<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported)
April 7, 1995
SUNRISE MEDICAL INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
0-12744 95-3836867
(Commission File Number) (I.R.S. Employer Identification No.)
2382 Faraday Avenue, Suite 200
Carlsbad, California 92008
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code
(619) 930-1500
Exhibit Index on Page 2 Page 1 of 31
<PAGE>
Item 2.
On April 7, 1995 Sunrise Medical, Inc. ("Sunrise" or the "registrant"), through
a wholly owned affiliate, Homecare Holdings France S.A., purchased all of the
outstanding stock of S.E.P.A.C., Corona S.A., Tecktona Bois S.A., and Tecktona
Sante S.A., a group of related French corporations, (collectively, the "Corona
Group"), from Mr. Christian Suzanne, Mrs. Jeane Santucci-Suzanne, Mr. Pascal
Suzanne, Mr. Laurent Suzanne, Mrs. Isabelle Suzanne-Aubert, Mrs. Nathalie
Suzanne-Naylor, and Lion Expansion PME, a French corporation, and all of the
outstanding stock of Sci La Planche, a French real estate company, from Mr.
Christian Suzanne and Mrs. Jeane Santucci-Suzanne. The total purchase price of
206 million French francs includes cash of 175 million French francs and Sunrise
common stock valued at 31 million French francs. The cash portion of the
purchase price will be provided from the registrant's existing credit facility.
The terms of the purchase are more fully described in the Purchase Agreement, a
copy of which is attached as an exhibit hereto.
The Corona Group manufactures and markets hydraulic and electric beds and other
furniture for home care, nursing homes and hospital markets in France. Corona
sales outside France are minimal. Sunrise intends to continue to utilize the
assets acquired in this transaction in the same manner as they were employed
prior to the acquisition.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
a) Financial Statements of Corona SA, its subsidiaries and related companies
b) Pro Forma Financial Information
c) Exhibits
The following exhibits are filed with or incorporated by reference in this
report:
Exhibit
Number Description
- ------- -----------
2 Purchase Agreement dated as of
February 23, 1995
23 Accountants' consent - KPMG Audit
2
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUNRISE MEDICAL INC.
Date: April 7, 1995 By /s/ Ted N. Tarbet
--------------------------------
Ted N. Tarbet
Senior Vice President, Chief Financial
Officer and Secretary
(Principal Financial Officer)
Date: April 7, 1995 By /s/ John M. Radak
--------------------------------
John M. Radak
Vice President and Controller
(Principal Accounting Officer)
3
<PAGE>
Item 7.a
CORONA SA, ITS SUBSIDIARIES
AND RELATED COMPANIES
Combined Financial Statements
September 30, 1994
(With Independent Auditors' Report Thereon)
4
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Corona SA:
We have audited the accompanying combined balance sheet of Corona SA, its
subsidiaries and related companies as of September 30, 1994, and the related
combined statements of income and cash flow for the year then ended. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in France and in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Corona SA, its
subsidiaries and related companies at September 30, 1994 and the results of
their operations and their cash flow for the year then ended in conformity with
accounting principles generally accepted in France.
Accounting principles generally accepted in France for consolidated financial
statements differ in certain respects from accounting principles generally
accepted in the United States. Differences between accounting principles
accepted in France and the United States are summarized in Note 3 to the
combined financial statements.
[KPMG Audit]
Neuilly sur Seine, France
April 3, 1995
5
<PAGE>
CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES
COMBINED BALANCE SHEET (SEE NOTE 2)
September 30, 1994
(in thousands of French Francs)
<TABLE>
<CAPTION>
Gross Depreciation Net
ASSETS Notes amount or allowances amount
------- ------ ------------- ------
<S> <C> <C> <C> <C>
FIXED ASSETS:
Intangible assets:
Franchises, patents and similar assets 217 203 14
Goodwill 4.1 1,670 - 1,670
Other intangible assets 30 - 30
Tangible fixed assets: 4.2
Land 669 36 633
Buildings 11.1 18,957 5,133 13,824
Industrial fixtures and equipment 11.1 15,351 8,658 6,693
Other tangible fixed assets 2,559 1,560 999
Financial assets:
Loans 362 - 362
Other financial assets 43 - 43
------- ------ -------
39,858 15,590 24,268
------- ------ -------
CURRENT ASSETS:
Inventories: 5
Raw materials and supplies 8,883 - 8,883
Work in progress - goods 2,704 - 2,704
Finished goods 7,712 1,450 6,262
Receivables:
Trade receivables 48,371 899 47,472
Sundry receivables 3,524 - 3,524
Marketable securities 132 - 132
Cash and cash equivalents 7,925 - 7,925
Prepaid expenses 1,096 - 1,096
------- ------ -------
80,347 2,349 77,998
------- ------ -------
Deferred charges 37 - 37
------- ------ -------
TOTAL ASSETS 120,242 17,939 102,303
======== ====== =======
</TABLE>
See accompanying notes to the combined financial statements.
6
<PAGE>
CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES
COMBINED BALANCE SHEET (SEE NOTE 2) - Continued
September 30, 1994
(in thousands of French Francs)
<TABLE>
<CAPTION>
LIABILITIES AND EQUITY
Notes
-----
<S> <C> <C>
SHAREHOLDERS' EQUITY: 7
Common stock 2,360
Additional paid - in capital 300
Retained earnings - prior years: 7 & 12.3
Legally restricted reserves 412
Tax related reserves 21
Other retained earnings 16,463
Net income for the year 18,100
Special provision for tax purposes 401
-------
38,057
-------
OTHER FUNDS 100
-------
100
-------
PROVISIONS 8
Provision for risks 4,011
Provision for future costs 143
-------
4,154
-------
LIABILITIES:
Financial liabilities: 6
Convertible debenture 3,203
Borrowings from credit institutions 11.1 19,079
Other borrowings and loans 1,907
Customers' advances 436
Operating liabilities
Trade accounts payable and related liabilities 20,112
Taxes and social debts 13,512
Other liabilities
Liabilities related to fixed assets 11
Other creditors 1,732
-------
59,992
-------
TOTAL LIABILITIES AND EQUITY 102,303
=======
</TABLE>
See accompanying notes to the combined financial statements.
7
<PAGE>
CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES
COMBINED STATEMENT OF INCOME (SEE NOTE 2)
Year ended September 30, 1994
(in thousands of French Francs)
<TABLE>
<CAPTION>
Notes
-----
<S> <C> <C>
Operating income:
Sales of manufactured goods 176,935
Sales of services 654
-------
Net sales (sub total) 9 177,589
-------
Changes in inventory of manufactured goods (213)
Trading subsidies or grants 300
Reversal of depreciation, provisions
and transfer of charges 6,744
Other income 659
-------
Total operating income 185,079
-------
Operating expenses:
Purchases of raw materials and supplies 88,841
Changes in inventory of raw materials
and supplies (2,391)
Other purchases and expenses 23,895
Non-income taxes 2,313
Wages and salaries 24,185
Social security charges 9,560
Depreciation and provisions:
Depreciation of fixed assets 4.2 2,838
Amortization of deferred charges 6
On current assets: provisions 1,546
For risks and future charges 2,393
Other expenses 474
-------
Total operating expenses 153,660
-------
Net operating income 31,419
-------
</TABLE>
See accompanying notes to the combined financial statements.
8
<PAGE>
CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES
COMBINED STATEMENT OF INCOME (SEE NOTE 2) - Continued
Year ended September 30, 1994
(in thousands of French Francs)
<TABLE>
<CAPTION>
Notes
-----
<S> <C> <C>
Balance brought forward 31,419
------
Financial income:
Interest and similar income 297
Foreign currency exchange gain 25
Net profit on disposal of marketable securities 294
------
Total financial income 616
------
Financial expenses:
Interest and similar expense 2,284
Foreign currency exchange loss 29
------
Total financial expenses 2,313
------
Net financial expenses (1,697)
------
Net income before items below 29,722
------
Exceptional income:
Capital transactions 287
Reversal of provisions 322
------
Total exceptional income 609
------
Exceptional expenses:
Operating charges 57
Capital transactions 285
Provisions 1,406
------
Total exceptional expenses 1,748
------
Net exceptional loss (1,139)
Employees' profit sharing plan expense (2,563)
Corporate income tax on profit (7,920)
------
Net income 18,100
======
</TABLE>
See accompanying notes to the combined financial statements.
9
<PAGE>
CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES
COMBINED STATEMENT OF CASH FLOWS (SEE NOTE 2)
Year ended September 30, 1994
(in thousands of French Francs)
<TABLE>
<CAPTION>
Notes
-----
<S> <C> <C>
Net cash provided by
operating activities 10 11,969
Cash flows from investing activities:
Proceeds from sale of property,
plant and equipment 320
Capital expenditure (8,283)
------
Net cash used in investing activities (7,963)
------
Cash flows from financing activities:
Principal payments on notes payable to banks (18)
Principal payments on long-term debt (3,550)
Principal payments under capital lease obligations (482)
Dividends paid (2,166)
-------
Net cash used in financing activities (6,216)
-------
Net decrease in cash and cash equivalents (2,210)
Cash and cash equivalents at beginning of year 10,135
-------
Cash and cash equivalents at end of year 7,925
=======
</TABLE>
See accompanying notes to the combined financial statements.
10
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
1 NATURE OF BUSINESS
Corona SA and its related companies (Corona Group) is the second largest
manufacturer in France of beds and bedroom furniture for hospitals, nursing
homes and distributors of home medical equipment.
During recent years the Corona Group has gained a substantial share of the
French market in hospital beds, its principal product being the electrical
height adjustable bed.
The Corona Group is privately owned and is comprised of the following
entities: Corona SA, Tecktona Bois SA, Tecktona Sante SA, S.E.P.A.C., and
SCI La Planche.
Corona SA is the main manufacturing and distributing company in the Group
and owns 95% of the common shares of both Tecktona Bois SA and Tecktona
Sante SA.
Tecktona Bois SA manufactures wood based products which it supplies solely
to Corona SA.
Tecktona Sante SA is a distribution company which sells products to
retailers which it purchases from Corona SA.
S.E.P.A.C. is the holding company of Corona SA with 56.7% of the share
capital of that company. The remaining shares in Corona SA are held by
private shareholders and an external investor. S.E.P.A.C. was created in
order to facilitate the transfer of shares in Corona SA to relatives of the
private shareholders.
SCI La Planche is owned by the same private shareholders.
The purpose of SCI La Planche is the ownership, management, administration
and sale of assets which are leased to Corona SA and its subsidiaries.
11
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 PRINCIPLES OF PRESENTATION AND COMBINATION
The combined financial statements include the financial statements of
Corona SA, Tecktona Bois SA, Tecktona Sante SA and those of S.E.P.A.C. and
SCI La Planche.
