so indicate in the box
captioned "Odd Lots" on the Letter of Transmittal and, if applicable, the
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<PAGE> 10
Notice of Guaranteed Delivery, in which case such stockholder will be deemed to
have tendered at the Purchase Price.
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.
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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 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 10 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,
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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 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 11 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.
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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 5:00 P.M. New York City time, on Friday, May 14, 1999.
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 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 (i) will determine the
lowest single Purchase Price that will allow it to purchase 400,000 Shares (or
such lesser number of Shares as are validly tendered and not withdrawn prior to
the Expiration Date), taking into account the number of Shares so tendered and
the prices specified by tendering stockholders, and (ii) will accept for payment
and pay for (and thereby purchase) Shares validly tendered at prices at or below
the Purchase Price 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 at or below the Purchase Price 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.
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Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay a single per Share Purchase Price 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 all
Shares tendered at prices in excess of the Purchase Price and 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 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 7 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 March 22, 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,
14
<PAGE> 15
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 March 19, 1999;
(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 otherwise), 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.
15
<PAGE> 16
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 (through)
March 19, 1999......................................... 9.44 7.38 0
</TABLE>
On March 16, 1999, the last full Nasdaq trading day prior to announcement
of the Offer, the closing per Share sales price as reported by Nasdaq was $8.00.
On March 19, 1999, the last full Nasdaq trading day prior to the commencement of
the Offer, the closing per Share sales price as reported by Nasdaq was $9.375.
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.
8. SOURCE AND AMOUNT OF FUNDS.
Assuming that the Company purchases 400,000 Shares pursuant to the Offer at
a purchase price of $10.00 per Share, the Company expects the maximum amount
required to purchase shares pursuant to the Offer and to pay related taxes, fees
and expenses will be approximately $4,050,000, which the Company expects to
obtain from its general corporate funds and from borrowings under the Company's
$20,000,000 revolving loan facility ("Revolving Loan Facility") with Compass
Bank. Under the terms of the Revolving Loan Facility, there is a $10,000,000
unsecured revolving facility and a $10,000,000 revolving facility which must be
secured at the time it is used. The Revolving Loan Facility expires on May 20,
2000; however, at any time during the term, subject to certain conditions, the
Company may convert any or all outstanding amounts under either facility to a
secured term loan with a minimum maturity of two years. The Revolving Loan
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 secured and unsecured facilities is contingent on meeting
certain financial covenants in the Revolving Loan Facility, including a net
worth covenant requiring the Company to maintain a net worth beginning May 20,
1999
16
<PAGE> 17
of not less than $45,000,000, after taking into account certain adjustments
provided for in the Revolving Loan Facility, and a net income covenant requiring
the Company to have net income of at least $2,000,000 in each calendar year.
Loans under the Revolving Loan Facility bear interest at a rate equal to the 90
day LIBOR rate plus 1%.
9. CERTAIN INFORMATION CONCERNING THE COMPANY.
The Company designs, develops, manufactures, markets, sells and distributes
medical products and components. The Company is a Delaware corporation which was
incorporated in 1996 and is the successor to the former ATRION Corporation as a
result of a merger to change domicile from Alabama to Delaware. 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 and in its other
filings made with the Commission under the Exchange Act.
The Company's Board of Directors is divided into three classes: Class I,
Class II and Class III. The terms of the current Class I directors, Class II
directors and Class III directors expire at the annual meetings of stockholders
to be held in 1999, 2000 and 2001, respectively. Effective as of the 1999 annual
meeting, the Board of Directors has reduced the number of directors in each of
Class I (which currently includes J. Kenneth Smith who will be retiring from the
Board of Directors upon the expiration of his term at the 1999 annual meeting)
and Class III (in which class there is currently a vacancy) from three to two.
Accordingly, two Class I directors will be elected at the 1999 annual meeting.
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. 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."
17
<PAGE> 18
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS EXCEPT RATIOS AND PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------
12/31/98 12/31/97
----------------------
<S> <C> <C>
STATEMENT OF INCOME DATA:
Sales 43,397 30,277
Income (Loss) From Continuing Operations 1,478 (2,045)
Income From Discontinued Operations -- 1,923
Gain on Disposal of Discontinued Operations 662 17,292
Net Income 2,140 17,170
Earnings (Loss) Per Basic Share:
Continuing Operations 0.46 (0.63)
Discontinued Operations -- 0.60
Gain on Disposal of Discontinued Operations 0.21 5.36
------ -------
0.67 5.33
Earnings (Loss) Per Diluted Share:
Continuing Operations 0.46 (0.63)
Discontinued Operations -- 0.60
Gain on Disposal of Discontinued Operations 0.21 5.36
------ -------
0.67 5.33
Basic Shares Outstanding 3,203 3,224
Diluted Shares Outstanding 3,210 3,224
Ratio of Earnings to Fixed Charges 14.4x -6.8x (1)
BALANCE SHEET AND OTHER DATA:
Working Capital 18,707 33,593
Total Assets 60,415 60,942
Total Debt 203 656
Shareholders' Equity 49,369 49,986
Dividends Per Share -- 0.60
Book Value Per Common Share 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.
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 the period presented, with respect
to operating statement data, 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.
18
<PAGE> 19
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION (1)
(IN THOUSANDS, EXCEPT RATIOS AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Fiscal Year Ended December 31, 1998
------------------------------------
Proforma
Historical Adjustments Proforma
---------- ----------- ---------
<S> <C> <C> <C>
STATEMENT OF INCOME
Revenues 43,397 43,397
Cost of Goods Sold 26,937 26,937
------- -------
Gross Profit 16,460 16,460
Operating Expenses 14,881 14,881
------- -------
Operating Income 1,579 1,579
Other Income and Expenses:
Interest Income, Net 577 (219) 358
Other Income 57 57
------- ---- -------
Income from Continuing Operations
Before Provision for Income Tax 2,213 (219) 1,994
Provision for Income Taxes (735) 74 (661)
------- ---- -------
Income (Loss) From Continuing
Operations 1,478 (145) 1,333
Income from Discontinued Operations
Gain on Disposal of Discontinued
Operations 662 662
------- ---- -------
Net Income 2,140 (145) 1,995
======= ==== =======
Earnings Per Basic and
Diluted Share:
Continuing Operations 0.46 0.01 0.47
Gain on Disposal of
Discontinued Operations 0.21 0.03 0.24
------- ---- -------
0.67 0.04 0.71
Dividends per Share
Ratio of Earnings to Fixed
Charges (2) 14.4x -1.3x 13.1x
Basic Shares Outstanding 3,203 (400) 2,803
Diluted Shares Outstanding 3.210 (400) 2,810
</TABLE>
19
<PAGE> 20
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA FINANCIAL INFORMATION (CONT.) (1)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
As of December 31, 1998
----------------------------------------------------
Proforma
Historical Adjustments Proforma
-------------- --------------- ------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
ASSETS
Current Assets:
Cash & Cash Equivalents 5,635 5,635
Accounts Receivable 7,278 7,278
Inventories 8,568 8,568
Prepayments 1,358 1,358
------------- --------------- ------------
Total Current Assets 22,839 22,389
Property, Plant & Equipment:
Original Cost 22,315 22,315
Less Accumulated
Depreciation (4,921) (4,921)
------------- --------------- ------------
Total PP&E 17,394 17,394
Deferred Charges:
Patents, net 3,620 3,620
Goodwill, net 13,986 13,986
Other 2,576 2,576
------------- --------------- ------------
Total Deferred Charges 20,182 20,182
TOTAL ASSETS 60,415 60,415
============= =============== ============
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current Liabilities:
Curr. Maturities of LTD 203 203
Accounts Payable and
Accrued Liabilities 3,929 3,929
------------- --------------- ------------
Total Current Liabilities 4,132 4,132
Long Term Debt, less
Current Maturities 0 0
Other Noncurrent Liabilities 6,914 6,914
Stockholders' Equity:
Common Shares 342 342
Paid-in Capital 6,394 6,394
Retained Earnings 46,821 46,821
Treasury Shares (4,188) (4,050) (8,238)
------------- --------------- ------------
Total Stockholders' Equity 49,369 (4,050) 45,319
TOTAL EQUITY &
LIABILITIES 60,415 (4,050) 56,385
============= =============== ============
Book Value per
Common Share 16.66 17.68
</TABLE>
20
<PAGE> 21
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 400,000 shares are repurchased and
recorded as Treasury Shares at $10.00 per Share.
(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 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 assumed income tax rate applicable to pro forma adjustments
was 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 March 19, 1999, the Company had issued and outstanding 2,825,953
Shares and had 237,200 Shares issuable on the exercise of stock options
exercisable within 60 days. The 400,000 Shares that the Company is offering to
purchase represent approximately 14.2% of the Shares then outstanding. As of
March 19, 1999, the Company's directors and executive officers as a group (10
persons) beneficially owned (including 175,200 shares issuable on the exercise
of options exercisable within 60 days) an aggregate of 503,404 Shares
representing approximately 16.4% of the outstanding Shares (including Shares
issuable on the exercise of options exercisable within 60 days).
If the Company purchases 400,000 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 18.9% of the outstanding Shares immediately after the Offer
(including Shares issuable on the exercise of options exercisable within 60
days).
21
<PAGE> 22
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 136,600 Shares at a price of $7.75 per Share in a block trade on
Nasdaq on March 3, 1999.
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 may reduce the
number of stockholders. However, 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, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Company as
22
<PAGE> 23
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.
23
<PAGE> 24
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.
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
24
<PAGE> 25
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.
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
25
<PAGE> 26
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 & Company 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.
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 7 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
March 22, 1999
26
<PAGE> 27
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 Transmissions: (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 & Company Inc.
Wall Street Plaza
New York, New York 10005
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 MARCH 22, 1999
- ------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON TUESDAY, APRIL 20, 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)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(s) TENDERED(2)
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
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 14.
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 14.
- ------------------------------------------------------------------------------
<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 the price
per Share indicated in this Letter of Transmittal, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated March 22, 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.
3
<PAGE> 4
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 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 and the purchase price at which such Shares are
being tendered 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, determine the lowest single per Share
price (not greater than $10.00 nor less than $8.00 per Share), net to the seller
in cash (the "Purchase Price"), that will allow it to purchase 400,000 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 at prices at or below the
Purchase Price 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 tendered
at prices greater than the Purchase Price and not withdrawn and 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.
4
<PAGE> 5
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.
- -------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED.
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE
SPECIFIED MUST BE USED.
(SEE INSTRUCTION 5)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF
NO BOX IS CHECKED (EXCEPT AS PROVIDED IN THE ODD
LOTS BOX AND INSTRUCTIONS BELOW), THERE IS NO VALID
TENDER OF SHARES.
- -------------------------------------------------------------------------------
[ ] $8.00 [ ] $9.00
[ ] $8.25 [ ] $9.25
[ ] $8.50 [ ] $9.50
[ ] $8.75 [ ] $9.75
[ ] $10.00
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 9)
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 March
19, 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 March 19, 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 March 19, 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.
If you do not wish to specify a purchase price, check the following box,
in which case you will be deemed to have tendered at the Purchase Price
determined by the Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share in the box entitled
"Price (In Dollars) Per Share At Which Shares are Being Tendered" in this Letter
of Transmittal). [ ]
5
<PAGE> 6
<TABLE>
<CAPTION>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 6, 7 AND 8) (SEE INSTRUCTIONS 6 AND 8)
<S> <C>
To be completed ONLY if the check for the To be completed ONLY if the check for the
aggregate Purchase Price of Shares purchased Purchase Price of Shares purchased and/or
and certificates for Shares not tendered or not certificates for Shares not tendered or not
purchased are to be issued in the name of purchased are to be mailed to someone other than
someone other than the undersigned. the undersigned or to the undersigned at an
address other than that shown below the
Issue [ ] check and/or [ ] certificate(s) to: undersigned's signature(s).
Name: Issue [ ] check and/or [ ] certificate(s) to:
----------------------------------------
- ---------------------------------------------
(PLEASE PRINT) Name:
-------------------------------------------
Address: -------------------------------------------
------------------------------------- (PLEASE PRINT)
- ---------------------------------------------
(INCLUDE ZIP CODE) Address:
-----------------------------------------
- --------------------------------------------- -------------------------------------------------
(TAX IDENTIFICATION OR SOCIAL SECURITY NO.) (INCLUDE ZIP CODE)
- --------------------------------------------- -------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER) (TAX IDENTIFICATION OR SOCIAL SECURITY NO.)
-------------------------------------------------
(BOOK-ENTRY TRANSFER FACILITY ACCOUNT NUMBER)
</TABLE>
6
<PAGE> 7
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 6.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Firm Name:
---------------------------------------------------------------------
(PLEASE PRINT)
Authorized Signature:
----------------------------------------------------------
Title:
-------------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
------------------------------------------------
Dated: , 1999
---------------------------------------------------
7
<PAGE> 8
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 6.
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.
8
<PAGE> 9
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.
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. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
validly tendered, the stockholder must check the box indicating the price per
Share at which such stockholder is tendering Shares under "Price (In Dollars)
Per Share At Which Shares Are Being Tendered" in this Letter of Transmittal,
except that Odd Lot Owners (as defined in Section 1 of the Offer to Purchase)
may check the box above in the section entitled "Odd Lots" indicating that such
stockholder is tendering all Shares at the Purchase Price determined by the
Company.
ONLY ONE BOX MAY BE CHECKED. IF MORE THAN ONE BOX IS CHECKED OR (OTHER THAN
AS DESCRIBED ABOVE FOR ODD LOT OWNERS) IF NO BOX IS CHECKED, THERE IS NO VALID
TENDER OF SHARES. A stockholder wishing to tender portions of such stockholder's
Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which such stockholder wishes to tender each such
portion of such stockholder's Shares. The same Shares cannot be tendered (unless
previously validly withdrawn as provided in Section 4 of the Offer to Purchase)
at more than one price.
6. 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
9
<PAGE> 10
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.
7. 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 7, IT WILL NOT BE NECESSARY TO
AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED
HEREBY.
8. 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.
9. ODD LOTS. As described in Section 1 of the Offer to Purchase, if fewer
than all Shares validly tendered at or below the Purchase Price 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 March 19, 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 at or below the Purchase Price
(including by not designating a purchase price as described above). 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.
10
<PAGE> 11
10. 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.
11. 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 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
11
<PAGE> 12
United States federal income tax withholding, including eligibility for a
withholding tax reduction or exemption and refund procedures.
12. 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.
13. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the price to be paid therefor 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.
14. 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.
15. 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.
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.
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<PAGE> 13
TO BE COMPLETED BY ALL TENDERING REGISTERED HOLDERS OF SECURITIES
PAYOR'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
SUBSTITUTE REQUEST FOR TAXPAYER
FORM W9 IDENTIFICATION NUMBER AND CERTIFICATION GIVE FORM TO THE
DEPARTMENT OF THE TREASURY REQUESTER. DO NOT
INTERNAL REVENUE SERVICE SEND TO THE IRS.
