<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
Suburban Ostomy Supply Co., Inc.
(NAME OF SUBJECT COMPANY)
Inva Acquisition Corp.
Invacare Corporation
(BIDDERS)
Common Stock, No Par Value
(TITLE OF CLASS OF SECURITIES)
864471 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
THOMAS R. MIKLICH, ESQ.
Chief Financial Officer, General Counsel,
Treasurer and Corporate Secretary
Invacare Corporation
One Invacare Way
Elyria, Ohio 44036
(440) 329-6000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPIES TO:
DALE C. LAPORTE, ESQ.
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
(216) 622-8200
CALCULATION OF FILING FEE
================================================================================
TRANSACTION VALUATION AMOUNT OF FILING FEE
$134,193,190 $26,839
================================================================================
* For purposes of calculating amount of filing fee only. The amount assumes the
purchase of 11,420,697 shares of Common Stock, no par value (the "Shares"), at
a price per Share of $11.75 in cash. Such number of shares represents all of
the 10,538,622 Shares outstanding as of December 16, 1997, plus 882,075 Shares
issuable upon the exercise of outstanding options or other rights to acquire
Shares.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form or
Schedule and the date of its filing.
Amount Previously Paid: None
Filing Party: N/A
Form or Registration No.: N/A
Date Filed: N/A
<PAGE> 2
CUSIP NO. 864471 10 7 14D-1 AND 13D
<TABLE>
<C> <S>
- ----------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Inva Acquisition Corp.
- ----------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- ----------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or
2(e)
[ ]
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
- ----------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
5,177,465
- ----------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
- ----------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 45.3% of the Shares outstanding on a fully diluted basis as of December
16, 1997
- ----------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ----------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
CUSIP NO. 864471 10 7 14D-1 AND 13D
<TABLE>
<C> <S>
- ----------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Invacare Corporation
- ----------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- ----------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ----------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC,BK
- ----------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or
2(e)
[ ]
- ----------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
- ----------------------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
5,177,465
- ----------------------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ]
- ----------------------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
Approximately 45.3% of the Shares outstanding on a fully diluted basis as of December
16, 1997
- ----------------------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ----------------------------------------------------------------------------------------------
</TABLE>
* On December 17, 1997, in connection with a Merger Agreement dated as of
December 17, 1997 (the "Merger Agreement") among Suburban Ostomy Supply Co.,
Inc. (the "Company"), Invacare Corporation ("Parent") and Inva Acquisition
Corp., a wholly owned subsidiary of Parent (the "Purchaser"), Parent and
Purchaser entered into entered into a Stockholders Agreement (the
"Stockholders Agreement"), with Herbert Gray, Donald Benovitz, Summit
Ventures III, L.P., Summit Investors II, L.P., and Summit Subordinated Debt
Fund, L.P. (collectively, the "Selling Stockholders") who beneficially own an
aggregate of 5,177,465 Shares, of which 310,000 Shares are issuable upon
exercise of stock options. Pursuant to the Stockholders Agreement, among
other things, the Selling Stockholders have agreed to tender their Shares in
the Offer (as hereinafter defined) (including any Shares that are issued upon
3
<PAGE> 4
exercise of their stock options prior to the expiration of the Offer). The
Stockholders Agreement is described more fully in Section 12--"Purpose of the
Offer, Merger, Merger Agreement and Other Transaction Agreements" of the Offer
to Purchase.
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 relates to the offer by the
Purchaser to purchase all outstanding shares of common stock, no par value (the
"Shares"), of Suburban Ostomy Supply, Inc., a Massachusetts corporation, at
$11.75 per Share, net to the seller in cash, on the terms and subject to the
conditions set forth in the Offer to Purchase, dated December 22, 1997 (the
"Offer to Purchase"), and in the related Letter of Transmittal, copies of which
are attached hereto as Exhibits (a)(1) and (a)(2), respectively (which, as
amended or supplemented from time to time, together constitute the "Offer").
This Tender Offer Statement on Schedule 14D-1 also constitutes a Statement on
Schedule 13D with respect to the acquisition by Parent and the Purchaser of
beneficial ownership of the Shares subject to the Stockholders Agreement. The
item numbers and responses thereto below are in accordance with the requirements
of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Suburban Ostomy Supply Co., Inc., a
Massachusetts corporation (the "Company"), which has its principal executive
offices at 75 October Hill Road, Holliston, Massachusetts, 01746.
(b) This Schedule 14D-1 relates to the offer by Inva Acquisition Corp. (the
"Purchaser"), to purchase all outstanding Shares at a price of $11.75 per Share,
net to the seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively. Information concerning the number of
outstanding Shares is set forth in "Introduction" of the Offer to Purchase and
is incorporated herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of Shares for each quarterly period
during the past two years is set forth in Section 6 ("Price Range of the Shares;
Dividends on the Shares") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser, a
Massachusetts corporation, and Invacare Corporation, an Ohio corporation
("Parent"). The Purchaser is a wholly owned subsidiary of Parent. Information
concerning the principal business and the address of the principal offices of
the Purchaser and Parent is set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase and is
incorporated herein by reference. The names, business addresses, present
principal occupations or employment, material occupations, positions, offices or
employments during the last five years and citizenship of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I to
the Offer to Purchase and are incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning the Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 11 ("Contacts with the
Company; Background of the Offer") and Section 12 ("Purpose of the Offer, the
Merger, Merger Agreement and Other Transaction Agreements") of the Offer to
Purchase is incorporated herein by reference.
4
<PAGE> 5
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer,
Merger, Merger Agreement and Other Transaction Agreements") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in "Introduction," Section 9
("Certain Information Concerning the Purchaser and Parent") and Section 12
("Purpose of the Offer, the Merger, Merger Agreement and Other Transaction
Agreements") of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction," Section 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts with
the Company; Background of the Offer") and Section 12 ("Purpose of the Offer,
the Merger, Merger Agreement and Other Transaction Agreements") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) Not applicable.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Agreement and Plan of Merger dated as of December 17, 1997,
among the Purchaser, Parent and the Company, copies of which are attached hereto
as Exhibits (a)(1), (a)(2) and (c), respectively, is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase.
5
<PAGE> 6
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated December 22, 1997.
(a)(8) Text of Press Release dated December 17, 1997, issued by the Company
and Parent.
(b) Loan Agreement, dated November 18, 1997, among the Parent and NBD Bank
and Key Bank National Association.
(c)(1) Agreement and Plan of Merger dated as of December 17, 1997, among
the Purchaser, Parent and the Company.
(c)(2) Confidentiality Agreement dated September 5, 1997, among the Parent
and Bear, Stearns & Co. Inc. on behalf of the Company.
(c)(3) Stockholders Agreement dated December 17, 1997, among Puchaser,
Parent and Herbert Gray, Donald Benovitz, Summit Ventures III, L.P., Summit
Investors II, L.P., and Summit Subordinated Debt Fund, L.P.
(d) None.
(e) Not applicable.
(f) None.
6
<PAGE> 7
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
Dated: December 22, 1997
INVA ACQUISITION CORP.
By: /s/ THOMAS R. MIKLICH
------------------------------------
Name: Thomas R. Miklich
Title: Treasurer
INVACARE CORPORATION
By: /s/ THOMAS R. MIKLICH
------------------------------------
Name: Thomas R. Miklich
Title: Chief Financial Officer,
General Counsel,
Treasurer and Corporate Secretary
7
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO EXHIBIT NAME PAGE NUMBER
- ----------- ---------------------------------------------------------------- ----------------
<S> <C> <C>
(a)(1) Offer to Purchase...............................................
(a)(2) Letter of Transmittal...........................................
(a)(3) Notice of Guaranteed Delivery...................................
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees........................................................
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees....................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9..........................................
(a)(7) Form of Summary Advertisement dated December 22, 1997...........
(a)(8) Text of Press Release dated December 17, 1997, issued by the
Company and Parent..............................................
(b) Loan Agreement, dated November 18, 1997, among the Parent and
NBD Bank and Key Bank National Association......................
(c)(1) Agreement and Plan of Merger dated as of December 17, 1997,
among the Purchaser, Parent and the Company.....................
(c)(2) Confidentiality Agreement dated September 5, 1997, among the
Parent and Bear, Stearns & Co. Inc. on behalf of the Company....
(c)(3) Stockholders Agreement dated December 17, 1997, among Puchaser,
Parent and Herbert Gray, Donald Benovitz, Summit Ventures III,
L.P., Summit Investors II, L.P., and Summit Subordinated Debt
Fund, L.P. .....................................................
(d) None............................................................
(e) Not applicable..................................................
(f) None............................................................
</TABLE>
8
<PAGE> 1
Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SUBURBAN OSTOMY SUPPLY CO., INC.
AT
$11.75 NET PER SHARE
BY
INVA ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
INVACARE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, JANUARY 22, 1998, UNLESS EXTENDED
THE BOARD OF DIRECTORS OF SUBURBAN OSTOMY SUPPLY CO., INC. HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE
STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD REPRESENT AT LEAST TWO-THIRDS OF THE OUTSTANDING SHARES
(DETERMINED ON A FULLY DILUTED BASIS ASSUMING THE EXERCISE OF ALL OUTSTANDING
OPTIONS, RIGHTS AND CONVERTIBLE SECURITIES (IF ANY) AND THE ISSUANCE OF ALL
SHARES THAT THE COMPANY IS OBLIGATED TO ISSUE) AND (II) ANY WAITING PERIOD UNDER
THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE
REGULATIONS THEREUNDER APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE
OFFER HAVING EXPIRED OR BEEN TERMINATED.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal or a facsimile copy thereof in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon guaranteed
if required by Instruction 1 to the Letter of Transmittal, mail or deliver the
Letter of Transmittal or such facsimile, or in the case of a book-entry transfer
effected pursuant to the procedure set forth in Section 2, an Agent's Message
(as defined herein), and any other required documents, to the Depositary and
either deliver the certificates for such Shares to the Depositary along with the
Letter of Transmittal or facsimile or deliver such Shares pursuant to the
procedure for book-entry transfer set forth in Section 2 or (2) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect the
transaction for such stockholder. A stockholder having Shares registered in the
name of a broker, dealer, bank, trust company or other nominee must contact such
broker, dealer, bank, trust company or other nominee if such stockholder desires
to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
------------------------
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
December 22, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
INTRODUCTION......................................................................... 1
1. Terms of the Offer............................................................... 2
2. Procedure for Tendering Shares................................................... 4
3. Withdrawal Rights................................................................ 7
4. Acceptance for Payment and Payment............................................... 7
5. Certain Federal Income Tax Consequences.......................................... 8
6. Price Range of the Shares; Dividends on the Shares............................... 9
7. Effect of the Offer on the Market for the Shares; Stock Quotation; Exchange Act
Registration; Margin Regulations................................................ 9
8. Certain Information Concerning the Company....................................... 10
9. Certain Information Concerning the Purchaser and Parent.......................... 13
10. Source and Amount of Funds....................................................... 14
11. Contacts With the Company; Background of the Offer............................... 15
12. Purpose of the Offer; the Merger, Merger Agreement and Other Transaction
Agreements......................................................................... 16
13. Dividends and Distributions...................................................... 25
14. Certain Conditions of the Offer.................................................. 25
15. Certain Legal Matters............................................................ 27
16. Fees and Expenses................................................................ 28
17. Miscellaneous.................................................................... 29
SCHEDULE I
Directors and Executive Officers................................................. I-1
</TABLE>
<PAGE> 3
TO THE HOLDERS OF COMMON STOCK OF SUBURBAN OSTOMY SUPPLY CO., INC.:
INTRODUCTION
Inva Acquisition Corp., a Massachusetts corporation (the "Purchaser") and a
wholly owned subsidiary of Invacare Corporation, an Ohio corporation ("Parent"),
is offering to purchase all outstanding shares (the "Shares") of Common Stock,
no par value ("Company Common Stock"), of Suburban Ostomy Supply Co., Inc., a
Massachusetts corporation (the "Company"), at $11.75 per Share (the "Offer
Price"), net to the seller in cash, upon the terms and subject to the conditions
set forth in this Offer to Purchase dated December 22, 1997 and in the related
Letter of Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Wheat, First Securities, Inc.
("Wheat First"), which is acting as Dealer Manager (the "Dealer Manager"), First
Chicago Trust Company of New York, which is acting as the Depositary (the
"Depositary") and MacKenzie Partners, Inc., which is acting as Information Agent
(the "Information Agent"), incurred in connection with the Offer. See Section
16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER
AND THE MERGER (AS DEFINED BELOW) AND DETERMINED THAT THE TERMS OF THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
Bear, Stearns & Co. Inc. ("Bear Stearns") has delivered to the Board of
Directors of the Company its written opinion to the effect that, as of the date
of such opinion, the $11.75 per Share in cash to be received by the holders of
Shares in the Offer and the Merger is fair to such holders from a financial
point of view. Such opinion is set forth in full as an exhibit to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders of the Company herewith. STOCKHOLDERS ARE
URGED TO, AND SHOULD, READ SUCH OPINION CAREFULLY IN ITS ENTIRETY. The Offer is
conditioned upon, among other things, (1) there being validly tendered and not
withdrawn prior to the Expiration Date (as defined in Section 1) such number of
Shares that would constitute at least two-thirds of the outstanding Shares
(determined on a fully diluted basis assuming the exercise of all outstanding
stock options and rights and convertible securities (if any) and the issuance of
all Shares that the Company is obligated to issue ("Fully Diluted Shares")) (the
"Minimum Condition") and (2) any waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations thereunder
(the "HSR Act") applicable to the purchase of Shares pursuant to the Offer
having expired or been terminated. The Purchaser reserves the right (subject to
the applicable rules and regulations of the Securities and Exchange Commission
(the "Commission")), which it presently has no intention of exercising, to waive
or reduce the Minimum Condition and to elect to purchase, pursuant to the Offer,
less than the Minimum Number of Shares (as hereinafter defined). See Sections 1
and 14.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 17, 1997 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer and
the satisfaction or waiver of certain conditions, a merger (the "Merger") will
be effected under the terms of which either: (i) in the event that the Purchaser
acquires less than 90% of the outstanding shares pursuant to the Offer, the
Purchaser will be merged with and into the Company, with the Company surviving
the Merger; or (ii) in the event that the Purchaser acquires 90% or more of the
outstanding shares pursuant to the Offer, and Purchaser determines, in its sole
discretion, to use the "short form" merger procedure described below, the
Company will be merged with and into the Purchaser, with the Purchaser surviving
the merger (the entity surviving either of the transactions described in clauses
(i) and (ii) of this sentence being hereinafter referred to as, the "Surviving
Corporation"). Irrespective of how the Merger is structured, the Surviving
Corporation will be a wholly owned subsidiary of Parent. In the Merger, each
outstanding Share (other than Shares owned by the Company or by any subsidiary
of the Company, Parent, the Purchaser or any other subsidiary of Parent or by
stockholders, if any, who are entitled to and who properly
<PAGE> 4
exercise dissenters' rights under Massachusetts law) will be converted into the
right to receive the per Share price paid in the Offer in cash, without interest
(the "Merger Consideration"). See Section 12.
The Merger is subject to a number of conditions, including approval by
stockholders of the Company, if such approval is required by applicable law. In
the event the Purchaser acquires 90% or more of the outstanding Shares pursuant
to the Offer or otherwise the Merger Agreement permits the Parent, in its sole
discretion, to cause the Company to be merged into the Purchaser pursuant to the
short-form merger provisions of the Massachusetts General Laws (the "MGL"),
without prior notice to, or any action by, any other stockholder of the Company
as soon as practicable after such acquisition. In such event, stockholders of
the Company (other than the Purchaser and its affiliates and holders of
dissenting shares) will receive the Merger Consideration for each share held on
the date of such merger. If, however, the Purchaser does not acquire at least
90% of the then outstanding Shares, and a vote of the Company's stockholders is
required under the MGL, a significantly longer period of time will be required
to effect the Merger. See Section 12.
In addition, in connection with the execution of the Merger Agreement,
Parent and the Purchaser entered into a Stockholders Agreement, dated as of
December 17, 1997 (the "Stockholders Agreement"), with Herbert P. Gray, the
Company's Chairman and Chief Executive Officer, Donald H. Benovitz, the
Company's President and Chief Operating Officer, Summit Ventures III, L.P.,
Summit Investors II, L.P. and Summit Subordinated Debt Fund, L.P. (collectively,
the "Selling Stockholders"). The Selling Stockholders beneficially own an
aggregate of 4,867,465 Shares directly and hold stock options to purchase an
aggregate of 310,000 Shares (which Shares represent approximately 45% of the
Company's Fully Diluted Shares). Pursuant to the Stockholders Agreement, the
Selling Stockholders have agreed to validly tender pursuant to the Offer and not
withdraw all Shares which are beneficially owned by the Selling Stockholders
prior to the Expiration Date (as hereinafter defined). The Stockholders
Agreement is more fully described in Section 12.
The Company has informed the Purchaser that as of the close of business on
December 16, 1997, there were 10,538,622 Shares issued and outstanding and
882,075 Shares issuable upon the exercise of outstanding options or other rights
to acquire Shares. Based upon the foregoing, the Purchaser believes that the
Minimum Condition will be satisfied if at least 7,613,798 Shares (the "Minimum
Number of Shares") are validly tendered and not withdrawn prior to the
Expiration Date. If the Minimum Condition is satisfied and the Purchaser accepts
for payment Shares tendered pursuant to the Offer, the Purchaser will be able to
elect a majority of the members of the Company's Board of Directors and to
effect the Merger without the affirmative vote of any other stockholder of the
Company.
The Merger Agreement is more fully described in Section 12. Certain Federal
income tax consequences of the sale of Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3. The
term "Expiration Date" means Midnight, New York City time, on Thursday, January
22, 1998, unless and until the Purchaser shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
Subject to the terms of the Merger Agreement (see Section 12) and the
applicable rules and regulations of the Commission, the Purchaser expressly
reserves the right, in its sole discretion, at any time and from time to time,
and regardless of whether or not any of the events set forth in Section 14
hereof shall have occurred or shall have been determined by the Purchaser to
have occurred, to (1) extend the period of time during which the Offer is open,
and thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (2) amend
the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
2
<PAGE> 5
If by Midnight, New York City time, on Thursday, January 22, 1998, (or any
other date or time then set as the Expiration Date), any or all conditions to
the Offer have not been satisfied or waived, and if the Purchaser determines
that all such conditions are reasonably capable of being satisfied and subject
to Commission rules with respect to extension of time periods, the Merger
Agreement provides that the Offer will be extended from time to time until such
conditions are satisfied or waived; provided, however, that the Merger Agreement
does not obligate the Purchaser to extend the Offer beyond January 31, 1998. The
Purchaser reserves the right on or prior to any scheduled Expiration Date (but,
except to the extent set forth in the preceding sentence, shall not be
obligated), subject to the terms and conditions contained in the Merger
Agreement and to the applicable rules and regulations of the Commission, to (1)
terminate the Offer and not accept for payment any Shares and return all
tendered Shares to tendering stockholders, (2) waive all the unsatisfied
conditions and, subject to complying with the terms of the Merger Agreement and
the applicable rules and regulations of the Commission, accept for payment and
pay for all Shares validly tendered prior to the Expiration Date and not
theretofore withdrawn, (3) extend the Offer and, subject to the right of
stockholders to withdraw Shares until the Expiration Date, retain the Shares
that have been tendered during the period or periods for which the Offer is
extended or (4) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer. Any extension, waiver, amendment or termination will be
followed as promptly as practicable by public announcement. In the case of an
extension, Rule 14e-l(d) under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), requires that the announcement be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date in accordance with the public announcement
requirements of Rule 14d-4(c) under the Exchange Act. Subject to applicable law
(including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require
that any material change in the information published, sent or given to
stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change), and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
In the Merger Agreement, the Purchaser has agreed that it will not, without
the prior written consent of the Company, make any change in the Offer which
reduces the maximum number of Shares to be purchased in the Offer or which
changes the form of consideration or make any other change in the terms and
conditions of the Offer, except as may be required pursuant to Commission rules
with respect to extension of time periods, in any manner which is adverse to the
holders of Shares or which imposes conditions to the Offer in addition to those
set forth in this Offer to Purchase; provided, however, that if on a scheduled
Expiration Date for the Offer all conditions to the Offer have not been
satisfied or waived, the Offer may be extended from time to time without the
consent of the Company for such period of time as is reasonably expected to be
necessary to satisfy the unsatisfied conditions and provided, further, that if,
as of a scheduled Expiration Date all of the conditions to the Offer have been
satisfied, but less than 90% of the Fully-Diluted Shares have been tendered, the
Purchaser may extend the Offer for up to an aggregate of an additional ten (10)
business days. As used in this Offer to Purchase, "business day" has the meaning
set forth in Rule 14d-1 under the Exchange Act.
The Merger Agreement provides that, without the prior written consent of
the Company, the Purchaser may not terminate the Offer other than in accordance
with the provisions described in Section 14, "Certain Conditions of the Offer,"
or extend the Expiration Date to a date later than March 31, 1998.
If the Purchaser extends the Offer or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its acceptance for
payment of or payment for Shares or it is unable to pay for Shares pursuant to
the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-1 under the Exchange
Act, which requires that a bidder pay the consideration offered or return the
securities deposited by or on behalf of holders of securities promptly after the
termination or withdrawal of such bidder's offer.
3
<PAGE> 6
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer
(including a waiver of the Minimum Condition), the Purchaser will disseminate
additional tender offer materials and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-l under the Exchange Act. The minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer, other than a change in price
or a change in the percentage of securities sought, will depend upon the facts
and circumstances then existing, including the relative materiality of the
changed terms or information. With respect to a change in price or a change in
the percentage of securities sought, a minimum period of ten (10) business days
is generally required to allow for adequate dissemination to stockholders.
Consummation of the Offer is conditioned upon satisfaction of the Minimum
Condition, the expiration or termination of all waiting periods imposed by the
HSR Act and the other conditions set forth in Section 14. Subject to the terms
and conditions contained in the Merger Agreement, the Purchaser reserves the
right (but shall not be obligated) to waive any or all such conditions.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of the Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and will be furnished by the Purchaser to brokers, dealers, banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (1) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), together with any required signature guarantees, or in
the case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior to
the Expiration Date and either certificates for tendered Shares must be received
by the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedure for book-entry transfer set forth below (and a
Book-Entry Confirmation (as defined below) received by the Depositary), in each
case prior to the Expiration Date, or (2) the tendering stockholder must comply
with the guaranteed delivery procedure set forth below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of
the Offer within two business days after the date of this Offer to Purchase. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing such
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with such Book-Entry Transfer Facility's procedures for
such transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents, must, in any case, be transmitted to,
and received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedure described below.
The confirmation of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility as described above is referred to
herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO A BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
4
<PAGE> 7
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (1) the Letter of Transmittal is signed by the registered holder
(which term, for purposes of this Section, includes any participant in the
Book-Entry Transfer Facility's system whose name appears on a security position
listing as the owner of the Shares) of Shares tendered therewith unless such
registered holder has completed either the box entitled "Special Delivery
Instructions" or the box entitled "Special Payment Instructions" on the Letter
of Transmittal or (2) such Shares are tendered for the account of a financial
institution (including most commercial banks, savings and loan associations and
brokerage houses) that is a participant in the Security Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Guarantee
Program or the Stock Exchange Medallion Program (such participant, an "Eligible
Institution"). In all other cases, all signatures on the Letters of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not tendered or not accepted for payment
are to be issued to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed as aforesaid.
See Instruction 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Purchaser is received by
the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or, in the
case of a book-entry transfer, an Agent's Message, and any other documents
required by the Letter of Transmittal, are received by the Depositary
within three trading days after the date of execution of such Notice of
Guaranteed Delivery. A "trading day" is any day on which the Nasdaq
National Market operated by the National Association of Securities Dealers,
Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (1) certificates for (or a timely Book-Entry
Confirmation with respect to) such Shares, (2) a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or, in the case of a book-entry transfer, an Agent's
Message, and (3) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations are actually
received by the Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
5
<PAGE> 8
PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY
EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after December 17, 1997. All such proxies shall be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
acceptance for payment, all prior powers of attorney and proxies given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney and
proxies may be given (and, if given, will not be deemed effective). The
designees of the Purchaser will thereby be empowered to exercise all voting and
other rights with respect to such Shares or other securities or rights in
respect of any annual, special or adjourned meeting of the Company's
stockholders, or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting and other rights
with respect to such Shares and other securities or rights, including voting at
any meeting of stockholders then scheduled.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of, or payment for, which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in any tender with respect to any particular Shares,
whether or not similar defects or irregularities are waived in the case of other
Shares. No tender of Shares will be deemed to have been validly made until all
defects or irregularities relating thereto have been cured or waived. None of
the Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification. The
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Backup Withholding. In order to avoid "backup withholding" of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalty of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. Certain
stockholders (including, among others, all corporations and certain foreign
individuals and entities) are not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the main
signature form and the Substitute Form W-9 included as part of the Letter or
Transmittal to provide the information and certification necessary to avoid
backup withholding (unless an applicable exemption exists and is proven in a
manner satisfactory to the Purchaser and the Depositary). Noncorporate foreign
stockholders should complete and sign the main signature form and a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 11 to the
Letter of Transmittal.
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<PAGE> 9
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after February 20, 1998.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution, the signatures on the notice of withdrawal must be
guaranteed by an Eligible Institution. Withdrawals of tenders of Shares may not
be rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for any purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent or any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or incur any liability for failure to give any such
notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms, and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. Any determination
concerning the satisfaction of such terms and conditions will be within the sole
discretion of the Purchaser, and such determination will be final and binding on
all tendering stockholders. See Sections 1 and 14. The Purchaser expressly
reserves the right, in its sole discretion, to delay acceptance for payment of
or payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
the Purchaser's obligation to pay for or return tendered Shares promptly after
the termination or withdrawal of the Offer).
Parent will file a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after the
date such form is filed, unless early termination of the waiting period is
granted. In addition, the Antitrust Division of the Department of Justice (the
"Antitrust Division") or the Federal Trade Commission (the "FTC") may extend the
waiting period by requesting additional information or documentary material from
Parent. If such a request is made, such waiting period will expire at 11:59
p.m., New York City time, on the 10th day after compliance by Parent with such
request. See Section 15 hereof for additional information concerning the HSR Act
and the applicability of the antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
such Shares (or timely Book-Entry Confirmation of a transfer of such Shares as
described in Section 2), (2) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees and
(3) any other documents required by the Letter of Transmittal. The per Share
consideration paid to any stockholder pursuant to the Offer will be the highest
per Share consideration paid to any other stockholder pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn, if and when the Purchaser gives oral or
7
<PAGE> 10
written notice to the Depositary of the Purchaser's acceptance for payment of
such Shares. Payment for Shares accepted for payment pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payment from the Purchaser and transmitting payment to tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES
TO BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act,
which requires that a tender offeror pay the consideration offered or return the
tendered securities promptly after the termination or withdrawal of a tender
offer), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares. Any such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer because of
an invalid tender or otherwise, certificates for any such Shares will be
returned, without expense to the tendering stockholder (or, in the case of
Shares delivered by book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedure set forth in
Section 2, such Shares will be credited to an account maintained at such
Book-Entry Transfer Facility), as promptly as practicable after the expiration
or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer. Any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of the right to
receive cash by stockholders of the Company pursuant to the Merger) will be
taxable transactions for Federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For Federal income
tax purposes, a tendering stockholder will generally recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer (or to be received pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the stockholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer (or canceled pursuant to the Merger). If tendered Shares are held
by a tendering stockholder as capital assets, gain or loss recognized by the
tendering stockholder will be capital gain or loss, which will be long-term
capital gain or loss if the tendering stockholder's holding period for the
Shares exceeds one year. Pursuant to recently enacted legislation, in the case
of stockholders who are individuals, any such gain will be subject to a maximum
federal income tax rate of (i) 20% if the stockholder's holding period for the
Shares was more than 18 months at the time of the sale and (ii) 28% if the
stockholder's holding period was more than 12 months but not more than 18 months
at such time.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) that tenders Shares
may be subject to 31% backup withholding unless the stockholder provides its TIN
and certifies that such number is correct or properly certifies that it is
awaiting a TIN. A stockholder that does not furnish its TIN may be subject to a
penalty imposed by the IRS. Each stockholder should complete and sign the
Substitute Form W-9 included as part of the Letter of Transmittal so as to
provide the information and certification necessary to avoid backup withholding.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the stockholder upon filing an income tax return.