As S.E.P.A.C. is a French partnership, which has no commercial activity, it
cannot be the consolidating company for Corona SA and its subsidiaries
under French accounting rules.
In order to present the substance of the Group's activities and financial
position the net assets of SCI La Planche, and the net assets of S.E.P.A.C.
have been included in the combined financial statements of the Corona
Group.
All significant intercompany balances and transactions have been eliminated
in combination. The closing date is September 30, 1994, the financial year
end of Corona SA, Tecktona Bois SA and Tecktona Sante SA.
The financial statements which have been combined for S.E.P.A.C. and SCI La
Planche are those for the year ended December 31, 1994, being the financial
year end of these companies. As the impact of the last three months of
this period is insignificant, these financial statements have not been
adjusted in the financial statements of the Corona Group at September
30, 1994.
Minority interests have not been identified under a separate caption within
the combined financial statements of the Corona Group. They are included
within other retained earnings but do not represent a significant
proportion of the net assets.
2.2 GENERAL ACCOUNTING POLICIES
The principal accounting policies adopted by the Corona Group are in
accordance with accounting policies generally accepted in France (see note
3).
The financial statements have been prepared on the basis of the following
general accounting concepts:
. assumption of going concern,
. consistency in accounting principles,
. use of historical costs,
. matching concept.
12
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
2.3 SPECIFIC ACCOUNTING POLICIES
INTANGIBLE ASSETS
Computer software licences are capitalized and amortized on a straight line
basis over one year. Research and development costs are charged to expenses
as incurred.
TANGIBLE FIXED ASSETS
Tangible fixed assets are valued at cost and are depreciated on a straight
line or accelerated basis over the following estimated useful lives:
<TABLE>
<CAPTION>
Straight Accelerated
line (years) (years)
------------ ------------
<S> <C> <C>
Buildings 20 -
Furnitures and fittings 5 to 10 5 and 7
Plant and machinery 2 to 10 5 and 10
Moulds 3 to 5 -
Water purification station 7 to 15 -
Hardware 3 to 10 5
Vehicles 2 to 4 -
Furnitures 10 -
</TABLE>
When assets are disposed of, the cost and related accumulated depreciation
are removed from the financial statements, and any resulting gain or loss
is recognized in exceptional income for the period. The costs of
maintenance and repairs are charged to the income statement as incurred;
significant improvement costs are capitalized.
FINANCIAL ASSETS
Financial assets are recorded at their purchase price. Acquisition costs of
financial assets are not capitalized.
INVENTORIES
Raw materials are valued according to the latest invoice price which
management does not consider to be significantly different from historical
cost. Unit costs are updated each time a supplier's invoice is registered
in the accounting system.
13
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
Work in progress and finished goods are valued according to the bill of
materials included in the products at every step of the production process.
The bills of materials include the costs of raw material, labor and sub-
contractor costs as follows:
In valuing work in process and finished goods, raw materials are valued at
the latest invoice price; labor cost is calculated according to a standard
time and a standard hourly cost for each step of the process. The standard
hourly cost corresponds to the annual operating expenses divided by the
workers' productive hours during the year. The operating expenses include
all such expenses except for salesmen's commissions, freight and
subcontractors' expenses. This basis of valuation has the effect of
including in inventory a portion of selling expenses. Whilst it is an
unusual practice from a French point of view, this policy has been adopted
because the significant majority of the Corona Group production is
manufactured to order.
Subcontractors' costs are valued at the invoice price.
The only inventory depreciated is the demonstration inventory which is
provided for on a straight-line basis over one year from the date of its
being made available to clients.
RECEIVABLES
Accounts receivables are recorded at historical cost.
Provisions against bad and doubtful receivables are made on a case by case
basis. The provisioning policy is a 100% provision for doubtful receivables
when management consider that there is nearly no chance of recovering the
debt.
PREPAID EXPENSES
Prepaid expenses is largely comprised of the inventory of advertising
catalogues whose costs are capitalized and amortized over the expected
useful lives.
REVENUE RECOGNITION
Revenue is recognized in the financial statements upon delivery of goods to
customers. The Corona Group production is essentially based on orders
received. These orders provide for a delivery date which can, at the
customer's request, be deferred. Accordingly, revenue is recognised in the
financial statements at the delivery date or, in the event of a valid
business reason for deferral at the customer's request, at the date on
which goods are ready for delivery.
14
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
RETIREMENT INDEMNITIES
No accrual provision is made by the Corona Group for future liabilities for
the lump sum retirement indemnities payable under French labor law. These
future payments are charged to expenses as they are incurred.
WARRANTY ACCRUAL
Warranty costs are accrued for after sales service of any nature provided
by the company over a period of one year from the date of sale. The
calculation method is based on the determination of an estimate of the
annual cost of the after sales service. This estimated cost takes into
account the purchase cost of repair parts, the operating charges of the
department, the labor cost and overheads related to aftersales service.
GRANTS
No large grants or subsidies have been received by the Corona Group during
the period.
FOREIGN CURRENCY TRANSLATION
The accounting records of the Company are maintained in French francs.
During the period foreign currency transactions are recorded at prevailing
rates of exchange and the effect of rate changes are included in the
determination of net income for the period. Year end balances are
translated at the rates prevailing at the balance sheet date.
LEASES
The Corona Group has acquired assets under finance leases. The major
contracts relate to the premises leased by Tecktona Bois SA, and to a robot
leased by Corona SA.
The leasing operations detailed above have been treated as capital leases
according to French accounting standards in the combined financial
statements.
DEFERRED TAX
Deferred tax has been recorded on all material timing differences between
book and taxable income in accordance with French accounting standards in
the combined financial statements.
15
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
2.4 CONSISTENCY IN APPLICATION OF ACCOUNTING POLICIES
The principal accounting policies detailed above have been consistently
applied in the financial statements from year to year.
3 DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN FRANCE AND
THE US
The principal differences between the French accounting principles ('French
GAAP') which have been applied in the preparation of the Corona Group
financial statements and accounting principles generally accepted in the US
('US GAAP') are as follows:
3.1 PROVISION FOR POST-RETIREMENT BENEFITS
No provision has been made in the financial statements of the Corona Group
for these payments. The total of this commitment is not considered material
given the low average age of the employees of the group.
3.2 DIVIDENDS
According to French accounting principles, dividends declared at the end of
one financial period are not distributed until they have been approved by
the shareholders in a General Meeting. Dividends paid are, therefore,
accounted for after the period end. This causes a timing difference between
French GAAP and US GAAP in which dividends are accounted for when they are
declared.
See note 12 for subsequent events.
3.3 INVENTORY VALUATION
As described in note 2.3 above, the carrying value of inventory includes an
element of selling expenses which should be expensed as a period cost under
accounting principles accepted in the US. The impact of this policy on net
income for 1994 is not considered significant. The pre-tax impact of this
policy on the shareholders' equity as of September 30, 1994 is estimated at
FF. 1,350.
16
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
3.4 AMORTIZATION OF GOODWILL
As explained in note 4.1, the goodwill arising from the acquisition by
S.E.P.A.C. of shares in Corona SA has not been amortized. Accounting
principles generally accepted in the United States would require such
goodwill to be amortized over a period not exceeding 40 years.
3.5 INCOME STATEMENT PRESENTATION
The reclassifications which would be necessary for a presentation in
accordance with US GAAP have not been undertaken. The major characteristics
of the French accounts format which differ from the U.S. format are as
follows:
. French GAAP financial statements do not comprise a "cost of sales"
caption and, as a result, it is not possible to derive a "gross profit"
for the year from the combined financial statements as presented.
. The increases and decreases in provisions are shown gross rather than
net.
. Systematic classification of certain items as "exceptional" which are
not "exceptional" for U.S. purposes. These include accelerated fixed
asset depreciation for tax purposes, gain or loss on the disposal of
fixed assets and "prior year" items.
17
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
4 FIXED ASSETS
4.1 GOODWILL IN S.E.P.A.C UPON THE PURCHASE OF SHARES IN CORONA SA
S.E.P.A.C. purchased shares in Corona SA as follows: 9,810 on April 14,
1990 and 3,751 on October 1, 1991.
The differences between the acquisition prices and the share of the net
assets in Corona SA acquired at the time of these purchases have been
treated as goodwill. This amounts to FF. 1,670 and is included in
intangible assets on the accompanying combined balance sheet.
Goodwill has not been amortized.
4.2 TANGIBLE FIXED ASSETS
4.2.1 MOVEMENTS IN COSTS AND RELATED DEPRECIATIONS
The table below shows the analysis of tangible fixed assets by category.
<TABLE>
<CAPTION>
Land & Industrial
Land fixtures &
Improve- equipment Work in
ment Buildings & Other process Total
<S> <C> <C> <C> <C> <C>
COST:
At October 1, 1993 669 15,157 12,995 49 28,870
Additions - 3,751 5,483 - 9,234
Disposals - - (568) - (568)
Transfers - 49 - (49) -
At September 30, 1994 669 18,957 17,910 - 37,536
DEPRECIATION:
Accumulated depreciation
at October 1, 1993 30 4,147 8,678 - 12,855
Charge for the year 6 986 1,823 - 2,815
Disposals - - (283) - (283)
At September 30, 1994 36 5,133 10,218 - 15,387
Net book value at
September 30, 1994 633 13,824 7,692 - 22,149
</TABLE>
18
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
4.2.2 EXPLANATIONS OF SIGNIFICANT MOVEMENTS
Additions to buildings are largely composed of extensions to the
production premises of Corona SA in order to rationalize the production
process. More specifically, surfaces for an automatic painting chain were
installed.
Additions to plant and equipment were largely comprised of a painting
chain (FF. 2,987) and of a robot (FF. 1,000).
5 CURRENT ASSETS
5.1 INVENTORIES
The table below shows the analysis of inventories at September 30, 1994:
<TABLE>
<S> <C>
Raw materials 8,883
Work in process 2,704
Finished goods 4,888
Demonstration stocks 2,824
------
Gross inventories 19,299
Provision (1,450)
------
Net value 17,849
======
</TABLE>
Demonstration inventories were completely provided for as of September 30,
1993. Those demonstration inventories held at September 30, 1994 have been
provided for over one year according to the date at which they were made
available to clients.
5.2 MATURITIES OF CURRENT ASSETS
Current assets are recoverable within 1 year except for an amount of FF.
1,660 which represents VAT recoverable. This receivable is due from the
French government and is interest bearing at a rate of approximately 4%.
19
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
6 FINANCIAL LIABILITIES
6.1 MATURITIES OF DEBTS
<TABLE>
<CAPTION>
Less than Between After
1 year 1 and 5 years 5 years Total
---------- ------------- ------- -----
<S> <C> <C> <C> <C>
Convertible debenture 3,203 -- -- 3,203
Bank loans 2,731 6,977 1,685 11,393
Finance lease: building 423 2,199 4,164 6,786
Finance lease: equipment 150 750 -- 900
Other borrowings and
loans 1,907 -- -- 1,907
----- ------ ------ ------
8,414 9,926 5,849 24,189
===== ====== ====== ======
</TABLE>
Other borrowings and loans relate to the current accounts with the private
shareholders.