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
PART 1 TAXPAYER IDENTIFICATION NUMBER (TIN)
- ------------------------------------------------------------------------------------------------------------------
Enter your TIN in the appropriate box. For individuals, this
is your social security number (SSN). However, if you are
a 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 NUMBER ON PAGE 2 OF THE GUIDELINES.
NOTE: If the account is in more than one name, see
the chart on page 1 of the Guidelines for guidance on whose
number to enter.
--------------------------------------------------------------
Social security number
--------------------------------------------------------------
OR
--------------------------------------------------------------
Employer identification number
- ------------------------------------------------------------------------------------------------------------------------
</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 Guidelines on
page 2.)
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
-------------------- ------------------------------
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<PAGE> 14
THE INFORMATION AGENT FOR THE OFFER IS:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, New York 10005
BANKS AND BROKERS CALL COLLECT: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (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 March 22, 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) -------------------------------------
-------------------------------------
Name(s) (Please Print)
If shares will be tendered by book entry transfer:
- -------------------------------------------------- -------------------------------------
Name of Tendering Institution -------------------------------------
-------------------------------------
- -------------------------------------------------- -------------------------------------
Account No. at The Depository Trust Company Address(es)
Dated:
-------------------------------------------- -------------------------------------
Area Code/Telephone Number
</TABLE>
- -------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED.
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A
SEPARATE LETTER OF TRANSMITTAL FOR EACH PRICE
SPECIFIED MUST BE USED.
(SEE INSTRUCTION 5.)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX IS
CHECKED (EXCEPT AS PROVIDED IN THE ODD LOTS BOX AND INSTRUCTIONS BELOW),
THERE IS NO VALID TENDER OF SHARES.
- -------------------------------------------------------------------------------
[ ] $8.00 [ ] $9.00
[ ] $8.25 [ ] $9.25
[ ] $8.50 [ ] $9.50
[ ] $8.75 [ ] $9.75
[ ] $10.00
- -------------------------------------------------------------------------------
2
<PAGE> 3
ODD LOTS
(SEE INSTRUCTION 9)
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 March
19, 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 March 19, 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 March 19, 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.
If you do not wish to specify a purchase price, check the following box, in
which case you will be deemed to have tendered at the Purchase Price determined
by the Company in accordance with the terms of the Offer (persons checking this
box need not indicate the price per Share in the box entitled "Price (In
Dollars) Per Share At Which Shares are Being Tendered" in this Letter of
Transmittal). [ ]
3
<PAGE> 4
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.
- ----------------------------------- ----------------------------------
Name of Firm Authorized Signature
- -----------------------------------
- ----------------------------------- ----------------------------------
Address Name (Please Print)
- ----------------------------------- ----------------------------------
City, State, Zip Code Title
- -----------------------------------
Area Code and Telephone Number
Dated:
----------------------------
DO NOT SEND SHARE CERTIFICATES WITH THIS FORM.
YOUR SHARE CERTIFICATES MUST BE SENT WITH
THE LETTER OF TRANSMITTAL.
4
<PAGE> 1
EXHIBIT (a)(4)
ATRION CORPORATION
OFFER TO PURCHASE FOR CASH
UP TO 400,000 SHARES OF ITS COMMON STOCK
AT
A PURCHASE PRICE NOT GREATER THAN
$10.00 NOR LESS THAN $8.00 PER SHARE
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON TUESDAY, APRIL 20, 1999, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
March 22, 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 400,000
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 prices not greater than $10.00 nor less than $8.00 per Share, net
to the seller in cash, specified by tendering stockholders, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated March 22,
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, determine the lowest single per Share price (not greater than $10.00 nor
less than $8.00 per Share), net to the seller in cash (the "Purchase Price"),
that will allow it to purchase 400,000 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 at prices at or
below the Purchase Price 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
tendered at prices in excess of the Purchase Price and not withdrawn and 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
400,000 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
<PAGE> 2
and customary handling and mailing expenses incurred by you in forwarding any of
the enclosed materials to your clients.
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 5:00 P.M., NEW
YORK CITY TIME, ON TUESDAY, APRIL 20, 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 7 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 400,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer) have been validly tendered at or below the Purchase Price 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 at or below the Purchase Price and not
withdrawn prior to the Expiration Date by any stockholder who owned beneficially
as of the close of business on March 19, 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
2
<PAGE> 3
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 at or below the Purchase Price 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 SHARES AND, IF
SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. 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 400,000 SHARES OF ITS COMMON STOCK
AT
A PURCHASE PRICE NOT GREATER THAN
$10.00 NOR LESS THAN $8.00 PER SHARE
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON TUESDAY, APRIL 20, 1999, UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
March 22, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase dated March 22,
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 400,000 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 prices not greater than $10.00 nor less than $8.00 per Share, net to the
seller in cash, specified by tendering stockholders, 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, determine the lowest single per Share price (not greater than $10.00 nor
less than $8.00 per Share), net to the seller in cash (the "Purchase Price"),
that will allow it to purchase 400,000 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 at prices at or
below the Purchase Price 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
tendered at prices in excess of the Purchase Price and not withdrawn and 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
400,000 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.
<PAGE> 2
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:
(1) You may tender Shares at prices (in increments of $0.25), which
cannot be greater than $10.00 nor less than $8.00 per Share, as indicated
in the attached Instruction Form, net to you in cash.
(2) The Offer is for a maximum of 400,000 Shares, constituting
approximately 14.2% of the total Shares outstanding as of March 19, 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
5:00 P.M., New York City time, on Tuesday, April 20, 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 400,000 Shares (or such greater number of Shares as
the Company may elect to purchase pursuant to the Offer) have been validly
tendered at prices at or below the Purchase Price and not withdrawn, the
Company will purchase Shares in the following order of priority:
(a) all Shares validly tendered at or below the Purchase Price
and not withdrawn prior to the Expiration Date by any stockholder
who owned beneficially as of the close of business on March 19,
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 at or below the Purchase Price 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 7 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 wish to tender portions of your Shares at different
prices, you must complete a separate Instruction Form for each price at
which you wish to tender each portion of your Shares. We must submit
separate Letters of Transmittal on your behalf for each price you will
accept.
(7) If you owned beneficially as of the close of business on March
19, 1999, and continue to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares and you instruct us to tender at or
below the Purchase Price 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 AND THE PRICE OR PRICES AT WHICH SHARES SHOULD BE
TENDERED. THE COMPANY HAS BEEN ADVISED THAT NONE OF ITS DIRECTORS OR EXECUTIVE
OFFICERS INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
2
<PAGE> 3
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 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 400,000 SHARES OF COMMON STOCK
OF ATRION CORPORATION
AT A PURCHASE PRICE NOT GREATER THAN
$10.00 NOR LESS THAN $8.00 PER SHARE
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated March 22, 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 400,000 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
prices not greater than $10.00 nor less than $8.00 per Share, net to the
undersigned in cash, specified by the undersigned, 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, at the price per Share indicated
below, 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.
- --------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT
WHICH SHARES ARE BEING TENDERED.
IF SHARES ARE BEING TENDERED AT MORE THAN ONE PRICE, A SEPARATE
LETTER OF TRANSMITTAL FOR EACH PRICE SPECIFIED MUST BE USED.
(SEE INSTRUCTION 5)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF
NO BOX IS CHECKED (EXCEPT AS PROVIDED IN THE ODD LOTS BOX
AND INSTRUCTIONS BELOW), THERE IS NO VALID TENDER OF SHARES.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
[ ] $8.00 [ ] $9.00
[ ] $8.25 [ ] $9.25
[ ] $8.50 [ ] $9.50
[ ] $8.75 [ ] $9.75
[ ] $10.00
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE> 5
- --------------------------------------------------------------------------------
ODD LOTS
(SEE INSTRUCTION 9)
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 March
19, 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 March 19, 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 March
19, 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.
If you do not wish to specify a purchase price, check the following box,
in which case you will be deemed to have tendered at the Purchase Price
determined by the Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share in the box entitled
"Price (In Dollars) Per Share At Which Shares are Being Tendered" in this Letter
of Transmittal). [ ]
- --------------------------------------------------------------------------------
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.
SIGN HERE:
Date: , 1999
---------
--------------------------------------
--------------------------------------
Signature(s)
- --------------------------------
Area Code and Telephone Number
Name
----------------------------------
- --------------------------------
Taxpayer Identification or Address
Social Security Number -------------------------------
--------------------------------------
Taxpayer Identification or Social
Security Number
5
<PAGE> 1
EXHIBIT (a)(6)
NEWS RELEASE
ATRION CORPORATION
ONE ALLENTOWN PARKWAY
ALLEN, TEXAS 75002
ATRION
NEWS RELEASE
FOR IMMEDIATE RELEASE
ATRION CORPORATION TO COMMENCE TENDER OFFER
FOR UP TO 400,000 SHARES OF ITS COMMON STOCK
ALLEN, Texas (March 17, 1999) - Atrion Corporation (Nasdaq/NM-ATRI)
announced today that it plans to commence a Dutch Auction issuer tender offer to
purchase for cash up to 400,000 shares of its issued and outstanding common
stock, par value $.10 per share. The tender offer is expected to begin Monday,
March 22, 1999 and to expire, unless extended, at 5:00 p.m., New York City time,
on Tuesday, April 20, 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 400,000 shares of the Company's common stock to the Company at prices not
greater than $10.00 nor less than $8.00 per share, as specified by the tendering
stockholders. The offer is subject to certain conditions. The Company will,
subject to the terms and conditions of the offer, determine the lowest single
per share price (not greater than $10.00 nor less than $8.00 per share) net to
the seller in cash that will allow it to purchase 400,000 shares (or such lesser
number of shares as are validly tendered and not withdrawn) pursuant to the
offer. Such lowest single per share price will be the purchase price the Company
will pay for all shares validly tendered at prices at or below such purchase
price and not withdrawn, subject to the terms and conditions of the offer.
Shares tendered at prices in excess of the purchase price and 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
400,000 shares pursuant to the offer.
Emile A. Battat, Chairman of Atrion, said "Yesterday our stock closed at
$8.00 per share, some 15% higher than the closing price on November 12, 1998
just prior to announcing our previous tender offer. We continue to believe that
our stock is undervalued and that the repurchase is consistent with our goal of
maximizing shareholder value. At the same time, our offer provides an
opportunity to those who wish to sell shares in what has been a very difficult
market for small capitalization stocks."
<PAGE> 2
The Depositary is American Stock Transfer & Trust Company and the
Information Agent is Georgeson & Company 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 beginning next week
from Georgeson & Company Inc., Wall Street Plaza, New York, New York 10006.
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-
2
<PAGE> 1
EXHIBIT (a)(7)
ATRION LOGO
March 22, 1999
Dear Stockholder:
Atrion Corporation is offering to purchase up to 400,000 shares of its
common stock at a price not greater than $10.00 nor less than $8.00 per share.
The Company is conducting the Offer through a procedure commonly referred to as
a "Dutch Auction." This procedure allows you to select the price within the
specified price range at which you are willing to sell all or a portion of your
shares to the Company.
The Offer 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 5:00 P.M., New York
City time, on Tuesday, April 20, 1999, unless extended by the Company. Questions
regarding the Offer should be directed to Georgeson & Company Inc., the
Information Agent for the Offer, at Wall Street Plaza, New York, New York 10005,
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 FOR THIS TYPE GIVE THE SOCIAL SECURITY
OF ACCOUNT: NUMBER OF: OF ACCOUNT: NUMBER OF:
<S> <C> <S> <C>
1. An individual's account The individual 8. Sole proprietorship The owner(4)
account
2. Two or more individuals The actual owner of the account
(joint account) or, if combined funds, any one 9. The valid trust, estate, The legal entity (Do not
of the individual on the or pension trust furnish the trust identifying
account(1) number of the personal
representatives or trustee
3. Husband and wife The actual owner of the account unless the legal entity
(joint account) or, if joint funds, either itself is not designated in
person(1) the account title.)(5)
4. Custodian account of a The minor(2)
minor (Uniform Gift 10. Corporate account The corporation
to Minors Act)
11. Religious, charitable The organization
5. Adult and minor The adult or, if the minor is the or educational
(joint account) only contributor, the minor(1)
12. Partnership account The partnership
6. Account in the name The ward, minor, or held in the name of
of guardian or committee incompetent person(3) the business
for a designated ward,
minor, or incompetent 13. Association, club, or The organization
person other tax-exempt
organization
7. a. The usual revocable The grantor-trustee(1)
savings trust account 14. The broker or registered The broker or nominee
(grantor is also trustee) nominee
b. So-called trust The actual owner(1) 15. Account with the The public entity
account that is not Department of Agriculture
a legal or valid trust in the name of a public
under State law 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)
$20,000,000.00
CREDIT AGREEMENT
DATED JANUARY 20, 1995
BETWEEN
ALATENN CREDIT CORP.