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<PAGE> 11
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT APPLY TO A
HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE
URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded in the over-the-counter market and prices are quoted
on The Nasdaq Stock Market's National Market System under the symbol "SOSC." The
following table sets forth, for each of the periods indicated, the high and low
reported last sale prices per Share, as reported by the Nasdaq National Market
and the Dow Jones News Retrieval Service.
<TABLE>
<CAPTION>
SALES PRICE
------------------
FISCAL YEAR HIGH LOW
- -------------------------------------------------------------------------- ------ -------
<S> <C> <C>
1997
First Quarter* (ended November 30, 1996)................................ $15.75 $10.75
Second Quarter (ended March 1, 1997).................................... 14.00 10.125
Third Quarter (ended May 31, 1997)...................................... 11.75 8.75
Fourth Quarter (ended August 30, 1997).................................. 11.25 8.25
1998
First Quarter (ended November 30, 1997)................................. 11.125 9.125
Second Quarter (through December 19, 1997).............................. 11.594 10.063
</TABLE>
- ---------------
* Trading in the Company's Common Stock began on October 10, 1996
On December 16, 1997, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported last sale
price of the Shares on the Nasdaq National Market was $10.875 per Share. On
December 19, 1997, the last full day of trading before the commencement of the
Offer, the reported last sale price of the Shares on the Nasdaq National Market
was $11.5625 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
According to the Company's Annual Report on Form 10-K for the fiscal year
ended August 30, 1997 (the "Form 10-K"), the Company has not paid cash dividends
on its Common Stock to date and does not plan to pay cash dividends to its
stockholders in the foreseeable future.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
The purchase of Shares pursuant to the Offer will reduce the number of
holders of Shares and the number of Shares that might otherwise trade publicly
and could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the National Association of
Securities Dealers, Inc. (the "NASD") for continued inclusion in the Nasdaq
National Market (the top tier market of The Nasdaq Stock Market), which requires
that an issuer have at least 200,000 publicly held shares, held by at least 400
stockholders or 300 stockholders of round lots, with a market value of
$1,000,000, and have net tangible assets of at least $1,000,000, and in certain
circumstances where an issuer has sustained losses in recent years, either
$2,000,000 or $4,000,000, depending on profitability levels during the issuer's
three or four most recent fiscal years. If these standards are not met, the
Shares might nevertheless continue to be included in The Nasdaq Stock Market
with quotations published in the Nasdaq
9
<PAGE> 12
"additional list" or in one of the "local lists," but if the number of holders
of the Shares were to fall below 300, or if the number of publicly held Shares
were to fall below 100,000 or there were not at least two registered and active
market makers for the Shares, the NASD's rules provide that the Shares would no
longer be "qualified" for Nasdaq Stock Market reporting and The Nasdaq Stock
Market would cease to provide any quotations. Shares held directly or indirectly
by directors, officers or beneficial owners of more than 10% of the Shares are
not considered as being publicly held for this purpose. According to the
Company, as of December 16, 1997, there were approximately 36 holders of record
of Shares and 10,538,622 Shares were outstanding. If, as a result of the
purchase of Shares pursuant to the Offer, the Shares no longer meet the
requirements of the NASD for continued inclusion in The Nasdaq Stock Market or
the Nasdaq National Market, as the case may be, the market for Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for quotation through any tier of The Nasdaq Stock Market, it is possible that
the Shares would continue to trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Shares and the availability of such quotations would, however, depend
upon the number of holders of Shares remaining at such time, the interests in
maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to its stockholders and to
the Commission and would make certain provisions of the Exchange Act no longer
applicable to the Company, such as the short swing profit recovery provisions of
Section 16(b) of the Exchange Act, the requirement of furnishing a proxy
statement pursuant to Section 14(a) of the Exchange Act in connection with
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions. Furthermore, the ability of
"affiliates" of the Company and persons holding "restricted securities" of the
Company to dispose of such securities pursuant to Rule 144 or 144A promulgated
under the Securities Act of 1933, may be impaired or eliminated. The Purchaser
intends to seek to cause the Company to apply for termination of registration of
the Shares under the Exchange Act as soon after the completion of the Offer as
the requirements for such termination are met.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will cease to be reported on The Nasdaq Stock Market and the
registration of the Shares under the Exchange Act will be terminated following
the consummation of the Merger.
The Shares are currently "margin securities" under the regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend credit
on the collateral of the Shares. Depending upon factors similar to those
described above regarding listing and market quotations, it is possible that,
following the Offer, the Shares would no longer constitute "margin securities"
for the purposes of the margin regulations of the Federal Reserve Board and
therefore could no longer be used as collateral for loans made by brokers. If
registration of Shares under the Exchange Act were terminated, the Shares would
no longer be "margin securities" or be eligible for Nasdaq reporting.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Massachusetts corporation with its principal executive
offices at 75 October Hill Road, Holliston, Massachusetts 01746. According to
the Form 10-K, the Company is a national direct marketing wholesaler of medical
supplies and related products to the home health care industry. The Company
sells products to over 23,000 customers, including: (i) independent providers of
home health care products (principally home medical equipment dealers, home
health agencies and local and chain pharmacies); (ii) national home health care
chains and wholesalers; and (iii) Managed Care Organizations.
Set forth below is certain selected consolidated financial information with
respect to the Company excerpted or derived from the information contained in
the Form 10-K. More comprehensive financial information is
10
<PAGE> 13
included in such reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by reference
to such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information."
11
<PAGE> 14
SUBURBAN OSTOMY SUPPLY CO., INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------
AUGUST 30, 1997 AUGUST 31, 1996 SEPTEMBER 2, 1995
--------------- --------------- -----------------
<S> <C> <C> <C>
STATEMENT OF INCOME DATA
Net sales.................................... $94,440 $72,558 $52,667
Operating income............................. 8,502 6,909 4,777
Net income*.................................. 4,853 4,000 2,955
Net income per share*........................ .44 .37 .32
BALANCE SHEET DATA:
Total current assets......................... $21,884 $18,679 $12,601
Total assets................................. 41,124 33,130 13,832
Total current liabilities.................... 7,624 8,851 5,133
Total long-term liabilities.................. 28 34,888 21,865
Total stockholders' equity (deficit)......... 33,472 (18,046) (19,926)
</TABLE>
- ---------------
* These figures represent supplemental pro forma data. Prior to a
recapitalization on July 3, 1995, the Company elected to be taxed as a
Subchapter S corporation, and accordingly, was not subject to federal income
taxes and certain state income tax jurisdictions. Further, the Company repaid
various borrowings with a portion of the net proceeds from public offering of
the Company's Common Stock on October 10, 1996. Net income per share for the
years ended August 30, 1997 and August 31, 1996 have been calculated (1) as if
the Company had been subject to federal and state income taxes for 1996 and
(2) as if, at the beginning of the respective periods, the Company had sold,
at an offering price of $12.00 per share, shares of Company Common Stock
sufficient to fund a July 3, 1995 recapitalization and repay indebtedness
incurred in 1996 to finance the acquisitions of St. Louis Ostomy in January,
1996 and Patient-Care in June, 1996.
Available Information. The Company is subject to the reporting requirements
of the Exchange Act and, in accordance therewith, is required to file reports
and other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities of the
Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located in the Northwestern Atrium Center,
500 West Madison Street (Suite 1400), Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies should be obtainable,
by mail, upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission maintains a web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. Such reports, proxy and information statements and other
information may be found on the Commission's web site, the address of which is:
http://www.sec.gov. Such information should also be on file at The Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Parent do not have any
knowledge that any such information is untrue, neither the Purchaser nor Parent
takes any responsibility for the accuracy or completeness of such information or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information.
12
<PAGE> 15
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT
The Purchaser, a Massachusetts corporation and a wholly owned subsidiary of
the Parent, was recently organized in connection with the proposed acquisition
of the Company and has not carried on any unrelated activities to date other
than those incident to its formation.
The Parent is the leading home medical equipment manufacturer in the world
based upon its distribution channels, the breadth of its product line and sales.
The Parent designs, manufactures and distributes an extensive line of medical
equipment for the home health care and extended care markets. The Parent
continuously revises and expands its product lines to meet changing market
demands. Its products are sold principally to over 10,000 home health care and
medical equipment provider locations throughout the world. Products are sold
through its world-wide distribution network by its sales force, telemarketing
employees and various organizations of independent manufacturer's
representatives. The Parent also uses its extensive dealer network to distribute
medical equipment and related supplies manufactured by others.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history of each of the directors and
executive officers of the Purchaser and the Parent and certain other information
are set forth in Schedule I hereto.
Set forth below are certain selected consolidated financial data relating
to the Parent and its subsidiaries for the Parent's three fiscal years ending
December 31, 1996 which were derived from Parent's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, and for the nine-month periods
ending September 30, 1997 and 1996, which were derived from the Parent's
Quarterly Reports on Form 10-Q for the quarters ended September 30, 1997 and
September 30, 1996. More comprehensive financial information is included in such
documents (including management's discussion and analysis of financial condition
and results of operations) and other documents filed by Parent with the
Commission, and the following financial data is qualified in its entirety by
reference to such other documents including the financial information and
related notes contained therein. Such other documents may be examined and copies
thereof may be obtained from the offices of the Commission and the Nasdaq Stock
Market in the same manner as set forth with respect to Available Information
about the Company in Section 8.
INVACARE CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
--------------------- ----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net sales......................... $482,660 $451,776 $619,498 $504,032 $411,123
Income from operations............ (13,078) 44,943 65,393 54,144 43,736
Earnings before income taxes...... (15,391) 43,281 63,768 51,845 41,877
Income taxes...................... 4,380 (16,875) (24,850) (19,680) (15,500)
-------- -------- -------- -------- --------
Net earnings...................... $(11,011) $ 26,406 $ 38,918 $ 32,165 $ 26,377
======== ======== ======== ======== ========
Net earnings per share............ $ (0.36) $ 0.87 $ 1.28 $ 1.07 $ 0.89
Weighted average number of shares
outstanding for EPS
calculation.................... 30,355 30,387 30,393 30,077 29,696
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
--------------------- ----------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................... $137,602 $155,806 $160,952 $119,749 $112,768
Total assets...................... 503,685 488,082 509,628 408,750 338,109
Total liabilities................. 289,384 260,681 271,031 207,431 174,102
Total shareholders' equity........ 221,819 227,401 238,597 201,319 164,007
</TABLE>
Except as described in this Offer to Purchase and in Schedule I, none of
the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the
Parent, any of the persons listed on Schedule I hereto or any associate or
majority-owned subsidiary of the Purchaser, the Parent or any of the persons so
listed, beneficially owns or has a right to acquire directly or indirectly any
Shares, and none of the Purchaser, the Parent nor, to the best knowledge of the
Purchaser and the Parent, any of the persons or entities referred to above, or
any of the respective executive officers, directors or subsidiaries of any of
the foregoing, has effected any transactions in the Shares during the past 60
days.
Except as set forth in this Offer to Purchase, neither the Purchaser nor
the Parent nor, to the best knowledge of the Purchaser and the Parent, any of
the persons listed on Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including but not limited to contracts, arrangements,
understandings or relationships concerning the transfer or voting of such
securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, neither the Purchaser
nor the Parent nor, to the best knowledge of the Purchaser and the Parent, any
of the persons listed on Schedule I hereto, has had any business relationships
or transactions with the Company or any of its executive officers, directors or
affiliates that are required to be reported under the rules and regulations of
the Commission applicable to the Offer. Except as set forth in this Offer to
Purchase, there have been no contacts, negotiations or transactions between any
of the Parent, the Purchaser or, to the best knowledge of the Purchaser and the
Parent, any of the persons listed in Schedule I hereto, on the one hand, and the
Company or its affiliates, on the other hand, concerning a merger, consolidation
or acquisition, a tender offer or other acquisition of securities, an election
of directors, or a sale or other transfer of a material amount of assets.
10. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $135.3 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
a capital contribution which will be made by Parent and/or one or more of
Parent's wholly-owned subsidiaries to the Purchaser. Parent plans to obtain the
funds for such capital contribution from cash on hand and from its existing
credit agreement.
Parent and certain of its subsidiaries are parties to a five year Loan
Agreement dated November 18, 1997, with a group of lenders represented by NBD
Bank, as Agent and Keybank National Association, as Co-Agent (the "Loan
Agreement"). The Loan Agreement established a revolving credit facility
providing the Parent and its subsidiaries with a maximum availability (including
letters of credit) of $360 million. At December 17, 1997, Parent had
approximately $148 million outstanding and $212 million available for borrowing
under the Loan Agreement.
The Loan Agreement provides for revolving loans which bear interest, at the
option of Parent, at rates based on competitive bids of lenders participating in
such facilities, at a prime rate or at various interbank offered rates plus a
margin which varies from between 18.5 and 37.5 basis points depending on the
Parent's ratio of funded debt to total capitalization. The Revolving Credit
Facilities contain certain financial covenants as well as certain restrictions
on, among other things, liens, mergers, consolidations, liquidations,
dissolutions and sales of substantially all assets, and changes in the character
of business. The financial covenants require Parent to maintain minimum interest
coverage ratios, net worth levels and ratio of funded debt to total
capitalization. In connection with the Loan Agreement, Parent has agreed to pay
the Lenders certain fees and to reimburse the
14
<PAGE> 17
Lenders for certain expenses and to provide certain indemnities, as is customary
for commitments of the type described herein. The Parent is currently
negotiating with its Lenders to increase the maximum borrowing availability
under the Loan Agreement to $425 million.
It is anticipated that any indebtedness incurred by Parent under the Loan
Agreement will be repaid from funds generated internally by Parent and its
subsidiaries through additional borrowings, or through a combination of such
sources. No final decisions have been made concerning the method Parent will
employ to repay such indebtedness. Such decisions when made will be based on
Parent's review from time to time of the advisability of particular actions, as
well as on prevailing interest rates and financial and other economic
conditions.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER
Parent regularly explores and conducts discussions with regard to
acquisitions and other strategic corporate transactions. In August 1997, Parent
identified the Company as a potential acquisition candidate and Parent decided
to approach the Company regarding a possible strategic transaction.
In late August 1997, Thomas R. Miklich, Parent's Chief Financial Officer,
General Counsel, Treasurer and Secretary contacted Donald H. Benovitz, the
Company's President and Chief Operating Officer, and informed him of Parent's
interest in the Company. Mr. Benovitz indicated that the Company was
investigating methods to enhance stockholder value. The parties agreed that a
meeting would be appropriate and that the Company would contact the Parent to
schedule such a meeting.
Prior to the end of August 1997, Mr. Miklich was contacted by a
representative of Bear Stearns who indicated that Bear Stearns had been retained
by the Company to explore strategic alternatives to enhance stockholder value.
The Bear Stearns representative indicated that, among the alternatives to be
explored, was a potential sale of the Company. The Bear Stearns representative
agreed to set up a meeting with the Company's management. Parent agreed to
execute a Confidentiality Agreement prior to that meeting.
On September 5, 1997, Parent executed a Confidentiality Agreement with the
Company. On September 11, 1997, at the Company's executive offices in Holliston,
Massachusetts, A. Malachi Mixon III, the Parent's Chairman and Chief Executive
Officer, Mr. Miklich, Thomas J. Buckley, then the Parent's Group Vice-
President--Standard Products and Louis F. J. Slangen, the Parent's Senior Vice
President--Sales and Marketing met with Herbert P. Gray, the Company's Chairman
and Chief Executive Officer, Mr. Benovitz, Steven N. Aschettino, the Company's
Vice President and Chief Financial Officer, Patrick Bohan, the Company's Vice
President of Sales and Marketing and John Manos, the Company's Vice President of
MIS and discussed the benefits of a closer relationship between the two
companies. The parties discussed the possibility of Parent becoming a supplier
to the Company, as well as the potential benefits of a merger between Parent and
the Company.
Subsequent to this meeting, Parent was provided with certain information
concerning the Company. On October 3, 1997, Parent sent Bear Stearns a letter
outlining its preliminary indication of interest in acquiring the Company. The
letter included a discussion of Parent's preliminary views of the consideration
involved in such a transaction and identified the further steps that would be
required to finalize the terms and conditions of a formal acquisition proposal.
On October 29, 1997, Messrs. Buckley, Miklich and Slangen met with Messrs.
Gray, Benovitz, Bohan, Aschettino and a representative of Bear Stearns in
Boston. At that meeting, the parties reviewed the Company's results for fiscal
1997 and sales growth objectives for 1998 and 1999. A detailed discussion took
place regarding the strategies behind the Company's recent acquisitions, and the
parties also discussed the potential synergies associated with an acquisition of
the Company by Parent.
Subsequent to this meeting, Parent conducted further financial analysis
regarding the Company and the costs and synergies associated with an acquisition
of the Company. On November 4, 1997, Parent received a letter from Bear Stearns
on behalf of the Company requesting a formal proposal for the purchase of the
Company, and enclosing a preliminary draft form of Merger Agreement. In a
telephone conversation with a Bear Stearns representative on or about November
10, 1997, Mr. Miklich advised the representative that Parent would not be
15
<PAGE> 18
willing to submit an acquisition proposal containing terms within the requested
valuation range indicated by Bear Stearns.
On November 18, 1997, Mr. Miklich received a telephone call from a Bear
Stearns representative indicating that a proposal within a range of values
acceptable to Parent might be acceptable to the Company. Parent's Board of
Directors was meeting that day, and Parent reviewed its financial analysis of
the Company with its Board. Management recommended, and the Board approved, an
offer to acquire the Company for a cash purchase price of $11.75 per share. The
Board's decision was communicated to Bear Stearns and confirmed in a letter
dated November 20, 1997. Parent indicated to Bear Stearns that its proposal was
conditioned on an acceptable due diligence review and certain other conditions
including an appropriate termination fee.
On November 24, 1997, Parent and the Company executed a letter agreement
providing that, until December 15, 1997, the Company would negotiate exclusively
with Parent concerning a proposed sale of the Company. From time to time during
the course of the next several weeks, representatives of Parent and
representatives of the Company discussed valuation parameters of the Company and
continued to discuss generally the terms and conditions of a possible
transaction.
On December 1, 1997, Messrs. Mixon, Buckley, Miklich, Slangen and Gerald B.
Blouch, the President and Chief Operating Officer of Parent, met with Messrs.
Benovitz, Bohan, Gray, Aschettino and representatives of Bear Stearns in Boston
to conduct further due diligence. Beginning with that meeting, and continuing
through the date of the Merger Agreement, representatives of Parent, together
with Parent's legal counsel, accountants and other advisors conducted a due
diligence review at the offices of the Company's legal counsel and at the
Company's regional distribution facilities. During the same period, Parent's
legal counsel and the Company's legal counsel discussed structural issues
regarding the proposed acquisition, including Parent's requirement that there be
agreements along the lines of the Stockholders Agreement and Parent's
requirement that there be certain other provisions in the event of a termination
of the Merger Agreement (including the payment of a termination fee to Parent)
in connection with a competing transaction.
On December 8, 1997, Parent delivered a draft Merger Agreement to the
Company's legal counsel, and on December 11, 1997, Parent delivered a draft of
the Stockholders Agreement to the Company's legal counsel. Negotiations among
Parent and the Company and the Stockholders continued through December 16, 1997,
culminating in Parent and the Company agreeing upon a form of Merger Agreement
and Stockholders Agreement which were presented to and approved by the Company's
Board of Directors at a telephonic meeting held on December 16, 1997 and by
Parent's Board of Directors at a telephonic meeting also held December 16, 1997.
Following these approvals, the Merger Agreement and the Stockholders Agreement
were executed and delivered and the transaction was publicly announced on
December 17, 1997.
12. PURPOSE OF THE OFFER; THE MERGER, MERGER AGREEMENT AND OTHER TRANSACTION
AGREEMENTS
Purpose. The purpose of the Offer is to enable Parent to acquire control of
and the entire equity interest in the Company. Following the Offer, the
Purchaser and Parent intend to acquire any remaining equity interest in the
Company not acquired in the Offer by consummating the Merger.
THE MERGER AGREEMENT.
The Merger Agreement provides that following the satisfaction or waiver of
the conditions described below under "Conditions to the Merger," either: (i) in
the event that the Purchaser acquires less than 90% of the outstanding Shares
pursuant to the Offer, the Purchaser will be merged with and into the Company or
(ii) in the event that the Purchaser acquires 90% or more of the outstanding
Shares pursuant to the Offer, and Purchaser determines, in its sole discretion,
to use the "short form" merger procedure described below, the Company will be
merged with and into the Purchaser. In either case, upon consummation of the
Merger, each then outstanding Share (other than Shares owned by the Company or
by any direct or indirect subsidiary of the Company, including Purchaser, or by
stockholders, if any, who are entitled to and who properly exercise dissenters'
rights under Massachusetts law), will be converted into the right to receive an
amount in cash equal to the price per Share paid pursuant to the Offer.
16
<PAGE> 19
Vote Required to Approve Merger. The MGL requires, among other things, that
the adoption of any plan of merger or consolidation of the Company must be
approved by the Board of Directors of the Company and, if the "short form"
merger procedure described below is not available, by the holders of two-thirds
of the Company's outstanding Shares. The Board of Directors of the Company has
approved the Offer, the Merger and the Merger Agreement; consequently, the only
additional action of the Company that may be necessary to effect the Merger is
approval by such stockholders if the "short-form" merger procedure described
below is not available. Under the MGL, the affirmative vote of holders of
two-thirds of the outstanding Shares (including any Shares owned by the
Purchaser), is generally required to approve the Merger. If the Purchaser
acquires, through the Offer or otherwise, voting power with respect to at least
two-thirds of the outstanding Shares (which would be the case if the Minimum
Condition was satisfied and the Purchaser was to accept for payment Shares
tendered pursuant to the Offer), it would have sufficient voting power to effect
the Merger without the vote of any other stockholder of the Company. However,
the MGL also provides that if a parent company owns at least 90% of each class
of stock of a subsidiary, the parent company can effect a short-form merger with
that subsidiary merging into the Parent without the action of the other
stockholders of the subsidiary. Accordingly, if, as a result of the Offer or
otherwise, the Purchaser acquires or controls the voting power of at least 90%
of the outstanding Shares, the Purchaser is permitted to effect a merger of the
Company into Purchaser using the "short-form" merger procedures without prior
notice to, or any action by, any other stockholder of the Company. In such an
event, stockholders of the Company shall not be adversely affected thereby
(other than the right to receive the Proxy Statement, attend the Stockholders
Meeting and vote on the Merger, which shall no longer be applicable).
Conditions to the Merger. The Merger Agreement provides that the Merger is
subject to the satisfaction of certain conditions, including the following: (1)
if required by applicable law, the Merger Agreement having been approved and
adopted by the affirmative vote of holders of two-thirds of the outstanding
Shares, (2) the expiration or termination of the applicable waiting period under
the HSR Act; and (3) no temporary restraining order, preliminary or permanent
injunction or other order issued by any Federal, state or local government or
any court, administrative agency or commission or other governmental authority
(a "Governmental Entity") or other legal restraint or prohibition preventing or
prohibiting the acceptance for payment of or payment for Shares pursuant to the
Offer or the consummation of the Merger being in effect; provided, however, that
each of the parties shall have used their best efforts to have any such
injunction, order, restraint or prohibition or other order vacated.
Termination of the Merger Agreement. The Merger Agreement may be terminated
at any time prior to the effective time of the Merger (the "Effective Time"),
whether before or after approval by the stockholders of the Company (1) by
mutual written consent of the Purchaser and the Company; (2) by either the
Purchaser or the Company if any Governmental Entity shall have issued an order,
decree or ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree or ruling or other
action has become final and nonappealable or if any other legal restraint or
prohibition preventing or prohibiting the acceptance for payment of, or payment
for, Shares pursuant to the Offer or Merger shall be in effect and shall have
become final and non-appealable: (other than due to the failure of the party
seeking to terminate the Merger Agreement to perform its obligations thereunder
required to be performed at or prior to the Effective Time); (3) by the Company
if the Purchaser has not (a) commenced the Offer within five business days after
the initial public announcement of Parent's intention to commence the Offer or
(b) accepted for payment any Shares pursuant to the Offer prior to March 31,
1998 (other than due to the failure of the Company to perform its obligations
thereunder); (4) by the Purchaser in the event of a material breach or failure
to perform in any material respect by the Company of any representation,
warranty, covenant or other agreement contained in the Merger Agreement which
cannot be or has not been cured within 20 days after the giving of written
notice to the Company; (5) by the Company upon its execution, prior to the
Parent or the Purchaser's purchase of Shares pursuant to the Offer, of a binding
agreement with a third party with respect to a Transaction Proposal (as defined
below in "Transaction Proposals"), provided that it has complied with all
provisions of the Merger Agreement, including the notice provisions described in
"Transaction Proposals" below, and that it pays the Termination Fee (as defined
below) as provided in the terms of the Merger Agreement described below in "Fees
and Expenses"; (6) by the Company in the event of a material breach or failure
to perform in any material respect by the Purchaser or the Parent of any
representation, warranty, covenant or other agreement contained in the Merger
Agreement which cannot be or has not been cured within 20 days after the giving
of written notice to the Parent and the Purchaser; or (7) by the Purchaser if
the
17
<PAGE> 20
Purchaser terminates the Offer as a result of the occurrence of any event set
forth under "Certain Conditions of the Offer".
Transaction Proposals. The Merger Agreement provides that neither the
Company nor any of its subsidiaries, nor any of their respective officers,
directors, employees, representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or any of its subsidiaries) will directly or indirectly initiate,
solicit or knowingly encourage (including by way of furnishing non-public
information or assistance), or take any other action to facilitate knowingly,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to any Transaction Proposal (as defined below) or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain a Transaction Proposal or agree to or
endorse any Transaction Proposal or authorize or permit any of its officers,
directors, or employees of any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by any
of its subsidiaries to take any such action; provided, however, that if, at any
time prior to the acceptance for payment of Shares pursuant to the Offer, the
Board of Directors of the Company determines in good faith, after consultation
with their financial advisors and after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), that it is necessary to do so in order to comply
with its fiduciary duties to the Company's stockholders under applicable law,
the Company may, subject to compliance with the notification provisions
discussed below and the receipt of a confidentiality agreement containing terms
and provisions substantially similar to those contained in the confidentiality
agreement executed by the Company and Parent, (a) furnish information to or
enter into discussions or negotiations with any person or entity that makes an
unsolicited written, bona fide proposal, to acquire the Company and/or its
subsidiaries pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction in respect of
which such person or entity has the necessary funds or commitments therefor. The
Merger Agreement defines "Transaction Proposal" as any of the following (other
than the transactions between the Company and Purchaser contemplated by the
Offer and the Merger Agreement) involving the Company or any of its
subsidiaries: (i) any merger, consolidation, share exchange, recapitalization,
business combination, or other similar transaction; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 20% or more of the
assets of the Company and its subsidiaries, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for, or the acquisition (or right to acquire) of beneficial ownership by any
person, group or entity, other than a person, group or entity which has signed
the Stockholders' Agreement, of 20% or more of the outstanding Shares or the
filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing. The
Merger Agreement provides further that if a Transaction Proposal exists and the
Board of Directors of the Company, after consultation with their financial
advisors and after consultation with and based upon advice of independent legal
counsel ( who may be the Company's regularly engaged independent legal counsel)
determines in good faith that such action is necessary for the Board of
Directors to comply with its fiduciary duties to stockholders under applicable
law in connection with such Transaction Proposal, the Board of Directors of the
Company may, at any time prior to the acceptance for payment of Shares pursuant
to the Offer and subject to the notification requirements described below: (i)
withdraw or modify its recommendation of the Offer, the Merger or the Merger
Agreement and (ii) make to the Company's stockholders any recommendation and
related filing with the Commission as required by Rule 14e-2 and 14d-9 under the
Exchange Act with respect to any tender offer, or take any other legally
required action with respect to such tender offer (including, without
limitation, the making of public disclosures as may be necessary or reasonably
advisable under applicable securities laws).