6.2 CHARACTERISTICS OF THE CONVERTIBLE DEBT
During the year ended September 30, 1993 Corona SA obtained a loan of FF.
3,000 which was made up of 1,770 debentures with a nominal value of FF.
1.695 each and which are convertible into shares. Interest is payable on
these debentures on an annual basis.
Under the terms of the contract, this borrowing is repayable in equal parts
over the years 1996, 1997 and 1998. However, as described in note 12, the
characteristics of this liability have been modified since the year end
and, as a result, the debt is shown as current in note 6.1.
20
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
7 SHAREHOLDERS' EQUITY
7.1 CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Special
Additional Legally Tax provision
Common paid-in restricted Related Retained Net income for tax
stock capital reserves reserves earnings for the year purposes TOTALS
------ ---------- ---------- -------- -------- ------------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of
October 1, 1993 2,360 300 316 21 8,896 10,161 473 22,527
Attribution of
1993 net income
(of which FF.2,166
is dividend) 96 7,899 (10,161) (2,166)
1994 SCI result
distributed to owners (332) (332)
Write back of
provision to
income statement (72) (72)
Net income for
the year 18,100 18,100
Balance as of
September 30, 1994 2,360 300 412 21 16,463 18,100 401 38,057
</TABLE>
7.2 COMPOSITION OF THE SHARE CAPITAL
The share capital is that of Corona SA.
The investments in the subsidiaries Tecktona Bois SA and Tecktona Sante SA
have been eliminated in the consolidation of these two companies. The
minority interests of these companies, are not considered to be significant
and have been included in retained earnings.
21
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
8 PROVISIONS FOR RISKS AND CHARGES
These provisions are comprised of the following elements:
<TABLE>
<S> <C>
Warranty accrual 2,250
Provision for corporation taxes
(following an inspection by the tax authorities
for the years ended September 30, 1991,
1992 and 1993) 1,406
Other 498
------
4,154
======
</TABLE>
The tax provision has been substantially paid over to the tax authorities
subsequent to the year end.
9 DETAILS OF THE INCOME STATEMENT
9.1 ANALYSIS OF SALES
<TABLE>
<S> <C>
Sales Corona France production 129,267
Sales to French overseas territories and departments 3,639
Sales of goods and spare parts 29,441
Other income 654
-------
TOTAL France 163,001
-------
Corona export sales 14,572
Other export 16
-------
TOTAL export 14,588
-------
TOTAL SALES 177,589
=======
</TABLE>
22
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
9.2 AVERAGE NUMBERS OF PERSONNEL
<TABLE>
<CAPTION>
Salaried Non-salaried
personnel personnel
--------- ------------
<S> <C> <C>
Executives 6 --
Technicians and other professionals 20 --
Employees 15 --
Laborers 107 6
----- -----
Sub-total 148 6
Sales people 6 --
----- -----
TOTAL 154 6
===== =====
</TABLE>
10 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
The reconciliation of net income to net cash provided by operating
activities for the year ended September 30, 1994 follows (in thousand of
French francs):
<TABLE>
<S> <C>
Net income 18,100
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of fixed assets 2,838
Gain on sale of equipment (11)
Increase in trade accounts receivable (8,258)
Increase in inventories (2,775)
Decrease in prepaid expenses 214
Decrease in other receivables 979
Increase in trade accounts payable 2,466
Increase in accrued expenses 264
Decrease in income taxes payable (710)
Decrease in other liabilities (1,138)
------
Net cash provided by operating activities 11,969
======
</TABLE>
23
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
11 OTHER COMMITMENTS
11.1 FINANCE LEASE COMMITMENTS
The capitalization of the finance leases has the following effects on the
combined financial statements as of and for the year ended September 30,
1994:
<TABLE>
<CAPTION>
Plant and
Buildings equipment
--------- ---------
<S> <C> <C>
BALANCE SHEET
Capital value of items 8,411 1,000
Accumulated depreciation (2,229) (100)
Capital payments remaining (6,786) (900)
------ -----
Impact on net assets (604) --
====== =====
INCOME STATEMENT
Finance lease charge (1,050) (180)
Depreciation expense 420 100
Financial expense 668 80
------ -----
Impact on pre-tax net income 38 --
====== =====
</TABLE>
24
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
11.2 DEFERRED TAXATION
The following deferred tax assets have been accounted for in the
accompanying combined balance sheet:
<TABLE>
<S> <C>
Deferred tax on the capitalization of the
finance lease contracts 201
Deferred tax on employee profit sharing and other
timing differences or the 1994 financial year
(deductible in the 1995 financial year) 780
----
981
====
These deferred taxes are applied as follows:
. to the combined reserves at the
beginning of the financial year 633
. to the net income for the financial year 348
----
981
====
</TABLE>
11.3 SECURITIES GRANTED
Shares in Corona SA held by S.E.P.A.C. have been pledged to guarantee the
financing made available by Credit Lyonnais.
In addition, certain fixed assets are mortgaged to provide security for
the leasing companies or financial institutions who have financed such
assets.
25
<PAGE>
Corona SA, its Subsidiaries and Related Companies
Notes to the Combined Financial Statements
September 30, 1994
(all amounts are in thousands of French francs)
12 EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
12.1 TRANSACTIONS IN PROCESS
Negotiations have been entered into, subsequent to the balance sheet date
for the combined financial statements, for the sale of all the shares of
the companies in the Corona Group to an American company, Sunrise Medical
(via an intermediate company incorporated in France, Homecare Holdings
France SA).
12.2 CONVERSION OF THE DEBENTURES
The conversion of the convertible debentures into shares will be made
prior to the acquisition by Sunrise Medical and will result in an increase
of FF.3,000 in the net assets of the Corona Group.
12.3 DISTRIBUTION OF DIVIDENDS
As described in note 3.2, the annual French financial statements are
prepared before recording the dividends which the shareholders have agreed
to distribute.
The distributions which have been made subsequent to September 30, 1994
amount to:
. FF. 5,003 taken from the net income for the year ended September 30,
1994 of which FF. 2,838 is effectively returned to the Group (since it
is paid to the holding company S.E.P.A.C),
. FF. 4,600 taken from prior year retained earnings of which FF. 2,608
is returned to the Group (since it is paid to the holding company
S.E.P.A.C.).
26
<PAGE>
Item 7.b
SUNRISE MEDICAL INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated balance sheet as of December 30,
1994 assumes that the acquisition of all shares of Corona S.A. and its related
companies ("Corona") had occurred on December 30, 1994 and accordingly is
reflected in the financial position of Sunrise Medical Inc. ("Sunrise") as of
December 30, 1994.
The unaudited pro forma condensed consolidated statements of operations for the
year ended July 1, 1994 and the six months ended December 30, 1994 present the
results of operations of Sunrise assuming the Corona acquisition had been
consummated as of the beginning of the periods indicated, except that operating
results for Corona's fiscal year ending September 30, 1994 were used to prepare
the unaudited pro forma condensed consolidated statement of operations for the
year ended July 1, 1994, Sunrise's fiscal year end.
The unaudited pro forma condensed financial statements have been prepared by
Sunrise and all calculations have been made based upon assumptions deemed
appropriate. The unaudited pro forma condensed financial statements were
prepared utilizing the accounting policies of both Sunrise and Corona (except,
in the case of Corona, where those policies deviated from U.S. generally
accepted accounting principles). The preliminary allocations of the purchase
price, which will be subject to further adjustments as Sunrise finalizes the
allocation of the purchase price in accordance with generally accepted
accounting principles, are included in the unaudited pro forma condensed
financial statements.
The unaudited pro forma financial information does not purport to be indicative
of the results of operations or the financial position which would have actually
been obtained if the acquisitions had been consummated on the dates indicated.
In addition, the unaudited pro forma financial information does not purport to
be indicative of results of operation or financial positions which may be
achieved in the future.
The unaudited pro forma financial information should be read in conjunction with
Sunrise's historical consolidated financial statements and notes thereto
contained in the 1994 Annual Report on Form 10-K and the Quarterly Report on
Form 10-Q for the quarter ended December 30, 1994.
27
<PAGE>
SUNRISE MEDICAL INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 30, 1994
(in thousands)
<TABLE>
<CAPTION>
Sunrise Medical
December 30, 1994 Corona Unaudited
Per Form 10-Q December 31, 1994 Acquisition Pro Forma
(Unaudited) (1) (Unaudited) Adjustments Amount
----------------- ----------------- ----------- ---------
Assets
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $6,132 $1,979 $8,111
Receivables, net 133,975 13,261 147,236
Inventories 77,549 3,460 81,009
Other current assets 10,882 482 11,364
---------------------------------------------------------------------
Total current assets 228,538 19,182 247,720
Property, plant and equip., net 82,874 4,084 1,055 (2) 88,013
Goodwill & other intangibles, net 229,071 320 31,871 (3) 261,262
Other assets, net 744 744
---------------- ----------------- ----------- ---------
Total assets $541,227 $23,586 $32,926 $597,739
================ ================= =========== =========
<CAPTION>
Liabilities and
Stockholders' Equity
<S> <C> <C> <C> <C>
Current liabilities:
Current maturities
-- long-term obligations $1,710 $ 1,435 $ 3,145
Trade accounts payable 32,823 7,629 40,452
Accrued compensation
and other expenses 53,259 2,935 2,271 (4) 58,465
Income taxes 9,455 1,321 10,776
---------------- ----------------- ----------- ---------
Total current liabilities 97,247 13,320 2,271 112,838
Long-term debt,
less current installments 157,077 2,942 32,735 (5) 192,754
Deferred income taxes 2,865 2,865
Stockholders' equity 284,038 7,324 (2,080)(6) 289,282
--------------------------------------------------------------------
Total liabilities and
stockholders' equity $541,227 $23,586 $32,926 $597,739
====================================================================
</TABLE>
(See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements)
28
<PAGE>
SUNRISE MEDICAL INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 30, 1994
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Sunrise Medical
December 30, 1994 Corona Unaudited
Per Form 10 - Q December 31, 1994 Acquisition Pro Forma
(Unaudited) (8) (Unaudited) Adjustments Amount
----------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $287,462 $18,725 $306,187
Cost of sales 186,393 12,489 198,882
----------------- ---------------- ----------- ---------
Gross profit 101,069 6,236 107,305
Marketing, selling and
administrative expenses 60,844 3,242 6 (9) 64,092
Research and
development expenses 6,088 205 6,293
Corporate expenses 3,404 3,404
Amortization of goodwill
and other intangibles 3,188 398 (10) 3,586
----------------- ---------------- ----------- ---------
Corporate operating income 27,545 2,789 (404) 29,930
Other (expense) income:
Interest expense (4,462) (233) (1,244) (11) (5,939)
Other income & exp., net (409) 50 (359)
----------------- ---------------- ----------- ---------
Income before taxes 22,674 2,606 (1,648) 23,632
Income taxes 9,319 923 (480) (12) 9,762
----------------- ---------------- ----------- ---------
Net income $13,355 $1,683 ($1,168) $13,870
================= ================ =========== =========
Earnings per share $0.72 $0.74
================= =========
Weighted average number
of shares outstanding 18,577 264 (13) 18,841
================= =========== =========
</TABLE>
(See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements)
29
<PAGE>
SUNRISE MEDICAL INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED JULY 1, 1994
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Sunrise Medical Corona Unaudited
July 1, 1994 September 30, 1994 Acquisition Pro Forma
Per Form 10 - K (7)(8) (Unaudited) Adjustments Amount
----------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $467,906 $31,321 $499,227
Cost of sales 297,081 20,890 317,971
----------------- ---------------- ----------- ---------
Gross profit 170,825 10,431 181,256
Marketing, selling and
administrative expenses 100,238 5,158 11 (9) 105,407
Research and
development expenses 11,029 384 11,413
Corporate expenses 5,444 5,444
Amortization of goodwill
and other intangibles 5,435 797 (10) 6,232
----------------- ---------------- ----------- ---------
Corporate operating income 48,679 4,889 (808) 52,760
Other (expense) income:
Interest expense (6,078) (408) (2,488) (11) (8,974)
Other income & exp., net (17) 109 92
----------------- ---------------- ----------- ---------
Income before taxes 42,584 4,590 (3,296) 43,878
Income taxes 16,727 1,397 (960) (12) 17,164
----------------- ---------------- ----------- ---------
Net income $25,857 $3,193 ($2,336) $26,714
================= ================ =========== =========
Earnings per share $1.41 $1.44
================= =========
Weighted average number
of shares outstanding 18,317 232 (13) 18,549
================= =========== =========
</TABLE>
(See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements)
30
<PAGE>
SUNRISE MEDICAL INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(dollars in thousands)
(1) Condensed from the unaudited balance sheet of Corona S. A. and related
companies ("Corona") as of December 31, 1994 and translated from French
francs to U.S. dollars at the month end exchange rate.