AND
COMPASS BANK
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C> <C>
ARTICLE I
DEFINITIONS............................................ 1
ARTICLE Il
THE CREDITS............................................. 9
2.1. Commitment........................................................................... 9
2.2. Extensions........................................................................... 13
2.3. Facility 1........................................................................... 14
2.4. Facility 2........................................................................... 14
2.5. Term Option.......................................................................... 15
2.6. Non-use Fee.......................................................................... 17
2.7. Applicable Interest Rate............................................................. 17
2.8. Record of Advances, Payments, Etc.................................................... 17
2.9. Procedure for Re-Advances, Payments, Etc............................................. 17
2.10. Assignment of Group Member Notes..................................................... 17
2.11. Letters of Credit.................................................................... 17
2.12. Partial Release of Negative Pledge................................................... 18
ARTICLE III
CONDITIONS PRECEDENT....................................... 18
3.1. Initial Advance...................................................................... 18
3.2. Each Advance......................................................................... 19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES................................... 19
4.1. Corporate Existence and Standing..................................................... 19
4.2. Authorization and Validity........................................................... 20
4.3. No Conflict; Government Consent...................................................... 20
4.4. Financial Statements................................................................. 20
4.5. Material Adverse Change.............................................................. 20
4.6. Taxes................................................................................ 20
4.7. Litigation and Guaranteed Obligations................................................ 21
4.8. Group................................................................................ 21
4.9. ERISA................................................................................ 21
4.10. Accuracy of Information.............................................................. 21
4.11. Regulation U......................................................................... 21
4.12. Material Agreements.................................................................. 21
4.13. Compliance With Laws................................................................. 21
4.14. Investment Company Act............................................................... 22
4.15. Public Utility Holding Company Act................................................... 22
4.16. Licenses............................................................................. 22
4.17. Solvency............................................................................. 22
ARTICLE V
COVENANTS 22
5.1. Financial Reporting.................................................................. 22
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C> <C>
5.2. Use of Proceeds...................................................................... 23
5.3. Notice of Certain Events............................................................. 24
5.4. Conduct of Business.................................................................. 24
5.5. Taxes................................................................................ 24
5.6. Insurance............................................................................ 24
5.7. Compliance with Laws................................................................. 24
5.8. Maintenance of Properties............................................................ 24
5.9. Inspection........................................................................... 25
5.10. Merger............................................................................... 25
5.11. Sale of Assets....................................................................... 25
5.12. Sale and Leaseback................................................................... 25
5.13. Liens (Negative Pledge).............................................................. 25
5.14. Consolidated Tangible Net Worth...................................................... 25
5.15. Ratio of Consolidated Indebtedness to Consolidated Tangible Net Worth................ 25
5.16. Interest Coverage Ratio.............................................................. 25
5.17. Ratio of Cash Flow to Current Maturities............................................. 25
5.18. Earnings............................................................................. 26
5.19. Affiliates........................................................................... 26
5.20. Compliance with ERISA................................................................ 26
ARTICLE VI
DEFAULTS........................................................ 26
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C>
6.1................................................................................................. 26
6.2................................................................................................. 26
6.3................................................................................................. 27
6.4................................................................................................. 27
6.5................................................................................................. 27
6.6................................................................................................. 27
6.7................................................................................................. 27
6.8................................................................................................. 28
6.9................................................................................................. 28
6.10................................................................................................ 28
6.11................................................................................................ 28
6.12................................................................................................ 28
6.13................................................................................................ 28
ARTICLE VII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES.......................... 28
7.1. Acceleration............................................................................... 28
7.2. Preservation of Rights..................................................................... 29
ARTICLE VIII
GENERAL PROVISIONS........................................ 29
8.1. Survival of Representations................................................................ 29
8.2. Governmental Regulation.................................................................... 29
8.3. Headings................................................................................... 29
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C> <C>
8.4. Entire Agreement............................................................................ 29
8.5. Benefits of this Agreement.................................................................. 29
8.6. Expenses; Indemnification................................................................... 29
8.7. Accounting.................................................................................. 30
8.8. Severability of Provisions.................................................................. 30
8.9. Nonliability of Lender...................................................................... 30
8.10. Choice of Law............................................................................... 30
8.11. Setoff...................................................................................... 30
ARTICLE IX
NOTICES............................................... 30
9.1. Giving Notice............................................................................... 30
9.2. Change of Address........................................................................... 30
Testimonium......................................................................................... 31
Signatures.......................................................................................... 31
Exhibit "A-I" - Form of Facility I Note
Exhibit "A-2" - Form of Facility 2 Note
Exhibit "B" - Form of Group Member Notes
Exhibit "C" - Form of Collateral Assignment and
Pledge of Master Promissory Notes
Exhibit "D" - Form of Opinion
Exhibit "E" - Form of Compliance Certificate
Schedule "1" - Subsidiaries
</TABLE>
5
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of January 20, 1995 ("this Agreement")
is entered into by ALATENN CREDIT CORP., an Alabama corporation (the
"Borrower"), and COMPASS BANK, an Alabama banking corporation (the "Lender").
ARTICLE I
DEFINITIONS
As used in this Agreement:
"Advance" means a borrowing hereunder pursuant to Facility 1 or
Facility 2 and shall include the face amount of all Letters of Credit issued by
Lender for Borrower's account.
"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 stock, by contract or
otherwise.
"Agreement" means this credit agreement, as it may be amended or
modified and in effect from time to time.
"Article" means an article of this Agreement.
"Authorized Officer" means any of the President, Secretary, Treasurer,
Assistant Secretary or Assistant Treasurer, acting singly.
"Borrower" means AlaTenn Credit Corp., an Alabama corporation, and its
successors and assigns.
"Borrower's Loan Accounts" shall mean the accounts on the books of
Lender in which Lender will record Advances to or on behalf of Borrower
pursuant to the Facility 2 and the Facility 1, payments received on such
Advances, and other appropriate debits and credits as provided by this
Agreement or any of the other Loan Documents. Separate Borrower's Loan Accounts
shall be maintained for the Facility 2 and the Facility 1.
"Borrowing Date" means a date on which an Advance is made hereunder.
<PAGE> 8
"Business Day" means a day (other than a Saturday or Sunday) on which
banks generally are open in Birmingham, Alabama for the conduct of
substantially all of their commercial lending activities and on which Federal
Reserve Banks are open.
"Capitalized Lease" of a member of the Group means any lease of
Property by such Group Member as lessee that would be capitalized on the
consolidated balance sheet of the Group prepared in accordance with GAAP.
"Capitalized Lease Obligations" of the Group means the amount of the
obligations of the Group under Capitalized Leases that would be shown as the
liability on a balance sheet of the Group prepared in accordance with GAAP
(exclusive of any Capitalized Lease Obligation of a project financed through
Project Financing).
"Change Date" shall mean a date ninety (90) days after the date
hereof, and successive dates, each ninety (90) days after the other, provided,
however, that in the event that the applicable rate under the Facility I Note
or the Facility 2 Note is based on "Compass Bank Prime Rate," the applicable
interest rate thereunder shall change as Compass Bank Prime Rate changes.
"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 the Borrower.
"Closing Date" means January 20, 1995.
"Code" means the Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time.
"Collateral Assignment" means the Collateral Assignment and Pledge of
Master Promissory Notes from Borrower to Lender dated as of the date hereof, in
substantially the form of Exhibit C hereto, pursuant to which the Group Member
Notes are being assigned and pledged to Lender.
"Compass Bank Prime Rate", as used herein, is a reference rate
established by Lender for use in computing and adjusting interest, is subject
to increase, decrease or change at Lender's discretion, and is only one of the
reference rates or indices that Lender uses. Lender may lend to others at rates
of interest at, or greater or less than, Compass Bank Prime Rate or the rate(s)
provided herein. Any change in said rate due to a change in Compass Bank Prime
Rate shall take effect on the day of such change.
"Compliance Certificate" shall mean a certificate in the form of
Exhibit E attached hereto, signed by an Authorized Officer of Borrower.
2
<PAGE> 9
"Concentration Account" means the checking account of Borrower with
Lender into which shall be deposited Advances under the Facility I and the
Facility 2 and payments under the Group Member Notes and from which shall be
disbursed advances from Borrower to Group Members under the Group Member Notes.
The day-to-day administration of the Concentration Account shall be governed by
Section 2.10 hereof and by Lender's standard forms of cash management account
agreements to be executed by Borrower and Lender.
"Consolidated Cash Flow" means net profit plus depreciation and
amortization of the Group as determined on a consolidated basis in accordance
with GAAP (exclusive of any cash flow generated from a project financed through
Project Financing other than cash distributions to the Group on account of the
applicable Group member's equity interest in the project so financed).
"Consolidated Current Maturities" means that portion of long-term debt
of Group which is due within twelve months of the statement date as determined
on a consolidated basis in accordance with GAAP (exclusive of any Project
Financing).
"Consolidated Indebtedness" means the Indebtedness of the Group as
shown on the Group's financial statements on a consolidated basis in accordance
with GAAP (exclusive of any Project Financing).
"Consolidated Interest Expense" means, for any period of calculation,
interest expense, whether paid or accrued, of the Group calculated on a
consolidated basis in accordance with GAAP (exclusive of any such expense
related to Project Financing).
"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 any income from any project financed through Project Financing other than
income to the Group from distributions on account of the applicable Group
member's equity interest in the project so financed).
"Consolidated Retained Earnings" means the amount of consolidated
retained earnings of the Group as shown on the Group's consolidated financial
statements determined in accordance with GAAP.
"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).
"Default" means an event described in Article VI.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
3
<PAGE> 10
"ERISA Affiliate" means any Person that is a member of the Group, or
under common control with the 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.
"Facility 1" means the $10,000,000.00 line of credit described in
Section 2.3 hereof.
"Facility 1 Note" means the $10,000,000.00 Master Revolving Promissory
Note (Facility 1) executed by Borrower and delivered to Lender to evidence sums
advanced and repayable under Facility 1 in substantially the form of Exhibit
A-1 hereto.
"Facility 2" means the $10,000,000.00 line of credit described in
Section 2.4 hereof.
"Facility 2 Collateral" means collateral now or hereafter securing
Advances under Facility 2.
"Facility 2 Note" means the $10,000,000.00 Master Revolving Promissory
Note (Facility 2) executed by Borrower and delivered to Lender to evidence
advances made and repayable under Facility 2 in substantially the form of
Exhibit A-2 hereto.
"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
4
<PAGE> 11
by, such financial statements, provided, however, that interim financial
statements shall be unaudited and subject to normal year end adjustments.
"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 including, without limitation, the Federal Energy Regulatory
Commission or its successor in function.
"Group" means the Borrower, the Guarantor and the Subsidiaries listed
on Schedule I attached hereto and any Subsidiary subsequently formed or
acquired.
"Group Member Notes" means the promissory notes of the Group Members
payable to the order of Borrower which shall be in substantially the form of
Exhibit B hereto, shall evidence advances from Borrower to such Group Members
of funds advanced to Borrower hereunder and shall be pledged to Lender to
secure advances under Facility I and Facility 2 pursuant to the Collateral
Assignment in substantially the form of Exhibit C hereto.
"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.
"Guarantor" means AlaTenn Resources, Inc., an Alabama corporation.
"Guaranty" means the Guaranty of even date herewith executed by the
Guarantor in favor of the Lender.
"Highest Lawful Rate" means the maximum non-usurious interest rate
that at any time may be contracted for, taken, reserved, charged or received on
amounts due Lender, under laws applicable to Lender presently in effect or, to
the extent allowed by law, under such applicable laws that shall allow a higher
maximum non-usurious rate than applicable laws now allow.
"Indebtedness" of the Group means, without duplication, (i)
obligations for borrowed money, (ii) obligations representing the deferred
purchase price of Property or services (other than accounts payable arising in
the ordinary course of the Group's business payable on terms customary in the
trade), (iii) obligations, whether or not assumed, secured by Liens or payable
out of the proceeds or production from Property now or hereafter owned or
acquired by a member of the Group, (iv) obligations evidenced by notes,
acceptances or other instruments, including guaranties and other contingent
obligations (v) Capitalized Lease Obligations, and (vi) obligations for
reimbursement of amounts drawn or available to be drawn under Letters of
Credit, as reflected on the consolidated financial statements of the Group
determined in accordance with GAAP, but exclusive of Project Financing.
"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.
5
<PAGE> 12
"Lender" means Compass Bank, its successors and assigns.
"Letter of Credit" of a Group member means a letter of credit or
similar instrument issued upon the application of such Group member or upon
which such member is an account party or for which it is in any way liable.
"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).
"Loan Documents" means this Agreement, the Notes, the Collateral
Assignment and the Guaranty.
"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 Borrower
to make any payment or perform any other material obligation required under
this Credit 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" means a "multiemployer plan" as defined in
Section 3(37) of ERISA.
"Multiple Employer Plan" means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (i) is maintained for employees of the Group
or an ERISA Affiliate and at least one 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 4064 or 4049
of ERISA in the event such plan has been or were to be terminated.
"Ninety-Day LIBOR Rate" means, at the time of any computation required
under the Facility I Note or the Facility 2 Note, the interest rate offered on
the London interbank market for deposits of ninety days' maturity, as reported
by an on-line financial reporting service such as Reuters or TeleRate on each
Change Date or, if the London interbank market is not open for
6
<PAGE> 13
trading on any Change Date, then on the next day on which the London interbank
market is open for trading. In the event quotations become unavailable on such
an on-line reporting service, Lender may obtain quotations from such other
sources as may be available at its discretion. In the event funds of ninety
days' maturity are no longer offered on the London interbank market, Lender
shall so advise Borrower promptly and shall offer to Borrower an alternative
index (to which one percentage point per annum (1%) shall be added to
calculate the applicable rate under the Note on each Change Date) which is
reasonably equivalent to the Ninety-Day LIBOR Rate and the Borrower shall have
the option, within 5 business days of receiving such advice from Lender, to
elect such alternative index (to which one percentage point per annum (1%)
shall be added to calculate the applicable rate under the Note on each Change
Date) or an applicable rate for the Facility 1 Note and the Facility 2 Note
equal to Compass Bank Prime Rate, and unless and until Borrower makes such
election, Compass Bank Prime Rate shall be the applicable rate on the Facility
1 Note and the Facility 2 Note.
"Notes" mean the promissory notes duly executed by the Borrower and
payable to the order of Lender consisting of the Facility 1 Note and the
Facility 2 Notes, including any amendment, modification, renewal or replacement
of each such promissory note evidencing the Facility 1 and the Facility 2
hereunder.
"Obligations" means all unpaid principal of and accrued and unpaid
interest on the Notes, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lender
or any indemnified party hereunder arising under the Loan Documents.
"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
7
<PAGE> 14
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;
(f) Liens referred to or reflected in the Group's June
30, 1994 consolidated financial statements, which
statements have been certified by an Authorized
Officer of Borrower;
(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; and
(i) Liens created after the date hereof which cover
assets expressly released by Lender pursuant to
Section 2.5(e) or 2.12 hereof.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any Governmental Authority.
"Plan" means a Single Employer Pension Plan or a Multiple Employer
Pension Plan.
"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.
"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.
"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.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"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
8
<PAGE> 15
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.
"Subsidiary" means (1) 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 the Borrower or the
Guarantor or by one or more of their Subsidiaries or by the Borrower and one or
more of its Subsidiaries, 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, 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 twelve-month period ending with 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
financial statements delivered to Lender.
"Term Loans" means Advances which are converted to term obligations
pursuant to Section 2.5 hereof.
"Termination Date" means January 20, 1996, or such earlier date on
which the obligations of the Lender to make Loans 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.
"Unmatured Default" means an event that, but for the lapse of any
applicable cure period or the giving of notice, or both, would constitute a
Default. The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE Il
THE CREDITS
2.1. Commitment. (a) From and including the date of this Agreement
and prior to the Termination Date, Lender agrees, on the terms and
conditions set forth in this Agreement, to make Advances to the
Borrower from time to time in amounts not to exceed in the aggregate
at any one time outstanding the amount of $20,000,000.00. Subject to
the terms and conditions set forth below, such Advances may be
obtained under either the Facility 2 or the Facility 1; provided,
however, that at no time shall the aggregate Advances outstanding
under the Facility 2 and the Facility I exceed $10,000,000.00 each;
provided, further, that such maximum limitations may be adjusted
pursuant to the provisions of Section 2.2 below. Facility 1 and
Facility 2 shall be secured
9
<PAGE> 16
by a pledge of the Group Member Notes and Facility 2 shall be further
secured by the additional collateral provided pursuant to Section 2.4
hereof. Subject to the terms of this Agreement, the Borrower may
borrow, repay and reborrow and prepay without penalty at any time
prior to the Termination Date.