The Merger Agreement obligates the Company to promptly advise the Purchaser
orally and in writing of any request for nonpublic information from, or
discussions or negotiations with, any person or entity or of any Transaction
Proposal known to it, the material terms and conditions of such request or
Transaction Proposal and the identity of the person or entity making such
request or Transaction Proposal, and to promptly inform the Purchaser of any
material change in the details of such request, the contents of any discussions
or negotiations or any material change in such Transaction Proposal. In
addition, neither the Board of Directors nor any committee thereof may take any
action with respect to the matters set forth in clauses (i) or (ii) of the last
sentence of the preceding paragraph until a time that is after the later of the
fourth business day following the Purchaser's receipt
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of written notice advising it that the Board of Directors of the Company has
received a Transaction Proposal, specifying the material terms thereof and
identifying the person making the same and, in the event of any amendment to the
price or any material term of a Transaction Proposal, two business days
following the Purchaser's receipt of written notice containing the material
terms of such amendment, including any change in price (it being understood that
each further amendment to the price or any material terms of a Transaction
Proposal will necessitate an additional written notice to Parent and an
additional two business day period prior to which the Company can take the
actions set forth in clauses (i) or (ii) the last sentence of the preceding
paragraph).
Fees and Expenses. The Merger Agreement provides that except as provided
below, all fees and expenses incurred in connection with the Offer, the Merger,
the Merger Agreement and the transactions contemplated by the Merger Agreement
will be paid by the party incurring such fees or expenses, whether or not the
Offer or the Merger is consummated. The Merger Agreement further provides that,
subject to the last sentence of this paragraph, the Company will pay to the
Purchaser the amount equal to 4.25% of the aggregate consideration to be paid
pursuant to the Merger Agreement (the "Termination Fee") if any person (other
than the Purchaser or any of its affiliates) has made, proposed, communicated or
disclosed a Transaction Proposal in a manner which is or otherwise becomes
public and the Merger Agreement is terminated: (1) by the Company in accordance
with the provisions described above in clause 5 of "Termination of the Merger
Agreement" or in accordance with the provisions described above in clause 3 of
"Termination of the Merger Agreement" if Purchaser's failure to accept Shares
for payment results from the failure of the Minimum Condition to be satisfied or
the occurrence of any of the events set forth in subparagraphs (c), (d) or (e)
of "Certain Conditions of the Offer" or (2) by the Purchaser in accordance with
the provisions described above in clause 4 of "Termination of the Merger
Agreement" or in accordance with the provisions described above in clause 7 of
"Termination of the Merger Agreement" if Purchaser's failure to accept Shares
for payment results from the failure of the Minimum Condition to be satisfied or
the occurrence of any of the events set forth in subparagraphs (c), (d) or (e)
of "Certain Conditions of the Offer." Notwithstanding the foregoing, the Merger
Agreement provides that no Termination Fee will be payable if such termination
is based upon the Company's breach of certain representations and warranties
relating to the absence of a Material Adverse Change (as defined) in its
business and the absence of any condition, event or occurrence which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect (as defined) on the Company or give rise to a Material
Adverse Change with respect to the Company.
The Merger Agreement defines the terms Material Adverse Change or Material
Adverse Effect to mean, when used in connection with the Company, any change or
effect that either individually or in the aggregate with all such other changes
or effects is materially adverse to the business, financial condition, prospects
or results of operations of the Company and its subsidiaries taken as a whole;
provided, however, that no Material Adverse Change or Material Adverse Effect
will be deemed to have occurred as a result solely of any one or more of: (i)
those matters described in a separate writing dated the date of the Merger
Agreement and specifically referencing the pertinent section of the Merger
Agreement delivered by the Company to Parent, (ii) general economic conditions
affecting generally the industry in which the Company competes and general
market conditions in the United States, or (iii) changes after the date of the
Merger Agreement in the relationship between the Company and any customer or
supplier, so long as any such change is not attributable to or does not arise
from a breach by the Company of any of its representations, warranties or
covenants contained in the Merger Agreement.
In addition, in connection with any termination of the Merger Agreement
under any circumstance in which the Termination Fee would be payable, the Merger
Agreement provides that the Company also will be obligated, simultaneously with
such termination, to reimburse the Purchaser for all out-of-pocket expenses and
fees in an aggregate amount not to exceed $1.5 million.
Conduct of Business by the Company. The Merger Agreement provides that
until the earlier of the Effective Time of the Merger Agreement and consummation
of the Offer, the Company will, and will cause its subsidiaries to, act and
carry on their respective businesses in the usual, regular and ordinary course
of business consistent with past practice and, to the extent consistent
therewith, use their respective reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, advertisers, distributors and others
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having business dealings with them and to preserve goodwill. Without limiting
the generality of the foregoing, during the period from the date of the Merger
Agreement until the earlier of the Effective Time of the Merger and consummation
of the Offer, the Company will not, and will not permit any of its subsidiaries
to, without Purchaser's prior written consent: (a) declare, set aside or pay any
dividends on, or make any other distributions in respect of, any of its capital
stock, (b) split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock (c) purchase, redeem or otherwise
acquire any shares of capital stock of the Company or any of its subsidiaries or
any other securities thereof or any rights, warrants or options to acquire any
such shares or other securities, except for the acquisition of shares of Company
Common Stock from holders of Company Stock Options in full or partial payment of
the exercise price payable by such holder upon exercise of Company Stock Options
outstanding on the date of the Merger Agreement; (d) authorize for issuance,
issue, deliver, sell, pledge or otherwise encumber any shares of its capital
stock or the capital stock of any of its subsidiaries, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible securities
or any other securities or equity equivalents (including without limitation
stock appreciation rights) (other than an increase in the number of shares
subject to the Stock Option Plan pursuant to existing contractual obligations
and the issuance of Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of the Merger Agreement and in accordance with
their present terms); (e) in the case of the Company, amend its Articles of
Organization, by-laws or other comparable charter or organizational documents;
(f) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the stock or assets of, or by any other
manner, any business or any corporation, partnership, joint venture, association
or other business organization or division thereof material to the Company; (g)
other than as specifically permitted by the Merger Agreement, sell, lease,
license, mortgage or otherwise encumber or subject to any Lien or otherwise
dispose of any of its properties or assets other than any such properties or
assets the value of which do not exceed $1.0 million individually and $3.0
million in the aggregate, except sales of inventory, in the ordinary course of
business consistent with past practice; (h) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
the Company or any of its Subsidiaries, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having the
economic effect of any of the foregoing, except for short-term borrowings and
for lease obligations, in each case incurred in the ordinary course of business
consistent with past practice; (i) make any loans, advances or capital
contributions to, or investments in, any other person, other than to the Company
or any direct or indirect wholly owned subsidiary of the Company (other than
certain immaterial ordinary course loans to employees); (j) pay, discharge or
satisfy any claims (including claims of stockholders), liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), except for the payment, discharge or satisfaction, (i) of
liabilities or obligations in the ordinary course of business consistent with
past practice or in accordance with their terms as in effect on the date hereof
or (ii) claims settled or compromised to the extent permitted under clause (n)
below, or waive, release, grant, or transfer any rights of material value or
modify or change in any material respect any existing license, lease, Permit,
contract or other document, other than in the ordinary course of business
consistent with past practice; (k) adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing such a liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or
reorganization; (1) enter into any new collective bargaining agreement; (m)
change any material accounting principle used by it; (n) settle or compromise
any litigation (whether or not commenced prior to the date of the Merger
Agreement) other than settlements or compromises of litigation where the amount
paid (after giving effect to insurance proceeds actually received) in settlement
or compromise is not material to the Company; or (o) authorize any of, or commit
or agree to take any of, the foregoing actions.
Board of Directors. The Merger Agreement provides that effective upon the
acceptance for payment by the Purchaser of Shares pursuant to the Offer such
that the Parent or the Purchaser shall own at least a majority of the Shares on
a fully diluted basis, the Parent will be entitled to designate the number of
Directors, rounded up to the next whole number, on the Company's Board of
Directors that equals the product of (i) the total number of directors on the
Company's Board of Directors (giving effect to the election of any additional
directors pursuant to this provision of the Merger Agreement) and (ii) the
percentage that the number of Shares owned by the
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Purchaser or the Buyer (including shares of Common Stock accepted for payment)
bears to the total number of shares of Common Stock outstanding, and the Company
will take all necessary action to cause the Parent's designees to be elected or
appointed to the Company's Board of Directors. The Merger Agreement also
provides that the Company will use its best efforts to cause individuals
designated by the Parent to constitute the same percentage as such individuals
represent on the Company's Board of Directors of each committee of the Board
(other than committees established to take action under the Merger Agreement),
each board of directors of each subsidiary of the Company and each committee of
each such board. The Company's obligations to appoint designees to the Board of
Directors are subject to Section 14(f) of the Exchange Act. The Company has
agreed to take all action required pursuant to Section 14(f) and Rule 14(f)-1 in
order to fulfill its obligations to appoint such directors, including mailing to
its stockholders the Information Statement containing the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder,
which Information Statement is attached as Appendix A to the Schedule 14D-9. The
Merger Agreement further provides that in the event that the Purchaser's
designees are elected to the Board of Directors of the Company, until the
effective time of the Merger the Board of Directors of the Company will have at
least two directors who are directors on the date of the Merger Agreement and
who are not officers of the Company or any of its subsidiaries ("Independent
Directors").
Stock Options and Bank Warrant. The Merger Agreement provides that as soon
as practicable following the date of the Merger Agreement, the Board of
Directors of the Company (or, if appropriate, any committee administering the
Company's stock plans) will adopt such resolutions or take such other actions if
any, as may be reasonably required to: (1) adjust the terms of all outstanding
options to purchase Company Common Stock (the "Company Stock Options") granted
under the Company's 1995 Stock Option Plan (the "Stock Option Plan"), whether
vested or unvested, as necessary to provide that, at the Effective Time, each
Stock Option outstanding immediately prior to the Effective Time will vest as a
consequence of the Merger and be canceled in exchange for a payment from the
Company after the Merger (subject to any applicable withholding taxes) equal to
the product of (a) the total number of shares of Company Common Stock subject to
such Company Stock Option and (b) the excess of $11.75 over the exercise price
per share of Company Common Stock subject to such Company Stock Option and
applicable withholding taxes, payable in cash immediately following the
Effective Time of the Merger; (2) cause the cancellation of an outstanding
warrant to purchase 86,180 shares of Company Common Stock (the "Bank Warrant")
by causing a "Redemption Event" as defined in the Bank Warrant to occur and
taking such other steps as may be necessary to cause such cancellation,
including making all payments required to be made in connection therewith.
Indemnification. The Merger Agreement provides that for six years after the
Effective Time of the Merger, the Company and the Parent will indemnify all
present and former directors or officers of the Company and its subsidiaries
("Indemnified Parties") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time of the Merger, whether asserted or claimed prior
to, at or after the Effective Time of the Merger, to the fullest extent as would
have been permitted in their respective articles of organization or by-laws
consistent with applicable law, to the extent such Costs have not been paid for
by insurance and shall, in connection with defending against any action for
which indemnification is available hereunder, reimburse such officers and
directors, from time to time upon receipt of sufficient supporting
documentation, for any reasonable costs and expenses reasonably incurred by such
officers and directors; provided that such reimbursement shall be conditioned
upon such officer's or director's agreement promptly to return such amounts to
the Company if a court of competent jurisdiction shall ultimately determine that
indemnification of such officer or director is prohibited by applicable law. The
Merger Agreement also provides that the Company will maintain for a period of
not less than six years from the Effective Time of the Merger, the Company's
current directors' and officers, insurance and indemnification policy (or a
policy providing substantially similar coverage) to the extent that it provides
coverage for events occurring prior to the Effective Time of the Merger (the
"D&O Insurance") for all persons who are directors and officers of the Company
on the date of the Merger Agreement; provided that the Company shall not be
required to spend as an annual premium for such D&O Insurance an amount in
excess of 150% of the annual premium paid for directors' and officers' insurance
in effect prior to the date of the Merger Agreement; and provided further that
the Company shall nevertheless be obligated to provide such coverage as may be
obtained for such amount. The
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indemnity provisions of the Merger Agreement are intended for the benefit of,
and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives. The Merger Agreement also obligates the Company, prior to the
expiration of the Offer, to obtain the termination of all rights under certain
existing Indemnification Agreements with its Directors and officers.
Reasonable Best Efforts. Upon the terms and subject to the conditions set
forth in the Merger Agreement, each of the parties has agreed to use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the Offer, the Merger and
the other transactions contemplated by the Merger Agreement. The Parent, the
Purchaser and the Company will use their reasonable best efforts and cooperate
with one another (i) in promptly determining whether any filings are required to
be made or consents, approvals, waivers, licenses, permits or authorizations are
required to be obtained (or, which if not obtained, would result in a breach or
violation, or an event of default, termination or acceleration of any agreement
or any put right under any agreement) under any applicable law or regulation or
from any governmental authorities or third parties, including parties to loan
agreements or other debt instruments, in connection with the transactions
contemplated by the Merger Agreement, including the Offer and the Merger and
(ii) in promptly making any such filings, in furnishing information required in
connection therewith and in timely seeking to obtain any such consents,
approvals, permits or authorizations. Notwithstanding the foregoing, or any
other covenant contained in the Merger Agreement, in connection with the receipt
of any necessary approvals under the HSR Act, neither the Company nor any of its
subsidiaries will be entitled to divest or hold separate or otherwise take or
commit to take any action that limits its freedom of action with respect to, or
its ability to retain, the Company or any of its subsidiaries or any material
portions thereof or any of the businesses, product lines, properties or assets
of the Company or any of its subsidiaries, without the Purchaser's prior written
consent. The Merger Agreement requires the Company to make, subject to the
condition that the transactions contemplated by the Merger Agreement actually
occur, any undertakings (including undertakings to make divestitures, provided,
in any case, that such divestitures need not themselves be effective or made
until after the transactions contemplated hereby actually occur) required in
order to comply with the antitrust requirements or laws of any governmental
entity, including the HSR Act, in connection with the transactions contemplated
by the Merger Agreement; provided that no such divestiture or undertaking may be
made unless acceptable to the Purchaser. Each of the parties has also agreed to
cooperate with each other in taking, or causing to be taken, all actions
necessary to delist the Shares from The Nasdaq National Market ("Nasdaq"),
provided that such delisting shall not be effective until after the Effective
Time of the Merger. The Merger Agreement also contains an acknowledgment by the
parties that it is the Purchaser's intent that the Shares following the Offer
and the Merger will not be quoted on Nasdaq or listed on any national securities
exchange.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties, including representations from the
Company to the Parent and the Purchaser with respect to, among other things, its
organization, subsidiaries, capitalization, authorization and validity of the
Merger Agreement, consents and approvals, public filings and financial
statements, undisclosed liabilities, conduct of business and absence of certain
adverse changes or events, litigation, labor matters, compliance with laws,
employee benefit plans, tax matters, employee benefit plans, environmental
matters, material contracts, brokers and finders, opinion of financial advisor,
recommendation of the Board of Directors, state takeover statutes, intellectual
property, related party transactions, permits, insurance policies, business
practices, relationships with suppliers and customers and product warranties.
Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that the affirmative vote of the majority of the Independent
Directors will be required to (i) amend or otherwise modify the Company's
Articles of Organization, (ii) approve any amendment, modification or waiver by
the Company of any provisions of the Merger Agreement or (iii) approve any other
action by the Company that materially and adversely affects the interests of the
stockholders of the Company (other than Purchaser and Parent) with respect to
the transactions contemplated hereby, including without limitation any actions
which would constitute a breach by the Company of its representations,
warranties or covenants contained in the Merger Agreement.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit (c) to
Purchaser's Tender Offer Statement on Schedule 14D-1 filed
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with the Commission on the date hereof (the "Schedule 14D-1"). The Merger
Agreement should be read in its entirety for a more complete description of the
matters summarized above.
STOCKHOLDERS AGREEMENT
The following is a summary of the material terms of the Stockholders
Agreement. This summary is qualified in its entirety by reference to the
Stockholders Agreement which is incorporated herein by reference and a copy of
which has been filed with the Commission as Exhibit (c)(3) to the Schedule
14D-1. The Stockholders Agreement may be examined and a copy of it may be
obtained at the place and in the manner set forth in Section 8.
Tender of Shares. In connection with the execution of the Merger Agreement,
Parent and the Purchaser entered into a Stockholders Agreement with the Selling
Stockholders. Upon the terms and subject to the conditions of such agreement,
each of the Selling Stockholders has agreed to validly tender (and not withdraw)
pursuant to and in accordance with the terms of the Offer, no later than the
fifteenth business day after commencement of the Offer, the number of Shares
owned beneficially by such Selling Stockholder. The Selling Stockholders
beneficially own an aggregate of 4,867,465 Shares directly and hold stock
options to purchase an aggregate of 310,000 additional Shares (which aggregate
number of Shares represent approximately 45% of the Company's Fully Diluted
Shares).
Provisions Concerning the Shares. The Selling Stockholders have agreed that
during the period commencing on the date of the Stockholders Agreement and
continuing until the first to occur of the Effective Time or the termination of
the Merger Agreement in accordance with its terms, at any meeting of the
Company's stockholders or in connection with any written consent of the
Company's stockholders, the Selling Stockholders will vote (or cause to be
voted) the Shares held of record or beneficially owned by each of such Selling
Stockholders: (i) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other actions contemplated by the Merger Agreement, and the Stockholders
Agreement and any actions required in furtherance thereof; and (ii) against any
Transaction Proposal and against any action or agreement that would impede,
frustrate, prevent or nullify the Stockholders Agreement or result in a breach
in any respect of any covenant, representation or warranty or any other
obligation or agreement of the Company under the Merger Agreement or which would
result in any of the conditions to the Offer or to the Merger not being
fulfilled. In addition, each of the Selling Stockholders has appointed Parent
and certain officers of Parent as proxies to vote such Selling Stockholder's
Shares or grant a consent or approval in respect of such Shares in favor of the
various transactions contemplated by the Merger Agreement and against any
Transaction Proposal. Each of the Selling Stockholders also has agreed not to
transfer such Selling Stockholder's Shares (other than to certain permitted
transferees who would be required, as a condition to any such transfer, to sign
a similar Stockholders Agreement) and not to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than Parent or any of its affiliates or representatives) concerning
any Transaction Proposal.
Other Covenants, Representations and Warranties. In connection with the
Stockholders Agreement, each of the Selling Stockholders made certain customary
representations and warranties, including with respect to (i) ownership of the
Shares, (ii) the Selling Stockholder's authority to enter into and perform its
or his obligations under the Stockholders Agreement, (iii) the absence of
conflicts and requisite governmental consents and approvals, and (iv) the
absence of encumbrances on and in respect of the Selling Stockholder's Shares.
Parent and the Purchaser have made certain representations and warranties with
respect to Parent and the Purchaser's authority to enter into the Stockholders
Agreement and the absence of conflicts and requisite governmental consents and
approvals.
CONFIDENTIALITY AGREEMENT
Pursuant to a confidentiality agreement dated September 5, 1997 (the
Confidentiality Agreement) between the Parent and Bear Stearns acting on behalf
of the Company, the Company agreed to supply Parent with certain information
relating to the Company (the "Information") for the purpose of facilitating
Parent's evaluation and/or implementation of a possible transaction between
Parent and the Company and/or its stockholders. For its
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part, the Parent agreed to keep the Information confidential, and not, without
the prior written consent of the Company, disclose the Information to any
outside persons, or use the Information for any purpose other than to evaluate a
potential transaction. In addition, the Parent agreed not to disclose the fact
that the Information was made available to it, the existence of any discussions
or negotiations concerning a potential transaction, or any of the terms,
conditions or other facts with respect to a potential transaction. For a period
of two years following the execution of the Confidentiality Agreement, the
Parent and its affiliates agreed not to, without the prior written authorization
of the Board of Directors of the Company: (i) acquire or agree to acquire or
make any proposal to acquire, in any manner, any securities or property of the
Company or its affiliates; (ii) assist, advise or encourage any other persons to
acquire or agree to acquire, in any manner, any securities or property of the
Company or its affiliates; (iii) solicit proxies of the Company's stockholders,
or form, join or in any way participate in a proxy group; (iv) seek any
modification to or waiver of its obligations under the Confidentiality
Agreement; or (v) make any public announcement with respect to the foregoing,
except as may be required by applicable law or regulatory authorities. Pursuant
to the Merger Agreement, all obligations of Parent and its affiliates under the
Confidentiality Agreement were terminated except for the obligation to hold any
nonpublic information concerning the Company in confidence.
The foregoing summary of the Confidentiality Agreement is qualified in its
entirety by reference to the text of the Confidentiality Agreement, a copy of
which is filed as an exhibit the Schedule 14D-1 of the Purchaser and Parent
filed with the Commission in connection with the Offer, and is incorporated
herein by reference and may be inspected in the same manner as set forth in
Section 8.
APPRAISAL RIGHTS
Holders of Shares do not have dissenters' rights as a result of the Offer.
However, if the Merger is consummated, holders of Shares will have certain
rights pursuant to the provisions of Chapter 156B of the MGL to dissent and
demand appraisal of, and to receive payment in cash of the fair value of, their
Shares. If the statutory procedures were complied with, such rights could lead
to a judicial determination of the fair value required to be paid in cash to
such dissenting holders for their Shares. Any such judicial determination of the
fair value of Shares could be based upon considerations other than or in
addition to the Offer Price or the market value of the Shares, including asset
values and the investment value of the Shares. The value so determined could be
more or less than the Offer Price or the Merger Consideration.
If any holder of Shares who demands appraisal under Chapter 156B of the MGL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the MGL, the Shares of such stockholder will be converted into the
Merger Consideration in accordance with the Merger Agreement. A stockholder may
withdraw his demand for appraisal by delivery to Parent of a written withdrawal
of his demand for appraisal and acceptance of the Merger.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the MGL and is qualified in its entirety by the full text
of Chapter 156B of the MCL.
FAILURE TO FOLLOW THE STEPS REQUIRED BY CHAPTER 156B OF THE MGL FOR
PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS.
GOING PRIVATE TRANSACTIONS
The Merger would have to comply with any applicable Federal law operative
at the time of its consummation. Rule 13e-3 under the Exchange Act is applicable
to certain "going private" transactions. The Purchaser does not believe that
Rule 13e-3 will be applicable to the Merger unless the Merger is consummated
more than one year after the termination of the Offer. If applicable, Rule 13e-3
would require, among other things, that certain financial information concerning
the Company and certain information relating to the fairness of the Merger and
the consideration offered to minority stockholders be filed with the Commission
and disclosed to minority stockholders prior to consummation of the Merger.
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<PAGE> 27
OTHER MATTERS
The Purchaser or an affiliate of the Purchaser may, following the
consummation or termination of the Offer, seek to acquire additional Shares
through open market purchases, privately negotiated transactions, a tender offer
or exchange offer or otherwise, upon such terms and at such prices as it shall
determine, which may be more or less than the price to be paid pursuant to the
Offer. The Purchaser and its affiliates also reserve the right to dispose of any
or all Shares acquired by them. Except as otherwise described in this Offer to
Purchase, the Purchaser and Parent have no current plans or proposals that would
relate to, or result in, any extraordinary corporate transaction involving the
Company or any of its subsidiaries, such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries, a sale or transfer
of a material amount of assets of the Company or any of its subsidiaries, any
change in the present Board of Directors of the Company or management of the
Company, any material change in the Company's capitalization or dividend policy
or any other material change in the Company's business, corporate structure or
personnel.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Parent of any of
its rights under the Merger Agreement or a limitation of remedies available to
the Purchaser or Parent for any breach of the Merger Agreement, including
termination thereof.
The Offer Price will automatically be adjusted appropriately in connection
with any stock dividend, split or any conversion or reclassification in respect
of the Company Common Stock occurring after the date of the Merger Agreement and
prior to the date of consummation of the Offer.
If, on or after the date of the Merger Agreement, the Company should (1)
acquire currently outstanding Shares or otherwise cause a reduction in the
number of outstanding Shares or (2) issue or sell additional Shares, shares of
any other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, to acquire any of the
foregoing, other than Shares issued pursuant to the exercise of Stock Options
outstanding as of the date of the Merger Agreement, then, subject to the
provisions of Section 14 below, the Purchaser, in its sole discretion, may make
such adjustments as it deems appropriate in the Offer Price and other terms of
the Offer, including without limitation the number or type of securities offered
to be purchased.
If, on or after the date of the Merger Agreement, the Company should
declare or pay any cash dividend on the Shares or other distribution on the
Shares, or issue with respect to the Shares any additional Shares, shares of any
other class of capital stock, other voting securities or any securities
convertible into, or rights, warrants or options, conditional or otherwise, to
acquire, any of the foregoing, payable or distributable to stockholders of
record on a date prior to the transfer of the Shares purchased pursuant to the
Offer to the Purchaser or its nominee or transferee on the Company's stock
transfer records, then, subject to the provisions of Section 14 below, (1) the
Offer Price may, in the sole discretion of the Purchaser, be reduced by the
amount of any such cash dividend or cash distribution and (2) the whole of any
such noncash dividend, distribution or issuance to be received by the tendering
stockholders will (a) be received and held by the tendering stockholders for the
account of the Purchaser and will be required to be promptly remitted and
transferred by each tendering stockholder to the Depositary for the account of
the Purchaser, accompanied by appropriate documentation of transfer, or (b) at
the direction of the Purchaser, be exercised for the benefit of the Purchaser,
in which case the proceeds of such exercise will promptly be remitted to the
Purchaser. Pending such remittance and subject to applicable law, the Purchaser
will be entitled to all rights and privileges as owner of any such noncash
dividend, distribution, issuance or proceeds and may withhold the entire Offer
Price or deduct from the Offer Price the amount or value thereof, as determined
by the Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or the Merger Agreement,
and subject to any applicable rules and regulations of the Commission, including
Rule 14e-1(c) relating to Purchaser's obligation to pay for or return tendered
shares after termination of the Offer, Purchaser shall not be required to accept
for payment or pay for any shares of Company Common Stock tendered pursuant to
the Offer and may terminate the Offer at any time after January 31, 1998, if (i)
the Minimum Condition has not been satisfied; (ii) any applicable waiting
25
<PAGE> 28
period under the HSR Act has not expired or terminated; or (iii) at any time
after the date of the Merger Agreement, and before acceptance for payment of any
shares of Company Common Stock, any of the following events shall occur and be
continuing:
(a) there shall be instituted or pending by any Governmental Entity
any suit, action or proceeding (i) challenging the acquisition by Parent or
Purchaser of any Shares under the Offer, or seeking to restrain or prohibit
the making or consummation of the Offer or the Merger, (ii) seeking to
prohibit or materially limit the ownership or operation by the Company,
Parent or any of Parent's subsidiaries of a material portion of the
business or assets of the Company or Parent and its subsidiaries, taken as
a whole, or to compel the Company or Parent to dispose of or hold separate
any material portion of the business or assets of the Company or Parent and
its subsidiaries, taken as a whole, in each case as a result of the Offer
or the Merger or (iii) seeking to impose material limitations on the
ability of Parent or Purchaser to acquire or hold, or exercise full rights
of ownership of, any Shares to be accepted for payment pursuant to the
Offer including, without limitation, the right to vote such Shares on all
matters properly presented to the stockholders of the Company or (iv)
seeking to prohibit Parent or any of its subsidiaries from effectively
controlling in any material respect any material portion of the business or
operations of the Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, by any Governmental Entity or court, other than
the application to the Offer or the Merger of applicable waiting periods
under the HSR Act, that would result in any of the consequences referred to
in clauses (i) through (iv) of paragraph (a) above;
(c) any of the representations and warranties of the Company and its
subsidiaries contained in the Merger Agreement shall not be true and
correct at and as of the date of consummation of the Offer (except to the
extent such representations and warranties speak to an earlier date), in
each case except as contemplated or permitted by the Merger Agreement and
except, in the case of any such breach would not have individually or in
the aggregate, a Material Adverse Effect with respect to the Company or
materially affect the ability of the Company to consummate the Merger or
the Purchaser to accept for payment or pay for Shares pursuant to the
Offer;
(d) the Company shall have failed to perform the obligations required
to be performed by it under the Merger Agreement at or prior to the date of
expiration of the Offer, including but not limited to its obligations
described in Section 12 under the caption "Transaction Proposals" (except
for such failures to perform as have not had or would not individually or
in the aggregate, have a Material Adverse Effect with respect to the
Company or materially adversely affect the ability of the Company to
consummate the Merger or the Purchaser to accept for payment or pay for
Shares of Company Common Stock pursuant to the Offer);
(e) the Board of Directors of the Company or any committee thereof
shall have (i) withdrawn, modified or amended in any respect adverse to
Parent or Purchaser its approval or recommendation of the Offer or the
Merger, (ii) recommended or approved any Transaction Proposal from a person
other than Parent, Purchaser or any of their respective affiliates, (iii)
failed to publicly announce, within ten (10) business days after the
occurrence of a Transaction Proposal, its opposition to such Transaction
Proposal, or amended, modified or withdrawn its opposition to any
Transaction Proposal in any manner adverse to Parent or Purchaser or (iv)
resolved to do any of the foregoing;
(f) the Merger Agreement shall have been terminated in accordance with
its terms; or
which, in the good faith judgment of Parent or Purchaser, in its sole
discretion, make it inadvisable to proceed with such acceptance of shares of
Company Common Stock for payment or the payment therefor.