(2) To record the estimated increase to fair market value of real estate owned
by Corona.
(3) Represents estimated goodwill from acquisition.
(4) Represents estimated acquisition-related fees and expenses, including
corporate and real estate transfer taxes, incurred by Sunrise Medical
Inc. ("Sunrise").
(5) Reflects the debt incurred to finance the acquisition. The purchase price
of $38,533 (FFR 206,000) consisted of $32,735 (FFR 175,000) in cash drawn
from Sunrise's multi-currency credit facility and $5,798 (FFR 31,000) in
Sunrise common stock to be issued at date of acquisition.
(6) Reflects elimination of equity of Corona and issuance of Sunrise common
stock valued at $5,798.
(7) The results of operations for Corona's fiscal year ending September 30,
1994 have been used to prepare the unaudited pro forma condensed
consolidated statement of operations for the year ended July 1, 1994.
(8) Condensed from the unaudited statements of operations of Corona S.A. and
related companies for the fiscal year ending September 30, 1994 and the
six months ending December 31, 1994 and translated from French francs to
U.S. dollars using the applicable weighted average exchange rates.
(9) Additional depreciation expense on the depreciable portion of the revalued
real estate.
(10) Represents the amortization of goodwill generated by the acquisition on a
straight line basis over forty years.
(11) Reflects additional interest expense attributable to the bank debt used
to finance the acquisition.
(12) Recognizes pro forma income taxes calculated using statutory tax rates for
the applicable period and providing no tax benefit from the amortization of
goodwill.
(13) Reflects the additional number of shares outstanding assuming the
acquisition had occurred at the beginning of the period.
31
<PAGE>
EXHIBIT 2
AGREEMENT FOR
-------------
THE PURCHASE
------------
OF SHARES OF
------------
S.E.P.A.C, CORONA S.A., TECKTONA BOIS S.A.,
-------------------------------------------
TECKTONA SANTE S.A., and SCI LA PLANCHE
---------------------------------------
BY
--
HOMECARE HOLDINGS FRANCE S.A.
-----------------------------
<PAGE>
INDEX
-----
RECITALS.................................................................... 2
ARTICLE 1 DEFINITIONS...................................................... 3
-----------
ARTICLE 2 SALE............................................................. 6
----
2.1 Shares........................................................... 6
------
2.2 Minority Shares.................................................. 6
---------------
2.3 SCI Shares....................................................... 6
----------
2.4 Assignment....................................................... 6
----------
2.5 Effective Date of Sale and Transfer.............................. 6
-----------------------------------
2.6 Undistributed Profits............................................ 6
---------------------
ARTICLE 3 PURCHASE PRICE................................................... 7
--------------
3.1 Purchase Price - Payment......................................... 7
------------------------
3.1.1 Shares.............................................. 7
------
3.1.2 SCI Shares.......................................... 8
----------
ARTICLE 4 NET WORTH........................................................ 8
---------
4.1 Guaranteed Net Worth............................................. 8
--------------------
4.2 Net Worth Determination.......................................... 9
-----------------------
4.2.1 Preparation of Financial Statements................. 9
-----------------------------------
4.2.2 Financial Statements Audit.......................... 9
--------------------------
4.3 Price Adjustments................................................ 10
-----------------
4.4 Conversion of Convertible Bonds.................................. 10
-------------------------------
4.5 Reimbursment of Cash Advances.................................... 10
-----------------------------
ARTICLE 5 INFORMATION, REPRESENTATIONS AND WARRANTIES...................... 10
-------------------------------------------
5.1 Disclosure to Buyer.............................................. 10
-------------------
5.2 Representation and Warranties regarding the CORONA GROUP......... 11
--------------------------------------------------------
1
<PAGE>
5.2.1 Representations and Warranties at Signing........... 11
-----------------------------------------
5.2.2 Representations, Warranties and Indemnification
-----------------------------------------------
at Closing.......................................... 11
----------
5.3 Representations and Warranties regarding SCI..................... 11
--------------------------------------------
5.3.1 Representations and Warranties at Signing........... 11
-----------------------------------------
5.3.2 Representations, Warranties and Indemnification
-----------------------------------------------
at Closing.......................................... 12
----------
5.4 Access to Information............................................ 12
---------------------
5.5 Knowledge of Sellers............................................. 12
--------------------
ARTICLE 6 CONSUMMATION, CLOSING............................................ 12
---------------------
6.1 Condition Precedent to Closing................................... 12
------------------------------
6.2 Closing.......................................................... 13
-------
6.2.1 Documents to be delivered by the Sellers
----------------------------------------
and LION EXPANSION.................................. 13
------------------
6.2.2 Documents to be delivered by Mr. Christian Suzanne
--------------------------------------------------
and Mrs Jeanne Santucci-Suzanne..................... 14
-------------------------------
6.2.3 Documents to be delivered by Buyer.................. 15
----------------------------------
6.3 Closing Undertakings of Buyer.................................... 15
-----------------------------
ARTICLE 7 OPERATION OF BUSINESS............................................ 16
---------------------
ARTICLE 8 MISCELLANEOUS PROVISIONS......................................... 16
------------------------
8.1 Cooperation...................................................... 16
-----------
8.2 Announcements.................................................... 17
-------------
8.3 Obligations Joint and Several.................................... 17
-----------------------------
8.4 Notices.......................................................... 17
-------
8.5 Costs and Fees................................................... 18
--------------
8.6 Entire Agreement................................................. 18
----------------
8.7 Attachments...................................................... 18
-----------
8.8 Commissions...................................................... 19
-----------
2
<PAGE>
8.9 Severability..................................................... 19
------------
8.10 Governing Law.................................................... 19
-------------
8.11 Disputes / Arbitration........................................... 19
----------------------
8.12 Language......................................................... 19
--------
---------------------
3
<PAGE>
ATTACHMENTS
-----------
TO
--
PURCHASE AGREEMENT
------------------
ATTACHMENT 1 - Ownership of the Shares of CORONA GROUP and SCI
ATTACHMENT 2 - Allocation of Purchase Price and Schedule of Payments
including Ownership Percentages
ATTACHMENT 3 - Terms of Sunrise Medical Inc. Shares
ATTACHMENT 4 - Escrow Agreement
ATTACHMENT 5 - Cancelled
ATTACHMENT 6 - Representations and Warranties at Signing
ATTACHMENT 7 - Representations, Warranties and Indemnification at Closing
ATTACHMENT 8 - SCI Representations and Warranties at Signing
ATTACHMENT 9 - SCI Representations, Warranties and Indemnification at
Closing
ATTACHMENT 10 - Non-Competition Undertaking
ATTACHMENT 11 - SCI La Planche Shares Purchase Agreement
ATTACHMENT 11bis- SEPAC Shares Purchase Agreement
ATTACHMENT 12 - Cancelled
ATTACHMENT 13 - Arbitration Procedure
ATTACHMENT 14 - English Version of the Agreement
The Company hereby agrees to furnish supplementally a copy of the omitted
exhibits to the Commission upon request.
4
<PAGE>
PURCHASE AGREEMENT
------------------
entered into this 23rd day of February, 1995,
BETWEEN THE UNDERSIGNED:
- -----------------------
1. Mr. Christian Suzanne, a French citizen born on December 12, 1926 and
residing at 36 rue des Hautes Gatinieres, 37210 Rochecorbon,
2. Mrs. Jeanne Santucci-Suzanne, a French citizen born on March 24, 1936 and
residing at 37210 Rochecorbon,
3. Mr. Pascal Suzanne, a French citizen born on November 14, 1960 and residing
at Domaine de la Touche 37210 Vernou, represented for the purpose hereof by
Jeanne Santucci-Suzanne pursuant to a power of attorney dated February 22,
1995,
4. Mr. Laurent Suzanne, a French citizen born on April 17, 1963 and residing at
59 rue Origet, 37000 Tours, represented for the purpose hereof by
Christian Suzanne pursuant to a power of attorney dated February 23, 1995,
5. Mrs. Isabelle Suzanne-Aubert a French citizen born on January 10, 1959 and
residing at 6 rue des Bons-Enfants 37000 Tours, represented for the purpose
hereof by Christian Suzanne pursuant to a power of attorney dated
February 23, 1995,
6. Mrs. Nathalie Suzanne-Naylor a French citizen born on February 2, 1967 and
residing at 101 West 15th Street, New York, NY 1000-11, represented for the
purpose hereof by Jeanne Santucci-Suzanne pursuant to a power of attorney
dated February 7, 1995,
Hereafter collectively referred to as the "Sellers",
acting jointly and severally for the purposes hereof,
7. LION Expansion PME, a French Corporation having its registered office at 19,
Boulevard des Italiens, 75008 PARIS, registered with the clerk of the
commercial Registry of Paris under No 326 356 250, represented by Mr. Claude
Venot, General Secretary,
Hereafter referred to as "LION EXPANSION",
and,
8. Homecare Holdings France S.A., with a registered capital of FF 3,509,700,
having its registered office Village d'activite du Petit Chatelier, 357
Route de Sainte Luce, C.P. 2402, 44301 Nantes, Cedex 03, France, registered
with the Clerk of the Commercial Registry of Nantes under No B 379 425 665,
represented by Mr. Sam Sinasohn, having all the necessary powers for the
purpose hereof.