(b)(i) The Facility I Note and the Facility 2 Note shall
bear interest at the Ninety Day LIBOR Rate plus one percentage point
per annum (1 %), adjusted on each Change Date on the basis of the
then-effective Ninety-Day LIBOR Rate, determined in accordance with
the foregoing definition of Ninety-Day LIBOR Rate. All references to
the London interbank market notwithstanding, Borrower agrees the
Lender shall not be required actually to obtain funds from such source
at any time. Any sums outstanding after maturity (whether due to
acceleration or otherwise) shall bear interest at the Compass Bank
Prime Rate.
(ii) Irrespective of whether the applicable interest rate
is Compass Bank Prime Rate, the applicable increment over the
Ninety-Day LIBOR Rate or some other rate, interest from date on the
outstanding unpaid principal balance shall be calculated by
multiplying the product of the relevant principal amount and the
applicable rate set forth herein by the actual number of days elapsed,
and dividing by 360.
(iii) It is the intention of Lender and Borrower to
conform strictly to any applicable usury laws. Accordingly, if the
transactions contemplated hereby would be usurious under any
applicable law, then, in that event, notwithstanding anything to the
contrary in either the Facility Note or the Facility 2 Note, or any
other. agreement entered into in connection with or as security for or
guaranteeing either the Facility 1 Note or the Facility 2 Note, it is
agreed as follows: (1) the aggregate of all consideration which
constitutes interest under applicable law that is contracted for,
taken, reserved, charged, or received by Lender under the respective
Note or under any other agreement entered into in connection with or
as security for or guaranteeing Facility 1 or Facility 2 shall under
no circumstances exceed the Highest Lawful Rate, and any excess shall
be canceled automatically and, if theretofore paid, shall, at the
option of Lender, be credited by Lender on the principal amount of any
indebtedness owed to Lender by Borrower or refunded by Lender to
Borrower, and (II) in the event that the payment of Facility I or
Facility 2 is accelerated or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under
law applicable to Lender may never include more than the Highest
Lawful Rate and excess interest, if any, to Lender provided for in
this Note or otherwise shall be canceled automatically as of the date
of such acceleration or prepayment and, if theretofore paid, shall, at
the option of Lender, be credited by Lender on the principal amount of
any indebtedness owed to Lender by Borrower or refunded by Lender to
Borrower.
(iv) Notwithstanding anything herein to the contrary, in no event
will interest payable to Lender exceed the maximum amount permitted by the law
applicable to Lender (after taking into account all charges payable to Lender
that constitute interest under such applicable law),
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<PAGE> 17
but if any amount referred to in the respective Note that would be payable to
Lender but for the applicability of usury or other laws limiting the
consideration payable to Under is not paid to Lender as a result of the
applicability of such laws, then interest on the outstanding principal balance
of this Note payable to Lender shall, to the extent permitted by the law,
accrue at the maximum rate of interest permitted by applicable law (after
taking into account all charges payable to Lender that constitute interest
under applicable law) until the total amount received by Lender equals the
amount it would have received had no such laws been applicable.
(v) With respect to Advances bearing interest calculated
with reference to the Ninety-Day LIBOR Rate, if any future law, rule,
regulation or directive, or any future judicial or administrative
interpretation of any existing law, rule, regulation or directive
(a) subjects Under to any tax, duty, charge or
withholding on or from payments due from Borrower
(excluding taxation of the overall net income of
Lender or taxation which may be treated as an offset
against such taxation of overall net income), or
(b) imposes or increases any reserve, assessment,
special deposit or similar requirement against
Lender, or
(c) imposes any other condition, the result of which is
to increase the cost to Lender of making, funding or
maintaining loans or reduces any amount receivable
by Lender in connection with loans, or to require
Under to make any payment calculated by reference to
the amount of loans held or interest received by it,
then, in accordance with the following paragraph, Borrower shall pay
to Lender that portion of such increased expense incurred or reduced
amount received which is attributable to making, funding and
maintaining such advances hereunder. Lender promptly shall notify
Borrower upon its becoming aware of any such increased expense or
reduced amount received.
A certificate as to the amount due under clause (v) above,
together with reasonable substantiation of such increase, shall be
submitted by the Lender to Borrower. Determination of amounts payable
under clause (v) above shall be calculated as though Lender funded the
Ninety-Day LIBOR Rate Advances through the purchase of a deposit of
the type, amount and maturity corresponding to the deposit used as a
reference in determining the applicable rate for such advance. The
amount specified in the certificate shall be payable on the interest
payment date next following receipt by Borrower of the certificate.
The indemnity obligations of Borrower under this Agreement shall
survive payment of the Facility 1 Note and the Facility 2 Note.
(vi) If Lender, in its reasonable discretion, determines
that maintenance of any rate based upon the Ninety-Day LIBOR Rate
would violate any applicable law, rule,
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<PAGE> 18
regulation, or directive applicable to Lender, then Lender may suspend
the availability of such a rate and shall so advise Borrower promptly
and shall offer to Borrower an alternative index (to which one
percentage point per annum (1 %) shall be added to calculate the
applicable rate under the Facility 1 Note and the Facility 2 Note on
each Change Date) and Borrower shall have the option, within 5
business days of receiving such advice from Lender, to elect such
alternative index (to which one percentage point per annum (1%) shall
be added to calculate the applicable rate under the Facility 1 Note
and the Facility 2 Note on each Change Date) or an applicable rate for
the Facility 1 Note and Facility 2 Note equal to Compass Bank Prime
Rate, and unless and until Borrower makes such election, the Compass
Bank Prime Rate will be the applicable rate under the Facility 1 Note
and the Facility 2 Note.
(vii) Notwithstanding anything to the contrary contained
or implied herein, the applicable rate on Advances which are converted
to a Term Loan pursuant to Section 2.5 hereof shall be determined
pursuant to Section 2.5 hereof.
(c) The Commitment to lend hereunder shall expire on the
Termination Date, or if the Termination Date is extended pursuant to
the terms hereof, on the date to which the Termination Date is
extended (each such extended date being referred to herein as the
("Extended Termination Date"). Any outstanding Advances and all other
unpaid Obligations (other than those outstanding under Term Loans)
shall be paid in full by the Borrower on the Termination Date or any
Extended Termination Date.
(d) If at any time prior to the Termination Date, as it
may be extended from time to time, all amounts payable by Borrower
hereunder have been paid in full (including, without limitation, fees
payable under Section 2.6 below) and all other obligations under the
Loan Documents have been satisfied, the Borrower may terminate this
Credit Agreement, and its obligations hereunder, by delivering to
Lender a written release of its commitment to lend and of any other
Lender obligations hereunder, which release shall be in form and
substance satisfactory to the Lender and its counsel.
(e) If at any time prior to the Termination Date, as it
may be extended from time to time, all amounts payable by Borrower
hereunder have been paid in full with the exception of amounts
outstanding under the Tenn Loans, and all other obligations under the
Loan Documents have been satisfied (including, without limitation,
payment of fees under Section 2.6 below), the Lender, upon receipt
from Borrower of a release in the form described in Section 2. 1 (d)
above, (1) shall have no continuing commitment to lend hereunder and
(11) shall release the Borrower from the provisions of this Agreement
except to the extent that any of the terms hereof are contained or
incorporated by reference in the documents and instruments relating to
the Term Loans executed pursuant to Section 2.5(b) hereof, and the
Term Loans shall be governed by the provisions of such Term Loan
documents and instruments executed pursuant to Section 2.5(b) hereof.
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<PAGE> 19
2.2. Extensions.
(a) Initial Extension. The Termination Date shall be
extended 364 days (the "Initial Extension") subject to the following
conditions:
(i) Between 30 and 60 days prior to the
Termination Date, Borrower shall submit to Lender a written notice to
extend and, in the event Borrower wishes to lower the amount of credit
available hereunder, Borrower shall specify such lower amount, (the
"Initial Extension Notice");
(ii) The Initial 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 Unmatured Default.
(b) Additional Extension Options.
Borrower may request, at the same time that an Extension
Request is made pursuant to clauses 2.2(a)(i) or 2.2(c)(i) hereof, an
option to extend the Extended Termination Date for additional periods
of 364 days beyond the Initial Extension or any Subsequent Extension,
as hereinafter defined, subject to the following conditions:
(i) Contemporaneously with the submission of
the Initial Extension Notice pursuant to Subsection 2.2(a) above or
any submission of any Subsequent Extension Notice pursuant to
Subsection 2.2(c) below, Borrower may submit to Lender a written
request (the "Additional Extension Option Request"), which shall make
specific reference to this Subsection 2.2(b) and which shall specify
the amount of credit requested.
(ii) Within 60 days following receipt of the
Additional Extension Option Request, Lender shall notify Borrower in
writing whether or not Lender is willing, based on its normal credit
underwriting procedures, to offer the Additional Extension Option on
terms substantially similar to the terms hereof, subject to adjustment
of financial covenants as stated in such writing.
(iii) It is acknowledged and agreed that Lender
has no obligation to grant any Additional Extension Option Request.
(c) Exercise of Additional Extension Option.
If the Lender grants any Additional Extension Option Request
pursuant to 2.2(b) above, the Borrower may exercise such option to
extend ("Subsequent Extension") by satisfaction of the following
conditions:
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<PAGE> 20
(i) Between 30 and 60 days prior to the Extended
Termination Date, Borrower shall submit to Lender a written notice of
its intent to exercise the Additional Extension option ("Subsequent
Extension Notice").
(ii) The Subsequent Extension Notice shall be accompanied
by a Compliance Certificate, together with the most recent unaudited
consolidated and consolidating financial statements of the Group.
(iii) Any amendments or modifications of this Agreement,
as appropriate to place in effect the conditions imposed by Lender
pursuant to Subsection 2.2(b)(ii), shall have been executed by
Borrower.
(iv) As disclosed by the subject Compliance Certificate
and the accompanying financial statements and other information as may
be available to Under, there shall exist no Default or Unmatured
Default under this Agreement, as modified pursuant to Subsection
2.2(b)(ii), above.
2.3. Facility 1. On any Business Day prior to the Termination Date
or any Extended Termination Date, so long as there exists no Default or
Unmatured Default hereunder, Borrower may automatically obtain Advances under
the Facility 1 to the extent of shortages in the Concentration Account and upon
verbal or written request of the Borrower. All Advances shall be recorded in
the Borrower's Loan Account for Facility 1 and deposited in the Concentration
Account.
2.4. Facility 2. (a) From the date hereof until the Termination
Date or any Extended Termination Date, so long as there exists no Default or
Unmatured Default hereunder, Advances shall be available under the Facility 2.
Advances may be obtained upon the submission of a written request specifying
the amount of such requested Advance. In addition to such written request,
Borrower shall furnish the Lender all information regarding the collateral
which Borrower proposes to serve as security for the Advance as may be
necessary for the Lender to obtain a security interest therein and to assess
the value thereof. If, in the exclusive and absolute judgment of the Lender,
the value of such proposed collateral is unacceptable to Lender to secure the
subject Advance, whether in terms of amount, type or otherwise, Lender may
require such additional collateral as it considers necessary to adequately
secure each such Advance. In order to allow Lender to assess the value of the
proposed collateral prior to each Advance and to allow time to prepare all
documentation necessary to create and perfect the Lender's security interest,
Borrower shall submit any request for an Advance under Facility 2 at least 30
days prior to the date on which such Advance is to be made. The collateral for
each Advance under Facility 2 shall secure all other Advances evidenced by the
Facility 2 Note. Borrower shall execute and deliver all documentation
reasonably required by Lender and its counsel to create and perfect the
required security interest in the collateral to secure such Advance. Any
out-of-pocket expenses incurred in connection with such documentation,
including, without limitation, reasonable fees and expenses of Lender's legal
counsel, recording taxes, filing fees, title insurance premiums, surveys, and
environmental reports shall be born by the Borrower.
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<PAGE> 21
(b) Notwithstanding the fact that all Facility 2 Collateral
secures all Facility 2 Advances, the Lender acknowledges that to the extent
that each Facility 2 Advance relates to a specific project (the "Project
Advance"), the principal collateral to be offered as security for such Advance
will relate to such project (the "Project Collateral"); provided, however, that
such acknowledgement by Lender is made solely for convenience of reference to
and to describe a relationship between a particular Project Advance and the
principal collateral therefor and that nothing contained or implied in this
paragraph shall constitute an acceptance by lender, or create any obligation of
Lender to accept or release any collateral, the acceptance or release of
collateral by lender being subject to Lender's absolute and exclusive
determination of the acceptability thereof as expressly provided elsewhere in
this Agreement. Upon Borrower's written request and payment in full of the
applicable Project Advance, provided that no Event of Default or Unmatured
Default exists at such time and Lender determines in its exclusive and absolute
judgment that the value of all other Facility 2 Collateral is acceptable to
Lender in terms of amount, type and in all other respects to secure Facility 2,
Lender agrees to consider releasing the Project Collateral applicable to the
paid Project Advance from any and all mortgages, security agreements, pledge
agreements or other security documents.
2.5. Term Option. (a) From time to time, Borrower may convert any
portion of Facility 1 or Facility 2 to a Term Loan provided that (i) conversion
of Advances under Facility 1 to Term Loans shall be conditioned upon the
Borrower's granting to Lender a security interest in collateral acceptable to
Lender in its exclusive and absolute judgment in terms of amount, type and
otherwise to secure such Term Loans and (ii) all Advances under Facility 2
converted to Term Loans shall be secured by that portion of the Facility 2
Collateral given in connection with all such Facility 2 Advances being
converted.
(b) Each Term Loan shall be evidenced by a promissory note with
an adjustable interest rate equal to (i) fifty (50) basis points in excess of
the rate of interest applicable under the Facility I Note and the Facility 2
Note, as applicable, subject to periodic adjustments as provided therein, or
(ii) alternatively, at the Borrower's option, to be exercised at the time of
conversion, a fixed interest rate equivalent to such adjusted rate, determined
with reference to the "interest rate swap" market at such time. The maturity
and repayment terms of each Term Loan shall be subject to the mutual agreement
of Lender and Borrower, provided that each Term Loan (i) shall have a term of
two (2) years or such longer term as the parties may agree or such shorter term
as Borrower shall elect commencing on the Termination Date as it may be
extended from time to time, (ii) shall provide for equal payments of principal
plus interest based on an amortization schedule of no fewer than 120 months
with a balloon payment upon maturity, and (iii) if the applicable note provides
for an adjustable interest rate, shall provide for prepayment without premium
or penalty. Borrower and Lender shall, in connection with the conversion of any
Advance to a Term Loan, execute and deliver documents and instruments relating
thereto and the collateral therefor containing or incorporating such of the
covenants, events of default, representations and warranties of this Agreement
as may be applicable thereto, as well as such other terms, conditions and
assurances relating to the priority, preservation and perfection of Lender's
interest in the collateral for such Tenn Loan as Lender may require in
connection therewith.