The Merger Agreement provides that the foregoing conditions may, subject to
the terms of the Merger Agreement, be waived by Parent and the Purchaser in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right, the waiver of any such
right with respect to particular facts and circumstances will not be deemed a
waiver with respect to any other facts and circumstances and each such right
will be deemed an ongoing right that may be asserted at any time and from time
to time.
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<PAGE> 29
15. CERTAIN LEGAL MATTERS
Based on a review of publicly available filings made by the Company with
the Commission and other publicly available information concerning the Company,
neither the Purchaser nor Parent is aware of any license or regulatory permit
that appears to be material to the business of the Company and its subsidiaries,
taken as a whole, that might be adversely affected by the Purchaser's
acquisition of Shares as contemplated herein or of any approval or other action,
except as otherwise described in this Section 15, by any Governmental Entity
that would be required for the acquisition or ownership of Shares by the
Purchaser as contemplated herein. Should any such approval or other action be
required, the Purchaser and Parent currently contemplate that such approval or
other action will be sought, except as described below under "State Takeover
Laws." While, except as otherwise expressly described in this Section 15, the
Purchaser does not presently intend to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial conditions
or that failure to obtain any such approval or other action might not result in
consequences adverse to the Company's business or that certain parts of the
Company's business might not have to be disposed of if such approvals were not
obtained or such other actions were not taken or in order to obtain any such
approval or other action. If certain types of adverse action are taken with
respect to the matters discussed below, the Purchaser could decline to accept
for payment or pay for any Shares tendered. See Section 14 for certain
conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, stockholders, executive offices or places or business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law, and, in particular, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders; provided that such laws were applicable
only under certain conditions.
Chapter 110F of the MGL limits the ability of a Massachusetts corporation
to engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 5% or more of the outstanding voting stock
of the corporation) unless, among other things, the corporation's board of
directors has given its prior approval to either the business combination or the
transaction which resulted in the stockholder becoming an "interested
stockholder." The Company's Board of Directors has approved the Merger Agreement
and the Purchaser's acquisition of Shares pursuant to the Offer and, therefore,
Chapter 110F of the MGL is inapplicable to the Offer and the Merger.
Under Chapter 110D of the MGL, entitled "Regulation of Control Shares
Acquisitions," any stockholder of a corporation subject to this statute who
acquires 20% or more of the outstanding voting stock of a Massachusetts
corporation may not vote such stock unless the stockholders holding a majority
of the outstanding voting stock (excluding the interested shares) of the
corporation so authorize. The Company's Board of Directors has approved the
Merger Agreement and the Purchaser's acquisition of Shares pursuant to the Offer
and, therefore, Chapter 110D of the MGL is inapplicable to the Offer and the
Merger.
Based on information supplied by the Company, the Purchaser does not
believe that any state takeover statutes purport to apply to the Offer or the
Merger. Neither the Purchaser nor Parent has currently complied with any state
takeover statute or regulation. The Purchaser reserves the right to challenge
the applicability or validity of any state law purportedly applicable to the
Offer or the Merger and nothing in this Offer to Purchase or any action taken in
connection with the Offer or the Merger is intended as a waiver of such right.
If it is asserted that any state takeover statute is applicable to the Offer or
the Merger and if an appropriate court does not determine that it is
inapplicable or invalid as applied to the Offer or the Merger, the Purchaser
might be required to file certain information with, or to receive approvals
from, the relevant state authorities, and the Purchaser might be unable to
accept for payment or pay for Shares tendered pursuant to the Offer, or be
delayed in consummating the
27
<PAGE> 30
Offer or the Merger. In such case, the Purchaser may not be obliged to accept
for payment or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
purchase of Shares under the Offer may be consummated following the expiration
of a 15-calendar day waiting period following the filing by Parent of a
Notification and Report Form with respect to the Offer, unless Parent receives a
request for additional information or documentary material from the Antitrust
Division or the FTC or unless early termination of the waiting period is
granted. Parent is in the process of making such filing. If, within the initial
15-day waiting period, either the Antitrust Division or the FTC requests
additional information or material from Parent concerning the Offer, the waiting
period will be extended and would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of compliance by Parent with such request.
Only one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may be
extended only by court order or with the consent of Parent. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant governmental agency
concerning possible means of addressing those issues and may agree to delay
consummation of the transaction while such negotiations continue.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's purchase of Shares
pursuant to the Offer, the Antitrust Division or FTC could take such action
under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of Parent or
its subsidiaries, or the Company or its subsidiaries. Private parties may also
bring legal action under the antitrust laws under certain circumstances. There
can be no assurance that a challenge to the Offer on antitrust grounds will not
be made or, if such a challenge is made, of the results thereof.
16. FEES AND EXPENSES
Wheat First has been engaged by Parent as its financial advisor to perform
financial advisory services in connection with the Offer and the acquisition of
the Company for which services it received customary compensation. In the
ordinary course of Wheat First's securities business, Wheat First actively
trades the shares of the Company for its own account and the accounts of its
customers, and Wheat First may therefore from time to time hold a long or short
position in such securities. Additionally, Wheat First served as a managing
underwriter for the Company's initial public offering in October 1996 for which
it received customary compensation.
The Purchaser has retained Wheat First to act as Dealer Manager, MacKenzie
Partners, Inc. to act as the Information Agent and First Chicago Trust Company
of New York to act as the Depositary in connection with the Offer. The Dealer
Manager and the Information Agent may contact holders of Shares by mail,
telephone, telex, telegraph and personal interview and may request brokers,
dealers, commercial banks, trust companies and other nominees to forward
materials relating to the Offer to beneficial owners. The Dealer Manager, the
Information Agent and the Depositary each will receive reasonable and customary
compensation for their services, will be reimbursed for certain reasonable
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection therewith, including certain liabilities under the
federal securities laws.
Except as set forth herein, neither Parent nor the Purchaser will pay any
fees or commissions to any broker or dealer or other person (other than to the
Dealer Manager and the Information Agent) for soliciting tenders of Shares
pursuant to the Offer. Brokers, dealers, commercial banks and trust companies
will be reimbursed by the Purchaser for reasonable expenses incurred by them in
forwarding material to their customers.
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<PAGE> 31
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. None of the Purchaser or Parent is aware of any jurisdiction in
which the making of the Offer or the tender of Shares in connection therewith
would not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to holders of Shares prior to the expiration
of the Offer. In those jurisdictions where securities or blue sky laws require
the Offer to be made by a licensed broker or dealer, the Offer is being made on
behalf of the Purchaser by the Dealer Manager or one or more registered brokers
or dealers which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser or Parent has filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional
information with respect to the Offer. In addition, the Company has filed with
the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act
setting forth its recommendation with respect to the Offer and the reasons for
such recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Sections 8 and 9 (except that they will not be available at the regional offices
of the Commission).
December 22, 1997
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<PAGE> 32
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND THE PARENT
1. Directors and Executive Officers of the Purchaser. The name and position
with the Purchaser of each director and executive officer of the Purchaser are
set forth below. The other required information with respect to each such person
is set forth under "Directors and Executive Officers of the Parent" below. All
directors and executive officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
NAME POSITION
<S> <C>
- --------------------------------------------
A. Malachi Mixon, III Director
Thomas R. Miklich Director and Treasurer
Gerald B. Blouch President and Director
Thomas J. Buckley Clerk
</TABLE>
2. Directors and Executive Officers of the Parent. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of the Parent and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is c/o Invacare Corporation, One Invacare Way, Elyria, OH
44036. Unless otherwise indicated, each occupation set forth opposite an
individual's name refers to employment with the Parent. All directors and
executive officers listed below are citizens of the United States.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS,
POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE
NAME AND ADDRESS YEARS
- ------------------------------
<S> <C>
A. Malachi Mixon, III......... A. Malachi Mixon, III, has been Chief Executive Officer and a
Director of the Company since 1979 and Chairman of the Board
since 1983. Mr. Mixon also served as President from 1979 until
November of 1996. Mr. Mixon also serves as a Director of The
Lamson & Sessions Co., Cleveland, Ohio, a New York Stock
Exchange listed company and a supplier of engineered
thermoplastic products, The Sherwin-Williams Company,
Cleveland, Ohio, a New York Stock Exchange listed company and
a manufacturer and distributor of coatings and related
products, NCS HealthCare, Inc., a Nasdaq listed company and a
provider of pharmacy services to long term care institutions
and PRIMUS, a Cleveland-based venture capital company. Mr.
Mixon also serves as Chairman of the Board of The Cleveland
Clinic Foundation, Cleveland, Ohio, one of the world's leading
teaching and health care institutions.
Frank B. Carr................. Frank B. Carr has been a Director since 1982. Since 1983 Mr.
Carr has been a Managing Director of McDonald & Company
Securities, Inc., Cleveland, Ohio, an investment banking and
brokerage firm, and a partner in its predecessor firm
(McDonald & Company) since 1968. Mr. Carr also serves as a
Director of Preformed Line Products Company, Cleveland, Ohio,
a supplier of supports and connectors for electric power and
communications lines.
Michael F. Delaney............ Michael F. Delaney has been a Director since 1986. From 1992
to the present, Mr. Delaney has been the Associate Director of
Development of the Paralyzed Veterans of America, 801 18th
Street, N.W. Washington, D.C. 20006
</TABLE>
I-1
<PAGE> 33
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS,
POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE
NAME AND ADDRESS YEARS
- ------------------------------
<S> <C>
Dr. Bernadine P. Healy........ Dr. Bernadine P. Healy has been a Director since 1996. From
1995 to the present, Dr. Healy has been the Dean of the
College of Medicine and Professor of Medicine at The Ohio
State University, Columbus, Ohio. From 1994 to 1995, Dr. Healy
served as Senior Policy Advisor of the Page Center for Health
and Science Policy Studies at The Cleveland Clinic Foundation,
Cleveland, Ohio and from 1991 to 1993 served as Director of
the National Institutes of Health in Bethesda, Maryland. From
1985 to 1991, Dr. Healy served as the Chairman of the Research
Institute of The Cleveland Clinic Foundation, Cleveland, Ohio.
Dr. Healy also serves as Trustee of the Battelle Memorial
Institute in Columbus, Ohio. Dr. Healy also serves as a
director of Medtronic, Inc. a New York Stock Exchange listed
Company and producer of cardiac pacemakers and on the Board of
National City Corporation, Cleveland, Ohio, a New York Stock
Exchange listed company and a bank holding company.
Francis J. Callahan, Jr....... Francis J. Callahan, Jr., has been a Director since 1980. From
1958 to the present, Mr. Callahan has been President of
Crawford Fitting Company, Cleveland, Ohio, a manufacturer of
tube fittings and valves. Mr. Callahan also serves as a
Trustee of The Cleveland Clinic Foundation, Cleveland, Ohio.
Whitney Evans................. Whitney Evans has been a Director since 1980. From 1980 to the
present, Mr. Evans has been a private investor. From 1983 to
1997, Mr. Evans was an officer and a Director of Pine Tree
Investments, Inc., Cleveland, Ohio, a business and real estate
investment firm. From 1987 to 1995, Mr. Evans served as
President of Harmony Group, Sonoma, California, a consultant
to non-profit organizations.
Dan T. Moore, III............. Dan T. Moore, III has been a Director since 1980. Since 1993,
Mr. Moore has served as President of Perfect Impression, 12801
Coit Road Cleveland, OH 44108, a manufacturer of a polymer
footbed that molds to the exact contours of the foot using a
brief microwave heating system. Since 1993, Mr. Moore has
served as Managing Partner of Whiskey Island Partners, which
is developing a marina complex on 35 acres of land on
Cleveland's Lakefront. Since March 1993, Mr. Moore has been
Chairman and Treasurer of Advanced Ceramics Corporation, a
closely-held manufacturer of industrial ceramic products. From
1979 to the present, Mr. Moore has been President of Dan T.
Moore Co., Cleveland, Ohio. Since 1988, Mr. Moore also has
served as Chairman of Soundwich, Inc., Cleveland, Ohio, a
closely-held company that produces polymers for damping sheet
metal engine components and since 1985 has served as Chairman
of Flow Polymers, Inc., a manufacturer of homogenizing aids
for rubber tire compounds. Mr. Moore is also a trustee of the
Cleveland Clinic Foundation, Cleveland, Ohio.
</TABLE>
I-2
<PAGE> 34
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS,
POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE
NAME AND ADDRESS YEARS
- ------------------------------
<S> <C>
Joseph B. Richey, II.......... Joseph B. Richey, II has been a Director since 1980. In 1992
he was named President-Invacare Technologies and Senior Vice
President-Total Quality Management. From 1989 to 1992, he was
Senior Vice President and General Manager--North American
Operations and was Senior Vice President and General
Manager--Rehabilitation and Laboratory Division from 1984 to
1989. Mr. Richey also serves as a Director of Steris
Corporation, Cleveland, Ohio, a Nasdaq listed manufacturer and
distributor of medical sterilizing equipment, a Director of
Royal Appliance Manufacturing Co., Cleveland, Ohio, a New York
Stock Exchange listed manufacturer of vacuum cleaners, and a
Director of Unique Mobility Inc., Golden, Colorado, an
American Stock Exchange listed engineering concern and
manufacturer of high efficiency permanent magnet motors and
electronic controls.
William M. Weber.............. William M. Weber has been a Director since 1988. In 1994, Mr.
Weber became President of Roundcap L.L.C. and a principal of
Roundwood Capital, a partnership that invests in public and
private companies. From 1968 to 1994, Mr. Weber was President
of Weber, Wood, Medinger, Inc., Cleveland, Ohio, a commercial
real estate brokerage and consulting firm.
Gerald B. Blouch.............. Gerald B. Blouch was named President in November 1996 and has
been Chief Operating Officer since December 1994 and
Chairman--Invacare International since December 1993.
Previously, Mr. Blouch was President--Home Care Division from
March 1994 to December 1994 and Senior Vice President--Home
Care Division from September 1992 to March 1994. Mr. Blouch
served as Chief Financial Officer from May 1990 to May 1993
and Treasurer from March 1991 to May 1993.
Thomas R. Miklich............. Thomas R. Miklich has been Chief Financial Officer, General
Counsel and Treasurer since May 1993 and in September 1993 was
named Secretary. Previously, Mr. Miklich was Executive Vice
President and Chief Financial Officer of Van Dorn Company from
1991 to 1993, and Chief Financial Officer of The
Sherwin-Williams Company from 1986 to 1991.
Louis F. J. Slangen........... Louis F. J. Slangen was named Senior Vice President--Sales &
Marketing in December 1994 and from September 1989 to December
1994 was Vice President--Sales and Marketing. Mr. Slangen was
previously Vice President and General Manager--Rehab Division
from 1992 to 1994.
M. Louis Tabickman............ M. Louis Tabickman was named Senior Vice
President--Respiratory Group in November 1997. Mr. Tabickman
was previously served as Group Vice President--Rehab Products
from August 1995 to November 1997. Mr. Tabickman has been an
officer since July 1985 and was named President--Invacare
Canada in March, 1994. Previously, Mr. Tabickman was Vice
President & General Manager--Power Business Unit from December
1994 to August 1995, Vice President and General Manager--
Invacare Canada from September 1992 to March 1994 and Vice
President and General Manager of Service and Distribution from
July 1985 until September 1992.
</TABLE>
I-3
<PAGE> 35
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL
OCCUPATIONS,
POSITIONS, OFFICES OR EMPLOYMENT HELD DURING THE LAST FIVE
NAME AND ADDRESS YEARS
- ------------------------------
<S> <C>
Thomas J. Buckley............. Thomas J. Buckley was named Senior Vice President, Continuing
Care & Distributed Products Group in November 1997. Mr.
Buckley was previously Group Vice President -- Standard
Products from August 1995 to November 1997, and General
Manager of Manual Wheelchairs from December 1994 to August
1995. From November 1993 to December 1994 Mr. Buckley was the
Business Unit Leader of the Bed Products and Pressure Relief
Business Units. Before this period, Mr. Buckley served as
Director of Distribution.
Larry E. Steward.............. Larry E. Steward was named Corporate Vice President of Human
Resources in April, 1997. Mr. Steward joined Invacare in April
1996, where his most recent position was director of Human
Resources -- Rehab Group. From November 1991 until joining
Invacare, Mr. Steward served as Manager -- Human Resources
Direct Hot Charge Complex at LTV Steel Company's Cleveland
Works in Cleveland, Ohio.
</TABLE>
I-4
<PAGE> 36
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand: By Mail: By Overnight Courier:
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
c/o The Depository Trust Company Suite 4660-505 Suite 4680-505
55 Water Street P.O. Box 2569 14 Wall Street-8th Floor
DTC TAD Jersey City, NJ 07303-2569 New York, NY 10005
Vietnam Veterans Memorial Plaza
New York, NY 10041
</TABLE>
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained
from the Information Agent. You may also contact your broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE LOGO
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or
Call Toll-Free: (800) 322-2885
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza, West Tower
901 East Byrd Street
Richmond, VA 23219
(800) 532-2916
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
SUBURBAN OSTOMY SUPPLY CO., INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 22, 1997
BY
INVA ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
INVACARE CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 22, 1998, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Hand: By Mail: By Overnight Courier:
Tenders & Exchanges Tenders & Exchanges Tenders & Exchanges
c/o The Depository Trust Company Suite 4660 -- SOS Suite 4680 -- SOS
55 Water Street P.O. Box 2569 14 Wall Street -- 8th Floor
DTC TAD Jersey City, NJ 07303-2569 New York, NY 10005
Vietnam Veterans Memorial Plaza
New York, NY 10041
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
This Letter of Transmittal is to be completed by stockholders if
certificates are to be forwarded herewith or, unless an Agent's Message (as
defined in Section 2 of the Offer to Purchase (as defined below)) is utilized,
if tenders of Shares are to be made by book-entry transfer into the account of
First Chicago Trust Company of New York, as Depositary (the "Depositary"), at
The Depository Trust Company ("DTC") (the "Book-Entry Transfer Facility" )
pursuant to the book-entry procedures set forth in Section 2 of the Offer to
Purchase (as defined below). Stockholders who tender Shares by book-entry
transfer are referred to herein as "Book-Entry Stockholders".
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot complete the procedure for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedure set forth in
Section 2 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
THE BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER
RIGHTS BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
-------------------------------------------------------------------------------
Account Number
----------------------------------------------------------------------------
Transaction Code Number
----------------------------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY:
Name(s) of Registered Holder(s)
----------------------------------------------------------------------------
Window Ticket No. (if any)
---------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
---------------------------------------------------------
Name of Institution which Guaranteed Delivery
--------------------------------------------------------------
If delivered by Book-Entry Transfer, please provide the following:
Name of Tendering Institution
-------------------------------------------------------------------------------
Account Number
----------------------------------------------------------------------------
Transaction Code Number
----------------------------------------------------------------------------
<PAGE> 3
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
REGISTERED HOLDER(S) (ATTACH ADDITIONAL LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------------
SHARE NUMBER OF SHARES
CERTIFICATE EVIDENCED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
--------------------------------------------------------------
==============================================================
Total Shares................................
------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, all Share Certificates delivered to the
Depositary will be deemed to have been tendered. See Instruction 4.
================================================================================
<PAGE> 4
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Inva Acquisition Corp., a Massachusetts
corporation (the "Purchaser") and a wholly owned subsidiary of Invacare
Corporation, an Ohio corporation (the "Parent"), the above-described shares of
Common Stock, no par value (the "Shares"), of Suburban Ostomy Supply Co., Inc.,
a Massachusetts corporation (the "Company"), at a purchase price of $11.75 per
Share, net to the seller in cash without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase dated December 22,
1997 (the "Offer to Purchase") and in this Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"). The undersigned
understands that the Purchaser reserves the right to transfer or assign, in
whole or from time to time in part, to one or more of its affiliates, the right
to purchase all or any portion of the Shares tendered pursuant to the Offer,
receipt of which is hereby acknowledged.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby (and any other Shares or other securities or rights issued or issuable in
respect thereof on or after the date hereof), and irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to (i) deliver
certificates for such Shares (and any such other Shares or securities or
rights), or transfer ownership of such Shares (and any such other Shares or
securities or rights) on the account books maintained by the Book-Entry Transfer
Facility together, in any such case, with appropriate evidences of transfer and
authenticity to, or upon the order the of the Purchaser, (ii) present such
Shares (and any such other Shares or securities or rights) for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any such other Shares or
securities or rights), all in accordance with the terms and subject to the
conditions of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints designees of the Purchaser and each of them as such stockholder's
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in this Letter of Transmittal, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser (and with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date hereof). All such powers of attorney and proxies shall be
considered irrevocable and coupled with an interest in the tendered Shares. Such
appointment will be effective when, and only to the extent that, the Purchaser
accepts such Shares for payment. Upon such acceptance for payment, all prior
powers of attorney and proxies given by such stockholder with respect to such
Shares (and such other shares and securities) will be revoked without further
action, and no subsequent powers of attorney and proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of the Purchaser will, with respect to the
Shares (and such other shares and securities) for which such appointment is
effective, be empowered to exercise all voting and other rights of such
stockholder as they in their sole discretion may deem proper at any annual or
special meeting of the Company's stockholders or any adjournment or postponement
thereof, by written consent in lieu of any such meeting or otherwise. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's payment of such Shares, the
Purchaser must be able to exercise full voting rights with respect to such
Shares and other securities, including voting at any meeting of stockholders.
<PAGE> 5
The undersigned hereby represents and warrants that the (a) undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and (b) when the Shares are accepted for payment by the
Purchaser, the Purchaser will acquire good, marketable and unencumbered title to
the Shares, free and clear of all liens, restrictions, charges and encumbrances,
and the same will not be subject to any adverse claim. The undersigned, upon
request, will execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby (and any Distribution). In
addition, the undersigned shall promptly remit and transfer to the Depositary
for the account of the Purchaser any and all Distributions in respect of the
Shares tendered hereby, accompanied by appropriate documentation of transfer;
and, pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be, subject to applicable law, entitled to all rights and
privileges as the owner of each such Distribution, and may withhold the entire
purchase price of the Shares and or deduct from the purchase price, the amount
or value of such Distribution, as determined by the Purchaser in its sole
discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date (as defined in the Offer to Purchase) and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after February 20, 1998 (or such later date as may apply
in case the Offer is extended). See Section 3 of the Offer to Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation and warranty that the
undersigned owns the Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered". Similarly, unless otherwise indicated "Special Delivery
Instructions", please mail the check for the purchase price and/or any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered". In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or any
certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or certificates to, the person or persons so
indicated. Unless otherwise indicated herein under "Special Payment
Instructions", please credit any Shares tendered herewith by book-entry transfer
that are not accepted for payment by crediting the account at the Book-Entry
Transfer Facility designated above. The undersigned recognizes that the
Purchaser has no obligation, pursuant to the Special Payment Instructions, to
transfer any Shares from the name(s) of the registered holder(s) thereof if the
Purchaser does not accept for payment any of the Shares so tendered.
<PAGE> 6
---------------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned of if Shares tendered by book-entry transfer which are not
accepted for payment are to be returned by credit to an account maintained
at a Book-Entry Transfer Facility.
Issue: [ ] Check [ ] Certificate(s) to:
Name
---------------------------------------------------------------------------
(PLEASE PRINT)
Address
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(ZIP CODE)
---------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION NUMBER)
[ ]Credit unpurchased Shares tendered by book-entry transfer to the
account set forth below:
(Check one):
Name of Account Party
---------------------------------------------------------------------------
Account No.
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown above.
Mail: [ ] Check [ ] Certificate(s) to:
Name
---------------------------------------------------------------------------
(PLEASE PRINT)
Address
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(ZIP CODE)
---------------------------------------------------------------------------
(TAXPAYER IDENTIFICATION NUMBER)
---------------------------------------------------------------------------
(SEE SUBSTITUTE FORM W-9)
---------------------------------------------------------------------------
<PAGE> 7
IMPORTANT
STOCKHOLDERS: SIGN HERE
(AND COMPLETE SUBSTITUTE FORM W-9)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDERS(S)
Dated:
- ------------------------------------------, 199
- -
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustee, executor, administrator,
guardian, attorney-in-fact, officer of corporation or other person acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- -------------------------------------------------------------------------
Taxpayer Identification or
Social Security No.:
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.:
- --------------------------------------------------------------------------
Dated:
- ------------------------------------------, 199
- -
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee Of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for purposes of this document, shall
include any participant in the Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of Shares) tendered herewith, unless
such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" above, or (b)
if such Shares are tendered for the account of a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (each of the foregoing being referred to as an "Eligible
Institution"). In all other cases, all signatures on this Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter
of Transmittal.
2. Requirements Of Tender. This Letter of Transmittal is to be completed
by stockholders either if certificates are forwarded herewith or, unless an
Agent's Message (as defined in Section 2 of the Offer to Purchase) is utilized,
if tenders are to be made pursuant to the procedure for tender by book-entry
transfer set forth in Section 2 of the Offer to Purchase. For a stockholder
validly to tender Shares pursuant to the Offer, either (a) a Letter of
Transmittal (or a facsimile hereof), properly completed and duly executed,
together with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in Section 1
of the Offer to Purchase) and either certificates for tendered Shares must be
received by the Depositary at one of such addresses or such Shares must be
delivered pursuant to the procedures for book-entry transfer set forth herein
(and a Book-Entry confirmation received by the Depositary), in each case prior
to the Expiration Date, or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below and in Section 2 of the Offer to
Purchase.
Stockholders whose Share Certificates are not immediately available or who
cannot deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares by
properly completing and duly executing a Notice of Guaranteed Delivery pursuant
to the guaranteed delivery procedure set forth in Section 2 of the Offer to
Purchase. Pursuant to such procedure: (a) such tender must be made by or through
an Eligible Institution; (b) a properly completed and duly executed Notice of
Guaranteed Delivery, substantially in the form made available by the Purchaser,
must be received by the Depositary prior to the Expiration Date; and (c) the
Share Certificates (or a Book-Entry Confirmation) representing all tendered
Shares, in proper form for transfer, in each case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three Nasdaq National Market trading
days after the date of execution of such Notice of Guaranteed Delivery. If Share
Certificates are forwarded separately to the Depositary, a properly completed
and duly executed Letter of Transmittal must accompany each such delivery.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
<PAGE> 9
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. Partial Tenders (not applicable to book-entry stockholders). If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures On Letter Of Transmittal, Stock Powers And Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or not purchased are to be issued in the
name of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. Stock Transfer Taxes. Except as provided in this Instruction 6, the
Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or if certificate(s) for Shares not
tendered or accepted for payment are to be registered in the name of, any person
other than the registered holder(s), or if tendered certificate(s) are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or an exemption therefrom, is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Share Certificates evidencing the
Shares tendered hereby.
<PAGE> 10
7. Special Payment And Delivery Instructions. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or to an address other than that shown in this Letter of
Transmittal, the appropriate boxes on this Letter of Transmittal must be
completed. A Book-Entry Stockholder may request that Shares not accepted for
payment be credited to such account maintained at the Book-Entry Transfer
Facility as such Book-Entry Stockholder may designate under "Special Payment
Instructions". If no such instructions are given, such Shares not accepted for
payment will be returned by crediting the account of the Book-Entry Transfer
Facility designated above.