Hereafter referred to as "Buyer",
<PAGE>
RECITALS
A. All capitalized terms herein have the respective meaning ascribed thereto in
Article 1 hereof.
B. The Sellers are the sole shareholders of SEPAC. The detailed ownership of
the shares of SEPAC among the Sellers is as set out in Attachment 1 hereto;
------------
C. The Sellers, SEPAC and LION EXPANSION are, except for the minority shares
held by Mr. Henri Sorin and by Mr Jean Marie Santucci, the sole shareholders
of CORONA S.A ("CORONA"). The detailed ownership of the shares of CORONA
among the Sellers, SEPAC, LION EXPANSION and MM. Sorin and JM Santucci is as
set out in Attachment 1 hereto;
------------
D. LION EXPANSION also holds 1770 Convertible Bonds ("obligations
-----------
convertibles"), with a par value of FF 1,695 each, issued pursuant to the
------------
Convertible Loan. It is contemplated that 100% of these Convertible Bonds
will be converted into CORONA shares before Closing Date, as set out in
Attachment 1 hereto.
------------
E. The Sellers, SEPAC and CORONA are in turn, the sole shareholders of:
(i) Tecktona Sante S.A. ("TS"); and,
(ii) Tecktona Bois S.A. ("TB");
The detailed ownership of the shares of TS and TB among the Sellers, SEPAC
and CORONA is as set out in Attachment 1 hereto;
------------
F. Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne are also the sole
shareholders of SCI LA PLANCHE ("SCI"). The detailed ownership of the SCI
Shares among Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne is as set
out in Attachment 1 hereto;
------------
G. The Sellers and LION EXPANSION desire to sell and transfer the Shares to
Buyer, and Buyer desires to purchase and acquire all such Shares, and Mr.
Christian Suzanne and Mrs Jeanne Santucci-Suzanne desire to sell and
transfer the SCI Shares to Buyer, and Buyer desires to purchase and acquire
all such SCI Shares. The Buyer also desires to acquire the Minority Shares.
2
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1 DEFINITIONS
-----------
1.1 "Agreement" means this agreement for the purchase of shares of SEPAC,
CORONA, TB, TS, and SCI, and all Attachments hereto.
1.2 "Buyer" means the French corporation Homecare Holdings France S.A., with a
registered capital of FF 3,509,700, having its registered office Village
d'activite du Petit Chatelier, 357 Route de Sainte Luce, C.P. 2402, 44301
Nantes, Cedex 03, France, registered with the Clerk of the Commercial
Registry of Nantes under No B 379 425 665.
1.3 "Cash Advances" mean the sums in the amount of FF 883.622 and FF 760.000
respectively owed by SCI and SEPAC to some of the Sellers.
1.4 "Claim" means any claim by a third party against Buyer or any company of
the CORONA GROUP or SCI, giving rise to an Additional Liability (as defined
in the Representations, Warranties and Indemnification at Closing).
1.5 "Closing" means the completion of all transactions contemplated under this
Agreement, which shall take place on the Closing Date at the offices of
Baker & McKenzie, Paris, listed in Section 8.4, and/or such other location
as the parties may mutually agree.
1.6 "Closing Date Financial Statements" means the consolidated unaudited
financial statements of CORONA, TS and TB for the accounting period
beginning on October 1, 1994 and ending on the Closing Date prepared in
accordance with the consolidation principles defined by French accounting
rules and comprising a balance sheet, income statements and the relevant
schedules supporting the financial statements, and the financial statements
of SCI and of SEPAC for the accounting period beginning on January 1, 1995
and ending on the Closing Date comprising for each company a balance sheet
and income statements, all of which financial statements are to be prepared
in accordance with the procedure and other accounting principles defined in
Section 4.2 below.
1.7 "Closing Date" means April 23, 1995, 0 a.m., at the latest, or such other
date and/or time as the parties may mutually agree.
1.8
- See Rider 1.8 -
1.9 "Closing Net Worth Determination Date" means the day on which the final
determination of the Closing Net Worth will be made in accordance with the
provisions of Section 4 of this Agreement.
3
<PAGE>
RIDER 1.8
---------
1.8 "Closing Net Worth" means the sum of the following as of the Closing
Date:
(i) the total consolidated net worth of CORONA, TS and TB prepared in
accordance with French GAAP;
(ii) plus the net worth of SEPAC (non-consolidated), which includes
----
dividends received from CORONA;
(iii) less the net book value in SEPAC's financial statements of its
----
investments in CORONA and TS, accounted for at historical cost;
(iv) plus goodwill on acquisition ("Ecart d'acquisition") by SEPAC of
----
its investments in CORONA and TS, calculated in accordance with
French GAAP;
(v) plus the net worth of SCI;
----
(vi) For purposes of determining the Closing Net Worth, any transaction
of a capital nature which occurs or becomes known that would affect
the capital structure of SEPAC would be accounted for in accordance
with French GAAP.
As an example only, the following calculation demonstrates the method of the
sum described above which will be applied as of the Closing Date, this example
is based on latest available financial statements as at the date hereof.
<TABLE>
<CAPTION>
(in million FF)
<S> <C>
Total consolidated net worth of CORONA, TS and TB (30/09/94) 40.0
Net worth of SEPAC (31/12/94) 5.5
SEPAC's investments in CORONA and TS (9.5)
SEPAC's "ecart d'acquisition" on acquisition of CORONA and TS 1.5
Capital structure change in SEPAC 0
Net Worth of SCI (31/12/94) 0.4
Closing Net Worth 37.9
- ----------------- ----
</TABLE>
<PAGE>
1.10 "Convertible Bonds" means the 1,770 convertible bonds issued by CORONA and
held as at the date hereof by LION EXPANSION pursuant to the Convertible
Loan.
1.11 "Convertible Loan" means the convertible bonds issuance agreement dated
November 9, 1992 between CORONA and LION EXPANSION.
1.12 "CORONA" means the French corporation CORONA S.A. with a registered
capital of FF2,360,000, having its registered office at ZI La Planche,
37210 Rochecorbon, France, registered with the Clerk of the Commercial
Registry of Tours under the number B 664 800 166.
1.13 "CORONA GROUP" means SEPAC, CORONA, TS and TB collectively.
1.14 "Escrow Agent" means Bank of America, Paris branch, or any other bank or
financial establishment of notorious repute, established in Paris.
1.15 "Escrow Amount" means FF 15,000,000.
1.16 "GAAP" means the prevailing generally accepted accounting principles
applicable in France.
1.17 "Guaranteed Net Worth" means FF 43,500,000.
1.18 "KPMG" means KPMG Peat Marwick, Paris Office, France.
1.19 "LION EXPANSION" means LION Expansion PME, a French Corporation having its
registered office at 19 Boulevard des Italiens, 75002 Paris, registered
with the clerk of the commercial Registry of Paris under No 326 356 250.
1.20 "Nominal Exchange Rate" means the average French Franc/US dollar spot
exchange rate quoted in the key currency cross rate table of the Wall
Street Journal Western Edition for the period of seven (7) consecutive New
York business days ending on the seventh (7th) business day preceding the
Closing Date.
1.21 "Nominal Share Price" means the average daily closing share price of
Sunrise Shares as printed in the Wall Street Journal (Western Edition) for
the period of seven (7) consecutive New York business days ending on the
seventh (7th) business day preceding the Closing Date.
1.22 "Operating Year" means fiscal year.
1.23 "Parties" means all of the parties to this Agreement, including the
Sellers, LION EXPANSION, and the Buyer.
1.24 "SCI" means the French real estate company SCI LA PLANCHE with a
registered capital of FF68,000, having its registered office at ZI La
Planche, 37210 Rochecorbon, France, not registered with the Clerk of the
Commercial Registry.
4
<PAGE>
1.25 "SCI Shares" means the shares composing the registered capital of SCI held
by Mr. Christian Suzanne and Mrs. Jeanne Santucci-Suzanne.
1.26 "Securities Act" means the Securities and Exchange Act of 1933 of the
United States of America.
1.27 "Sellers" collectively means Mr. Christian Suzanne, Mrs. Jeanne Santucci-
Suzanne, Mr. Pascal Suzanne, Mr. Laurent Suzanne, Mrs. Isabelle Suzanne-
Aubert and Mrs. Nathalie Suzanne-Naylor.
1.28 "SEPAC" means the French civil company S.E.P.A.C. with a registered
capital of FF 20,000, having its registered office at 36 Rue des Hautes
Gatinieres, 37210 Rochecorbon, France, registered with the Clerk of the
Commercial Registry of Tours under the number D 377 682 232.
1.29 "Shares" collectively means the shares held as at the date hereof by the
Sellers and LION EXPANSION in the companies composing the CORONA GROUP and
the shares which may be issued by CORONA to LION EXPANSION and to the
Sellers between the signing of this Agreement and the Closing Date as a
result of the conversion by LION EXPANSION and the Sellers of all or part
of the Convertible Bonds. In addition, the Minority Shares will become
Shares as from the date on which they are acquired by Mr. Christian
Suzanne.
1.30 "Minority Shares" means the 25 shares held by Mr. Henri Sorin (5 shares)
and by Mr. Jean Marie Santucci (20 shares) in CORONA, and which will be
acquired by Mr. Christian Suzanne in accordance with Section 2.2 below.
1.31 "Sunrise Medical Group" means any and all legal entities, directly or
indirectly controlled by Sunrise Medical Inc.
1.32 "Sunrise Shares" means shares of the common stock of Sunrise Medical Inc.,
a corporation traded on the New York Stock Exchange (symbol SMD).
1.33 "TB" means the French corporation TECKTONA BOIS S.A. with a registered
capital of FF 1,100,000, having its registered office at ZI Route de
Meslay, La Logerie, 37210 Parcay Meslay, France, registered with the Clerk
of the Commercial Registry of Tours under the number B 343 786 992,
(hereinafter called "TB")
1.34 "Territory" means France, Belgium, Switzerland, Tunisia, Algeria, Morocco
and Egypt.