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<PAGE> 22
(c) Unless Lender and Borrower agree otherwise in writing, the
maximum amount of credit available under Facility I shall be reduced by the
amount of Facility 1 Advances converted to Term Loans, and the maximum amount
of credit available under Facility 2 shall be reduced by the amount of Facility
2 Advances converted to Tenn Loans. Subject to Section 2.5(d) below, as the
principal balance of any Term Loan is reduced, the maximum amount of credit
availability under Facility 1 or Facility 2, as applicable, shall be increased
by the amount of such reduction.
(d) A reduction of the principal balance of any Term Loan shall
not result in a corresponding increase in credit available under Facility 1 and
Facility 2 in the event that (i) the Borrower has paid a Term Loan in full and
has requested a corresponding reduction in credit availability under Facility 1
or Facility 2, as applicable and (ii) in accordance with Section 2.5(e) below,
the Lender has granted to Borrower a written release of the covenant set forth
in Section 5.13 hereof as it relates to the assets that were held by the Lender
as collateral with respect to any such Term Loan.
(e) Provided that no Default or Unmatured Event of Default then
exists, upon payment in full of any Term Loan and upon Borrower's request for a
corresponding reduction in the amount of credit available under Facility 1 or
Facility 2, as applicable, Lender agrees to release the collateral specifically
granted to secure such Tenn Loan (i) from any mortgage, security agreement or
other applicable collateral documents and (ii) from the covenant set forth in
Section 5.13 hereof. Thereafter, any liens created by the Borrower with respect
to such released assets shall be considered Permitted Liens for purposes of
this Credit Agreement.
(f) Provided that no Default or Unmatured Event of Default then
exists, upon payment in full of any Term Loan and a corresponding increase in
the amount of credit available under Facility 1 or Facility 2, as applicable,
Lender agrees to release the collateral specifically granted to secure such
Term Loan from any mortgage, security agreement or other applicable collateral
documents; provided that any assets so released will remain subject to the
covenants set forth in Section 5.13 hereof.
2.6. Non-use Fee. The Borrower agrees to pay to the Lender upon
submission of an invoice, a non-use fee of .25% (25 basis points) per annum on
the daily unborrowed portion of the Facility 2 and the Facility 1 from the
Closing Date to and including the Termination Date, payable in arrears on the
first 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 Loans
hereunder.
2.7. Applicable Interest Rate. All Advances shall bear interest at
the rate set forth in the Notes, payable as provided therein.
2.8. Record of Advances, Payments, Etc. All Advances and payments
shall be debited or credited, as the case may be, to the appropriate Borrower's
Loan Account. Lender shall also record in the appropriate Borrower's account
all other charges, expenses, fees and other items
16
<PAGE> 23
properly chargeable to Borrower hereunder. The debit balance of each Borrower's
Loan Account shall reflect the amount of Borrower's indebtedness under the
Facility 2 and the Facility 1, as applicable, from time to time outstanding.
Not less than monthly, Lender shall furnish Borrower with statements of
Borrower's Loan Account with respect to the Facility 2 and the Facility 1
provided that such information will be available to Borrower daily by
telephone. Unless Borrower objects to the information contained in any such
statement within 30 days after the date thereof, such statement shall be
conclusive as to the information therein contained absent manifest error.
2.9. Procedure for Re-Advances, Payments, Etc. Proceeds of
Advances shall be readvanced to Group Members under the Group Member Notes.
Such re-advances shall be disbursed from the Concentration Account, and all
payments under the Group Member Notes shall be deposited in the Concentration
Account. At the close of each business day, any funds remaining in the
Concentration Account will be applied to Advances outstanding under Facility 1
or the Facility 2 in the following order, unless otherwise directed in writing
by the Borrower: first, to Advances outstanding under the Facility I and,
second, to Advances outstanding under the Facility 2. At the end of each
business day, any shortages in the Concentration Account will be covered by
Advances under the Facility 1. If at the end of any business day the funds in
the Concentration Account exceed sums outstanding under the Facility 1 and the
Facility 2, such excess amount shall be invested overnight in accordance with
instructions from Borrower.
2.10. Assignment of Group Member Notes. Each of the Group Member
Notes shall be assigned and pledged to Lender as collateral for the Facility I
or the Facility 2, as appropriate, pursuant to the Collateral Assignment pledge
agreements in substantially the form of Exhibit C hereto.
2.11. Letters of Credit. Provided that all conditions for Advances
shall have been and remain fully satisfied and Borrower otherwise would at such
time be eligible for an Advance, Lender shall issue upon Borrower's request and
for Borrower's 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 Facility 1 or Facility 2, as applicable. Lender's
obligation to issue any such Letter of Credit shall be conditioned upon (i)
Borrower's payment of a one percent (1%) Letter of Credit issuance fee and
Lender's other customary Letter of Credit charges and (ii) Borrower's 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.
2.12. Partial Release of Negative Pledge. In the event that
Borrower receives a bona fide irrevocable commitment from a financial
institution other than Lender (the "Other Lender") for a secured loan with a
term longer than two (2) years or an amortization longer than 120 months,
provided that Borrower shall have first requested that Lender make such
financing available to Borrower on substantially the same terms and Lender
shall have declined to make such financing available to Borrower, Borrower
shall promptly present such commitment of Other Lender to Lender within three
(3) days of receipt thereof by Borrower, and Lender shall
17
<PAGE> 24
have the option in its sole discretion to: (1) provide financing to Borrower
under Facility 2 on substantially the same terms as the commitment of the Other
Lender, with a corresponding reduction in availability under Facility 2, (2)
consider reducing the credit available under Facility 2 by an amount equal to
the Other Lender's committed amount and releasing from the negative pledge
under Section 5.13 hereof the assets required as collateral under the Other
Lender's commitment to the extent required by such Other Lender in order to
receive a first priority security interest or mortgage, or (3) advise Borrower
that Lender will neither release such assets from Section 5.13 nor make such
financing available. Lender shall advise Borrower within 10 business days of
its receipt of the Other Lender's commitment whether Lender has elected option
(1), (2) or (3). In the event that Lender chooses option (2) above, the
mortgage or security interest of the other Lender on the assets released by
Lender will constitute a Permitted Lien.
ARTICLE III
CONDITIONS PRECEDENT
3.1. Initial Advance. The Lender shall not be required to make the
initial Advance hereunder unless the Borrower has furnished to the Lender:
(i) A certificate of corporate existence and
qualification from the Secretary of State of Alabama
and a certificate of good standing from the
Department of Revenue of the State of Alabama.
(ii) Copies, certified by the Secretary or an Assistant
Secretary of the 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 the Secretary
or any Assistant Secretary of the Borrower, which
shall identify by name and title and bear the
signature of the officers of the 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 the
Borrower of any change.
(iv) A certificate, signed by an Authorized Officer of
the Borrower, stating that on the initial Borrowing
Date no Default or Unmatured Default has occurred
and is continuing.
(v) A written opinion of the Borrower's counsel,
addressed to the Under in substantially the form of
Exhibit "D" hereto.
(vi) The Notes.
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<PAGE> 25
(vii) A duly completed Compliance Certificate as of the
Closing Date.
(viii) Such other documents as Lender or its counsel may
have reasonably requested.
3.2. Each Advance. The Lender shall not be required to make any
Advance, unless on the applicable Borrowing Date.
(i) There exists no Default or Unmatured Default.
(ii) The representations and warranties contained in
Article IV (other than Section 4.5) are true and
correct as of the date of such Advance.
Each request for an Advance shall constitute a representation
and warranty by the Borrower 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
The Borrower represents and warrants to the Lender that:
4.1. Corporate Existence and Standing. Each of the Borrower and
the Guarantor 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. The 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 the
Borrower of the Loan Documents and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Loan Documents constitute legal, valid and binding obligations of the Borrower
enforceable against the 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. The Guarantor has the
corporate power and authority and legal right to execute and deliver the
Guaranty and to perform its obligations thereunder. The execution and delivery
by the Guarantor of the Guaranty and the performance of its obligations
thereunder have been duly authorized by proper corporate proceedings, and the
Guaranty constitutes legal, valid and binding obligations of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except its
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
19
<PAGE> 26
Borrower 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 Borrower or any Group Member or the Borrower's or any Group
Member's certificate or articles of incorporation or by-laws or the provisions
of any indenture, instrument or agreement to which the Borrower or any member
of the Group 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 the Borrower or
any member of the Group 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 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, 1993 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, 1993, 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. The Group 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 the
Group or any , member of the Group except such taxes, if any, as are being
contested in good faith and as to which, in the good faith judgment of the
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 member of the
Group with respect to any taxes or other governmental charges are adequate in
the good faith judgment of the 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 member of the Group which could reasonably be expected to have a Material
Adverse Effect. The Borrower has no material Guaranteed Obligations not
provided for or disclosed in the financial statements referred to in Section
4.4.
4.8. Group. Schedule "1" hereto contains an accurate list of all
of the now existing members of the Group, setting forth their respective
jurisdictions of incorporation and the percentage of their respective capital
stock owned by the Borrower or the Guarantor. All the issued and outstanding
shares of capital stock of such Subsidiaries have been duly authorized and
issued and are fully paid and non-assessable.
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<PAGE> 27
4.9. 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. Neither the Borrower nor any ERISA Affiliate
is required to contribute to or has ever had a liability to a Multiemployer
Plan.
4.10. Accuracy of Information. Neither any verbal statements made
by Borrower's President or Secretary/Treasurer nor any written information,
exhibit or report furnished by or on behalf of the Borrower or any member of
the Group 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.
4.11. Regulation U. Margin stock (as defined in Regulation U)
constitutes less than 25% of those assets of the Group that are subject to any
limitation on sale, pledge or other restriction hereunder.
4.12. Material Agreements. No member of the Group 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 member of the Group 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 member of the Group is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument evidencing or governing
Indebtedness.
4.13. Compliance With Laws. Each member of the Group has complied
with all applicable statutes, rules, regulations, orders and restrictions of
any Governmental Authority having jurisdiction over the conduct of their
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 member of the Group 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.
4.14. Investment Company Act. No member of the Group is an
"investment company" nor a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
4.15. Public Utility Holding Company Act. The Group is exempt from
the requirements of the Public Utility Holding Company Act of 1935, as amended.
4.16. Licenses. Each member of the Group holds all necessary
Licenses, and is
21
<PAGE> 28
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 Borrower's knowledge no such suspension or revocation has been
threatened by any Governmental Authority.
4.17. Solvency. The total assets of the Group exceed its total
liabilities, and the Group is capable of paying its debts as and when they
become due.
ARTICLE V
COVENANTS
During the term of this Agreement, unless the Lender shall otherwise
consent in writing:
5.1. Financial Reporting. The Group will maintain a system of
accounting established and administered in accordance with GAAP and furnish to
the Lender:
(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 the Guarantor'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
Under's discretion upon written request of Borrower); 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
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.
(c) Together with the financial statements required
hereunder, a compliance certificate signed by an Authorized Officer of the
Borrower showing the calculations necessary to determine compliance with the
financial covenants contained herein and stating that no Default or Unmatured
Default exists, or if any Default or Unmatured Default exists, stating the
nature and status thereof.
22
<PAGE> 29
(d) In the event an Insufficiency exists, within 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.
(e) Promptly upon the request of the Lender, copies of
all the most recent material reports and notices in connection with Plans that
the Borrower or any Group member is required to file under ERISA with the
Internal Revenue Service or the PBGC or the U.S. Department of Labor, or which
the Borrower or any Subsidiary receives from such Governmental Authorities.
(f) As soon as possible and in any event within 10 days
after receipt by the 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.
(g) 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.
(h) Such other information (including, without
limitation, non-financial information) as the Lender may from time to time
reasonably request.
5.2. Use of Proceeds. The Borrower will, and will cause each
member of the Group to, use the proceeds of the Advances only for corporate
purposes of the Group. The Borrower will not, nor will it permit any member of
the Group to, use any of the proceeds of the Advances to purchase or carry any
"margin stock" (as defined in Regulation U).
5.3. Notice of Certain Events. The Borrower will give prompt
notice in writing to the Lender of (i) the occurrence of any Default or
Unmatured 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 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 Subsidiary, 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 Subsidiary which has been issued or adopted
and which could reasonably be expected to have a Material Adverse Effect.
5.4. Conduct of Business. The Borrower will do, and will cause
each member of the
23
<PAGE> 30
Group to 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. The Borrower will pay, and will cause each member of
the Group to 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. The Borrower will maintain, and will cause each
member of the Group to 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 the Borrower or such member of the Group, and the 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. The Borrower will comply, and will
cause each member of the Group to 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. The Borrower will do, and will
cause each member of the Group to 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. The Borrower will permit, and will cause each
member of the Group to permit, the Lender to inspect any of the Property,
corporate books and financial records of the Borrower and each member of the
Group, to examine and make copies of the books or accounts and other financial
records of the Borrower and each member of the Group, and to discuss the
affairs, finances and accounts of the Borrower and each member of the Group
with, and to be advised as to the same by, their respective Presidents and
financial officers at such reasonable times and intervals as the Lender may
designate.
5.10. Merger. The Borrower will not, nor will it permit any member
of the Group to, merge or consolidate with or into any other Person, except
that (i) a member of the Group may merge with the Borrower, the Guarantor or a
Wholly-Owned Subsidiary, and (ii) the Borrower and any member of the Group may
merge with any other Person provided that (a) the 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.
24
<PAGE> 31
5.11. Sale of Assets. The Borrower will not, 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).
5.12. Sale and Leaseback. The Borrower will not, nor will it permit
any member of the Group in any single transaction or series of transactions
within any 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. Liens (Negative Pledge). The Borrower will not create, incur
or suffer to exist, nor shall Borrower allow any member of the Group to create,
incur or suffer to exist, any Lien in, of or on any of their Properties except
for Permitted Liens.
5.14. Consolidated Tangible Net Worth. The Group will maintain at
all times Consolidated Tangible Net Worth equal to not less than $17,385,000.
5.15. Ratio of Consolidated Indebtedness to Consolidated Tangible
Net Worth. The Group will maintain at all times a ratio of Consolidated
Indebtedness to Consolidated Tangible Net Worth of not more than 2.9 to 1.0.
5.16. Interest Coverage Ratio. The Group shall maintain, on a
rolling four-quarter average basis, a ratio of Consolidated Cash Flow plus
Consolidated Interest Expense to Consolidated Interest Expense of not less than
2.0 to 1.0.
5.17. Ratio of Cash Flow to Current Maturities. The Group shall
maintain, on a rolling four-quarter average basis, a ratio of Consolidated Cash
Flow to Consolidated Current Maturities of not less than 1.75 to 1.0. For
purposes of the foregoing none of the Advances to be made hereunder shall be
considered "Current Maturities" (except for any principal portion of any
Advance converted to a term loan and payable during the then current Fiscal
Year).
5.18. Earnings. The Group shall have a minimum annual Consolidated
Net Income after taxes for each fiscal year, beginning with the fiscal year
ending December 31, 1995, of at least $2,500,000.