8. Waiver Of Conditions. The conditions of the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. Requests For Assistance Or Additional Copies. Questions or requests
for assistance may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
10. Lost, Destroyed Or Stolen Certificates. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Information Agent. The stockholder will then be instructed
as to the steps that must be taken in order to replace the certificate. This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
11. Substitute Form W-9. In order to avoid backup withholding of Federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below in this Letter of Transmittal and certify under
penalty of perjury that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide such
stockholder's correct TIN or fails to provide the certifications described
above, the Internal Revenue Service (the "IRS") may impose a $50 penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may be
subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the U.S. federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained form the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
<PAGE> 11
IMPORTANT: THIS LETTER OR TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<PAGE> 12
<TABLE>
<CAPTION>
<C> <S> <C>
- --------------------------------------------------------------------------------------------------------------
PAYER'S NAME:
==============================================================================================================
SUBSTITUTE PART I -- Taxpayer Identification Number -- For Social Security Number
FORM W-9 All Accounts Enter your taxpayer identification ------------------------------
DEPARTMENT OF THE TREASURY number in the appropriate box. For most OR
INTERNAL REVENUE SERVICE individuals and sole proprietors, this is your Employer
Social Security Number. For other entities, it Identification
is your Employer Identification Number. If you Number
do not have a number, see "How to Obtain a TIN" ------------------------------
in the enclosed Guidelines.
Note: if the account is in more than one name,
see the chart on page 2 of the enclosed
Guidelines to determine what number to enter.
-------------------------------------------------------------------------------
PART II -- For Payees Exempt From Backup PART III --
Withholding (see enclosed Guidelines and [ ] Awaiting TIN
complete as instructed therein).
-------------------------------------------------------------------------------
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification
PAYER'S REQUEST FOR number, or I am waiting for a number to be issued to me and either (a) I have
TAXPAYER IDENTIFICATION mailed or delivered an application to receive a taxpayer identification
NUMBER number to the appropriate Internal Revenue Service Center or Social
Security Administration Office or (b) I intend to mail or deliver an
application in the near future. I understand that if I do not provide a
taxpayer identification number within sixty (60) days, 31% of all
reportable payments made to me thereafter will be withheld until I provide
a number;
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service ("IRS") that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS
has notified me that I am no longer subject to backup withholding; and
(3) Any other information provided on this form is true, correct and complete.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have
been notified by the IRS that you are currently subject to backup withholding
because of underreporting interest or dividends on your tax return. However,
if after being notified by the IRS that you were subject to backup withholding
you received another notification from the IRS that you are no longer subject
to backup withholding, do not cross out item (2).
Signature ________________ Date: ________________ ,199_
- --------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS.
<PAGE> 13
The Information Agent for the Offer is:
[MACKENZIE LOGO]
156 Fifth Avenue
New York, NY 10010
(212) 929-5500 (call collect)
or
CALL TOLL-FREE: (800) 322-2885
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza, West Tower
901 East Byrd Street
Richmond, VA 23219
CALL TOLL-FREE: (800) 532-2916
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER SHARES OF COMMON STOCK
OF
SUBURBAN OSTOMY SUPPLY CO., INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 2 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for Shares (as defined below) are not
immediately available or the certificates for Shares and all other required
documents cannot be delivered to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase) or if the procedure for delivery
by book-entry transfer cannot be completed on a timely basis. This instrument
may be delivered by hand or transmitted by facsimile transmission or mail to the
Depositary.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Facsimile Transmission:
(For Eligible Institutions Only)
201-222-4720
OR
201-222-4721
By Hand: By Mail: By Overnight Courier:
TENDERS & EXCHANGES TENDERS & EXCHANGES TENDERS & EXCHANGES
C/O THE DEPOSITORY TRUST COMPANY SUITE 4660 -- SOS SUITE 4680 -- SOS
55 WATER STREET P.O. BOX 2569 14 WALL STREET -- 8TH FLOOR
DTC TAD JERSEY CITY, NJ 07303-2569 NEW YORK, NY 10005
VIETNAM VETERANS MEMORIAL PLAZA
NEW YORK, NY 10041
</TABLE>
To Confirm Receipt of Notice of Guaranteed Delivery:
201-222-4707
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to Inva Acquisition Corp., a Massachusetts
corporation and a wholly owned subsidiary of Invacare Corporation, an Ohio
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated December 22, 1997 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"), receipt of which is hereby acknowledged, the number of
shares of Common Stock, no par value (the "Shares"), indicated below of Suburban
Ostomy Supply Co., Inc., a Massachusetts corporation, pursuant to the guaranteed
delivery procedure set forth in Section 2 of the Offer to Purchase.
<PAGE> 2
<TABLE>
<S> <C>
Share Certificate Nos. (if available): Name(s) of Record Holder(s):
- ------------------------------------------ ---------------------------------------------
- ------------------------------------------ ---------------------------------------------
If Shares will be delivered by book-entry PLEASE TYPE OR PRINT
transfer, check the box:
Address(es)
--------------------------------
[ ] The Depositary Trust Company --------------------------------------------
ZIP CODE
Account Number Area Code and Telephone Number:
- ---------------------------------- --------------------------------------------
--------------------------------------------
Dated: , 199
-- --------------------------------------------
--------------------------------------------
SIGNATURE(S)
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program,
hereby (a) represents that the above named person(s) "own(s)" the Shares
tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange
Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender of
Shares complies with Rule 14e-4, (c) guarantees to deliver to the Depositary
either the certificates evidencing all tendered Shares, in proper form for
transfer, or to deliver Shares pursuant to the procedure for book-entry transfer
into the Depositary's account at the Depository Trust Company (the "Book-Entry
Transfer Facility"), in either case together with the Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed, with any required
signature guarantees or an Agent's Message (as defined in the Offer to Purchase)
in the case of a book-entry delivery, and any other required documents, all
within three Nasdaq National Market trading days after the date hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
<TABLE>
<S> <C>
Name of Firm:
- ---------------------------------------- ---------------------------------------------
AUTHORIZED SIGNATURE
Address: Name:
- --------------------------------------------- ---------------------------------------------
PLEASE TYPE OR PRINT
Title:
- --------------------------------------------- ---------------------------------------------
ZIP CODE
Area Code and
Tel. No.: Dated: , 199
- --------------------------------------------- --------------------------------------- -
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza, West Tower
901 East Byrd Street
Richmond, VA 23219
CALL TOLL-FREE: (800) 532-2916
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SUBURBAN OSTOMY SUPPLY CO., INC.
BY
INVA ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
INVACARE CORPORATION
AT
$11.75 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON THURSDAY, JANUARY 22, 1998, UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees:
We have been appointed by Inva Acquisition Corp., a Massachusetts
corporation (the "Purchaser") and a wholly owned subsidiary of Invacare
Corporation, an Ohio corporation (the "Parent"), to act as Dealer Manager in
connection with the Purchaser's offer to purchase all outstanding shares of
Common Stock, no par value (the "Shares"), of Suburban Ostomy Supply Co., Inc.,
a Massachusetts corporation (the "Company"), at a price of $11.75 per Share, net
to the seller in cash without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated December 22, 1997 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") enclosed herewith.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
The Offer is conditioned upon, among other things: (1) the Purchaser being
satisfied, in its sole discretion, that there have been validly tendered and not
properly withdrawn prior to the expiration of the Offer that number of Shares
that would represent at least two-thirds of the outstanding shares (determined
on a fully diluted basis assuming the exercise of all outstanding stock options,
rights and convertible securities (if any) and the issuance of all Shares that
the Company is obligated to issue); and (2) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder applicable to the purchase of Shares pursuant to the
offer having expired or been terminated.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated December 22, 1997.
2. The BLUE Letter of Transmittal to tender Shares for your use and
for the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. The PINK Notice of Guaranteed Delivery for Shares to be used to
accept the Offer if Share Certificates are not immediately available or if
such certificates and all other required documents cannot be delivered to
First Chicago Trust Company of New York (the "Depositary") by the
Expiration Date or if the procedure for book-entry transfer cannot be
completed by the Expiration Date.
4. The Letter to Stockholders of the Company from the Chairman and
Chief Executive Officer of the Company accompanied by The Company's
Solicitation/Recommendation Statement on Schedule 14D-9.
5. A GREEN printed form of letter which may be sent to your clients
for whose accounts you hold Shares registered in your name or in the name
of your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer.
<PAGE> 2
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to First Chicago Trust Company of New
York, the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 22, 1998, UNLESS THE
OFFER IS EXTENDED.
The Board of Directors of the Company has unanimously approved the Offer
and the Merger and determined that the terms of the Offer and the Merger are
fair to, and in the best interests of, the stockholders of the Company and
unanimously recommends that stockholders of the Company accept the Offer and
tender their Shares.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 17, 1997 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer and
the satisfaction or waiver of certain conditions, a merger (the "Merger") will
be effected under the terms of which either: (i) in the event that the Purchaser
acquires less than 90% of the outstanding Shares pursuant to the Offer, the
Purchaser will be merged with and into the Company, with the Company surviving
the Merger as a wholly owned subsidiary of the Parent or (ii) in the event that
the Purchaser acquires 90% or more of the outstanding Shares pursuant to the
Offer, and the Purchaser determines, in its sole discretion, to use the "short
form" merger procedure described in Section 12 of the Offer to Purchase, the
Company will be merged with and into the Purchaser, with the Purchaser surviving
the Merger as a wholly owned subsidiary of the Parent. In the Merger, each
outstanding Share (other than Shares owned by the Company or any subsidiary of
the Company or by Parent, the Purchaser or any other subsidiary of Parent or by
stockholders, if any, who are entitled to and who properly exercise dissenters'
rights under Massachusetts law) will be converted into the right to receive
$11.75 per share, without interest, as set forth in the Merger Agreement and
described in the Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary, of (a) certificates
for (or a timely Book-Entry Confirmation (as defined in the Offer to Purchase))
with respect to such Shares, (b) a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer effected pursuant to the procedure set
forth in Section 2 of the Offer to Purchase, an Agent's Message (as defined in
the Offer to Purchase), and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN
MAKING SUCH PAYMENT.
Neither the Purchaser nor Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Information Agent and the
Depositary as described in the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. You will be reimbursed
upon request for customary mailing and handling expenses incurred by you in
forwarding the enclosed offering materials to your customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent at the address and telephone number set
forth on the back cover of the enclosed Offer to Purchase.
Very truly yours,
WHEAT, FIRST SECURITIES, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE PARENT, THE PURCHASER, THE COMPANY, THE
DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY
OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENTS OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SUBURBAN OSTOMY SUPPLY CO., INC.
BY
INVA ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
INVACARE CORPORATION
AT
$11.75 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 22, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients: December 22, 1997
Enclosed for your consideration is an Offer to Purchase, dated December 22,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal relating
to an offer by Inva Acquisition Corp., a Massachusetts corporation (the
"Purchaser") and a wholly owned subsidiary of Invacare Corporation, an Ohio
corporation (the "Parent"), to purchase all of the outstanding shares of Common
Stock, no par value (the "Shares"), of Suburban Ostomy Supply Co., Inc., a
Massachusetts corporation (the "Company"), at a price of $11.75 per Share, net
to the seller in cash without interest thereon, upon the terms and subject to
the conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). Also enclosed is the Letter to Stockholders of the Company from the
Chairman and Chief Executive Officer of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. We are the holder of
record of Shares held by us for your account. A tender of such Shares can be
made only by us as the holder of record and pursuant to your instructions. The
Letter of Transmittal is furnished to you for your information only and cannot
be used by you to tender Shares held by us for your account.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is invited to the following:
1. The tender price is $11.75 per Share, net to the seller in cash
without interest thereon.
2. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the
stockholders of the Company and unanimously recommends that the
stockholders of the Company accept the Offer and tender their Shares.
3. The Offer is made for all of the outstanding Shares.
4. The Offer will expire at 12:00 midnight, New York City time, on
Thursday, January 22, 1998, unless the Offer is extended.
<PAGE> 2
5. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of December 17, 1997 (the "Merger Agreement") among Parent,
the Purchaser and the Company pursuant to which, following the consummation
of the Offer and the satisfaction or waiver of certain conditions, a merger
(the "Merger") will be effected under the terms of which either: (i) in the
event that the Purchaser acquires less than 90% of the outstanding Shares
pursuant to the Offer, the Purchaser will be merged with and into the
Company, with the Company surviving the Merger as a wholly owned subsidiary
of the Parent or (ii) in the event that the Purchaser acquires 90% or more
of the outstanding Shares pursuant to the Offer, and the Purchaser
determines, in its sole discretion, to use the "short form" merger
procedure described in Section 12 of the Offer to Purchase, the Company
will be merged with and into the Purchaser, with the Purchaser surviving
the Merger as a wholly owned subsidiary of the Parent. In the Merger, each
outstanding Share (other than Shares owned by the Company or by any
subsidiary of the Company or by Parent, the Purchaser or any other
subsidiary of Parent or by stockholders, if any, who are entitled to and
who properly exercise dissenters' rights under Massachusetts law) will be
converted into the right to receive $11.75 per Share, without interest, as
set forth in the Merger Agreement and described in the Offer to Purchase.
6. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which would represent at least two-thirds of the
outstanding Shares (determined on a fully diluted basis for all outstanding
stock options, rights and convertible securities (if any) and the issuance
of all Shares that the Company is obligated to issue) and (2) any waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations thereunder applicable to the purchase of
Shares pursuant to the Offer having expired or been terminated.
7. The Purchaser will pay any stock transfer taxes with respect to
the transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of all Shares. The Offer
is not being made to (nor will tenders be accepted from or on behalf of) holders
of Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the securities, blue sky or other laws
of such jurisdiction or any administrative or judicial action pursuant thereto.
However, the Purchaser may in its discretion take such actions as it may deem
necessary to make the Offer in any jurisdiction and extend the Offer to holders
of Shares in such jurisdiction. In those jurisdictions where securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by Wheat, First
Securities, Inc., the Dealer Manager, or one more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize a tender of your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the First Chicago Trust Company of New
York (the "Depositary"), of (a) certificates for (or a timely Book-Entry
Confirmation (as defined in the Offer to Purchase) with respect to) such Shares,
(b) a Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a
book-entry transfer effected pursuant to the procedure set forth in Section 2 of
the Offer to Purchase, an Agent's Message (as defined in the Offer to Purchase),
and (c) any other documents required by the Letter of Transmittal. Accordingly,
tendering stockholders may be paid at different times depending upon when
certificates for Shares or Book-Entry Confirmations with respect to Shares are
actually received by the Depository. UNDER NO CIRCUMSTANCES WILL INTEREST BE
PAID ON THE PURCHASE PRICE OF THE SHARES TO BE PAID BY THE PURCHASER, REGARDLESS
OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SUBURBAN OSTOMY SUPPLY CO., INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated December 22, 1997, and the related Letter of
Transmittal (the "Offer to Purchase") in connection with the offer by Inva
Acquisition Corp., a Massachusetts corporation (the "Purchaser") and a wholly
owned subsidiary of Invacare Corporation, an Ohio corporation, to purchase all
outstanding shares of Common Stock, no par value (the "Shares"), of Suburban
Ostomy Supply Co., Inc., a Massachusetts corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) held by you for the account of the
undersigned, upon the terms and subject to the conditions set forth in the Offer
to Purchase and in the related Letter of Transmittal furnished to the
undersigned.
- --------------------------------------------------------------------------------
NUMBER OF SHARES TO BE TENDERED:
________ SHARES*
Dated: , 199
------------------------------------------------------------- -----
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Signature(s)
------------------------------------------------------------------------------
Please Print Name(s)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Please Print Address(es)
------------------------------------------------------------------------------
Area Code and Telephone Number(s)
------------------------------------------------------------------------------
Tax Identification or Social Security Number(s)
- --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ---------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for incompetent
a designated ward, minor person(3)
or incompetent person
7. a. The usual revocable The grantor
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust The actual owner(1)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
===================================================
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------
9. A valid trust, estate, or The legal entity
pension trust (do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
business
13. Association, club, or The organization
other tax-exempt
organization
14. A broker or registered The broker or
nominee nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State
or local government,
school district, or
prison) that receives
agricultural program
payments
- ---------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
- An international organization or any agency, or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER, IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report for payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1994, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
underpayment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE
<PAGE> 1
Exhibit (a)(7)
================================================================================
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase dated December
22, 1997 and the related Letter of Transmittal. The Offer is not being
made to (nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction
or any administrative or judicial action pursuant
thereto. However, the Purchaser may in its discretion
take such actions as it may deem necessary to make the
Offer in any jurisdiction and extend the Offer to
holders of Shares in such jurisdiction. In
those jurisdictions where securities, blue
sky or other laws require the Offer to be
made by a licensed broker or dealer,
the Offer shall be deemed to be made
on behalf of the Purchaser by Wheat
First Butcher Singer (the "Dealer
Manager") or one or more registered
brokers or dealers that are
licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
SUBURBAN OSTOMY SUPPLY CO., INC.
BY
INVA ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY
OF
INVACARE CORPORATION
AT
$11.75 NET PER SHARE
Inva Acquisition Corp., a Massachusetts corporation (the "Purchaser") and a
wholly owned subsidiary of Invacare Corporation, an Ohio corporation (the
"Parent"), is offering to purchase all of the outstanding shares of Common
Stock, no par value (the "Shares"), of Suburban Ostomy Supply Co., Inc., a
Massachusetts corporation (the "Company"), at a purchase price of $11.75 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated December 22,
1997 (the "Offer to Purchase"), and in the related Letter of Transmittal (which
together, as amended or supplemented from time to time, constitute the "Offer").
--------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, JANUARY 22, 1998, UNLESS THE
OFFER IS EXTENDED.
--------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER AND
THE MERGER REFERRED TO HEREIN AND DETERMINED THAT THE TERMS OF THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE
COMPANY, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES.
The Offer is conditioned upon, among other things: (1) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer such
number of Shares that would constitute at least two-thirds of the outstanding
Shares (determined on a fully diluted basis for all outstanding stock options,
rights and convertible securities (if any) and the issuance of all Shares that
the Company is obligated to issue) and (2) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations thereunder applicable to the purchase of Shares pursuant to the
Offer having expired or been terminated.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as
of December 17, 1997 (the "Merger Agreement"), among the Parent, the Purchaser
and the Company pursuant to which, following the consummation of the Offer the
Purchaser will be merged with the Company (the "Merger"). On the effective date
of the Merger, each outstanding Share (other than Shares owned by the Company,
Parent, the Purchaser or any other subsidiary of Parent or by stockholders, if
any, who are entitled to and also properly exercise appraisal rights, if any,
under Massachusetts Law) will be converted into the right to receive $11.75, in
cash, without interest.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary (as defined in the Offer to Purchase) of the Purchaser's acceptance
for payment of such Shares. Upon the terms and subject to the conditions of the
Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payments
from the Purchaser and transmitting such payments to tendering stockholders
whose Shares have been accepted for payment. Under no circumstances will
interest on the purchase price for the Shares be paid by the Purchaser,
regardless of any delay in making such payments. In all cases, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates for such Shares, or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company (the "Book-Entry Transfer
Facility"), pursuant to the procedures set forth in Section 2 of the Offer to
Purchase, (ii) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Thursday, January 22, 1998, unless and until the Purchaser, in its sole
discretion, but subject to the terms of the Merger Agreement, shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date on which the Offer,
as so extended by the Purchaser, shall expire. The Purchaser expressly reserves
the right, in its sole discretion (but subject to the terms of the Merger
Agreement), at any time or from time to time, and regardless of whether or not
any of the events set forth in Section 14 of the Offer to Purchase shall have
occurred, (i) to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares, by giving
oral or written notice of such extension to the Depositary and (ii) to amend the
Offer in any other respect by giving written or oral notice of such amendment to
the Depositary. The Purchaser shall not have any obligation to pay interest on
the purchase price for tendered Shares, whether or not the Purchaser exercises
its right to extend the Offer. There can be no assurance that the Purchaser will
exercise the right to extend the Offer. Any such extension will be followed by a
public announcement thereof no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares. The Merger Agreement provides that, without
the prior written consent of the Company, the Purchaser may not terminate the
Offer other than in accordance with the provisions described in Section 14 of
the Offer to Purchase, or extend the Expiration Date to a date later than March
31, 1998.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after
February 20, 1998 (or such later date as may apply in case the Offer is
extended). For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If certificates for Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and, unless such Shares have been tendered by an
Eligible Institution (as defined in Section 2 of the Offer to Purchase), the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
appropriate Book-Entry Transfer Facility to be credited with the withdrawn
Shares, and otherwise comply with such Book-Entry Transfer Facility's
procedures. Withdrawals of tenders of Shares may not be rescinded, and any
Shares properly withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, withdrawn Shares may be retendered by again
following one of the procedures described in Section 2 of the Offer to Purchase
at any time prior to Expiration Date. All questions as to the form and validity
(including time of receipt) of any notice of withdrawal will be determined by
the Purchaser, in its sole discretion, whose determination will be final and
binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has agreed to provide the Purchaser with the Company's stockholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase and the related Letter of
Transmittal and other relevant materials will be mailed to record holders of
Shares and will be furnished to brokers, dealers, banks, trust companies and
similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
The Offer to Purchase and the related letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
all other tender offer materials may be directed to the Information Agent or the
Dealer Manager as set forth below, and copies will be furnished promptly at the
Purchaser's expense. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
The Dealer Manager for the Offer is:
WHEAT FIRST BUTCHER SINGER
Riverfront Plaza, West Tower
901 East Byrd Street
Richmond, VA 23219
CALL TOLL-FREE (800) 532-2916
December 22, 1997
================================================================================
<PAGE> 1
Exhibit (a)(8)
[Invacare logo]
Invacare, Suburban Ostomy Announce Merger Agreement
Deal will broaden distribution channels, enhance growth
ELYRIA, Ohio -- December 17, 1997 -- Invacare Corporation
(NASDAQ:IVCR), the world's leading manufacturer and distributor of home health
care products and mobility products for people with disabilities, and Suburban
Ostomy Supply Co., Inc. (NASDAQ:SOSC), a leading national direct marketing
wholesaler of medical supplies and related products to the home care industry,
today announced the execution of a definitive merger agreement whereby Invacare
would acquire for cash all outstanding shares of Suburban's common stock for
$11.75 per share. This represents an 8 percent premium to yesterday's Suburban
closing price of $10.875. Invacare's stock closed yesterday at $22.34.
Under the terms of the merger agreement, unanimously approved
by both company Boards, Invacare will initiate a tender offer for all of the
outstanding shares of Suburban to commence within five business days. Once
initiated, the offer will be open for 20 business days unless further extended.
Invacare's offer is contingent upon, among other things, a valid tender of at
least two-thirds of the outstanding shares of Suburban on a fully diluted basis.
After consummation of the tender offer, Invacare will acquire, pursuant to the
merger, any remaining outstanding Suburban shares for the same price per share.
It is anticipated that the proposed merger will be accounted for using purchase
accounting. The transaction is subject to a number of customary conditions
including the receipt of required regulatory approvals. In connection with the
merger agreement, certain shareholders owning, in the aggregate, approximately
45 percent of Suburban's outstanding shares have agreed to tender all of their
shares in the tender offer.
A. Malachi Mixon, III and Herbert P. Gray, Invacare and
Suburban's chief executive officers, respectively, note that the proposed merger
offers significant opportunities for enhancing sales growth in an increasingly
competitive environment.
"Suburban complements Invacare's industry-leading One Stop
Shopping strategy," said Mixon. "Suburban's product lines present a $1 billion
market opportunity for Invacare to further serve the dealer/provider channel.
Disposable medical supplies can represent as much as 20 percent of
dealer/provider revenues. The integrated company will leverage customer
relationships by combining Invacare's field sales and Suburban's inside sales
organizations. In a rapidly evolving health care environment that demands
increased efficiency, the combination creates an organization capable of
lowering our customers' operating costs and increasing their cash flow," he
added.
Gray said, "Suburban and its management have a high regard for
Invacare's growth and achievements in serving the home health care equipment
market. We believe our business will be strengthened through the addition of a
comprehensive line of home medical equipment products."
Mixon said Suburban will be a core strategic business to
Invacare and will be run as a separate operating group by the current management
team, who are based in Holliston, MA.
<PAGE> 2
"This acquisition is consistent with Invacare's previously
stated objective to augment future growth with strategic acquisitions," said
Mixon. "We anticipate that the acquisition will result in combined revenues
exceeding $860 million with a neutral effect on earnings in 1998, assuming a
January 31, 1998 closing." Gray added, "We believe this transaction will deliver
the highest value available to Suburban's stockholders."
Suburban Ostomy Co., Inc., which completed its initial public
offering in October 1996, is a direct marketing wholesaler of medical supplies
and related products to the home health care industry. The company sells
products to over 23,000 customers, including: home medical equipment suppliers
and pharmacies; home health agencies; national home health care chains; and
managed care organizations. Through its direct sales and marketing programs, the
company markets a comprehensive selection of more than 7,000 stock keeping
units, primarily products for ostomy, incontinence, diabetic and wound care.
Invacare's headquarters are in Elyria, OH, with manufacturing
plants in the United States, Australia, Canada, Germany, France, Mexico, New
Zealand, Portugal, Switzerland and the United Kingdom. Products are distributed
worldwide through more than 10,000 professional home health care providers,
institutions and retail outlets.
This press release contains forward-looking statements based
on current expectations which are covered under the "safe harbor" provision
within the Private Securities Litigation Reform Act of 1995. Actual results and
events related to the acquisition may differ from those anticipated as a result
of risks and uncertainties, which include, but are not limited to, the
successful completion of this transaction, the effective integration of Suburban
and its recent acquisitions and the overall economic, market and industry
conditions, as well as the risks described from time to time in Invacare's and
Suburban's reports as filed with the Securities and Exchange Commission,
including their most recently filed Form 10-K reports.