1.35 "TS" means the French corporation TECKTONA SANTE S.A. with a registered
capital of FF 2,100,000, having its registered office at ZI Route de
Meslay, 37210 Parcay Meslay, France, registered with the Clerk of the
Commercial Registry of Tours under the number B 383 473 758, (hereinafter
called "TS")
5
<PAGE>
ARTICLE 2 SALE
----
2.1 Shares
------
The Sellers and LION EXPANSION hereby agree to sell and transfer to Buyer
all of the Shares on the terms and subject to the conditions of this
Agreement, and Buyer hereby agrees to purchase such Shares and to accept
the transfer, with effect as of the Closing Date.
2.2 Minority Shares
---------------
Mr. Christian Suzanne hereby agree to acquire from Mr. Sorin and from Mr.
JM Santucci the Minority Shares prior to the Closing Date, so that the
said Minority Shares become Shares and can be sold and tranferred to Buyer
pursuant to Section 2.1 above.
2.3 SCI Shares
----------
Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne hereby agree to sell
and transfer to Buyer all of the SCI Shares on the terms and subject to
the conditions of this Agreement, and Buyer hereby agrees to purchase such
SCI Shares and to accept the transfer, with effect as of the Closing Date.
2.4 Assignment
----------
It is expressly agreed that until the Closing Date, Buyer may assign by
any means all or part of its rights and obligations pursuant to this
Agreement, to any legal entity in the Sunrise Medical Group, provided it
remains jointly liable hereunder.
2.5 Effective Date of Sale and Transfer
-----------------------------------
The sales provided in Sec. 2.1, 2.2 and 2.3 shall become effective on the
Closing Date.
2.6 Undistributed Profits
---------------------
The sales and transfers shall include all rights to profits of CORONA, TS
and TB for the period commencing on October 1, 1993, and ending on the
Closing Date ("Latest CORONA/TS/TB Profit Period"). The sales and
transfers shall also include all rights to profits of SEPAC and of SCI for
period commencing on January 1, 1994 and ending on the Closing Date
("Latest SEPAC/SCI Profit Period"). The Sellers agree, as from the date
hereof, not to vote nor accept any profit distribution from CORONA/TS/TB
relating to the Latest CORONA/TS/TB Profit Period, or from SEPAC/SCI
relating to the Latest SEPAC/SCI Profit Period. The Sellers also agree not
to vote nor accept any profit distribution relating to earlier Operating
Years.
As a specific exception to the foregoing principle, it is, however, agreed
that the Sellers and LION EXPANSION shall be authorized to vote their
shares in such a manner as to cause CORONA to distribute a dividend in the
aggregate amount of FF 4,620,000 before the Closing Date and to pay the
same before the said date. It is understood, however, that
6
<PAGE>
in such a case, the said dividend shall be voted and paid before the date
of the conversion of the Convertible Bonds, so as to be allocated to SEPAC
up to 56.7% and to the Sellers and LION EXPANSION for the balance, i.e., a
total amount of FF 2,000,460.
Finally, it is declared by the Sellers and LION EXPANSION that before the
date hereof, CORONA has distributed and paid a total dividend of
FF 5.000.000 from the earnings of the fiscal year which ended on September
30, 1994, out of which 56,7% was allocated to SEPAC which has not
distributed any dividends itself.
ARTICLE 3 PURCHASE PRICE
--------------
In consideration of the sale of the Shares, Minority Shares and SCI Shares
as contemplated herein, provided all the Convertible Bonds have been
converted on Closing date, Sellers and LION EXPANSION shall receive a
total purchase price of FF 206,000,000, which shall be allocated among
themselves in accordance with Attachment 2 hereof.
------------
Said total purchase price shall be subject to adjustment based on any
shortfall of the Closing Net Worth compared to the Guaranteed Net Worth,
all in accordance with the provisions of Section 4 hereof.
3.1 Purchase Price - Payment
------------------------
3.1.1 Shares
------
The total purchase price for the sale and transfer of the Shares
amounts to FF 188,600,160 and shall be payable in accordance with
the following:
(i) On the Closing Date, Buyer shall in accordance with
Attachment 2 (Allocation of the Purchase Price) pay to the
------------
Sellers and LION EXPANSION a total amount of FF 142,600,160
by SWIFT transfer;
(ii) On or before the Closing Date, Buyer shall cause Sunrise
Medical Inc. to issue to the Sellers and LION EXPANSION in
accordance with the breakdown indicated in Attachment 2
------------
hereof, Sunrise Shares for an amount equivalent to
FF 31,000,000.
The number of Sunrise Shares to be issued pursuant to this
Section shall be obtained by converting FF 31,000,000 into
U.S. dollars rounded to the nearest U.S. dollar using the
designated Nominal Exchange Rate and then dividing this
dollar figure by the Nominal Share Price. Fractional shares
will be paid in cash to the nearest French Franc.
For example, at a Nominal Share Price of $25.00 and a Nominal
Exchange Rate of FF 5.40 per US dollar, the FF 31,000,000
would be delivered as 229,629 Sunrise Shares plus FF 86.00
for the fractional share as explained herein below:
7
<PAGE>
FF 31,000,000/(FF 5,40 per US $) = US $5,740,741; US
$5,740,741/(US $25,00 per Sunrise Share) =
229,629.6400 Sunrise Shares; 0,6400 Sunrise Shares x
(FF 5.40 per US $) = FF 86.40.
The Sunrise Shares shall be delivered to the Sellers and LION
EXPANSION on the Closing Date.
The issuance and delivery of the Sunrise Shares shall be made
subject to the rules and undertaking set out in Attachment 3
------------
(Terms of Sunrise Medical Inc. Shares).
Buyer reserves the option to substitute cash for some portion
or all of the Sunrise Shares contemplated in this Section
2.1.1.
(iii) On the Closing Date, Buyer shall pay the Escrow Amount in
escrow to the Escrow Agent, in accordance with the terms of
the Escrow Agreement to be executed on the Closing Date in
the form of the document attached hereto as Attachment 4.
------------
Such Escrow Amount less any shortfall between the Guaranteed
Net Worth and the Closing Net Worth (as defined in Sect. 4
hereof), if any, shall be distributed to the Sellers and LION
EXPANSION in accordance with Attachment 2 within 10 days of
------------
the Closing Net Worth Determination Date. The shortfall, if
any, between the Guaranteed Net Worth and the Closing Net
Worth shall be returned to Buyer within 10 days of the
Closing Net Worth Determination Date.
The Escrow Amount shall be deposited in unit trust funds
invested in French Francs ("SICAV de Tresorerie en Francs
Francais") whose earnings shall be for the benefit of the
Sellers and LION EXPANSION, provided, however, that the
earnings relating to the portion of the Escrow amount
corresponding to a shortfall between the Guaranteed Net Worth
and the Closing Net Worth, if any, shall be for the benefit
of Buyer.
3.1.2 SCI Shares
----------
The total purchase price for the sale and transfer of the SCI Shares
amounts to FF 17,399,840 and shall be payable to Mr. Christian
Suzanne and Mrs Jeanne Santucci-Suzanne in accordance with
Attachment 2 on the Closing Date by SWIFT transfer.
------------
ARTICLE 4 NET WORTH
---------
4.1 Guaranteed Net Worth
--------------------
The Sellers and LION EXPANSION guarantee that the Closing Net Worth shall
be at least equal to the Guaranteed Net Worth.
8
<PAGE>
4.2 Net Worth Determination
-----------------------
The Closing Net Worth will be determined in the manner set forth below in
accordance with GAAP. Property, machinery and equipment shall be valued at
historical cost and net of depreciation and depreciated on a consistent
basis and in accordance with GAAP. Inventory will be valued in accordance
with GAAP net of all reserves including but not limited to reserves for
intercompany profits, slow-moving, excess and obsolete inventories as
required by GAAP. Accounts receivable shall be valued in accordance with
GAAP, net of all reserves as required. The Closing Date Financial
Statements shall include accruals for actual, contingent and estimated
liabilities incurred as of the Closing Date in accordance with GAAP,
including, but not limited to, (i) vacation earned and not taken by
employees (but not the retirement premiums for which no provisions are
recorded) and (ii) taxes expected to be paid currently or some time in the
future on revenues and income earned prior to the Closing Date. Amounts
receivable or payable, including accruals, in foreign currencies will be
valued at the exchange rate in effect on the Closing Date.
The Closing Net Worth shall be exclusive of any write-ups of asset values,
if any, since September 30, 1993, with respect to CORONA, TS and TB and
since December 31, 1993, with respect to SEPAC and SCI. It takes into
account the increase in net assets resulting from the conversion of the
Convertible Bonds.
4.2.1 Preparation of Financial Statements
-----------------------------------
Buyer will cause the usual chartered accountant of the CORONA GROUP
and SCI to prepare and remit respectively to the Sellers and Buyer
the Closing Date Financial Statements and a statement detailing the
calculation of the Closing Net Worth, no later than forty five (45)
days from the Closing Date.
4.2.2 Financial Statements Audit
--------------------------
The Closing Date Financial Statements and the Closing Net Worth
will be audited by KPMG. KPMG will submit to the Buyer, the Sellers
and LION EXPANSION its final written audit report within forty five
(45) days after the date on which the Closing Date Financial
Statements were submitted to the Buyer and to the Sellers.
The Sellers may raise objections to the Net Worth computation
within twenty (20) days from the date KPMG submitted its audit
report, by providing Buyer with a written statement specifying all
appropriate details supporting their objections. KPMG will allow
the Sellers to inspect and review its conclusions and workpapers.
If objections are raised by the Sellers as to KPMG's audit report,
the Sellers, LION EXPANSION and Buyer shall attempt to amicably
resolve the dispute. If no agreement is reached within thirty (30)
days after Buyer has received the Sellers written statement of
objections, the Closing Date Financial Statement shall be submitted
for review to the firm Coopers & Lybrand, Paris Office, which firm
shall act as an arbitrator which shall finally determine the
Closing Net Worth considering the principles set forth in this
Agreement. Coopers & Lybrand shall
9
<PAGE>
have access to all relevant documents and information, and its
conclusions shall be final and binding upon the parties.
The arbitration costs, which shall include at a minimum Coopers &
Lybrand's fees in their capacity as arbitrator, shall be advanced
equally by the Buyer on the one hand and the Sellers and LION
EXPANSION on the other hand, and shall be finally borne in the
manner which the arbitrator deems appropriate in its final
decision.
4.3 Price Adjustments
-----------------
Any shortfall of the Closing Net Worth, as determined in accordance with
this Agreement, from the Guaranteed Net Worth shall be deducted franc for
franc from the Escrow Amount, including allocable earnings thereon, and
returned to Buyer upon final determination of the Closing Net Worth in
accordance with this Section 4. To the extent the Closing Net Worth
shortfall is greater than the Escrow Amount, the Sellers and LION
EXPANSION shall each, on a prorata basis according to the allocation of
the purchase price for the Shares among themselves, immediately pay such
amount to the Buyer in cash.