5.19. 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 the 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 Borrower's, the Guarantor's or such Subsidiary's business and upon fair
and reasonable terms no less favorable to the Borrower, the Guarantor or such
Subsidiary than the Borrower, the Guarantor or such
25
<PAGE> 32
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.
5.20. Compliance with ERISA. The Group will not (i) terminate, or
permit any ERISA Affiliate to terminate, any Plan so as to result in any
material liability of the 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 the 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.
ARTICLE VI
DEFAULTS
The occurrence of any one or more of the following events shall constitute a
Default:
6.1. Any representation or warranty made or deemed made by or on
behalf of the Borrower or any member of the Group to the Lender under or in
connection with this Agreement, any Loan or any certificate or information
delivered in connection with this Agreement or any other Loan Document shall be
false on the date as of which made.
6.2. Nonpayment of principal of any Loan when due, or nonpayment
of interest upon any Loan or of any commitment fee or non-payment of any other
Obligation under any of the Loan Documents within 10 days after written notice
from Lender to Borrower that such Obligation is due.
26
<PAGE> 33
6.3. The breach of any of the terms or provisions of Section 5.2,
5.3, 5.10, 5.11, 5,12, 5.13, 5.14, 5.15, 5.16, 5.17 or 5.18 and, in the case of
a breach of the provisions of Section 5.14 or 5.15, the continuance of such
breach for a period of 15 days.
6.4. The breach (other than a breach that constitutes a Default
under any Section of this Article VI other than this Section 6.4) of any of
the terms or provisions of this Agreement, and the continuance of such breach
for a period of 30 days after written notice thereof from Lender to Borrower.
6.5. Failure of the Borrower or any member of the Group to pay
when due any Indebtedness, if the aggregate amount of all such Indebtedness
involved exceeds $1,000,000; or any Indebtedness of the 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
Indebtedness, if the aggregate amount of all such accelerated Indebtedness
involved exceeds $1,000,000; or any Indebtedness 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 Indebtedness involved exceeds $1,000,000, and such Indebtedness shall
not be paid in full within 3 days of such 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.
6.6. The Borrower or any member of the Group shall (i) have an
order for relief entered with respect to it under the Federal bankruptcy laws
as now or hereafter in effect, (ii) make an assignment for the benefit of
creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment
of a receiver, custodian, trustee, examiner, liquidator or similar official for
it or any Substantial Portion of the Property of the Group, (iv) institute any
proceeding seeking an order for relief under the Federal bankruptcy laws as now
or hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding, filed against it, (v) take any corporate action to authorize or
effect any of the foregoing actions set forth in this Section 6.6 or (vi) fail
to contest in good faith any appointment or proceeding described in Section
6.7.
6.7. Without the application, approval or consent of the Borrower
or any of its Subsidiaries, a receiver, trustee, examiner, liquidator or
similar official shall be appointed for the Borrower or any of its Subsidiaries
or any Substantial Portion of its Property, or a proceeding described in
Section 6.6(iv) shall be instituted against the Borrower or any of its
Subsidiaries, and such appointment continues undischarged or such proceeding
continues undismissed or unstayed for a period of 60 consecutive days.
6.8. Any Governmental Authority shall condemn, seize or otherwise
appropriate, or
27
<PAGE> 34
take custody or control of (each a "Condemnation"), all or any portion of the
Property of the Borrower or any of its Subsidiaries which, when taken together
with all other Property of the Borrower and its Subsidiaries so condemned,
seized, appropriated or taken custody or control of, during the twelve-month
period ending with the month in which any such Condemnation occurs, constitutes
a Substantial Portion.
6.9. The Borrower or the Guarantor shall fail within 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.
6.10. (i) Any ERISA Event shall have occurred.
6.11. Any Governmental Authority having jurisdiction shall prohibit
or limit the payment or distribution to the Borrower of dividends, principal or
interest payments or management fees, if such prohibition or limitation could
reasonably be expected to have a Material Adverse Effect.
6.12. The Borrower or any member of the Group 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 either
case, could reasonably be expected to have a Material Adverse Effect.
6.13. Any Change in Control shall occur.
ARTICLE VII
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES
7.1. Acceleration. If any Default described in Section 6.6 or 6.7
occurs, the obligations of the Lender to make Loans hereunder shall
automatically terminate, and the Obligations shall immediately become due and
payable without any election or action on the part of the Lender. If any other
Default occurs, Lender may, without notice to the Borrower, terminate or
suspend the obligations of the Lender to make Loans hereunder, or declare all
the Obligations to be due and payable, or both, whereupon all the Obligations
shall become immediately due and payable, without presentment, demand or
protest all of which the Borrower hereby expressly waives.
28
<PAGE> 35
7.2. 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 Borrower 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 Obligations have been paid in full.
ARTICLE VIII
GENERAL PROVISIONS
8.1. Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive delivery
of the Notes and the making of the Loans.
8.2. Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, Lender shall not be obligated to extend credit
to the Borrower in violation of any limitation or prohibition provided by any
applicable statute or regulations.
8.3. Headings. Section headings in the Loan Documents are for
convenience of reference only and shall not govern the interpretation of any of
the provisions of the Loan Documents.
8.4. Entire Agreement. The Loan Documents embody the entire
agreement and understanding between the Borrower and the Lender and supersede
all prior agreements and understandings among the Borrower and the Lender
relating to the subject matter thereof.
8.5. Benefits of this Agreement. This Agreement shall not be
construed so as to confer any right or benefit upon any Person other than the
parties to this Agreement and their respective successors and assigns.
8.6. Expenses, Indemnification. The Borrower shall reimburse the
Lender for any costs and out-of-pocket expenses (including 90% of attorneys'
fees of attorneys for the Lender, not to exceed $15,000) paid or incurred by
the Lender in connection with the preparation, negotiation, execution, delivery
and review of the Loan Documents. The Borrower also agrees to reimburse the
Lender for any out-of-pocket expenses (including reasonable attorneys' fees of
attorneys for the Lender) paid or incurred by the Lender in connection with the
collection and enforcement of the Loan Documents. The obligations of the
Borrower under this Section 8.6 shall survive the termination of this
Agreement.
29
<PAGE> 36
8.7. Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
8.8. Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
8.9. Nonliability of Lender. The relationship between the Borrower
and the Lender shall be solely that of borrower and lender. Lender shall not
have any fiduciary responsibilities to the Borrower. Lender undertakes no
responsibility to the Borrower to review or inform the Borrower of any matter
in connection with any phase of the Borrower's business or operations.
8.10. Choice of Law. The Loan Documents shall be construed in
accordance with the internal laws (and not the law of conflicts) of the State
of Alabama.
8.11. Setoff. In addition to, and without limitation of, any rights
of the Lender under applicable law, if the Borrower becomes insolvent, however
evidenced, or any 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 Borrower may be offset and applied toward the
payment of the Obligations owing to Lender.
ARTICLE IX
NOTICES
9.1. Giving Notice. All notices and other communications provided
to any party hereto under this Agreement or any other Loan Documents shall be
in writing and shall be delivered or mailed (or in the case of electronic
communication, delivered by telecopy with copy by U.S. mail or courier)
addressed to such party at its address set forth below its signature hereto or
at such other address as may be designated by such party in a notice to the
other parties. Any notice, if personally delivered or mailed (properly
addressed with postage prepaid), shall be deemed given when received; any
notice, if transmitted by telecopy shall be deemed given when transmitted
(receipt confirmed by telephone).
9.2. Change of Address. The Borrower and the Lender may change the
address for service of notice upon it by a notice in writing to the other
parties hereto.
IN WITNESS WHEREOF, the Borrower and the Lender have executed this Agreement on
the day and year first above written.
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<PAGE> 37
BORROWER:
ALATENN CREDIT CORP.
By: /s/ George G. Petty
-----------------------------------------
Print Name: George G. Petty
--------------------------------
Title: Secretary/Treasurer
Address: 100 East Second Street
Sheffield, Alabama 35660
Attention: Mr. George Petty
Telephone Number: (205) 323-6241
Telecopier: (205) 351-2858
LENDER:
COMPASS BANK
BY: /s/ W. Don Ellis
----------------------------------------
Print Name: W. Don Ellis
--------------------------------
Title: Vice President
-------------------------------------
Address: 412 North Court Street
Florence, Alabama
Attention: Commercial Loan Department
Telephone Number: (205) 767-8879
Telecopier: (205) 767-8872
31
<PAGE> 38
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS
THIS LOAN MODIFICATION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS (this
"Agreement") is being entered into as of the 26th day of January, 1996, by and
between COMPASS BANK, an Alabama state banking corporation ("Bank") and ALATENN
CREDIT CORP., a corporation (the "Borrower").
P R E A M B L E
The Borrower is the maker of a certain $10,000,000.00 Master Revolving
Promissory Note (Facility 1) dated as of January 20, 1995 (the "Facility 1
Note") and a certain $10,000,000 Master Revolving Promissory Note (Facility 2)
dated as of January 20, 1995 (the "Facility 2 Note", or together with the
Facility 1 Note, the "Notes"), which together evidence a certain $20,000,000.00
loan from the Bank to the Borrower (the "Loan"). The Loan was extended pursuant
to a certain Credit Agreement by and between the Bank and the Borrower dated as
of January 20, 1995 (the "Credit Agreement"), and is secured by, among other
things, that certain Collateral Assignment and Pledge of Master Promissory
Notes from Borrower to Bank dated as of January 20, 1995 and is guaranteed by
the Continuing Guaranty of AlaTenn Resources, Inc. (the "Guarantor"). The Bank
and the Borrower have agreed to renew and modify the Loan, and to amend the
documents and instruments evidencing, securing, relating to, guaranteeing or
executed or delivered in connection with the Loan (collectively the "Loan
Documents").
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
agreements of the parties as set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and to induce Bank to renew and modify the Loan, the parties, intending to be
legally bound hereby, agree as follows:
<PAGE> 39
A. Modification of Loan. The maturity date of the Loan shall be
extended to January 20, 1997.
B. Amendment of Credit Agreement. The Credit Agreement shall be
and the same hereby is amended as follows:
(i) By deleting from Section 5.14 thereof the amount
"$17,385,000" and inserting in place thereof the
amount "$10,000,000".
(ii) By adding a new Section 5.14A which shall read as
follows:
"5.14A Consolidated Net Worth. The Group will
maintain at all times a Consolidated Net Worth equal
to not less than $27,110,000, with Consolidated Net
Worth being defined as the amount of consolidated
net worth of the Group as shown on the Group's
consolidated financial statements, determined in
accordance with GAAP."
(iii) By deleting from Section 5.15 the ratio "2.9:1" and
inserting in place thereof the ratio "3.7:1".
(iv) By adding a new Section 5.15A which shall read as
follows:
"5.15A Ratio of Consolidated Indebtedness to
Consolidated Net Worth. The Group will maintain at
all times a ratio of Consolidated Indebtedness to
Consolidated Net Worth (as defined in Section 5.14A
hereof) of not more than 1.35:1."
C. Amendment of Notes. The Notes shall be and the same hereby
are amended by changing the maturity dates thereof to January 20, 1997.
D. Effect on Loan Documents. Each of the Loan Documents shall be
deemed amended as set forth hereinabove and to the extent necessary to carry
out the intent of this Agreement. Without limiting the generality of the
foregoing, each reference in the Loan Documents to the "Notes", the "Credit
Agreement", or any other "Loan Documents" shall be deemed to be references to
said documents, as amended hereby. Except as is expressly set forth herein, all
of the Loan Documents shall remain in full force and effect in accordance with
their respective terms and
2
<PAGE> 40
shall continue to evidence, secure, guarantee or relate to, as the case may be,
the Loan.
E. Representations and Warranties. Each representation and
warranty contained in the Loan Documents is hereby reaffirmed as of the date
hereof. The Borrower hereby represents, warrants and certifies to Bank that no
Event of Default nor any condition or event that with notice or lapse of time
or both would constitute an Event of Default, has occurred and is continuing
under any of the Loan Documents or the Loan, and that Borrower has no offsets
or claims against Bank arising under, related to, or connected with the Loan,
the Credit Agreement or any of the other Loan Documents.
F. Additional Documentation; Expenses. Borrower shall provide to
Bank a certified resolution of the Borrower properly authorizing the
transactions contemplated hereby and the execution of this Agreement and all
other documents and instruments being executed in connection herewith and all
other documents and instruments required by Bank, all in form and substance
satisfactory to Bank. Borrower shall pay any recording and all other expenses
incurred by Bank and Borrower in connection with the modification of the Loan
and any other transactions contemplated hereby, including without limitation,
title or other insurance premiums, survey costs, legal expenses, recording fees
and taxes.
G. Execution by Guarantor. Guarantor has executed this Agreement
to evidence its consent to the modification and amendments as described herein,
and to acknowledge the continuing effect of its Guaranty and the obligations
contained therein.
3
<PAGE> 41
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed as of the date first set forth above.
BORROWER:
ALATENN CREDIT CORP.
By: /s/ Jerry A. Howard
---------------------------------------
Its President
By: /s/ George G. Petty
---------------------------------------
Its: Secretary
BANK:
WITNESS: COMPASS BANK
/s/ Kelly Munger By: /s/ Bob Broadway
- -------------------------------- ---------------------------------------
Its: Officer
GUARANTOR:
ALATENN RESOURCES, INC.
By: /s/ Jerry A. Howard
---------------------------------------
4
<PAGE> 42
STATE OF ALABAMA )
COUNTY COLBERT )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that George G. Petty, whose name as Secretary of ALATENN
CREDIT CORP., a corporation, is signed to the foregoing instrument and who is
known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 26th day of Jan., 1996.
/s/ Sheila Pounders Jones
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 03-08-99
STATE OF ALABAMA )
COUNTY COLBERT )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jerry A. Howard, whose name as Chairman, President
and CEO of ALATENN CREDIT CORP., a corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 26th day of Jan., 1996.
/s/ Sheila Pounders Jones
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 03-08-99
5
<PAGE> 43
STATE OF ALABAMA )
COUNTY LAUDERDALE )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Bob Broadway, whose name as Loan Officer of COMPASS
BANK, an Alabama banking corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 26th day of January, 1996.
/s/ Donna R. Hortre
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 10-24-99
STATE OF ALABAMA )
COUNTY OF COLBERT )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jerry A. Howard, whose name as Chairman, President
and CEO of ALATENN RESOURCES, INC., a ___________ corporation, is signed to the
foregoing instrument and who is known to me, acknowledged before me on this day
that, being informed of the contents of the instrument, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 30th day of Sept., 1997.
/s/ Sheila Pounders Jones
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 3/8/99
6
<PAGE> 44
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS
THIS LOAN MODIFICATION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS (this
"Agreement") is being entered into as of the 10th day of February 1997, by and
between COMPASS BANK, an Alabama state banking corporation ("Bank") and ALATENN
CREDIT CORP., a corporation (the "Borrower") and ATRION CORPORATION, a
corporation formerly known as "AlaTenn Resources, Inc." (the "Guarantor").