CONTACT: Invacare Corporation
Media Inquiries: Susan A. Elder, 440/329-6549
Investor Inquiries: Thomas R. Miklich, 440/329-6111
<PAGE> 1
Exhibit (b)
EXECUTION COPY
INVACARE CORPORATION
AND CERTAIN BORROWING SUBSIDIARIES
LOAN AGREEMENT
DATED AS OF NOVEMBER 18, 1997
----------------------------------
THE BANKS NAMED HEREIN
AND
NBD BANK, AS AGENT
KEYBANK NATIONAL ASSOCIATION, AS CO-AGENT
<PAGE> 2
TABLE OF CONTENTS
Article Page
- ------- ----
ARTICLE I DEFINITIONS......................................................2
1.1 Certain Definitions.....................................2
1.2 Other Definitions; Rules of Construction...............15
ARTICLE II THE COMMITMENTS AND THE ADVANCES................................15
2.1 Commitments of the Banks...............................15
(a) Revolving Credit Advances.....................15
(b) Swing Line Loan...............................15
(c) Limitation on Amount of Advances..............16
(d) Extensions....................................16
(e) Non-Pro Rata Loans............................17
2.2 Bid-Option Loans.......................................17
(a) The Bid-Option................................17
(b) Bid-Option Quote Request......................18
(c) Invitation for Bid-Option Quotes..............18
(d) Submission and Contents of Bid-Option Quotes..18
(e) Notice to Borrower............................19
(f) Acceptance and Notice by Borrower.............20
(g) Allocation by Agent...........................20
2.3 Effect on Commitments..................................20
2.4 Termination and Reduction of Commitments...............21
2.5 Fees ..............................................21
2.6 Disbursement of Revolving Credit Advances..............22
2.7 Conditions for First Disbursement......................25
(a) Charter Documents.............................25
(b) By-Laws and Corporate Authorizations..........25
(c) Incumbency Certificate........................25
(d) Notes.........................................25
(e) Guaranty......................................25
(f) Legal Opinion.................................25
(g) Consents, Approvals, Etc......................25
<PAGE> 3
Article Page
- ------- ----
2.8 Further Conditions for Disbursement....................26
2.9 Subsequent Elections as to Borrowings..................26
2.10 Limitation of Requests and Elections...................27
2.11 Minimum Amounts; Limitation on Number of Borrowings....27
2.12 Treasury Manager.......................................28
ARTICLE III PAYMENTS AND PREPAYMENTS........................................28
3.1 Principal Payments.....................................28
3.2 Interest Payments......................................29
3.3 Payment Method.........................................30
3.4 No Setoff or Deduction.................................32
3.5 Payment on Non-Business Day; Payment Computations......32
3.6 Additional Costs.......................................33
3.7 Illegality and Impossibility...........................34
3.8 Indemnification........................................35
3.9 Right of Banks to Fund Through Other Offices...........36
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................36
4.1 Corporate Existence and Power..........................36
4.2 Corporate Authority....................................36
4.3 Binding Effect.........................................36
4.4 Subsidiaries...........................................36
4.5 Litigation.............................................37
4.6 Financial Condition....................................37
4.7 Use of Loans...........................................37
4.8 Consents, Etc..........................................37
4.9 Taxes ..............................................38
4.10 Title to Properties....................................38
4.11 ERISA ..............................................38
4.12 Environmental and Safety Matters.......................38
4.13 No Material Adverse Change.............................39
ARTICLE V COVENANTS ..............................................39
5.1 Affirmative Covenants..................................39
5.2 Negative Covenants.....................................42
(a) Interest Coverage Ratio.......................42
(b) Net Worth.....................................42
(c) Funded Debt to Total Capitalization...........43
(d) Liens.........................................43
(e) Merger; Etc...................................44
ii
<PAGE> 4
Article Page
- ------- ----
(f) Disposition of Assets; Etc....................44
(g) Nature of Business............................44
(h) Negative Pledge Limitation....................44
ARTICLE VI DEFAULT ..............................................45
6.1 Events of Default......................................45
(a) Nonpayment of Principal.......................45
(b) Nonpayment of Interest........................45
(c) Misrepresentation.............................45
(d) Certain Covenants.............................45
(e) Other Defaults................................45
(f) Cross Default.................................45
(g) Judgments.....................................46
(h) ERISA.........................................46
(i) Insolvency, Etc...............................46
(j) Change of Control.............................47
6.2 Remedies ..............................................47
ARTICLE VII THE AGENT AND THE BANKS.......................................48
7.1 Appointment and Authorization..........................48
7.2 Agent and Affiliates...................................48
7.3 Scope of Agent's Duties................................48
7.4 Reliance by Agent......................................49
7.5 Default ..............................................49
7.6 Liability of Agent.....................................49
7.7 Nonreliance on Agent and Other Banks...................50
7.8 Indemnification........................................50
7.9 Resignation of Agent...................................50
7.10 Sharing of Payments....................................51
7.11 Local Custom...........................................52
7.12 Withholding Tax Exemption..............................52
7.13 Co-Agent ..............................................52
ARTICLE VIII MISCELLANEOUS ..............................................52
8.1 Amendments, Etc........................................52
8.2 Notices ..............................................53
8.3 No Waiver By Conduct; Remedies Cumulative..............54
8.4 Reliance on and Survival of Various Provisions.........54
8.5 Expenses; Indemnification..............................54
iii
<PAGE> 5
Article Page
- ------- ----
8.6 Successors and Assigns; Additional Banks...............55
8.7 Counterparts...........................................58
8.8 Governing Law; Consent to Jurisdiction.................59
8.9 Table of Contents and Headings.........................59
8.10 Construction of Certain Provisions.....................59
8.11 Integration and Severability...........................59
8.12 Independence of Covenants..............................59
8.13 Interest Rate Limitation...............................59
8.14 Confidentiality........................................59
8.15 Relationship of this Agreement to the Existing Loan
Agreements...........................................60
8.16 Waiver of Jury Trial...................................60
8.17 Unification of Certain Currencies......................60
EXHIBITS
Exhibit A......... Bid-Option Note
Exhibit B......... Designation of new Borrowing Subsidiary
Exhibit C......... Guaranty
Exhibit D......... Revolving Credit Note
Exhibit E......... Swing Line Note
Exhibit F......... Bid-Option Quote Request
Exhibit G......... Invitation for Bid-Option Quotes
Exhibit H......... Bid-Option Quote
Exhibit I......... Request for Revolving Credit Advance
Exhibit J......... Form of Legal Opinion
Exhibit K......... Request for Continuation or Conversion
of Revolving Credit Loan
Exhibit L......... Assignment and Acceptance
Exhibit M......... Assumption Agreement
SCHEDULES
Schedule 1.1(a)... Borrowing Subsidiaries
Schedule 1.1(b)... OECD Countries
Schedule 4.4...... Subsidiaries
Schedule 4.5...... Litigation
Schedule 4.12..... Environmental Matters
Schedule 5.2...... Liens
iv
<PAGE> 6
THIS LOAN AGREEMENT, dated as of November 18, 1997 (as amended or
modified from time to time, this "Agreement"), is by and among INVACARE
CORPORATION, an Ohio corporation (the "Company"), each of the Subsidiaries of
the Company designated in Section 1.1 as a Borrowing Subsidiary (individually, a
"Borrowing Subsidiary" and collectively, the "Borrowing Subsidiaries") (the
Company and the Borrowing Subsidiaries may each be referred to as a "Borrower"
and, collectively, as the "Borrowers"), Invacare Corporation, as treasury
manager for the Borrowers (the "Treasury Manager") and the Banks set forth on
the signature pages hereof (collectively, the "Banks" and individually, a
"Bank") and NBD BANK, a Michigan banking corporation, as agent for the Banks (in
such capacity, the "Agent") and KEYBANK NATIONAL ASSOCIATION, a national banking
association, as co-agent for the Banks (in such capacity, the "Co-Agent").
INTRODUCTION
A. The Borrowers, certain banks named therein and NBD Bank, as agent
for such banks, entered into a Loan Agreement dated as of December 20, 1994, as
amended and modified (the "1994 Loan Agreement"), in which such banks agreed to
make loans and other credit available to the Borrowers.
B. The Company, certain banks named therein, NBD Bank, as agent for
such banks, and KeyBank National Association, as co-agent for such banks,
entered into a Loan Agreement dated as of February 27, 1997, as amended and
modified (the "1997 Loan Agreement"), in which such banks agreed to make loans
and other credit available to the Company. The 1994 Loan Agreement and the 1997
Loan Agreement may be referred to collectively as the "Existing Loan
Agreements".
C. The parties hereto wish to continue the existing credit
relationships between them by consolidating, amending and restating the Existing
Loan Agreements rather than entering into a new and unrelated loan agreement.
D. Pursuant to the terms of this Agreement, the Borrowers desire to
obtain a revolving credit facility, including letters of credit, in the
aggregate principal amount of $360,000,000 (or the equivalent thereof in any
other Permitted Currency), in order to refinance certain existing indebtedness
under the Existing Loan Agreements and provide funds for their general corporate
purposes, and the Banks are willing to establish such a credit facility in favor
of the Borrowers on the terms and conditions herein set forth.
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree that the Existing Loan Agreements shall be
amended and restated as follows:
<PAGE> 7
ARTICLE I
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms shall have
the following respective meanings:
"Acquisition" shall mean any transaction, or any series of related
transactions, consummated on or after the date of this Agreement, by which the
Company or any of its Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability
company, or division thereof, whether through purchase of assets, merger or
otherwise or (ii) directly or indirectly acquires (in one transaction or as the
most recent transaction in a series of transactions) at least a majority (in
number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power
only by reason of the happening of a contingency) or a majority (by percentage
or voting power) of the outstanding ownership interests of a partnership or
limited liability company.
"Advance" shall mean any Loan and any Letter of Credit Advance.
"Affiliate" when used with respect to any person shall mean any other
person which, directly or indirectly, controls or is controlled by or is under
common control with such person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.
"Applicable Lending Office" shall mean, with respect to any Advance
made by any Bank or with respect to such Bank's Commitment, the office of such
Bank or of any Affiliate of such Bank located at the address specified as the
applicable lending office for such Bank set forth next to the name of such Bank
in the signature pages hereof or any other office or Affiliate of such Bank or
of any Affiliate of such Bank hereafter selected and notified to the Company and
the Agent by such Bank. Unless the Agent shall notify the Treasury Manager
otherwise, the Applicable Lending Office of the Agent shall be: (a) with respect
to all Advances denominated in Dollars, the principal office of the Agent in
Detroit, Michigan; (b) with respect to Advances denominated in CAD, the main
office of First Chicago NBD Bank, Canada, an Affiliate of the Agent, in Toronto,
Ontario; (c) with respect to all Advances denominated in AUD or NZD, the branch
of FNBC in Adelaide, Australia and (d) with respect to all other Advances, the
branch of FNBC in London, England.
"Applicable Margin" shall mean with respect to any Floating Rate Loan,
Interbank Offered Rate Loan, S/L/C fee and facility fee, as the case may be, the
applicable percentage per annum set forth in the table below as adjusted on the
date on which the financial statements and compliance certificate required
pursuant to Section 5.1(d) are delivered to the Banks and shall remain in effect
until the next change to be effected pursuant to this definition, provided,
that, if any financial statements referred to above are not delivered within the
time period specified in Section 5.1(d),
2
<PAGE> 8
then, until the financial statements are delivered, the margins shall be as set
forth in Tier IV of the Table.
APPLICABLE MARGIN
<TABLE>
<CAPTION>
- ------------------------------------------------- ------------ -------------------- -------------- --------------------
Floating Interbank Offered S/L/C Fee Facility Fee
Funded Debt to Total Capitalization Rate Loan Rate Loan
- ------------------------------------------------- ------------ -------------------- -------------- --------------------
<S> <C> <C> <C> <C>
I. Less than 0.40:1.0 0.00% 0.185% 0.185% 0.09%
- ------------------------------------------------- ------------ -------------------- -------------- --------------------
II. Greater than or equal to 40:1.0 but less 0.00% 0.23% 0.23% 0.12%
than 0.50:1.0
- ------------------------------------------------- ------------ -------------------- -------------- --------------------
III. Greater than or equal to 0.50:1.0 0.00% 0.27% 0.27% 0.15%
but less than 0.575:1.0
- ------------------------------------------------- ------------ -------------------- -------------- --------------------
IV. Greater than or equal to 0.575:1.0 0.00% 0.375% 0.375% 0.175%
- ------------------------------------------------- ------------ -------------------- -------------- --------------------
</TABLE>
"Assignment and Acceptance" is defined in Section 8.6(d).
"AUD" shall mean the lawful currency of Australia.
"Australian Domestic Rate" shall mean, with respect to any Interbank
Interest Period, the per annum interest rate which is determined by the Agent by
taking the average bid rate quoted on the page numbered "BBSY" of the Reuters
Monitor System at or about 10:00 a.m. (Adelaide time) two (2) Business Days
prior to the first day of such Interbank Interest Period for not less than five
Australian trading banks (selected by the Agent in its sole discretion and
appearing on that page and so quoting) as being the mean buying rate for a Bill
having a tenor equal to such Interbank Interest Period, eliminating the highest
and the lowest mean rates and taking the average of the remaining mean rates,
provided that, if in respect of any Interbank Interest Period less than five
Australian trading banks have quoted rates on the page numbered "BBSY" of the
Reuters Monitor System, the rate shall be calculated as in the manner set forth
above by taking the rates otherwise quoted by five Australian trading banks upon
application by the Agent for a Bill of the same tenor.
"Bank Obligations" shall mean all indebtedness, obligations and
liabilities, whether now owing or hereafter arising, direct, indirect,
contingent or otherwise, of the Borrowers to the Agent or any Bank pursuant to
the Loan Documents.
"Bid-Option Auction" shall mean a solicitation of Bid-Option Quotes
setting forth Bid-Option Rates pursuant to Section 2.2(b).
"Bid-Option Interest Period" shall mean with respect to each Bid-Option
Borrowing, the period commencing on the date of such Borrowing and ending on the
date elected by the Treasury
3
<PAGE> 9
Manager in the applicable Bid-Option Quote Request, which date shall be not more
than 60 days after the date of such Bid-Option Loan; provided that:
(i) any such Interest Period that would otherwise end on a day
that is not a Business Day shall be extended to the next succeeding
Business day; and
(ii) no such Interest Period that would end after the
Termination Date shall be permitted.
"Bid-Option Loan" shall mean a Loan which is made by a Bank pursuant to
a Bid-Option Auction.
"Bid-Option Note" shall mean a promissory note of the Borrowers in
substantially the form of Exhibit A hereto evidencing the obligation of the
Borrowers to repay Bid-Option Loans, as amended or modified from time to time
and together with any promissory note or notes issued in exchange or replacement
therefor.
"Bid-Option Percentage" shall mean, with respect to any Bank, the
percentage of the aggregate outstanding principal amount of the Bid-Option Loans
of all the Banks represented by the outstanding principal amount of the
Bid-Option Loans of such Bank.
"Bid-Option Quote" shall mean an offer by a Bank to make a Bid-Option
Loan in accordance with Section 2.2(d).
"Bid-Option Quote Request" shall have the meaning ascribed thereto in
Section 2.2(b).
"Bid-Option Rate" shall mean, with respect to any Bid-Option Loan, the
Bid-Option Rate, as defined in Section 2.2(d)(ii)(E), that is offered for such
Loan.
"Bill" shall mean a bill of exchange as defined in the Australian Bills
of Exchange Act 1909, as amended, or any successor act or code, but shall not
include a check.
"Borrowing" shall mean the aggregation of Advances made to any
Borrower, or continuations and conversions of such Advances, made pursuant to
Article II on a single date and for a single Interest Period. A Borrowing may be
referred to for purposes of this Agreement by reference to the type of Loan
comprising the relating Borrowing, e.g., a "Floating Rate Borrowing" if such
Loans are Floating Rate Loans, an "Interbank Offered Rate Borrowing" if such
Loans are Interbank Offered Rate Loans or a "Bid-Option Borrowing" if such Loans
are Bid-Option Loans.
"Borrowing Subsidiary" shall mean each of the Subsidiaries of the
Company set forth on Schedule 1.1(a) on the Effective Date together with any
other Subsidiary of the Company upon request by the Company to the Agent for
designation of such Subsidiary as a "Borrowing Subsidiary" hereunder so long as
(a) the Company guarantees the obligations of such new Borrowing Subsidiary
pursuant to the terms of the Guaranty, (b) such new Borrowing Subsidiary
4
<PAGE> 10
delivers Notes executed in favor of each Bank and (c) the Company and such new
Borrowing Subsidiary execute an agreement in the form of Exhibit B hereto.
"Business Day" shall mean a day other than a Saturday, Sunday or other
day on which (a) the Agent is not open to the public for carrying on
substantially all of its banking functions or (b) if such reference relates to
the date for payment or purchase of any amount or deposit denominated in any
currency other than Dollars, banks are not generally open to the public for
carrying on substantially all of their banking functions in the principal
financial center of the country issuing such currency.
"CAD" shall mean the lawful currency of Canada.
"Canadian Domestic Rate" shall mean, with respect to any Interbank
Interest Period, the per annum interest rate which is equal to the Agent's cost
of funding an Advance in like amount and term as determined by the Agent at
10:00 a.m. on the date of such Advance (with calculation of such cost of funds
to be provided by the Agent in reasonable detail upon request by the Company to
the Agent).
"Capital Lease" of any person shall mean any lease which, in accordance
with generally accepted accounting principles, is capitalized on the books of
such person.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations thereunder.
"C/L/C" shall mean any commercial letter of credit issued by the Agent
hereunder.
"Commitment" shall mean, with respect to each Bank, the commitment of
each such Bank to make Revolving Credit Loans and to participate in Letter of
Credit Advances made through the Agent pursuant to Section 2.1, in amounts not
exceeding in aggregate principal amount outstanding at any time the commitment
amount for each such Bank set forth next to the name of each such Bank in the
signature pages hereof, or, as to any Bank becoming a party hereto after the
Effective Date, as set forth in the applicable Assignment and Acceptance in the
form of Exhibit L attached hereto or the applicable Assumption Agreement in the
form of Exhibit M attached hereto, as such amounts may be reduced or modified
from time to time pursuant to Section 2.4 or Section 8.6.
"Consolidated" or "consolidated" shall mean, when used with reference
to any financial term in this Agreement, the aggregate for the Company and its
consolidated Subsidiaries of the amounts signified by such term for all such
persons determined on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Net Income" of any person shall mean, for any period, the
net income (after deduction for income and other taxes of such person determined
by reference to income or profits of such person) for such period (but without
reduction for any net loss incurred for any fiscal year during such period), all
as determined in accordance with generally accepted accounting principles.
5
<PAGE> 11
"Contingent Liabilities" of any person shall mean, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor, surety or in any other capacity, or in respect of
which obligations such person assures a creditor against loss or agrees to take
any action to prevent any such loss (other than endorsements of negotiable
instruments for collection in the ordinary course of business), including
without limitation all reimbursement obligations of such person in respect of
any letters of credit, surety bonds or similar obligations and all obligations
of such person to advance funds to, or to purchase assets, property or services
from, any other person in order to maintain the financial condition of such
other person.
"Default" shall mean any of the events or conditions described in
Section 6.1 which might become an Event of Default with notice or lapse of time
or both.
"Designated Borrower" shall mean, in relation to any Advance, the
Borrower nominated by the Treasury Manager as the Designated Borrower in the
request for such Advance.
"Dollar Equivalent" shall mean, with respect to each Loan, the sum in
Dollars resulting from the conversion of the amount of such Loan from the
Permitted Currency in which such Loan is denominated into Dollars at the most
favorable spot exchange rate determined by the Agent to be available to it for
the purchase of such Permitted Currency with Dollars at approximately 11:00 a.m.
local time of the Applicable Lending Office on the date any Loan is disbursed or
rolled over, or on such other date as a determination of the Dollar Equivalent
is made, which rate shall be substantially representative of the market rate.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"EBIT" shall mean, with respect to any person, for any period, the sum
of (a) operating net income or loss plus (b) all amounts deducted in determining
such operating net income or loss on account of (i) Interest Expense and (ii)
taxes based on or measured by income, all as determined in accordance with
generally accepted accounting principles, provided, that, for any calculation of
EBIT including the fiscal quarter ending September 30, 1997, there shall be
excluded from such calculation an amount equal to $61,100,000, representing: (a)
the effect of a one time charge taken by the Company as of September 30, 1997 in
connection with the exit by the Company and its Subsidiaries from certain lines
of business, as further detailed in information provided by the Company to the
Banks dated August 20, 1997 (the "August 20, 1997 Information") and detailed in
the Company's press release of October 21, 1997 and attached hereto as Exhibit M
(the "Press Release") and (b) the effect of the increase of reserves related to
the acceleration of certain strategic initiatives as further detailed in the
August 20, 1997 Information and the Press Release.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Environmental Laws" at any date shall mean all provisions of law,
statute, ordinances, rules, regulations, judgments, writs, injunctions, decrees,
orders, awards and standards which are applicable to any Borrower or any
Subsidiary and promulgated by the government of the United
6
<PAGE> 12
States of America or any foreign government or by any state, province,
municipality or other political subdivision thereof or therein or by any court,
agency, instrumentality, regulatory authority or commission of any of the
foregoing concerning the protection of, or regulating the discharge of
substances into, the environment.
"Equivalent" of an amount of one currency (the "first currency")
denominated in another currency (the "second currency"), as of any date of
determination, shall mean the amount of the second currency which could be
purchased with the amount of the first currency at the most favorable spot
exchange rate quoted by the Agent at approximately 11:00 a.m. local time of the
Applicable Lending Office on such date, which rate shall be substantially
representative of the market rate.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations thereunder.
"ERISA Affiliate" shall mean, with respect to any person, any trade or
business (whether or not incorporated) which, together with such person or any
Subsidiary of such person, would be treated as a single employer under Section
414 of the Code.
"Event of Default" shall mean any of the events or conditions described
in Section 6.1.
"Federal Funds Rate" shall mean the per annum rate that is equal to the
per annum rate established and announced by the Agent from time to time as the
opening federal funds rate paid or payable by the Agent in its regional federal
funds market for overnight borrowings from other banks; as conclusively
determined by the Agent, absent manifest error, such rate to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%), which Federal Funds Rate shall change simultaneously with any
change in such announced rates.
"Fixed Rate Loan" shall mean any Fixed Rate Revolving Credit Loan or
Bid-Option Loan.
"Fixed Rate Revolving Credit Loan" means any Negotiated Rate Loan or
Interbank Offered Rate Loan.
"Floating Rate" shall mean the per annum rate equal to the greater of
(i) the Prime Rate in effect from time to time, or (ii) the sum of one-half of
one percent (1/2 of 1%) per annum plus the Federal Funds Rate in effect from
time to time; which Floating Rate shall change simultaneously with any change in
such Prime Rate or Federal Funds Rate, as the case may be.
"Floating Rate Loan" shall mean any Revolving Credit Loan which bears
interest at the Floating Rate.
"FNBC" shall mean The First National Bank of Chicago, an Affiliate of
the Agent.
"Funded Debt" of any person shall mean all Indebtedness that would, in
accordance with generally accepted accounting principles, constitute long term
debt, including (a) any Indebtedness
7
<PAGE> 13
with a maturity of longer than one year after the creation of such Indebtedness,
(b) any Indebtedness outstanding under a revolving credit or similar agreement
(and any renewal or extension thereof) providing for borrowings which constitute
long term debt; provided, however, that all Indebtedness outstanding under this
Agreement shall be deemed "Funded Debt" at all times regardless of the proper
classification under generally accepted accounting principles, (c) any Capital
Lease and (d) any guarantee with respect to Funded Debt of another person to the
extent the indebtedness or obligations guaranteed are not included in the
liabilities of the Company and its Subsidiaries determined on a consolidated
basis as of the date of the last balance sheet required to be furnished to the
Banks pursuant to Section 5.1(d)(ii) or 5.1(d)(iii) of this Agreement.
"generally accepted accounting principles" shall mean generally
accepted accounting principles in effect from time to time and applied on a
basis consistent with that reflected in the financial statements referred to in
Section 4.6, unless any change in generally accepted accounting principles from
those in effect on the Effective Date materially impacts the calculation of the
covenants set forth in Sections 5.2(a), (b) and (c).
"Guaranty" shall mean the guaranty entered into by the Company for the
benefit of the Agent and the Banks pursuant to this Agreement in the form of
Exhibit C hereto, as amended or modified from time to time.
"Indebtedness" shall mean (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(iii) obligations to pay the deferred purchase price of property or services,
except for trade accounts payable arising in the ordinary course of business
that are not more than 90 days past due or as are reasonably being contested,
(iv) obligations as lessee under leases which have been in accordance with
generally accepted accounting principles, recorded as Capital Leases, (v)
obligations to purchase property or services if payment is required regardless
of whether such property is delivered or services are performed (generally
called "take or pay" contracts), but such obligations shall only be included in
an amount equal to the difference between the amount of the required payment and
the value to the Company or a Subsidiary of the Company of the goods or services
required to be delivered in connection with such required payment, (vi)
obligations in respect of currency or interest rate swaps or comparable
transactions valued at the maximum termination payment payable by the obligor,
other than any such contracts entered into as hedges against Indebtedness of the
kinds referred to in clauses (i) and (ii) above; provided, that, for purposes of
Section 6.1(f) only, such contracts shall be included in "Indebtedness", (vii)
any obligation of any Person other than the Company or its Subsidiaries, if such
obligation is secured by any lien on the property of the Company or any of its
Subsidiaries, provided that, the amount of any such Indebtedness shall be
limited to the greater of the then book value or fair market value of the
property securing any such lien, (viii) guaranties in respect of indebtedness or
obligations of other Persons of the kinds referred to in clauses (i) through
(vii) above, to the extent the indebtedness or obligations guaranteed are not
included in the liabilities of the Company and its Subsidiaries determined on a
consolidated basis as of the date of the last balance sheet required to be
furnished to the Banks pursuant to Section 5.1(d)(ii) or 5.1(d)(iii) of this
Agreement, and (ix) liabilities in respect of unfunded vested benefits under
plans covered by Title IV of ERISA.
8
<PAGE> 14
"Interbank Offered Rate" applicable to any Interbank Interest Period
means, the per annum rate that is equal to the sum of:
(a) the Applicable Margin, plus
(b) other than an Interbank Offered Rate Loan denominated in
CAD and described in clause (ii) below, an Interbank Offered Rate Loan
denominated in AUD and described in clause (iii) below or an Interbank Offered
Rate Loan denominated in NZD and described in clause (iv) below, (i) the rate
per annum obtained by dividing (A) the per annum rate of interest at which
deposits in the Permitted Currency in which such Interbank Offered Rate Loan is
to be denominated for such Interbank Interest Period and in an aggregate amount
comparable to the amount of the related Interbank Offered Rate Loan to be made
by the Agent in its capacity as a Bank hereunder are offered to the Agent by
other prime banks in the applicable interbank market selected by the Agent in
its reasonable discretion, at approximately 11:00 a.m. local time of the
Applicable Lending Office, two (2) Interbank Business Days prior to the first
day of such Interbank Interest Period by (B) an amount equal to one minus the
stated maximum rate (expressed as a decimal) of all reserve requirements
including, without limitation, any marginal, emergency, supplemental, special or
other reserves, that is specified on the first day of such Interbank Interest
Period by the Board of Governors of the Federal Reserve System (or any successor
agency thereto) or the relevant fiscal or monetary authority for determining the
maximum reserve requirement with respect to eurocurrency funding (currently
referred to as "Eurocurrency liabilities" in Regulation D of such Board)
maintained by a member bank of such System; all as conclusively determined by
the Agent, absent manifest error, such sum to be rounded up, if necessary, to
the nearest whole multiple of one one-hundredth of one percent (1/100 of 1%) or
(ii) in the case of any Interbank Offered Rate Loans denominated in CAD, the
Canadian Domestic Rate or (iii) in the case of any Interbank Offered Rate Loans
denominated in AUD, the Australian Domestic Rate or (iv) in the case of any
Interbank Offered Rate Loan denominated in NZD, the New Zealand Domestic Rate;
which Interbank Offered Rate shall change simultaneously with any change in the
Applicable Margin.
"Interbank Business Day" shall mean, with respect to any Interbank
Offered Rate Loan, a day which is both a Business Day and a day on which
dealings in Dollar deposits or the relevant Permitted Currency are carried out
in the relevant interbank market.
"Interbank Interest Period" shall mean, with respect to any Interbank
Offered Rate Loan, the period commencing on the day such Interbank Offered Rate
Loan is made or converted to an Interbank Offered Rate Loan and ending on the
date one, two, three or six months thereafter, as any Borrower may elect under
Section 2.6 or 2.9, and each subsequent period commencing on the last day of the
immediately preceding Interbank Interest Period and ending on the date one, two,
three or six months thereafter, as any Borrower may elect under Section 2.6 or
2.9, provided, however, that (a) any Interbank Interest Period which commences
on the last Interbank Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Interbank Business Day of the appropriate
subsequent calendar month, (b) each Interbank Interest Period which would
otherwise end on a day which is not an Interbank Business Day shall end on the
next succeeding Interbank
9
<PAGE> 15
Business Day or, if such next succeeding Interbank Business Day falls in the
next succeeding calendar month, on the next preceding Interbank Business Day,
and (c) no Interbank Interest Period which would end after the Termination Date
shall be permitted.
"Interbank Offered Rate Loan" shall mean any Loan which bears interest
at the Interbank Offered Rate.
"Interest Expense" of any person shall mean, for any period, all
interest paid or payable by such person during such period.
"Interest Coverage Ratio" shall mean, as of any date, the ratio of (a)
Consolidated EBIT as calculated for the four most recently ended consecutive
fiscal quarters of the Company to (b) Consolidated Interest Expense as
calculated for the same four fiscal quarters.
"Interest Payment Date" shall mean (a) with respect to any Negotiated
Rate Loan, Interbank Offered Rate Loan or Bid-Option Loan, the last day of each
Interest Period with respect to such Negotiated Rate Loan, Interbank Offered
Rate Loan or Bid-Option Loan and, in the case of any Interest Period exceeding
three months, those days that occur during such Interest Period at intervals of
three months after the first day of such Interest Period, and (b) in all other
cases, within five (5) days of receipt of an invoice containing a computation of
interest due, which invoice shall be prepared as of the last Business Day of
each March, June, September and December occurring after the date hereof,
commencing with the first such Business Day occurring after the date of this
Agreement.
"Interest Period" shall mean any Negotiated Interest Period, Interbank
Interest Period or Bid-Option Interest Period.
"Invitation for Bid-Option Quotes" shall mean an invitation for
Bid-Option Quotes in the form referred to in Section 2.2(c).
"Letter of Credit" shall mean an S/L/C or C/L/C issued by the Agent on
behalf of the Banks for the account of any Borrower under an application and
related documentation acceptable to the Agent requiring, among other things,
immediate reimbursement by such Borrower to the Agent in respect of all drafts
or other demand for payment honored thereunder and all expenses paid or incurred
by the Agent relative thereto.