Any excess of the Closing Net Worth, if any, shall be for the Buyer only
and will not result in any price adjustment.
4.4 Conversion of Convertible Bonds
-------------------------------
It is agreed that before the Closing Date, all of the Convertible Bonds
will be converted by LION EXPANSION and/or the Sellers into shares of
CORONA.
4.5 Reimbursement of Cash Advances
-----------------------------
The Cash Advances shall be reimbursed by SEPAC and SCI to the Sellers on
the Closing Date in accordance with Section 6.3.3 hereof up to the maximum
amount set forth in Section 1.3 hereof.
ARTICLE 5 INFORMATION, REPRESENTATIONS AND WARRANTIES
-------------------------------------------
5.1 Disclosure to Buyer
-------------------
The Sellers and LION EXPANSION have provided Buyer with true, correct and
complete information concerning all facts and circumstances known or
recognizable to them at the date of signing of this Agreement which might
adversely in a material manner affect the financial position or the
business of the CORONA GROUP or its current or future earnings.
Should any of the facts or circumstances which might adversely in a
material manner affect the financial position, business or current or
future earnings of the CORONA GROUP become known to the Sellers or LION
EXPANSION on or before the Closing Date, the Sellers and/or LION EXPANSION
shall immediately notify Buyer in writing and shall provide Buyer with any
information related to such facts or circumstances which Buyer may in its
reasonable discretion request.
10
<PAGE>
5.2 Representation and Warranties regarding the CORONA GROUP
--------------------------------------------------------
5.2.1 Representations and Warranties at Signing
-----------------------------------------
As a material inducement for Buyer to enter into this Agreement
without which Buyer would not have agreed to purchase the Shares,
the Sellers and LION EXPANSION warrant and represent respectively
the accuracy and completeness as of the date hereof of (i) the
information relating to the CORONA GROUP set out in this Agreement
and in particular in the above Recitals, and of (ii) the
representations and warranties respectively made by them in the
document entitled "Representations and Warranties at Signing"
attached hereto as Attachment 6 (which includes in particular the
------------
audited and certified without reserves balance sheets, income
statements and exhibits of CORONA, TS and TB as at September 30,
1994 and the balance sheet and income statement of SEPAC as at
December 31, 1994) and that any facts or circumstances affecting
the accuracy or completeness of such information which come to
their knowledge prior to the Closing Date will immediately be
communicated to Buyer.
5.2.2 Representations, Warranties and Indemnification at Closing
----------------------------------------------------------
The Sellers and LION EXPANSION agree to reiterate to Buyer on the
Closing Date all of the representations and warranties which they
have respectively made, and to provide Buyer with an
indemnification against any breach thereof, and a bank guarantee
guaranteeing such indemnification, (i) by signing and delivering to
Buyer on the Closing Date the document entitled "Representations,
Warranties and Indemnification at Closing" attached hereto as
Attachment 7 and (ii) by respectively delivering to Buyer on the
-------------
Closing Date, the bank guarantees in the form of the documents
attached as Exhibit 7.5 to said Attachment 7, being stated that the
------------
bank guarantee to be provided by the Sellers shall also cover the
undertakings of Mr. Christian Suzanne and Mrs. Jeanne Santucci
Suzanne set forth in Section 5.3.2 below.
5.3 Representations and Warranties regarding SCI
--------------------------------------------
5.3.1 Representations and Warranties at Signing
-----------------------------------------
As a material inducement for Buyer to enter into this Agreement
without which Buyer would not have agreed to purchase the SCI
Shares, Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne
individually and jointly warrant and represent the accuracy and
completeness as of the date hereof of the information relating to
SCI set out in this Agreement, and in particular, in the Recitals
and in the document entitled "SCI Representations and Warranties at
Signing" attached hereto as Attachment 8 , which includes in
------------
particular the balance sheet and income statement of SCI as at
December 31, 1994, and that any facts or circumstances affecting
the accuracy or completeness of such information which come to
their knowledge prior to the Closing Date will immediately be
communicated to Buyer.
11
<PAGE>
5.3.2 Representations, Warranties and Indemnification at Closing
----------------------------------------------------------
Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne agree to
reiterate to Buyer on the Closing Date all of such representations
and warranties, and to provide Buyer with an indemnification
against any breach thereof, by signing and delivering to Buyer on
the Closing Date the document entitled "SCI Representations,
Warranties and Indemnification at Closing" attached hereto as
Attachment 9.
------------
5.4 Access to Information
---------------------
The representatives, attorneys and accountants of Buyer shall prior to the
Closing Date have reasonable access to the records and files, audits,
business premises and buildings of the CORONA GROUP and of SCI, as well as
to all information relating to taxes, commitments, agreements, titles and
the financial condition of, or otherwise pertaining to, its business.
The fact that the Sellers have allowed Buyer and its representatives
access to the above information and documents, or to any other information
and documents, prior to the date hereof or prior to the Closing Date shall
not affect any of the representations and warranties made by the Sellers
and LION EXPANSION under this Agreement.
5.5 Knowledge of Sellers
--------------------
In case of representations and warranties depending on the knowledge of
the Sellers of certain facts or circumstances, the Sellers shall be
imputed with the actual knowledge of any proxyholders, managers, sales
persons, sales representatives, accountants, attorneys and all other
employees of the CORONA GROUP not previously indentified in this Section.
ARTICLE 6 CONSUMMATION, CLOSING
---------------------
6.1 Condition Precedent to Closing
------------------------------
The Closing shall occur subject to the sole condition precedent that Buyer
shall have obtained, within sixty (60) days as from the date hereof, the
appropriate authorization from the French Ministry of Economy and
Finance -Treasury Department, to proceed with the investment described
herein.
Buyer undertakes as of the date hereof to perform with the utmost
diligence all of the steps and formalities to obtain the required
clearance from the Treasury Department. Buyer shall inform the Sellers by
remitting copies of the letters addressed to the Treasury Department. The
Sellers undertake, for their part, to fully cooperate with Buyer in these
efforts.
12
<PAGE>
Should the condition precedent not be fulfilled within the required period
of time, this Agreement will automatically become null and void at the
request of either party, without judiciary formalities and without
indemnification to either party.
6.2 Closing
-------
Subject to the fulfilment of the conditions precedent specified in Sect.
6.1, the consummation of the purchase and sale of the Shares, Minority
Shares and SCI Shares shall occur on the Closing Date (or where the
context so admits on Closing).
At the Closing, the parties shall exchange the following documents:
6.2.1 Documents to be delivered by the Sellers and LION EXPANSION
-----------------------------------------------------------
The Sellers and LION EXPANSION shall deliver the following
documents to Buyer:
(i) the share transfer forms, duly signed and completed by the
Sellers and LION EXPANSION, respectively, transferring the
Shares (except SEPAC Shares) and Minority Shares to Buyer;
(ii) ten (10) original and duly signed counterparts of the share
transfer agreement in the form of the document attached
hereto as Attachment 11bis (SEPAC Shares Purchase
----------------
Agreement), transferring the SEPAC Shares to Buyer, dated as
of the Closing Date;
(iii) the share transfer registers and individual shareholders'
accounts of CORONA, TS and TB, up to date as at the Closing
Date, such that the registration of the transfers effected
may be immediately entered on said registers and accounts;
(iv) a certified copy of the minutes containing the approval of
Buyer as new shareholder by the Board of Directors of
CORONA, TS and TB, and the approval of Buyer as a new
shareholder by the shareholders of SEPAC;
(v) a certified copy of the minutes of the Board of Directors of
CORONA acknowledging the conversion into CORONA shares of
all the Convertible Bonds, together with a certified copy of
the updated Articles of Incorporation of CORONA as of the
Closing Date;
(vi) the letters of resignation from their respective corporate
functions of all the Officers and Directors in office in the
CORONA GROUP on the Closing Date, such resignations being
effective without exception, on or before the Closing Date;
(vii) the letters of resignation of the statutory auditors of the
companies of the CORONA GROUP, such resignations being
effective on the Closing Date;
13
<PAGE>
(viii) non-competition undertakings in the form of the document
contained in Attachment 10 dated as of the Closing Date and
-------------
signed by each of the Sellers;
(ix) a warranty and indemnification in the form of the document
entitled "Representations, Warranties and Indemnification at
Closing" contained in Attachment 7, applicable on the
------------
Closing Date and duly signed by each of the Sellers and LION
EXPANSION on the Closing Date;
(x) a bank guarantee in the form of the model attached as
Exhibit 7.5 to Attachment 7 "Representations, Warranties and
Indemnification at Closing", issued by a reputable French
bank on behalf of the Sellers;
(xi) a bank guarantee in the form of the model attached as
Exhibit 7.5 to Attachment 7 "Representations, Warranties and
Indemnification at Closing", issued by a reputable French
bank on behalf of LION EXPANSION;
(xii) the Escrow Agreement in the form of the document attached
hereto as Attachment 4 dated as of the Closing Date and duly
------------
signed by each of the Sellers and LION EXPANSION;
(xiii) a copy of Attachment 3 hereto, duly signed and reiterated by
------------
the Sellers and LION EXPANSION on the Closing Date.
6.2.2 Documents to be delivered by Mr. Christian Suzanne and Mrs Jeanne
-----------------------------------------------------------------
Santucci-Suzanne
----------------
Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne shall deliver
the following documents to Buyer:
(i) six (6) original and duly signed counterparts of the share
transfer agreement in the form of the document attached
hereto as Attachment 11 (SCI La Planche Shares Purchase
-------------
Agreement), transferring the SCI Shares to Buyer, dated as
of the Closing Date;
(ii) a certified copy of the minutes containing the approval of
Buyer as new shareholder by the Shareholders of SCI;
(iii) letters of resignation from their respective corporate
functions as manager of SCI of all the managers in office in
SCI on the Closing Date, such resignations being effective
without exception, on or before the Closing Date;
14
<PAGE>
(iv) a warranty and indemnification in the form of the document
entitled "SCI Representations, Warranties and
Indemnification at Closing" contained in Attachment 9,
------------
applicable on the Closing Date and duly signed by each of
Mr. Christian Suzanne and Mrs. Jeanne Santucci-Suzanne on
the Closing Date;
6.2.3 Documents to be delivered by Buyer
----------------------------------
(i) Buyer shall deliver to the Sellers and LION EXPANSION the
Escrow Agreement in the form of the document attached hereto
as Attachment 4 dated as of the Closing Date and duly signed
------------
by an authorized representative of Buyer;
(ii) Buyer shall deliver to the Sellers and LION EXPANSION shares
certificates issued in compliance with applicable
regulations, for the Sunrise Shares issued in accordance
with Section 3.1.1 (ii) above;
(iii) Buyer shall deliver to the Sellers and LION EXPANSION a copy
of Attachment 3 hereto, duly signed and reiterated by the
------------
Buyer on the Closing Date.