P R E A M B L E
The Borrower is the maker of a certain $10,000,000.00 Master Revolving
Promissory Note (Facility 1) dated as of January 20, 1995 (as amended, the
"Facility 1 Note") and a certain $10,000,000 Master Revolving Promissory Note
(Facility 2) dated as of January 20, 1995 (as amended, the "Facility 2 Note",
or together with the Facility 1 Note, the "Notes"), which together evidence a
certain $20,000,000.00 loan from the Bank to the Borrower (the "Loan"). The
Loan was extended pursuant to a certain Credit Agreement by and between the
Bank and the Borrower dated as of January 20, 1995 (as amended, the "Credit
Agreement"), and is secured by, among other things, that certain Collateral
Assignment and Pledge of Master Promissory Notes from Borrower to Bank dated as
of January 20, 1995 and is guaranteed by the Guarantor. The Bank and the
Borrower have agreed to renew and modify the Loan, and to amend the documents
and instruments evidencing, securing, relating to, guaranteeing or executed or
delivered in connection with the Loan (collectively, as heretofore amended, the
"Loan Documents").
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
agreements of the parties as set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and to induce Bank to renew and modify the Loan, the parties, intending to be
legally bound hereby, agree as follows:
<PAGE> 45
A. Modification of Loan. The maturity date of the Loan shall be
extended to April 20, 1997.
B. Amendment of Credit Agreement. The Credit Agreement shall be
and the same hereby is amended as follows:
(i) By revising Section 5.13 thereof to read in its
entirety as follows:
5.13 Liens (Negative Pledge). The Borrower will
not create, incur or suffer to exist, nor shall
Borrower allow any member of the Group to create,
incur or suffer to exist, any Lien in, of or upon
any of their Properties except for Permitted Liens
and except for margin stock (as defined in
Regulation U of the Federal Reserve Board) owned by
Borrower or any Group member.
(ii) By revising Section 5.2 to read in its entirety as
follows:
5.2 Use of Proceeds. The Borrower will, and
will cause each member of the Group to, use the
proceeds of the Advances only for corporate purposes
of the Group. The Borrower will not, nor will it
permit any member of the Group to, use any of the
proceeds of the Advances, except for up to
$5,000,000.00 of the proceeds of Facility 1, to
purchase or carry any "margin stock" (as defined in
Regulation U of the Federal Reserve Board).
(iii) By adding a new Section 5.2A which shall read in its
entirety as follows:
"5.2A Right of First Refusal. Lender shall have and
is hereby granted a right of first refusal on any
loan or financial arrangement contemplated by
Borrower or any Group member which would provide
financing secured by any margin stock (as defined by
the Federal Reserve Board) owned by Borrower or any
Group member or by a Permitted Lien of the type
described in Paragraph (g) of the definition thereof
set forth in Article I hereof, on the same terms and
conditions as offered by any reputable financial
institution in any bona fide written commitment
delivered to Borrower; provided, however, that
Lender shall have no obligation to make any such
financing available to Borrower or any Group member.
Borrower shall notify Lender in writing within five
(5) business days of its receipt of any such
2
<PAGE> 46
commitment from another financial institution,
accompanied by a copy of such commitment. Lender
shall within twenty (20) business days of its
receipt of such notice and commitment, advise
Borrower whether Lender will make financing
available to Lender on the terms and conditions
contained in the commitment. In the event that
Lender fails to reply within such twenty (20)
business day period or, if before the expiration of
such period, Lender shall notify Borrower of
Lender's election not to make such financing
available, Borrower shall be entitled to proceed to
close such financing with such other financial
institution; provided, however, that Borrower's
entering into such financing with such other
financial institution does not otherwise violate any
of the other terms of this Agreement.
(iv) By adding a new Section 5.16A which shall read in
its entirety as follows:
5.16A Funded Debt. The Borrower shall not, nor will
it permit any member of the Group to, incur or be
liable in any manner for any Indebtedness,
obligation or liability in excess of an aggregate of
$1,000,000.00 to any one or more financial
institutions or other lenders other than existing
Indebtedness reflected on the financial statements
of the Group as at September 30, 1996, and the
Indebtedness to Bank under Facility 1 and Facility 2
hereunder and Indebtedness secured by Permitted
Liens of the types described in paragraphs (g) and
(h) of the definition thereof set forth in Article I
hereof.
(v) By deleting from Section 5.14A the amount
"$27,1110,000" and inserting in place thereof the
amount "$29,297,000."
(vi) By deleting from Section 5.14 thereof the amount
"$10,000,000" and inserting in place thereof the
amount "$13,1197,000."
(vii) By adding a new Section 5.16B which shall read in
its entirety as follows:
5.16B Minimum Annual Increase in Net Worth. The
Group's Consolidated Net Worth (as defined under
Section 5.14A above) in each fiscal year, beginning
with fiscal year 1997, shall increase by $1,000,000
over the Group's
3
<PAGE> 47
Consolidated Net Worth for the immediately preceding
fiscal year.
(viii) By deleting from Section 2.12 thereof the words "10
business days" and inserting in place thereof the
words "20 business days."
C. Amendment of Notes. The Notes shall be and the same hereby
are amended by changing the maturity dates thereof to April 20, 1997.
D. Effect on Loan Documents. Each of the Loan Documents shall be
deemed amended as set forth hereinabove and to the extent necessary to carry
out the intent of this Agreement. Without limiting the generality of the
foregoing, each reference in the Loan Documents to the "Notes", the "Credit
Agreement", or any other "Loan Documents" shall be deemed to be references to
said documents, as amended hereby. Except as is expressly set forth herein, all
of the Loan Documents shall remain in full force and effect in accordance with
their respective terms and shall continue to evidence, secure, guarantee or
relate to, as the case may be, the Loan.
E. Representations and Warranties. Each representation and
warranty contained in the Loan Documents is hereby reaffirmed as of the date
hereof. The Borrower hereby represents, warrants and certifies to Bank that no
Event of Default , nor any condition or event that with notice or lapse of time
or both would constitute an Event of Default, has occurred and is continuing
under any of the Loan Documents or the Loan, and that Borrower has no offsets
or claims against Bank arising under, related to, or connected with the Loan,
the Credit Agreement or any of the other Loan Documents.
F. Additional Documentation; Expenses. Borrower shall provide to
Bank a certified resolution of the Borrower properly authorizing the
transactions contemplated hereby and the execution of this Agreement and all
other documents and instruments being executed in connection herewith and all
other documents and instruments required by Bank, all in form and substance
satisfactory to Bank. Borrower shall pay any recording and all other expenses
incurred by Bank and Borrower in connection with the modification of the Loan
and any other transactions contemplated hereby,
4
<PAGE> 48
including without limitation, title or other insurance premiums, survey costs,
legal expenses, recording fees and taxes.
G. Execution by Guarantor. Guarantor has executed this Agreement
to evidence its consent to the modification and amendments as described herein,
and to acknowledge the continuing effect of its Guaranty and the obligations
contained therein.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed as of the date first set forth above.
BORROWER:
ALATENN CREDIT CORP.
By: /s/ Jerry A. Howard
------------------------------------
Its: President
By: /s/ Jeffery Strickland
------------------------------------
Its: Secretary
GUARANTOR:
ATRION CORPORATION
(f/k/a ALATENN RESOURCES, Inc.)
By: /s/ Jerry A. Howard
------------------------------------
Its: President
BANK:
WITNESS: COMPASS BANK
By: /s/ Bob Broadway
- ---------------------------------- ------------------------------------
Its: President
5
<PAGE> 49
STATE OF ALABAMA )
COUNTY OF COLBERT )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jerry A. Howard, whose name as President of ALATENN
CREDIT CORP., a corporation, is signed to the foregoing instrument and who is
known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 10th day of February, 1997.
/s/ Sheila Pounders Jones
----------------------------------------
Notary Public
[NOTARIAL SEAL) My commission expires: 3/8/99
STATE OF ALABAMA )
COUNTY OF COLBERT )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jeffery Strickland, whose name as Secretary of
ALATENN CREDIT CORP., a corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 10th day of February, 1997.
/s/ Sheila Pounders Jones
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 3/8/99
6
<PAGE> 50
STATE OF ALABAMA )
COUNTY OF COLBERT )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jerry A. Howard, whose name as President of ATRION
CORPORATION, a ______________ corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 10th day of February, 1997.
/s/ Sheila Pounders Jones
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 3/8/99
STATE OF ALABAMA )
COUNTY OF LAUDERDALE )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Bob Broadway, whose name an Officer of COMPASS BANK,
an Alabama banking corporation, is signed to the foregoing instrument and who
is known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 10th day of February, 1997.
/s/ Jana Melton
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires:
------------------
7
<PAGE> 51
LOAN ASSUMPTION AND MODIFICATION AGREEMENT
THIS LOAN ASSUMPTION AND MODIFICATION AGREEMENT (this "Agreement") is
being entered into as of the 30th day of September, 1997, by and between
COMPASS BANK, an Alabama state banking corporation ("Bank"), and ALATENN CREDIT
CORP., a corporation ("AlaTenn Credit"), and ATRION CORPORATION, a corporation
formerly known as "AlaTenn Resources, Inc." ("Atrion").
P R E A M B L E
AlaTenn Credit is the maker of and the original borrower under a
certain $10,000,000.00 Master Revolving Promissory Note (Facility 1) dated as
of January 20, 1995 (as amended, the "Facility 1 Note") and a certain
$10,000,000 Master Revolving Promissory Note (Facility 2) dated as of January
20, 1995 (as amended, the "Facility 2 Note", or together with the Facility 1
Note, the "Notes"), which together evidence a certain $20,000,000.00 credit
facility from the Bank to AlaTenn Credit (the "Loan"). As of the date hereof,
the outstanding balance under the Loan is ZERO AND NO/100THS DOLLARS ($0.00).
The Loan was made available to AlaTenn Credit by the Bank pursuant to a certain
Credit Agreement by and between the Bank and AlaTenn Credit dated as of January
20, 1995, as the same heretofore has been amended, including without limitation
by that certain Loan Modification Agreement and Amendment to Loan Documents
dated as of January 26, 1996 and by that certain Loan Modification Agreement
and Amendment to Loan Documents dated as of February 10, 1997 (as amended, the
"Credit Agreement"). The Loan is secured by, among other things, that certain
Collateral Assignment and Pledge of Master Promissory Notes from AlaTenn Credit
to Bank dated as of January 20, 1995 (the "Collateral Assignment"), and is
guaranteed by Atrion pursuant to that certain Continuing Guaranty (Unlimited)
of Atrion dated January 29, 1995 (the "Atrion Guaranty").
<PAGE> 52
Several of the subsidiaries of Atrion and makers of the Collateral
Notes covered by the Collateral Assignment have been, or will be in the
immediate future, sold to a third party, dissolved or merged with and into
Atrion or a subsidiary of Atrion. Atrion and AlaTenn Credit also have advised
Bank that in due course following the execution hereof, AlaTenn Credit will be
dissolved or merged with and into Atrion or a subsidiary thereof. Accordingly,
the Bank, AlaTenn Credit and Atrion have agreed that Atrion shall assume the
Loan, that AlaTenn Credit shall be released from the Loan simultaneously with
the dissolution or merger of AlaTenn Credit, that the Master Promissory Notes
of the subsidiaries which have been sold, dissolved or merged into Atrion or a
subsidiary thereof shall be released from the Collateral Assignment and that
the Loan shall be modified and the documents and instruments evidencing,
securing, relating to, guaranteeing or executed or delivered in connection with
the Loan (collectively, as heretofore amended, the "Loan Documents") be amended
as set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
agreements of the parties as set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound hereby, agree as follows:
A. Assumption of Loan.
(1) Atrion hereby assumes and agrees to be bound by and to
perform all of the terms, covenants, conditions, obligations, liabilities and
agreements of AlaTenn Credit as Borrower under the Loan, the Notes and the
other Loan Documents.
(2) Atrion and AlaTenn hereby acknowledge and agree that Atrion
shall be entitled to all rights and benefits of the Borrower under the Loan
Documents and shall be subject to all remedies reserved to the Bank in the Loan
Documents in the event of any Event of Default thereunder.
(3) Atrion and AlaTenn Credit hereby acknowledge and agree that
except for the Master Promissory Notes of the entities listed in item D(2)(i)
below, all collateral
2
<PAGE> 53
presently securing the Loan shall hereafter continue to secure the Loan as an
obligation of Atrion to the same extent as it presently secures the Loan as an
obligation of AlaTenn Credit and shall remain in all respects subject to the
security interest of the Bank therein. Nothing herein contained, and nothing
done pursuant hereto, shall affect or be construed to affect the priority the
Bank's security interest over any other liens, charges, encumbrances or
conveyances in respect of any collateral.
B. Release of AlaTenn Credit. AlaTenn Credit shall be released
from its obligations under the Loan Documents simultaneously with its
dissolution or merger, as applicable.
C. Extension of Availability. The date through which advances
shall be available under the Loan and the maturity date of the Loan shall be
extended to April 20, 1998, with an option to extend such availability/maturity
date to April 20, 1999, exercisable by the Borrower in accordance with Section
2.2 of the Loan Agreement.
D. Amendment to Loan Documents. The Loan Documents shall be and
are hereby amended as follows:
(1) All references to "Borrower" shall be changed to refer to
Atrion as Borrower rather than AlaTenn Credit and all references to "Guarantor"
are hereby deleted.
(2) The Credit Agreement shall be and is hereby further amended
as follows:
(a) By deleting from Section 5.14 thereof the amount
"$13,197,000" and inserting in place thereof the amount "$15,000,000."
(b) By deleting from Section 5.14A thereof the amount
"$29,297,000" and inserting in place thereof the amount "$40,000,000."
(c) By deleting from Section 5.15 thereof the ratio
"3.7:1" and inserting in place thereof the ratio "1.8:1".
(d) By deleting from Section 5.15A thereof the ratio
"1.35:1" and inserting in place thereof the ratio "1.00:1".
(e) By revising Section 5.17 thereof to read in its
entirety as follows:
5.17 Ratio of Cash Flow to Current Maturities. The
Group shall maintain a ratio of Consolidated Cash
Flow, on a rolling twelve-month basis, to
Consolidated Current Maturities of not less than
1.75 to 1.0. For purposes of the foregoing, none of
3
<PAGE> 54
the Advances to be made hereunder shall be
considered "Current Maturities" (except for any
principal portion of any Advance converted to a term
loan and payable during the then current Fiscal
Year).
(f) By deleting from Section 5.18 thereof the amount
"$2,500,000" and inserting in place thereof the amount of $2,000,000.