"Letter of Credit Advance" shall mean any issuance of a Letter of
Credit under Section 2.6 made pursuant to Section 2.1 in which each Bank
acquires a pro rata risk participation (based on such Bank's Commitment)
pursuant to Section 2.6(e).
"Lien" shall mean any pledge, assignment, deed of trust, hypothecation,
mortgage, security interest, conditional sale or title retaining contract,
financing statement filing, or any other type of lien, charge, encumbrance or
other similar claim or right.
10
<PAGE> 16
"Loan" shall mean any Revolving Credit Loan, any Swing Line Loan or any
Bid-Option Loan, as the context may require.
"Loan Documents" shall mean this Agreement, the Notes, the Letter of
Credit Documents, the Guaranty and any other agreement, instrument or document
executed at any time in connection with this Agreement.
"Margin Stock" shall mean Margin Stock within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"NBD" shall mean NBD Bank, a Michigan banking corporation.
"Negotiated Interest Period" shall mean, with respect to any Negotiated
Rate Loan, the period commencing on the day such Negotiated Rate Loan is made or
converted to a Negotiated Rate Loan and ending on the date agreed upon among the
Borrowers and the Agent at the time such Negotiated Rate Loan is made, and each
subsequent period commencing on the last day of the immediately preceding
Negotiated Interest Period and ending on the date agreed upon among the
Borrowers and the Agent at the time such Negotiated Rate Loan is elected to be
continued as a Negotiated Rate Loan by the Borrowers under Section 2.9, provided
no Negotiated Interest Period which would end after the Termination Date shall
be permitted.
"Negotiated Rate" shall mean, with respect to any Negotiated Rate Loan,
the rate per annum agreed upon between the Borrowers and the Agent at the time
such Negotiated Rate Loan is made.
"Negotiated Rate Loan" shall mean any Loan which bears interest at the
Negotiated Rate.
"Net Worth" of any person shall mean, as of any date, the amount of any
preferred stock, paid in capital and similar equity accounts plus (or minus in
the case of a deficit) the capital surplus and retained earnings of such person
and the amount of any foreign currency translation adjustment account shown as a
capital account of such person minus treasury stock, provided, that, for any
calculation of Net Worth including the fiscal quarter ending September 30, 1997,
there shall be excluded from such calculation an amount equal to $38,900,000,
representing: (a) the effect of a one time charge, net of related tax effects,
if any, to be taken by the Company as of September 30, 1997 in connection with
the exit by the Company and its Subsidiaries from certain lines of business, as
further detailed in the August 20, 1997 Information and the Press Release and
(b) the effect of the increase of reserves related to the acceleration of
certain strategic initiatives as further detailed in the August 20, 1997
Information and the Press Release.
"NZD" shall mean the lawful currency of New Zealand.
"New Zealand Domestic Rate" shall mean, with respect to any Interbank
Interest Period, the per annum interest rate which is determined by the Agent by
taking the average bid rate quoted on
11
<PAGE> 17
the page numbered "BKBM" of the Reuters Monitor System at or about 10:45 a.m.
(Wellington time) two (2) Business Days prior to the first day of such Interbank
Interest Period for not less than five New Zealand trading banks (selected by
the Agent in its sole discretion and appearing on that page and so quoting) as
being the mean buying rate for a Bill having a tenor equal to such Interbank
Interest Period, eliminating the highest and the lowest mean rates and taking
the average of the remaining mean rates, provided that, if in respect of any
Interbank Interest Period less than five New Zealand trading banks have quoted
rates on the page numbered "BKBM" of the Reuters Monitor System, the rate shall
be calculated as in the manner set forth above by taking the rates otherwise
quoted by five New Zealand trading banks upon application by the Agent for a
Bill of the same tenor.
"Notes" shall mean the Revolving Credit Notes, the Bid-Option Notes and
the Swing Line Note; "Note" shall mean any Revolving Credit Note, any Bid-Option
Note or any Swing Line Note.
"Notice of Bid-Option Loan" shall have the meaning set forth in Section
2.2(f).
"Original Dollar Amount" shall mean, with respect to any Loan, the
Equivalent in Dollars of the original principal amount of such Loan specified in
the related request therefor given by any Borrower pursuant to Section 2.6 (a)
as such amount is reduced by payments of principal made in respect of such Loan
in Dollars (or the Dollar Equivalent thereof in the case of a payment made in a
Permitted Currency other than Dollars) and (b) as such amount is adjusted
pursuant to Section 3.1(d).
"Overdue Rate" shall mean (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of two percent (2%) per annum
plus the Floating Rate, (b) in respect of principal of Fixed Rate Loans, a rate
per annum that is equal to the sum of two percent (2%) per annum plus the per
annum rate in effect thereon until the end of the then current Interest Period
for such Loan and, thereafter, a rate per annum that is equal to the sum of two
percent (2%) per annum plus, with respect to Loans denominated in Dollars, the
Floating Rate and, with respect to Loans denominated in any other Permitted
Currency, the relevant market rate for such Permitted Currency, and (c) in
respect of other amounts payable by any Borrower hereunder (other than
interest), a per annum rate that is equal to the sum of two percent (2%) per
annum plus the Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Percentage of Total Commitments" shall mean, with respect to each
Bank, the amount set forth on the signature page next to the name of such Bank
or as subsequently set forth in any Assignment and Acceptance in the form of
Exhibit L attached hereto or Assumption Agreement in the form of Exhibit M
attached hereto.
"Permitted Currency" shall mean Dollars and any currency which is
freely transferable and convertible into Dollars and is issued by an OECD
country (as such designation shall change from time to time) or any other
currency approved by the Agent. A list of all OECD countries as of the
12
<PAGE> 18
Effective Date is set forth in Schedule 1.1(b), which Schedule shall be updated,
if necessary, by the Agent on each anniversary of the Effective Date.
"Permitted Liens" shall mean Liens permitted by Section 5.2(d) hereof.
"Person" or "person" shall include an individual, a corporation, a
limited liability company, an association, a partnership, a trust or estate, a
joint stock company, an unincorporated organization, a joint venture, a trade or
business (whether or not incorporated), a government (foreign or domestic) and
any agency or political subdivision thereof, or any other entity.
"Plan" shall mean, with respect to any person, any pension plan (other
than a Multiemployer Plan) subject to Title IV of ERISA or to the minimum
funding standards of Section 412 of the Code which has been established or
maintained by such person, any Subsidiary of such person or any ERISA Affiliate,
or by any other person if such person, any Subsidiary of such person or any
ERISA Affiliate could have liability with respect to such pension plan.
"Prime Rate" shall mean the per annum rate announced by the Agent from
time to time as its "prime rate" (it being acknowledged that such announced rate
may not necessarily be the lowest rate charged by the Agent to any of its
customers), which Prime Rate shall change simultaneously with any change in such
announced rate.
"Prohibited Transaction" shall mean any non-exempt transaction
involving any Plan which is proscribed by Section 406 of ERISA or Section 4975
of the Code.
"Reportable Event" shall mean a reportable event as described in
Section 4043(b) of ERISA including those events as to which the thirty (30) day
notice period is waived under Part 2615 of the regulations promulgated by the
PBGC under ERISA.
"Required Banks" shall mean Banks in the aggregate having at least
sixty percent (60%) of the aggregate Commitments or, if the Commitments have
been terminated, Banks in the aggregate holding at least 60% of the aggregate
unpaid principal amount of the outstanding Advances.
"Restricted Margin Stock" means Margin Stock owned by the Company or
any of its Subsidiaries which represents not more than 25% of the aggregate
value (determined in accordance with Regulation U), on a consolidated basis, of
the property and assets of the Company and its Subsidiaries (other than any
Margin Stock) that is subject to the provisions of Section 5.2(d).
"Revolving Credit Advance" shall mean any Revolving Credit Loan, any
Letter of Credit Advance and any Swing Line Loan.
"Revolving Credit Loan" shall mean any Borrowing under Section 2.6 and
made pursuant to Section 2.1(a).
"Revolving Credit Note" shall mean any promissory note of the Borrowers
evidencing the Revolving Credit Loans in substantially the form annexed hereto
as Exhibit D, as amended or
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modified from time to time and together with any promissory note or notes issued
in exchange or replacement therefor.
"Short Term Borrowings" shall mean all Indebtedness for borrowed money
with an original maturity less than one year, other than the Advances.
"S/L/C" shall mean any standby letter of credit issued by the Agent
hereunder.
"Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors'
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and of
record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" shall mean a Subsidiary of the Company.
"Subordinated Debt" of any person shall mean, as of any date, that
Indebtedness of such person for borrowed money which is expressly subordinate
and junior in the right of payment to the Advances of such person to the Banks
in manner and by agreement satisfactory in form and substance to the Required
Banks, which consent and agreement may not be unreasonably withheld.
"Swing Line Facility" shall have the meaning specified in Section
2.1(b).
"Swing Line Loan" shall mean any borrowing under Section 2.6 and made
pursuant to Section 2.1(b).
"Swing Line Note" means the promissory note of the Company payable to
the order of the Agent, in substantially the form annexed hereto as Exhibit E,
as amended or modified from time to time and together with any promissory note
or notes issued in exchange or replacement therefor.
"Termination Date" shall mean the earlier to occur of (a) October 31,
2002, or such later date to which the Termination Date is extended pursuant to
Section 2.1(d), and (b) the date on which the Commitments shall be terminated
pursuant to Section 2.4 or 6.2.
"Total Capitalization" of any person shall mean the sum of Net Worth of
such person and Funded Debt of such person.
"Total Commitments" shall mean the aggregate amount of Commitments of
all Banks as set forth on the signature pages of this Agreement, as reduced or
modified from time to time pursuant to Section 2.4 or Section 8.6.
"Treasury Manager" includes any Affiliate of the Company appointed in
writing by the Company and the Borrowers as Treasury Manager under this
Agreement in the place of the person named above, and which is accepted by the
Agent for that purpose.
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"Unfunded Benefit Liabilities" shall mean, with respect to any Plan as
of any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
"Unrestricted Margin Stock" means any Margin Stock owned by the Company
or any of its Subsidiaries which is not Restricted Margin Stock.
1.2 Other Definitions; Rules of Construction. As used herein, the terms
"Agent", "Banks", "Company", "Borrowing Subsidiary", "Borrowing Subsidiaries"
and "this Agreement" shall have the respective meanings ascribed thereto in the
introductory paragraph of this Agreement. Such terms, together with the other
terms defined in Section 1.1, shall include both the singular and the plural
forms thereof and shall be construed accordingly. All computations required
hereunder and all financial terms used herein shall be made or construed in
accordance with generally accepted accounting principles unless such principles
are inconsistent with the express requirements of this Agreement. Use of the
terms "herein", "hereof", and "hereunder" shall be deemed references to this
Agreement in its entirety and not to the Section or clause in which such term
appears. References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided.
ARTICLE II
THE COMMITMENTS AND THE ADVANCES
2.1 Commitments of the Banks.
(a) Revolving Credit Advances. Each Bank agrees, for itself
only, subject to the terms and conditions of this Agreement, to make Revolving
Credit Loans to the Borrowers pursuant to Section 2.6 and to participate in
Letter of Credit Advances to the Borrowers pursuant to Section 2.6, from time to
time from and including the Effective Date to but excluding the Termination
Date, not to exceed in aggregate principal amount at any time outstanding the
amount determined pursuant to Section 2.1(c). On the date of each Advance, the
Dollar Equivalent on such date of all Advances outstanding, including the
Advances to be made or requested on such date, shall not exceed the aggregate
Commitments.
(b) Swing Line Loan.
(i) The Treasury Manager may request the
Agent to make, and the Agent may, in its sole discretion provided that the
requirements of Section 2.8 are complied with by the Borrowers at the time of
such request, make, Swing Line Loans to the Borrowers from time to time on any
Business Day during the period from the Effective Date until the Termination
Date in an aggregate principal amount not to exceed at any date the lesser of
(A) $25,000,000 (the "Swing Line Facility") and (B) the aggregate of the unused
portions of the Commitments of the Banks as of such date. Each Bank's Commitment
shall be deemed utilized by an amount equal to such Bank's pro rata share (based
on such Bank's Commitment) of each
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Swing Line Loan for purposes of determining the amount of Revolving Credit
Advances required to be made by such Bank. Swing Line Loans shall bear interest
at the Interbank Offered Rate or the Negotiated Rate, as the Borrowers may elect
hereunder. Within the limits of the Swing Line Facility, so long as the Agent,
in its sole discretion, elects to make Swing Line Loans, the Borrowers may
borrow and reborrow under this Section 2.1(b)(i).
(ii) The Agent may at any time in its
sole and absolute discretion require that any Swing Line Loan be refunded by a
Revolving Credit Loan which is an Interbank Offered Rate Loan in the same
Permitted Currency in which such Swing Line Loan is denominated, and upon notice
thereof by the Agent to the Company and the Banks, the Borrowers shall be deemed
to have requested a Revolving Credit Loan bearing interest at the Interbank
Offered Rate with an Interbank Interest Period of one month in an amount equal
to the amount of any such Swing Line Loan in the same Permitted Currency in
which such Swing Line Loan is denominated, and such Revolving Credit Loan shall
be made to refund such Swing Line Loan. Each Bank shall be absolutely and
unconditionally obligated (except as set forth in Section 2.1(b)(i)) to fund its
pro rata share (based on such Bank's Commitment) of such Revolving Credit Loan
and such obligation shall not be affected by any circumstance, including,
without limitation, (i) any set-off, counterclaim, recoupment, defense or other
right which such Bank or the Company or any of its Subsidiaries may have against
the Agent, any Borrower or any of their respective Subsidiaries or anyone else
for any reason whatsoever; (ii) the occurrence or continuance of a Default or an
Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of any Borrower or any of its Subsidiaries; (iv) any breach of this
Agreement by any Borrower or any of their respective Subsidiaries or any other
Bank; or (v) any other circumstance, happening or event whatsoever, whether or
not similar to any of the foregoing (including any Borrower's failure to satisfy
any conditions contained in Article II or any other provision of this
Agreement).
(c) Limitation on Amount of Advances. Notwithstanding anything
in this Agreement to the contrary, the aggregate principal amount of the
Revolving Credit Advances made by any Bank at any time outstanding shall not
exceed the amount of its respective Commitment as of the date any such Advance
is made, provided, however, that the aggregate principal amount of Letter of
Credit Advances outstanding at any time shall not exceed $10,000,000.
(d) Extensions.
The Banks shall consider annual requests for the
extension of the Termination Date. The Company shall deliver a notice in writing
to the Agent on or before August 31 of each year in the event the Company
chooses not to extend such Termination Date. The Agent shall provide notice to
each of the Banks within five (5) Business Days after August 31 of each year as
to whether the Agent has or has not received such election by the Company not to
extend such Termination Date. Each of the Banks agrees to provide notice in
writing to the Agent of its agreement or refusal to extend such Termination Date
on or before October 31 of each year; provided, however, that the failure of any
Bank to so communicate its agreement or refusal shall be deemed to be such
Bank's refusal to so extend the Termination Date. The
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determination to extend or not to extend the Termination Date shall be given or
withheld by each Bank in its absolute and sole discretion and any such agreement
or refusal once given shall not be revocable by any Bank prior to the then
applicable Termination Date. No extension of the Termination Date shall in any
event be effective until the Agent shall have received agreements to so extend
from each of the Banks; provided, however, that if any Bank refuses to extend
the Termination Date, the Agent shall provide notice to the Company and (i) the
Commitment of each Bank shall remain unchanged and the Total Commitment shall be
modified accordingly or (ii) additional lenders, as selected by the Company,
shall be added to the Agreement.
(e) Non-Pro Rata Loans.
(i) Each of the Banks shall deliver, on or
before the Effective Date, a list of all Permitted Currencies in which such Bank
can fund Loans hereunder free of withholding taxes, which list may be updated
from time to time by any Bank delivering an update of such list to the Agent.
Notwithstanding anything contained herein to the contrary, each of the
Borrowers, the Banks and the Agent agree that a Bank shall not fund its pro rata
portion of any Revolving Credit Loan if such Bank cannot make such Revolving
Credit Loan free of withholding taxes so long as one or more Banks is able to
make such Revolving Credit Loan free of withholding taxes. The non-pro rata
funding of such Revolving Credit Loans shall not affect the pro rata share of
the aggregate amount of Advances outstanding at any time.
(ii) Any funding Bank under Section 2.1(e)(i)
above may at any time in its sole discretion require that the non-funding Bank
or Banks fund each of their pro rata portion of the Revolving Credit Loans
herein described. Each non-funding Bank shall be absolutely and unconditionally
obligated to fund its pro rata share (based on such Bank's Commitment) of such
Revolving Credit Loan and such obligation shall not be affected by any
circumstance, including, without limitation (A) any set-off, counterclaim,
recoupment, defense or other right which such Bank or the Company or any of its
Subsidiaries may have against the Agent, any Borrower or any of their respective
Subsidiaries or anyone else for any reason whatsoever; (B) the occurrence or
continuance of a Default or an Event of Default; (C) any adverse change in the
condition (financial or otherwise) of any Borrower or any of its Subsidiaries;
(D) any breach of this Agreement by any Borrower or any of their respective
Subsidiaries or any other Bank; or (E) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing (including any
Borrower's failure to satisfy any conditions contained in Article II or any
other provision of this Agreement). Any Bank which requires payments from any
Borrower pursuant to Section 3.4 with respect to its making of any Loan
described in this Section 2.1(e)(ii) may be replaced by the Company in its sole
discretion.
2.2 Bid-Option Loans.
(a) The Bid-Option. From the Effective Date to but excluding
the Termination Date, the Treasury Manager may, as set forth in this Section
2.2, request the Banks to make offers to make Bid-Option Loans to a Designated
Borrower. Each Bank may, but shall have no obligation to, make such offers and
such Designated Borrower may, but shall have no obligation to, accept any such
offers, in the manner set forth in this Section 2.2; furthermore,
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each Bank may limit the aggregate amount of Bid-Option Loans when quoting rates
for more than one Bid-Option Interest Period in any Bid-Option Quote, provided
that such limitation shall not be less than the minimum amounts required
hereunder for Bid-Option Loans and the Designated Borrower may choose among the
Bid-Option Loans if such limitation is imposed; provided, that the aggregate
outstanding principal amount of Bid-Option Loans shall not at any time exceed
the lower of (i) the excess of (A) the aggregate amount of the Commitments over
(B) the sum of the aggregate outstanding principal amount of Revolving Credit
Advances or (ii) forty percent (40%) of the aggregate amount of the Commitments
(as the same may be reduced in accordance with the terms of this Agreement);
(b) Bid-Option Quote Request. When the Treasury Manager wishes
to request offers to make Bid-Option Loans under this Section 2.2, it shall
transmit to the Agent by telex or telecopy a Bid-Option Quote Request
substantially in the form of Exhibit F hereto so as to be received no later than
11:00 a.m. Detroit time on the Business Day next preceding the date of the Loan
proposed therein specifying:
(i) the proposed date of the Bid-Option Loan,
which shall be a Business Day;
(ii) the Designated Borrower;
(iii) the aggregate amount of such Bid-Option
Loan, which shall be a minimum of $5,000,000 or a larger multiple of $1,000,000;
and
(iv) the duration of the Interest Period
applicable thereto, subject to the provisions of the definition of Interest
Period.
A Borrower may request offers to make Bid-Option Loans for more than one
Bid-Option Interest Period in a single Bid-Option Quote Request.
(c) Invitation for Bid-Option Quotes. Promptly upon receipt of
a Bid-Option Quote Request, the Agent shall send to the Banks by telecopy (or
telephone promptly confirmed by telecopy) an Invitation for Bid-Option Quotes
substantially in the form of Exhibit G hereto, which shall constitute an
invitation by the Treasury Manager and the Designated Borrower to each Bank to
submit Bid-Option Quotes offering to make the Bid-Option Loans to which such
Bid-Option Quote Request relates in accordance with this Section 2.2.
(d) Submission and Contents of Bid-Option Quotes.
(i) Each Bank may submit a Bid-Option Quote
containing an offer or offers to make Bid-Option Loans in response to any
Invitation for Bid-Option Quotes. Each Bid-Option Quote must comply with the
requirements of this subsection (d) and must be submitted to the Agent by
telecopy (or by telephone promptly confirmed by telecopy) at its office referred
to in Section 8.2 not later than 10:00 a.m. Detroit time on the proposed date of
the Borrowing; provided that Bid-Option Quotes submitted by the Agent (or any
Affiliate of the Agent) in the
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capacity of a Bank may be submitted, and may only be submitted, if the Agent or
such Affiliate notifies the Borrower of the terms of the offer or offers
contained therein not later than 9:45 a.m. Detroit time on the proposed date of
such Borrowing. Subject to Article VI, any Bid-Option Quote so made shall be
irrevocable except with the written consent of the Agent given on the
instructions of the Treasury Manager.
(ii) Each Bid-Option Quote shall be in
substantially the form of Exhibit H hereto, but may be submitted to the Agent by
telephone with prompt confirmation by delivery to the Agent of such written
Bid-Option Quote, and shall in any case specify:
(A) the proposed date of the Borrowing;
(B) the principal amount of the
Bid-Option Loan for which each such offer is being made, which principal amount
(x) must be in a minimum of $5,000,000 or a larger multiple of $1,000,000, and
(y) may not exceed the principal amount of the Bid-Option Loans for which offers
were requested;
(C) the Interest Period(s) for which
each such Bid-Option Rate is offered;
(D) the rate of interest per annum
(rounded to the nearest 1/100 of 1%) (the "Bid-Option Rate") offered for each
such Bid-Option Loan;
(E) the identity of the quoting Bank.
(iii) Any Bid-Option Quote shall be disregarded
if it:
(A) is not substantially in the form of
Exhibit H hereto (or is not submitted by telephone to the Agent with prompt
written confirmation to follow) or does not specify all of the information
required by clause (ii) of this subsection (d);
(B) contains qualifying, conditional or
similar language;
(C) proposes terms other than or in
addition to those set forth in the applicable Invitation for Bid-Option Quotes;
or
(D) arrives after the time set forth in
Section 2.2(d)(i);
provided that a Bid-Option Quote shall not be disregarded pursuant to clause (B)
or (C) above solely because it contains an indication that an allocation that
might otherwise be made to it pursuant to Section 2.2(g) would be unacceptable.
The Agent shall notify the Treasury Manager of any disregarded Bid-Option Quote.
(e) Notice to Borrower. The Agent shall promptly notify the
Treasury Manager of the terms of any Bid-Option Quote submitted by a Bank that
is in accordance with
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Section 2.2(d). Any Bid-Option Quote not made in accordance with Section 2.2(d)
shall be disregarded by the Agent. The Agent's notice to the Treasury Manager
shall specify (i) the aggregate principal amount of Bid-Option Loans for which
offers have been received for each Bid-Option Interest Period specified in the
related Bid-Option Quote Request, and (ii) the respective principal amounts and
respective Bid-Option Rates so offered.
(f) Acceptance and Notice by Borrower. Not later than 11:00
a.m. Detroit time on the proposed date of a Borrowing, the Treasury Manager
shall notify the Agent of the Designated Borrower's acceptance or non-acceptance
of the offers so notified to it pursuant to subsection (e) of this Section and
the Agent shall, promptly upon receiving such notice from the Treasury Manager,
notify each Bank whose Bid-Option Quote has been accepted. In the case of
acceptance, such notice (a "Notice of Bid-Option Loan") shall specify the
aggregate principal amount of offers for the applicable Interest Period(s) that
have been accepted. The Borrower may accept any Bid-Option Quote in whole or in
part; provided that:
(i) the aggregate principal amount of each
Bid-Option Loan may not exceed the applicable amount set forth in the related
Bid-Option Quote Request for the applicable Bid-Option Interest Period;
(ii) the principal amount of each Bid-Option Loan
must be $5,000,000 or a larger multiple of $1,000,000;
(iii) acceptance of offers may only be made on the
basis of ascending Bid-Option Rates; and
(iv) the Borrower may not accept any offer that
is described in Section 2.2(d)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(g) Allocation by Agent. If offers are made by two or more
Banks with the same Bid-Option Rates for a greater aggregate principal amount
than the amount in respect of which offers are accepted for the related Interest
Period, the principal amount of Bid-Option Loans in respect of which such offers
are accepted shall be allocated by the Agent among such Banks as nearly as
possible (in such multiples, not greater than $100,000, as the Agent may deem
appropriate) in proportion to the aggregate principal amount of such offers.
Determinations by the Agent of the amounts of Bid-Option Loans shall be
conclusive in the absence of manifest error.
2.3 Effect on Commitments. Notwithstanding anything in this Agreement
to the contrary, the sum of the aggregate outstanding principal amount of all
Revolving Credit Loans plus, all Letter of Credit Advances (being the maximum
amount available to be drawn under the related Letters of Credit plus the amount
of any draws under Letters of Credit that have not been reimbursed) plus, all
Bid-Option Loans plus, all Swing Line Loans shall not at any time exceed the
aggregate amount of the Commitments of all Banks. Each Bank's obligation to make
its pro rata portion of any subsequently requested Revolving Credit Loan or
Letter of Credit Advance shall not be affected by the making by such Bank of a
Bid-Option Loan, and the Bank which has
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outstanding Bid-Option Loans may be obligated to exceed its Commitment, and
provided, that, as stated above, the aggregate principal amount of all Revolving
Credit Loans, all Letters of Credit Advances, all Swing Line Loans and all
Bid-Option Loans shall not at any time exceed the aggregate amount of the
Commitments of all Banks.
2.4 Termination and Reduction of Commitments.
(a) The Company shall have the right to terminate or reduce
the Commitments at any time and from time to time at its option, provided that
(i) the Treasury Manager shall give five days' prior written notice of such
termination or reduction to the Agent (with sufficient executed copies for each
Bank) specifying the amount and effective date thereof, (ii) each partial
reduction of the Commitments shall be in a minimum amount of $5,000,000 and in
integral multiples of $1,000,000 and shall reduce the Commitments of all of the
Banks proportionately in accordance with the respective commitment amounts for
each such Bank set forth in the signature pages hereof next to the name of each
such Bank, (iii) no such termination or reduction shall be permitted with
respect to any portion of the Commitments as to which a request for a Borrowing
pursuant to Section 2.6 is then pending and (iv) the Commitments may not be
terminated if any Advances are then outstanding and may not be reduced below the
principal amount of Advances then outstanding.
The Commitments or any portion thereof terminated or reduced pursuant to this
Section 2.4(a), whether optional or mandatory, may not be reinstated. The
Borrowers shall immediately prepay the Loans to the extent they exceed the
reduced aggregate Commitments pursuant hereto, and any reduction hereunder shall
reduce the Commitment amount of each Bank proportionately in accordance with the
respective Commitment amounts for each such Bank set forth on the signature
pages hereof next to the name of each such Bank.
(b) For purposes of this Agreement, a Letter of Credit Advance
(i) shall be deemed outstanding in an amount equal to the sum of the maximum
amount available to be drawn under the related Letter of Credit on or after the
date of determination and on or before the stated expiry date thereof plus the
amount of any draws under such Letter of Credit that have not been reimbursed
and (ii) shall be deemed outstanding at all times on and before such stated
expiry date or such earlier date on which all amounts available to be drawn
under such Letter of Credit have been fully drawn, and thereafter until all
related reimbursement obligations have been paid. Upon each payment made by the
Agent in respect of any draft or other demand for payment under any Letter of
Credit, the amount of any Letter of Credit Advance outstanding immediately prior
to such payment shall be automatically reduced by the amount of each Revolving
Credit Loan deemed advanced in respect of the related reimbursement obligation
of the Borrower.
2.5 Fees.
(a) The Company agrees to pay to the Banks a facility fee on
the daily average amount of the Commitments, whether used or unused, for the
period from the Effective Date to but excluding the Termination Date, at a rate
equal to the Applicable Margin for the facility fee.
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Accrued facility fees shall be payable quarterly in arrears in Dollars within
five (5) days of receipt of an invoice prepared by the Agent containing a
computation of facility fees due computed on the basis of 360 days and assessed
for the actual number of days elapsed, which invoice shall be prepared as of the
last Business Day of each March, June, September and December, commencing on the
first such Business Day occurring after the date of this Agreement, and on the
Termination Date.