(iv) Buyer shall deliver to Mr. Christian Suzanne and Mrs Jeanne
Santucci-Suzanne two (2) sets of the share transfer
agreements respectively referred to in Sections 6.2.1(ii)
and 6.2.2(i) above, duly signed.
6.3 Closing Undertakings of Buyer
-----------------------------
On the Closing Date, Buyer shall procure that :
6.3.1 Mrs Jeanne Santucci-Suzanne be appointed as Chairman ("President du
Conseil d'Administration") in CORONA, TS and TB, for a minimum
period of one (1) month to maximum period of twelve (12) months
as from the Closing Date, with a global gross compensation of
FF 60,000 per month for a full time employment to the benefit of
the group. However, Buyer will be entitled to appoint a bilingual
Chairman in replacement of Mrs Santucci Suzanne, in which case, Mrs
Santucci Suzanne will be appointed as General Manager ("mandataire
social") for the remainder of the twelve (12) month period. In such
a case, Mrs Santucci Suzanne will only work half time and her
compensation shall correlatively be reduced by 50%.
6.3.2 The companies of the CORONA GROUP and SCI obtain the release of all
personal guarantees granted by the Sellers for the benefit of any
of the companies of the CORONA GROUP or SCI as a collateral to the
existing bank facilities.
6.3.3 SEPAC and/or SCI repay to the Sellers the Cash Advances made by the
Sellers, within the limits set forth in Section 1.3 above.
15
<PAGE>
6.3.4 CORONA enter with MM Laurent and Pascal Suzanne into an employment
agreement whose terms and conditions will be negotiated before the
Closing Date.
ARTICLE 7 OPERATION OF BUSINESS
---------------------
Until the Closing Date, the Sellers shall continue to operate and maintain
the businesses of the companies of the CORONA GROUP and SCI in the
ordinary course in order to promote sales and profitability, and shall not
permit any of these companies to increase the rate of compensation or
commission of any employee or sales representative, and, except as
specifically authorized in Section 2.6 hereof, shall not pay nor accrue
dividend payments, other than those expressly authorized pursuant to
Section 2.6 above, or bonus payments to the Sellers, LION EXPANSION, other
shareholders and/or other employees of the CORONA GROUP or of SCI. Sellers
shall not pay nor accrue any extraordinary pension contribution. In
addition, except with the prior authorization of Buyer's appointed
representative for the purpose of this Section, Mr. Roger Lewis, who
undertakes to diligently handle the request, none of the companies in the
CORONA GROUP nor SCI shall commit to any expenditure or capital investment
which exceeds FF 300,000, nor enter into any material contracts as defined
in Section 1.12 of Attachment 6 with a term extending beyond the Closing
------------
Date, without Buyer's prior approval, nor dispose of any fixed assets,
either tangible or intangible, other than in the ordinary course of
business.
It is noted in this respect that the Buyer is duly informed and approves
Mr. Christian Suzanne's desire to purchase from CORONA at book value
before the Closing Date, the SAAB car which he usually drives.
ARTICLE 8 MISCELLANEOUS PROVISIONS
------------------------
8.1 Cooperation
-----------
At the Closing or as soon thereafter as practicable, but in no event later
than (thirty) 30 calendar days after the Closing Date, the Sellers shall
deliver or cause to be delivered to Buyer, or at Buyer's direction to the
CORONA GROUP or to SCI, all original agreements, documents, books, records
and files in their possession, relating to the CORONA GROUP or to SCI, to
the extent not then located on the premises occupied by the CORONA GROUP
or SCI. The Sellers shall assist Buyer and, at their direction, the
companies of the CORONA GROUP and SCI in connection with anything that
might be necessary or beneficial for the continued operation of the CORONA
GROUP's businesses after the Closing, and will cooperate to the best of
their capabilities with respect to any business, financial, tax and export
-related matters as well as any filings with authorities, courts,
associations and the like.
LION EXPANSION on its part agrees to cooperate fully with Buyer after the
Closing Date for all matters relating to the ownership and or sale of its
shares in CORONA.
16
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8.2 Announcements
-------------
Upon the signing of this Agreement, the parties shall arrange at the
request of Buyer for announcements of the purchase as contemplated by this
Agreement to the employees of the CORONA GROUP, the press, customers and
other business contacts of the CORONA GROUP. No public announcements shall
be made by the Sellers, LION EXPANSION or Buyer without prior clearance by
the respective other party, unless required under any applicable laws.
8.3 Obligations Joint and Several
-----------------------------
The Sellers and LION EXPANSION shall be severally liable for any of their
obligations under this Agreement. With respect to the non-competition
obligation of the Sellers, the rules of which are set out in
Attachment 10, the Sellers shall, as an exception to the principle stated
-------------
on the first page hereof, not be jointly and severally liable for the
obligations set forth therein.
8.4 Notices
-------
Any notice that is to be given shall be in French with English translation
and shall be duly and validly made by ordinary registered letter with
return receipt requested or express courier, and, in case of emergency, by
telex or by hand delivered letter, or in case of an interruption in postal
services, by any effective means, all time limits running from either the
delivery of said letter or of its first presentation, the Postal Service's
information being proof thereof, or from the date of the delivery of
notice given by another means.
All notices shall be given to the following respective address of the
following persons, except in case of change duly notified in advance:
For the Sellers:
Mr. Christian Suzanne
36 rue des Hautes Gratinieres
37210 Rochecorbon
For LION EXPANSION
Mr. Claude Venot
36 rue des Hautes Gratinieres
37210 Rochecorbon
For Buyer:
Roland Feneaux
Homecare Holdings France S.A.,
Village d'activite du Petit Chatelier,
357 Route de Sainte Luce, C.P. 2402,
44301 Nantes, Cedex 03, France
17
<PAGE>
and Mr. Richard H. Chandler, Chairman
Sunrise Medical Inc.
2382 Faraday Ave
Suite 200
Carlsbad, CA 92008
Copy to:
Mr. Remy Bricard
Baker & McKenzie
32, Avenue Kleber,
75016 Paris, France
Mr. Christian Suzanne shall be the Sellers' representative on all matters
relating to the transaction among the parties. In the event Mr. Christian
Suzanne is not able to fulfill as the Sellers' representative, Mr. Laurent
Suzanne will serve as the Sellers' representative.
Mr. Claude Venot shall be LION EXPANSION's representative on all matters
relating to the transaction among the parties.
Mr. Richard H. Chandler shall be the Buyer's representative on all matters
relating to the transaction among the parties. In the event Mr. Richard H.
Chandler is not able to fulfill as the Buyers's representative, Mr. Ted M.
Tarbeit will serve as the Buyer's representative.
8.5 Costs and Fees
--------------
Buyer shall bear all costs for transfer taxes, if any, accruing in
connection with the documents to be executed at the Closing. All other
costs and expenses of this Agreement, including tax, legal, financial,
advisory and similar services rendered to the parties shall be borne by
the respective parties which have incurred the same.
8.6 Entire Agreement
----------------
This Agreement, including its Attachments constitutes the entire agreement
of the parties with respect to the transactions contemplated herein, and
shall supersede all prior agreements, written or oral, made with respect
thereto. All amendments and supplements to this Agreement (including this
paragraph) shall be invalid unless made in writing and executed by the
Sellers and Buyer.
8.7 Attachments
-----------
All Attachments attached to or referred to in this Agreement shall
constitute an integral part of this Agreement. The defined terms of this
Agreement shall have the same meaning in its Attachments, and vice versa,
unless otherwise specified in the respective definition.
18
<PAGE>
8.8 Commissions
-----------
The parties acknowledge that, except for Credit Lyonnais/Clinvest on
behalf of Sellers, no person, firm or corporation has been employed or
retained or claims to be employed or retained to bring about, arrange for
or to represent either party in the transactions contemplated by this
Agreement. The fees associated with the services provided by Credit
Lyonnais/Clinvest shall be borne exclusively by the Sellers and not
charged to the CORONA GROUP or SCI.
8.9 Severability
------------
In the event that one or more provisions of this Agreement shall be
invalid or unenforceable, or if this Agreement is incomplete, the validity
of and the enforceability of the other provisions of this Agreement shall
not be affected thereby. In such a case, the parties hereby agree on such
valid and enforceable provision or on provisions completing this Agreement
which is or which are commensurate with the commercial intent of this
Agreement.
8.10 Governing Law
-------------
This Agreement shall be governed by the laws of France.
8.11 Disputes / Arbitration
----------------------
The parties shall do their best efforts to resolve amicably any
controversy or claim arising out of or relating to this Agreement, the
breach hereof or the rights or liabilities of either party hereunder. All
such claims and disputes which cannot be so resolved shall be referred to
and finally settled by arbitration. The arbitral proceedings shall be held
in Paris, France, in accordance with the Arbitration Procedure attached
hereto as Attachment 13 (Arbitration Procedure).
-------------
8.12 Language
--------
This Agreement and its Attachments was signed in French. A translation
into English, accepted by the Parties and acknowledged to be a true
translation of this Agreement, is contained in Attachment 14 (English
-------------
Version of the Agreement) hereto. The French version shall be the binding
version.
Signed in Paris, France
on 2/23/95
in 3 original counterparts,
Sellers: Homecare Holdings France S.A.
by: /s/ Sam Sinasohn
-----------------
name: Sam Sinasohn
/s/ Christian Suzanne title: Power of Attorney
- ---------------------
Mr Christian Suzanne
19
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/s/ Jeane Santucci-Suzanne
- --------------------------
Mrs Jeanne Santucci-Suzanne
/s/ Jeane Santucci-Suzanne
- --------------------------
Mr Pascal Suzanne
/s/ Christian Suzanne
- ---------------------
Mr Laurent Suzanne
/s/ Christian Suzanne
- ---------------------
Mrs Isabelle Suzanne-Aubert
/s/ Jeane Santucci-Suzanne
- --------------------------
Mrs Nathalie Suzanne-Naylor
/s/ Claude Venot
- --------------------------
Lion Expansion
by: Claude Venot
name:
title:Secretaire General
20
<PAGE>
EXHIBIT 23
SUNRISE MEDICAL INC.
ACCOUNTANTS' CONSENT
The Board of Directors
We consent to incorporation by reference in the Registration Statement No.
33-44082 on Form S-4, Statement No. 33-49500 on Form S-3, Statement No. 33-55880
on Form S-3, Statement No. 33-39887 on Form S-8, Statement No. 33-35797 on Form
S-8, Statement No. 33-13460 on Form S-8, and Statement No. 33-88216 on Form S-8
of Sunrise Medical Inc. of our report dated April 3, 1995, with respect to the
combined balance sheet of Corona SA, its subsidiaries and related companies as
of September 30, 1994 and the related combined statements of income and cash
flows for the year then ended, which report appears in the Form 8-K of Sunrise
Medical Inc. dated April 7, 1995.
[KPMG Audit]
Neuilly sur Seine, France
April 5, 1995