(g) By revising Section 5.16B to read in its entirety as
follows:
5.16B Minimum Annual Increase in Net Worth. The
Group's Consolidated Net Worth (as defined under
Section 5.14A above) in each fiscal year ending
after December 31, 1996 shall increase by the
following minimum amounts for the fiscal years
indicated below over the Group's actual Consolidated
Net Worth for the immediately preceding fiscal year:
<TABLE>
<CAPTION>
Minimum Increase in
Fiscal Year Consolidated Net Worth
Ending 12/31 Over Previous Year
----------------- ----------------------
<S> <C>
1997 $1,000,000
1998 & thereafter $ 250,000
</TABLE>
(h) By changing the date in the definition of
Termination Date in Article I to "April 20, 1998."
(i) By deleting from Schedule 1 thereto (and accordingly
from the definition of "Group") the following entities:
AlaTenn Energy Marketing Company, Inc.
Vulcan Oil and Gas Company
Tennessee River Development Company
Central Gas Company
Tennessee River Intrastate Gas Company, Inc.
North Mississippi Natural Gas Corporation
Hardin County Gas Company
Alabama-Tennessee Natural Gas Company
HRC Acquisition Holding Corporation
4
<PAGE> 55
Atrion Medical Products, Inc. (merged with Ryder
International Corporation which changed its name to
Atrion Medical Products, Inc.)
(3) The Collateral Assignment shall be and is hereby amended by
revising the first "WHEREAS" clause thereof to read in its entirety as follows:
WHEREAS, AlaTenn Credit Corp. ("AlaTenn Credit" or the
"Assignor") is the original borrower under a certain loan in
the maximum principal amount available of up to $20,000,000
(the "Loan") and AlaTenn Credit is, and any other party who
may hereafter assume AlaTenn Credit's liability under the
Loan will be, indebted to Bank under the Loan such
indebtedness being evidenced by two promissory notes, each in
the amount of $10,000,000 and dated as of the date hereof
from AlaTenn Credit to Bank (collectively, the "Notes") which
have been executed pursuant to a certain Credit Agreement
between AlaTenn Credit and Bank dated as of the date hereof
(the "Credit Agreement"); and
(4) The Notes shall be and are hereby amended by changing the
maturity dates thereof to "April 20, 1998."
E. Effect on Loan Documents. Each of the Loan Documents shall be
deemed amended as set forth hereinabove and to the extent necessary to carry
out the intent of this Agreement. Without limiting the generality of the
foregoing, each reference in the Loan Documents to the "Notes", the "Credit
Agreement", or any other "Loan Documents" shall be deemed to be references to
said documents, as amended hereby. Except as is expressly set forth herein, all
of the Loan Documents shall remain in full force and effect in accordance with
their respective terms and shall continue to evidence, secure, guarantee or
relate to, as the case may be, the Loan.
F. Representations and Warranties. Each representation and
warranty contained in the Loan Documents is hereby reaffirmed as of the date
hereof. Atrion and AlaTenn Credit each hereby represents, warrants and
certifies to Bank that no Event of Default nor any condition or event that with
notice or lapse of time or both would constitute an Event of Default, has
occurred and is continuing under any of the Loan Documents or the Loan, and
neither of them has any offsets or claims against Bank arising under, related
to, or connected with the Loan, the Credit Agreement or any of the other Loan
Documents. Bank specifically acknowledges and consents to
5
<PAGE> 56
the sale of any of the foregoing entities to third parties or dissolution or
merger with Atrion or a subsidiary thereof of the entities listed in Section
D(2)(i) above.
G. Additional Documentation; Expenses. Atrion and AlaTenn Credit
shall provide to Bank certified resolutions of their respective Boards of
Directors properly authorizing the transactions contemplated hereby and the
execution of this Agreement and all other documents and instruments being
executed in connection herewith and all other documents and instruments
required by Bank, all in form and substance satisfactory to Bank. Atrion shall
pay any recording and all other expenses incurred by Bank, Atrion and AlaTenn
Credit in connection with the assumption and modification of the Loan and any
other transactions contemplated hereby, including without limitation, legal
expenses, recording fees and taxes.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed as of the date first set forth above.
ORIGINAL BORROWER:
ALATENN CREDIT CORP.
By: /s/ Jerry A. Howard
------------------------------------
Its President
By: /s/ Jeffery Strickland
------------------------------------
Its: Secretary
NEW BORROWER/ORIGINAL
GUARANTOR:
ATRION CORPORATION
(f/k/a ALATENN RESOURCES, Inc.)
By: /s/ Jerry A. Howard
------------------------------------
Its President
BANK:
WITNESS: COMPASS BANK
By: /s/ Robert Broadway
- --------------------------------- ------------------------------------
Its VICE PRESIDENT
6
<PAGE> 57
STATE OF ALABAMA
COUNTY MARSHALL
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jerry A. Howard, whose name as President of ALATENN
CREDIT CORP., a corporation, is signed to the foregoing instrument and who is
known to me, acknowledged before me on this day that, being informed of the
contents of the instrument, he as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 30th day of Sept., 1997.
/s/ Charlotte Moore
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 07-11-98
STATE OF ALABAMA
COUNTY MARSHALL
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jeffery Strickland, whose name as Secretary of
ALATENN CREDIT CORP., a corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, he as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 30th day of Sept., 1997.
/s/ Charlotte Moore
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 07-11-98
7
<PAGE> 58
STATE OF ALABAMA
COUNTY MARSHALL
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jerry A. Howard, whose name as President of ATRION
CORPORATION, a Delaware corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, he as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 30th day of Sept., 1997.
/s/ Charlotte Moore
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 07-11-98
STATE OF ALABAMA
COUNTY OF LAUDERDALE
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that BOB BROADWAY (Whose name as VICE PRESIDENT of
COMPASS BANK, an Alabama banking corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, _he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 30TH day of Sept., 1997.
/s/ Renea Durham Patterson
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: April 3, 2001
8
<PAGE> 59
LOAN MODIFICATION AGREEMENT
AND AMENDMENT TO LOAN DOCUMENTS
THIS LOAN MODIFICATION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS (this
"Agreement") is being entered into as of the 20th day of April, 1998, by and
between COMPASS BANK, an Alabama state banking corporation ("Bank"), and ATRION
CORPORATION, a corporation formerly known as "AlaTenn Resources, Inc."
("Atrion").
P R E A M B L E
AlaTenn Credit Corp. ("AlaTenn Credit") is the maker of and the original
borrower under a certain $10,000,000.00 Master Revolving Promissory Note
(Facility 1 ) dated as of January 20, 1995 (as amended, the "Facility 1 Note")
and a certain $10,000,000 Master Revolving Promissory Note (Facility 2) dated
as of January 20, 1995 (as amended, the "Facility 2 Note", or together with the
Facility 1 Note, the "Notes"), which together evidence a certain $20,000,000.00
credit facility from the Bank to AlaTenn Credit (the "Loan"). The Loan was made
available to AlaTenn Credit by the Bank pursuant to a certain Credit Agreement
by and between the Bank and AlaTenn Credit dated as of January 20, 1995, as the
same heretofore has been amended, including without limitation by that certain
Loan Modification Agreement and Amendment to Loan Documents dated as of January
26, 1996 and by that certain Loan Modification Agreement and Amendment to Loan
Documents dated as of February 10, 1997 (as amended, the "Credit Agreement").
The Loan is secured by, among other things, that certain Collateral Assignment
and Pledge of Master Promissory Notes from AlaTenn Credit to Bank dated as of
January 20, 1995 (the "Collateral Assignment"). Pursuant to a Loan Assumption
and Modification Agreement dated September 30, 1997, Atrion assumed the Loan,
AlaTenn Credit was to be released from the Loan simultaneously with the
dissolution or merger of AlaTenn Credit, and the Master Promissory Notes of the
subsidiaries which were sold, dissolved or merged into Atrion or a subsidiary
thereof were released from the Collateral Assignment.
<PAGE> 60
The Bank and Atrion have agreed to renew and modify the Loan and to amend the
documents and instruments evidencing, securing, relating to, guaranteeing or
executed or delivered in connection with the Loan (collectively, as heretofore
amended, the "Loan Documents") as set forth herein.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
agreements of the parties as set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound hereby, agree as follows:
A. Extension of Availability. The date through which advances
shall be available under the Loan and the maturity date of the Loan shall be
extended to May 20, 1999, with an option to extend such availability/maturity
date to May 20, 2000, exercisable by the Borrower in accordance with Section
2.2 of the Loan Agreement.
B. Amendment to Loan Documents. The Loan Documents shall be and
are hereby amended as follows:
(1) Effective on May 20, 1999, the Credit Agreement shall be and
is hereby amended as follows:
(a) By deleting from Section 5.14 thereof the amount
"$15,000,000" and inserting in place thereof the amount "$20,000,000."
(b) By deleting from Section 5.14A thereof the amount
"$40,000,000" and inserting in place thereof the amount "$48,000,000."
(c) By deleting from Section 5.15 thereof the ratio
"1.8:1" and inserting in place thereof the ratio " 1.25:1".
(d) By deleting from Section 5.1 5A thereof the ratio
"1.00:1 " and inserting in place thereof the ratio ".75:1".
(e) By deleting from Section 5.17 thereof the ratio
"1.75 to 1.0" and inserting in place thereof the ratio "2.0 to 1.0".
(f) By adding a new Section 5.1 8A to read in its
entirety as follows:
2
<PAGE> 61
"5.18A Minimum Annual Retained Earnings. The Group shall have
minimum annual retained earnings as determined in accordance
with GAAP of at least $1,000,000."
(2) Effective as of the date hereof, the Credit Agreement shall
be and hereby is amended as follows:
(a) By changing the date in the definition of
Termination Date in Article I to "May 20, 1999"; and
(b) By adding a new Section 5.21 to read in its entirety
as follows:
"5.21 Purchase of Borrower's Stock. Notwithstanding
anything to the contrary contained in this Article
V, Borrower may purchase its outstanding shares to
be held as treasury stock, and up to $3,000,000 of
the purchase price for such treasury stock purchased
after the date hereof shall be added to the Group's
net worth in determining compliance with any
covenant contained herein which is based upon the
Group's Consolidated Net Worth or Consolidated
Tangible Net Worth."
(3) The Notes shall be and are hereby amended by changing the
maturity dates thereof to "May 20, 1999."
C. Effect on Loan Documents. Each of the Loan Documents shall be
deemed amended as set forth hereinabove and to the extent necessary to carry
out the intent of this Agreement. Without limiting the generality of the
foregoing, each reference in the Loan Documents to the "Notes", the "Credit
Agreement", or any other "Loan Documents" shall be deemed to be references to
said documents, as amended hereby. Except as is expressly set forth herein, all
of the Loan Documents shall remain in full force and effect in accordance with
their respective terms and shall continue to evidence, secure, guarantee or
relate to, as the case may be, the Loan.
3
<PAGE> 62
D. Representations and Warranties. Each representation and
warranty contained in the Loan Documents is hereby reaffirmed as of the date
hereof. Atrion hereby represents, warrants and certifies to Bank that no Event
of Default nor any condition or event that with notice or lapse of time or both
would constitute an Event of Default, has occurred and is continuing under any
of the Loan Documents or the Loan, and Atrion has no offsets or claims against
Bank arising under, related to, or connected with the Loan, the Credit
Agreement or any of the other Loan Documents.
E. Additional Documentation; Expenses. Atrion represents that
the transactions contemplated hereby and the execution of this Agreement and
all other documents and instruments being executed in connection herewith and
all other documents and instruments required by Bank, all in form and substance
satisfactory to Bank, are properly authorized. Atrion shall pay any recording
and all other expenses incurred by Bank and Atrion in connection with the
modification of the Loan and any other transactions contemplated hereby,
including without limitation, legal expenses, recording fees and taxes.
IN WITNESS WHEREOF, the undersigned have caused this instrument
to be duly executed as of the date first set forth above.
BORROWER:
ATRION CORPORATION
(f/k/a ALATENN RESOURCES, Inc.)
By: /s/ Jerry A. Howard
------------------------------------
Its President
BANK:
WITNESS: COMPASS BANK
By: /s/ Donald R. Morrisson
- --------------------------------- ------------------------------------
Its VICE PRESIDENT
4
<PAGE> 63
STATE OF TEXAS
COUNTY OF COLLIN
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jerry A. Howard, whose name as President and CEO of
ATRION CORPORATION, a corporation, is signed to the foregoing instrument and
who is known to me, acknowledged before me on this day that, being informed of
the contents of the instrument, he, as such officer and with full authority,
executed the same voluntarily for and as the act of said corporation.
Given under my hand this the 7th day of August, 1998.
/s/ Tonia D. Felczer Merlene
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: 03-06-00
STATE OF ALABAMA
COUNTY OF LAUDERDALE
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that DONALD R. MORRISON (Whose name as VICE PRESIDENT of
COMPASS BANK, an Alabama banking corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, _he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 19TH day of August, 1998.
/s/ Renea Durham Patterson
----------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires: April 3, 2001
5
<PAGE> 64
ADDENDUM ONE TO LOAN MODIFICATION AGREEMENT
This ADDENDUM ONE TO LOAN MODIFICATION AGREEMENT AND AMENDMENT TO LOAN
DOCUMENTS ("Addendum") is dated as of April 20, 1998 by and between Compass
Bank ("Bank") and Atrion Corporation, a corporation formerly known as "AlaTenn
Resources, Inc. ("Borrower").
WITNESSETH:
WHEREAS, Borrower executed that certain Loan Modification Agreement
and amendment to loan documents of even date herewith; and
WHEREAS, Bank and Borrower desire to amend the agreement as provided
in this Addendum.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties intending
to be legally bound, hereby agree as follows:
1. The following provision shall be added to the Agreement as
Section F:
F. Year 2000 Compliance
On or prior to June 30, 1999, Borrower shall have taken all actions
necessary to ensure that the automated systems used by Borrower that are
material to its operations (collectively, "Mission-Critical Systems"),
including, without limitation, software, hardware and other data processing
devices, shall not fail, malfunction or produce incorrect results with respect
to data, calculations and other processing involving dates before, as of or
after December 31, 1999, regardless of the form the date data is received or
processed (collectively "Year 2000 Compliant" or "Year 2000 Compliance") .
Without limiting the generality of the foregoing, on or prior to the Compliance
Date, Borrower shall test and certify that its Mission-Critical Systems are
Year 2000 Compliant in accordance with commercially reasonable practices and
industry standards. Borrower agrees that upon the reasonable request of Lender,
Borrower will make its employees, consultants, premises, records and
documentation available to Lender with respect to Borrower's Year 2000
Compliance efforts.
2. Except as specifically set forth herein, all terms and conditions of
the Agreement shall continue in full force and effect and all terms used herein
shall have the same meaning set forth in the Agreement.
IN WITNESS WHEREOF, the parties have executed this Addendum as of the
day and year first above written.
COMPASS BANK ATRION CORPORATION
(f/k/a ALATENN RESOURCES, Inc.)
By: /s/ /s/ Jeffery Strickland
----------------------------- ---------------------------------------
By: /s/ Its: Vice President and CFO
----------------------------- ----------------------------------