(b) The Borrowers agree to pay (i) with respect to S/L/Cs, a
fee to the Banks computed at the Applicable Margin on the maximum amount
available to be drawn from time to time under such S/L/C for the period from and
including the date of issuance of such S/L/C to and including the stated expiry
date of such S/L/C, which fee shall be paid annually in advance at the time such
S/L/C is issued or amended, a portion of which the Agent shall retain for its
own account to be negotiated between the Agent and the Banks at the time of the
initial request of a Letter of Credit Advance, and (ii) with respect to C/L/Cs,
a fee to the Banks to be negotiated at the time of issuance between the Agent
and the Borrower requesting such C/L/C, which fees shall be paid at each time as
any C/L/C is presented or drawn upon, in whole or in part. Such fees are
nonrefundable and the Borrowers shall not be entitled to any rebate of any
portion thereof if such Letter of Credit does not remain outstanding through its
stated expiry date or for any other reason. The Borrowers further agree to pay
to the Agent, on demand, such other customary and reasonable administrative
fees, charges and expenses of the Agent in respect of the issuance, negotiation,
acceptance, amendment, transfer and payment of such Letter of Credit or
otherwise payable pursuant to the application and related documentation under
which such Letter of Credit is issued in accordance with a schedule of fees
provided by the Agent to the Borrowers.
(c) The Borrowers agrees to pay to the Agent an agency fee for
its services as Agent under this Agreement in such amounts as may from time to
time be agreed upon by the Borrowers and the Agent.
2.6 Disbursement of Revolving Credit Advances.
(a) Except with respect to Swing Line Loans, the Treasury
Manager shall give the Agent notice of its request for each Revolving Credit
Advance in substantially the form of Exhibit I hereto at the Applicable Lending
Office of the Agent with respect to such Advance not later than 10:00 a.m. local
time of the Applicable Lending Office (i) three (3) Interbank Business Days
prior to the date such Advance is requested to be made if such Borrowing is to
be made as an Interbank Offered Rate Revolving Credit Borrowing, and (ii) three
(3) Business Days prior to the date any Letter of Credit Advance is requested to
be made and (iii) on the date such Revolving Credit Loan is requested to be made
if such Revolving Credit Loan is to be made as a Negotiated Rate Revolving
Credit Borrowing or a Floating Rate Revolving Credit Borrowing, which notice
shall specify the Designated Borrower for which such Advance is requested,
whether an Interbank Offered Rate Loan, Negotiated Rate Loan, Floating Rate Loan
or a Letter of Credit Advance is requested and, in the case of each requested
Fixed Rate Revolving Credit Loan, the Interest Period to be initially applicable
to such Loan and the Permitted Currency in which such Loan is to be denominated.
With respect to Swing Line Loans, the Treasury
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Manager shall give the Agent notice of its request for each Swing Line Loan in
substantially the form of Exhibit I hereto at the Applicable Lending Office of
the Agent with respect to such Advance not later than 1:00 p.m. local time of
the Applicable Lending Office on the same Business Day any Swing Line Loan is
requested to be made which notice shall specify the Designated Borrower for
which such Swing Line Loan is requested. The Agent, on the same day any such
notice is given, shall provide notice of such requested Revolving Credit Loan to
each Bank (which notice shall be provided by 2:00 p.m. local time of the
Applicable Lending Office with respect to Floating Rate Loans or Negotiated Rate
Loans). Subject to the terms and conditions of this Agreement, the proceeds of
each such requested Revolving Credit Loan shall be made available to the
Designated Borrower requesting such Loan by depositing the proceeds thereof, in
immediately available, freely transferable cleared funds, in the case of any
Revolving Credit Loan denominated in Dollars in an account maintained and
designated by such Borrower, and, in all other cases, in an account maintained
and designated by such Borrower at a bank acceptable to the Agent in the
principal financial center of the country issuing the Permitted Currency in
which such Loan is denominated or in such other place specified by the Agent.
Subject to the terms and conditions of this Agreement, the Agent shall, on the
date any Letter of Credit Advance is requested to be made, issue the related
Letter of Credit on behalf of the Banks for the account of the Designated
Borrower requesting such Letter of Credit. Notwithstanding anything herein to
the contrary, the Agent may decline to issue any requested Letter of Credit on
the basis that the beneficiary, the purpose of issuance or the terms or the
conditions of drawing are unacceptable to it in its discretion.
(b) Each Bank, on the date any Revolving Credit Loan is
requested to be made, shall make its pro rata share of such Revolving Credit
Loan available in immediately available, freely transferable cleared funds for
disbursement to the Designated Borrower requesting such Loan pursuant to the
terms and conditions of this Agreement, in the case of any Revolving Credit Loan
denominated in Dollars, at the principal office of the Agent and, in all other
cases, to the account of the Agent at its designated branch or correspondent
bank in the country issuing such Permitted Currency in which such Loan is
denominated or at such other place specified by the Agent. Unless the Agent
shall have received notice from any Bank prior to the date such Revolving Credit
Loan is requested to be made under this Section 2.6 that such Bank will not make
available to the Agent such Bank's pro rata portion of such Loan, the Agent may
assume that such Bank has made such portion available to the Agent on the date
such Loan is requested to be made in accordance with this Section 2.6. If and to
the extent such Bank shall not have so made such pro rata portion available to
the Agent, the Agent may (but shall not be obligated to) make such amount
available to such Designated Borrower, and such Bank agrees to pay to the Agent
forthwith on demand such amount together with interest thereon, for each day
from the date such amount is made available to such Designated Borrower by the
Agent until the date such amount is repaid to the Agent, at a rate per annum
equal to the Federal Funds Rate or the relevant market rate with respect to
Permitted Currencies other than Dollars then in effect. If such Bank shall pay
such amount to the Agent together with interest, such amount so paid shall
constitute a Revolving Credit Loan by such Bank as part of the related Borrowing
for purposes of this Agreement. The failure of any Bank to make its pro rata
portion of any such Borrowing available to the Agent shall not relieve any other
Bank of its obligation to make available its pro rata portion of such Loan on
the date such Loan is requested to be made, but no Bank shall be
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responsible for failure of any other Bank to make such pro rata portion
available to the Agent on the date of any such Loan.
(c) (i) Each Bank shall maintain in accordance with its usual
practice an account or accounts evidencing indebtedness of each Borrower to such
Bank resulting from each Loan of such Bank from time to time, including the
amounts of principal and interest payable thereon and paid to such Bank from
time to time under this Agreement.
(ii) The Agent shall maintain an account for each
Borrower in its books and records with a subaccount for each Bank, in which
shall be recorded (a) the amount of each Loan made hereunder, the type thereof
and each Interest Period applicable thereto, (b) the amount of any principal or
interest due and payable or to become due and payable from each Borrower to each
Bank hereunder in respect of the Loans and (c) both the amount of any sum
received by the Agent hereunder from each Borrower in respect of the Loans and
each Bank's share thereof.
(iii) The books and records of the Agent and of
each Bank maintained pursuant to this Section 2.6(c) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of each Borrower therein recorded; provided, however,
that the failure of any Bank or the Agent to maintain any such books and records
or any error therein, shall not in any manner affect the obligation of each
Borrower to repay (with applicable interest) the Loans made to such Borrower by
such Bank in accordance with the terms of this Agreement.
(iv) Each Borrower agrees that, upon the request
to the Agent by any Bank, such Borrower will execute and deliver to such Bank a
Revolving Credit Note and a Swing Line Note (if applicable) of such Borrower
evidencing the Loans of such Bank; provided, that the delivery of such Notes
shall not be a condition precedent to the Effective Date. Notwithstanding
anything herein to the contrary, any and all references in this Agreement or any
other Loan Document to any amounts due or outstanding under the Notes or
evidenced by the Notes shall, in the event Notes are not executed and delivered
in accordance with this Section 2.6(c), be deemed to refer to the Advances and
all other amounts outstanding under this Agreement.
(v) Subject to the terms and conditions of this
Agreement, each Borrower may borrow Revolving Credit Loans under this Section
2.6, prepay Revolving Credit Loans pursuant to Section 3.1 and reborrow
Revolving Credit Loans under this Section 2.6.
(d) All Bid-Option Loans shall be disbursed directly by
the Bank making such Bid-Option Loan to the Designated Borrower by 1:30 p.m.
Detroit time on the date such Bid-Option Loan is requested to be made via wire
transfer in immediately available funds to NBD Bank, 611 Woodward Avenue,
Detroit, Michigan 48226, ABA Number 072000326, Attention: Agency Administration,
Reference: Invacare Bid-Option, confirm to Agency Administration, Facsimile No.
(313) 225-2747 or as otherwise directed by the Borrowers.
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(e) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized that the
Agent has the sole obligation under this Agreement to issue Letters of Credit on
behalf of the Banks, and the Commitment of each Bank with respect to Letter of
Credit Advances is expressly conditioned upon the Agent's performance of such
obligations. Upon such issuance by the Agent, each Bank shall automatically
acquire a pro rata risk participation interest in such Letter of Credit Advance
based on the amount of its respective Commitment. If the Agent shall honor a
draft or other demand for payment presented or made under any Letter of Credit,
the Agent shall provide notice thereof to each Bank (which notice shall be
provided by 2:00 p.m. Detroit time) on the date such draft or demand is honored
unless a Borrower shall have satisfied its reimbursement obligation by payment
to the Agent on such date. Each Bank, on such date, shall make its pro rata
share of the amount paid by the Agent available in immediately available funds
at the principal office of the Agent for the account of the Agent. If and to the
extent such Bank shall not have made such pro rata portion available to the
Agent, such Bank and the Borrowers severally agree to pay to the Agent forthwith
on demand such amount together with interest thereon, for each day from the date
such amount was paid by the Agent until such amount is so made available to the
Agent at a per annum rate equal to the Federal Funds Rate or the relevant market
rate with respect to Permitted Currencies other than Dollars. If such Bank shall
pay such amount to the Agent together with such interest, such amount so paid
shall constitute a Revolving Credit Loan by such Bank as part of the Revolving
Credit Borrowing disbursed in respect of the reimbursement obligation of the
Company for purposes of this Agreement. The failure of any Bank to make its pro
rata portion of any such amount paid by the Agent available to the Agent shall
not relieve any other Bank of its obligation to make available its pro rata
portion of such amount, but no Bank shall be responsible for failure of any
other Bank to make such pro rata portion available to the Agent.
2.7 Conditions for First Disbursement. The obligation of each Bank to
make its first Advance hereunder is subject to receipt by each Bank and the
Agent of the following documents and completion of the following matters, in
form and substance reasonably satisfactory to each Bank and the Agent:
(a) Charter Documents. Certificates of recent date of the
appropriate authority or official of the Company's state of incorporation
listing all charter documents of the Company, on file in that office and
certifying as to the good standing and corporate existence of the Company,
together with copies of such charter documents of the Company, certified as of a
recent date by such authority or official and certified as true and correct as
of the Effective Date by a duly authorized officer of the Company;
(b) By-Laws and Corporate Authorizations. Copies of the
by-laws of the Company together with all authorizing resolutions and evidence of
other corporate action taken by the Company to authorize the execution, delivery
and performance by the Company of this Agreement, the Guaranty and the Notes and
the consummation by the Company of the transactions contemplated hereby,
certified as true and correct as of the Effective Date by a duly authorized
officer of the Company;
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(c) Incumbency Certificate. Certificates of incumbency of each
Borrower containing, and attesting to the genuineness of, the signatures of
those officers authorized to act on behalf of such Borrower in connection with
this Agreement and the Notes and the consummation by such Borrower of the
transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of each Borrower;
(d) Guaranty. The Guaranty duly executed by the Company for
the Banks;
(e) Legal Opinion. The favorable written opinion of counsel
for the Company in the form of Exhibit J attached hereto; and
(f) Consents, Approvals, Etc. Copies of all governmental and
nongovernmental consents, approvals, authorizations, declarations, registrations
or filings, if any, required on the part of the Company in connection with the
execution, delivery and performance of this Agreement, the Guaranty and the
Notes or the transactions contemplated hereby or as a condition to the legality,
validity or enforceability of this Agreement and the Notes, certified as true
and correct and in full force and effect as of the Effective Date by a duly
authorized officer of the Company, or, if none are required, a certificate of
such officer to that effect.
2.8 Further Conditions for Disbursement. The obligation of each Bank to
make any Advance (including its first Advance), or any continuation or
conversion under Section 2.9, is further subject to the satisfaction of the
following conditions precedent:
(a) The representations and warranties contained in Article IV
hereof and in any other Loan Document shall be true and correct in all material
respects on and as of the date such Advance is made, continued or converted
(both before and after such Advance is made, continued or converted) as if such
representations and warranties were made on and as of such date; and
(b) No Event of Default and no Default shall exist or shall
have occurred and be continuing on the date such Advance is made, continued or
converted (whether before or after such Advance is made, continued or
converted);
(c) Prior to the issuance of the initial Letter of Credit
Advance, the Borrowers, the Agent and the Banks shall have entered into an
agreement containing terms and conditions regarding Letters of Credit, which
agreement shall be mutually satisfactory to all parties thereto.
(d) In the case of any Letter of Credit Advance, the Borrower
requesting such Letter of Credit Advance shall have delivered to the Agent an
application for the related Letter of Credit and other related documentation
requested by and acceptable to the Agent and the Banks appropriately completed
and duly executed on behalf of such Borrower and the Agent and the Banks shall
have negotiated all fees described in Section 2.5(b).
Each Borrower shall be deemed to have made a representation and warranty to the
Banks at the time of the making of, and the continuation or conversion of, each
Advance to the effects set forth
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in clauses (a) and (b) of this Section 2.8. For purposes of this Section 2.8,
the representations and warranties contained in Section 4.6 hereof shall be
deemed made with respect to the most recent financial statements delivered
pursuant to Section 5.1(d)(ii) and (iii).
2.9 Subsequent Elections as to Borrowings. The Treasury Manager may
elect (a) to continue a Fixed Rate Revolving Credit Borrowing of one type, or a
portion thereof, as a Fixed Rate Revolving Credit Borrowing of the then existing
type, or (b) may elect to convert a Fixed Rate Revolving Credit Borrowing, or a
portion thereof, to a Borrowing of another type or (c) elect to convert a
Floating Rate Borrowing, or a portion thereof, to a Fixed Rate Revolving Credit
Borrowing, in each case by giving notice thereof to the Agent in substantially
the form of Exhibit K hereto at the principal office of the Agent and at the
Applicable Lending Office of the Agent with respect to such Loan not later than
10:00 a.m. local time of the Applicable Lending Office (i) three (3) Interbank
Business Days prior to the date any such continuation of or conversion to a
Interbank Offered Rate Revolving Credit Borrowing is to be effective and (ii)
the date such continuation or conversion is to be effective in all other cases,
provided that an outstanding Fixed Rate Revolving Credit Borrowing may only be
converted on the last day of the then current Interest Period with respect to
such Borrowing, and provided, further, if a continuation of a Borrowing as, or a
conversion of a Borrowing to, a Fixed Rate Revolving Credit Borrowing is
requested, such notice shall also specify the Interest Period to be applicable
thereto upon such continuation or conversion. The Agent, on the day any such
notice is given, shall provide notice of such election to the Banks. If the
Treasury Manager shall not timely deliver such a notice with respect to any
outstanding Fixed Rate Revolving Credit Borrowing, the Borrower shall be deemed
to have elected to convert such Fixed Rate Revolving Credit Borrowing to a
Floating Rate Borrowing on the last day of the then current Interest Period with
respect to such Borrowing.
2.10 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for a
Fixed Rate Revolving Credit Borrowing pursuant to Section 2.6, or a request for
a continuation of a Fixed Rate Revolving Credit Borrowing as a Fixed Rate
Revolving Credit Borrowing of the then existing type, or a request for
conversion of a Fixed Rate Revolving Credit Borrowing of one type to a Fixed
Rate Revolving Credit Borrowing of another type, or a request for a conversion
of a Floating Rate Borrowing to a Fixed Rate Revolving Credit Borrowing pursuant
to Section 2.9, (a) in the case of any Interbank Offered Rate Borrowing,
deposits in the relevant Permitted Currency for periods comparable to the
Interest Period elected by the Borrower are not available to any Bank in the
relevant interbank or secondary market and such Bank has provided to the Agent
and the Borrowers a certificate prepared in good faith to that effect, or (b)
any Bank reasonably determines that the applicable interest rate (net of the
Applicable Margin for the Interbank Offered Rate) will not adequately and fairly
reflect the cost to such Bank of making, funding or maintaining the related
Fixed Rate Revolving Credit Loan and such Bank has provided to the Agent and the
Borrowers a certificate prepared in good faith to that effect, or (c) by reason
of national or international financial, political or economic conditions or by
reason of any applicable law, treaty, rule or regulation (whether domestic or
foreign) now or hereafter in effect, or the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank with any directive of such
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authority (whether or not having the force of law), including without limitation
exchange controls, it is impracticable, unlawful or impossible for any Bank (i)
to make or fund the relevant Fixed Rate Revolving Credit Borrowing or (ii) to
continue such Fixed Rate Revolving Credit Borrowing as a Fixed Rate Revolving
Credit Borrowing of the then existing type or (iii) to convert a Loan to such a
Fixed Rate Revolving Credit Loan, and such Bank has provided to the Agent and
the Borrowers a certificate prepared in good faith to that effect, then the
Borrowers shall not be entitled, so long as such circumstances continue, to
request a Fixed Rate Revolving Credit Borrowing of the affected type pursuant to
Section 2.6 or a continuation of or conversion to a Fixed Rate Revolving Credit
Borrowing of the affected type pursuant to Section 2.9. In the event that such
circumstances no longer exist, the Banks shall again honor requests, subject to
this Agreement, for Fixed Rate Revolving Credit Borrowings of the affected type
pursuant to Section 2.6, and requests for continuations of and conversions to
Fixed Rate Revolving Credit Borrowings of the affected type pursuant to Section
2.9.
2.11 Minimum Amounts; Limitation on Number of Borrowings. Except for
(a) Borrowings and conversions thereof which exhaust the entire remaining amount
of the Commitments, and (b) conversions or payments required pursuant to Section
3.1(b) or Section 3.7, each Revolving Credit Loan and each continuation or
conversion pursuant to Section 2.9 and each prepayment thereof shall be in a
minimum amount of $1,000,000 and in integral multiples of $500,000 and each
Letter of Credit shall be in a minimum amount of $250,000. Notwithstanding
anything herein to the contrary, the Borrowers shall not be permitted to request
(a) that any Revolving Credit Loan be denominated in any currency other than a
Permitted Currency or (b) that any Revolving Credit Loan other than a Interbank
Offered Rate Loan be denominated in a currency other than Dollars.
2.12 Treasury Manager. Each Borrower authorizes the Treasury Manager to
act as its manager in making requests and in carrying out as its manager and on
its behalf all other functions conferred on the Treasury Manager under this
Agreement and all other ancillary functions. Each Borrower further agrees that
the Treasury Manager may nominate any Borrower as the Designated Borrower, and
agrees that the Advances allocated to it, and all other acts carried out by the
Treasury Manager falling within its authority, shall be conclusive and binding
on it and all parties. Neither any Bank nor the Agent is or shall be deemed to
be concerted as to the Treasury Manager's compliance or otherwise with
instructions from any Borrower. The content of each request and every other
notice delivered by the Treasury Manager shall be irrevocable, and the Agent and
the Banks shall be entitled to rely fully on their content.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.1 Principal Payments.
(a) Unless earlier payment is required under this Agreement, the
Borrowers shall pay to the Banks on the Termination Date the entire outstanding
principal amount of the Revolving Credit Loans.
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(b) Unless earlier payment is required under this Agreement, the
Borrowers shall, on the maturity date of any Bid-Option Loan, pay to the Bank of
such Bid-Option Loan the outstanding principal amount of such Loan.
(c) The Borrowers may at any time and from time to time prepay all or a
portion of the Loans without premium or penalty in the case of Revolving Credit
Loans, provided that (i) a Borrower may not prepay any portion of any Loan as to
which an election for continuation of or conversion to a Fixed Rate Revolving
Credit Loan is pending pursuant to Section 2.9, and (ii) unless earlier payment
is required under this Agreement or unless Borrower pays all amounts required
pursuant to Section 3.8, any Fixed Rate Revolving Credit Loan or Bid-Option Loan
may only be prepaid on the last day of the then current Interest Period with
respect to such Loan and (iii) such prepayment shall only be permitted if the
Treasury Manager shall have given notice thereof on the Business Day of such
prepayment with respect to prepayment of Floating Rate Loans and Negotiated Rate
Loans and not less than three (3) Interbank Business Days notice thereof with
respect to prepayment of Interbank Offered Rate Loans, such notice specifying
the Loan or portion thereof to be so prepaid and shall have paid to the Banks,
together with such prepayment of principal, all accrued interest to the date of
payment on such Loan or portion thereof so prepaid and all amounts owing to the
Banks under Section 3.8 in connection with such prepayment. Upon the giving of
such notice, the aggregate principal amount of such Loan or portion thereof so
specified in such notice, together with such accrued interest and other amounts,
shall become due and payable on the specified date.
(d) If, pursuant to Section 2.9, a Borrowing, or portion thereof, is
continued or converted, such Borrowing or portion thereof shall be repaid on the
last day of the related Interest Period in the Permitted Currency in which such
Borrowing is then denominated and (i) in the case of any conversion, the Agent
shall readvance to the Borrower making such request the Equivalent of the
Original Dollar Amount of the Borrowing or portion thereof as has been so repaid
by the Borrower in the Permitted Currency requested pursuant to Section 2.7, and
(ii) in the case of any continuation when the aggregate outstanding amount of
Revolving Credit Advances exceeds 90% of the aggregate Commitments, the Agent
shall readvance to the Borrower the same amount of such Permitted Currency as
has been so repaid. The Agent shall provide notice to the Company of the
activation of clause (ii) above. For purposes of effecting the repayment
required by this Section 3.1(d), the Agent shall apply the proceeds of such
readvance toward the repayment of such Borrowing or portion thereof on the last
day of the related Interest Period. In the case of any conversion, the Agent
shall be deemed to have applied the proceeds of such Advance toward the purchase
of the Permitted Currency to be repaid and to have applied the proceeds of such
purchase toward such repayment. If after any such application there shall remain
owing an amount of the Permitted Currency due to the Agent, for the benefit of
the Banks, or if an excess of such Permitted Currency shall result, such
Borrower shall pay to the Banks, or the Banks shall pay to such Borrower the
amount of such deficiency or such excess. In the case of any continuation
described in clause (ii) above, on the last day of such Interest Period, the
Original Dollar Amount of such Borrowing or portion thereof shall be adjusted to
the amount in Dollars resulting from the conversion of the amount of such
Permitted Currency so readvanced to Dollars determined two (2) Business Days
prior to such day. On the
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date of each such conversion or continuation, if the Dollar Equivalent on such
date of all Advances, including the Advances being continued or converted,
exceeds the aggregate Commitments of the Banks, the Borrower shall take the
following actions in the following order until such excess of the Dollar
Equivalent of all Advances over the aggregate Commitments of the Banks is
eliminated: (a) on such date, first, reduce or withdraw any pending request for
a new Advance in Dollars to be made on such date, second, repay in Dollars any
Floating Rate Loan denominated in Dollars then outstanding, and third, reduce
the amount of, or repay, in the Permitted Currency in which such Borrowing is
denominated, any Advance which the Borrower has requested to be converted or
continued on such date, and (b) on the last day of each Interbank Interest
Period ending thereafter, reduce the amount of, or repay in the Permitted
Currency in which such Borrowing is denominated, any Advance which the Borrower
has requested to be converted or continued on such last day.
3.2 Interest Payments. The Borrowers shall pay interest to the Banks on
the unpaid principal amount of each Loan (other than Bid-Option Loans, for which
the interest shall be payable directly to the Bank of such Bid-Option Loan as
described in clause (b) below), for the period commencing on the date such Loan
is made until such Loan is paid in full, on each Interest Payment Date and at
maturity (whether at stated maturity, by acceleration or otherwise), and
thereafter on demand, at the following rates per annum:
(a) With respect to Revolving Credit Loans:
(i) During such periods that such Loan is a
Floating Rate Loan, the Floating Rate.
(ii) During such periods that such Loan is a
Negotiated Rate Loan, the Negotiated Rate.
(iii) During such periods that such Loan is an
Interbank Offered Rate Loan, the Interbank Offered Rate applicable to such Loan
for each related Interbank Interest Period.
(b) With respect to Bid-Option Loans, the Bid-Option Rate
quoted for such Loan by the Bank making such Loan.
(c) With respect to Swing Line Loans:
(i) During such periods that such Loan is an
Interbank Offered Rate Loan, the Interbank Offered Rate.
(ii) During such periods that such Loan is a
Negotiated Rate Loan, the Negotiated Rate Loan.
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Notwithstanding the foregoing paragraphs (a) through (c), the Borrowers shall
pay interest on demand at the Overdue Rate on the outstanding principal amount
of any Loan and any other amount payable by the Borrowers hereunder (other than
interest) on and after an Event of Default.
3.3 Payment Method.
(a) All payments to be made by the Borrowers hereunder will be
made to the Agent for the account of the Banks (i) in the case of principal and
interest on any Loan, in the Permitted Currency in which such Loan is
denominated and (ii) in all other cases, in the otherwise specified or relevant
currency, and in all cases in immediately available, freely transferable,
cleared funds, in the case of any payment to be made in Dollars, not later than
2:00 p.m. at the place for payment on the date on which such payment shall be
come due and, in all other cases, on the date on which such payment shall become
due, (x) in the case of principal and interest on any Loan denominated in a
Permitted Currency other than Dollars, by credit to the account of the Agent at
its designated branch or correspondent bank in the country issuing the relevant
Permitted Currency or in such other place specified by the Agent with respect to
such Loan pursuant to Section 2.6(b), and (y) in all other cases to the Agent at
the address of its principal office specified in Section 8.2. Payments to be
made in Dollars received after 2:00 p.m. at the place for payment shall be
deemed to be payments made prior to 2:00 p.m. at the place for payment on the
next succeeding Business Day. Each Borrower hereby authorizes the Agent to
charge its account with the Agent in order to cause timely payment of amounts
due hereunder to be made (subject to sufficient funds being available in such
account for that purpose).
(b) At the time of making each such payment, a Borrower shall,
subject to the other terms and conditions of this Agreement, specify to the
Agent that Borrowing or other obligation of the Borrowers hereunder to which
such payment is to be applied. In the event that a Borrower fails to so specify
the relevant obligation or if an Event of Default shall have occurred and be
continuing, the Agent may apply such payments as it may determine in its sole
discretion to obligations of the Borrowers to the Banks arising under this
Agreement.
(c) On the day such payments are deemed received, the Agent
shall promptly remit to the Banks their pro rata shares of such payments in
immediately available funds, (i) in the case of payments of principal and
interest on any Borrowing denominated in a Permitted Currency other than
Dollars, at an account maintained and designated by each Bank at a bank in the
principal financial center of the country issuing the Permitted Currency in
which such Borrowing is denominated or in such other place specified by the
Agent and agreed to by the Banks and (ii) in all other cases, to the Banks at
their respective address in the United States specified for notices pursuant to
Section 8.2. Such pro rata shares shall be determined with respect to each such
Bank, (i) in the case of payments of principal and interest on any Borrowing, by
the ratio which the outstanding principal balance of its Loan included in such
Borrowing bears to the outstanding principal balance of the Loans of all of the
Banks included in such Borrowing and (ii) in the case of fees paid pursuant to
Section 2.5 and other amounts payable hereunder (other than the Agent's fees
payable pursuant to Section 2.5(c) and amounts payable to any Bank under Section
2.6 or 3.6) by the ratio which the Commitment of such Bank bears to the
Commitments of all the Banks.
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(d) This Agreement arises in the context of an international
transaction, and the specification of payment in a specific currency at a
specific place pursuant to this Agreement is of the essence. Such specified
currency shall be the currency of account and payment under this Agreement. The
obligations of the Borrowers hereunder shall not be discharged by an amount paid
in any other currency or at another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid, on prompt conversion into the
applicable currency and transfer to the Banks under normal banking procedure,
does not yield the amount of such currency due under this Agreement. In the
event that any payment, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in payment of the amount of such
currency due under this Agreement, the Banks shall have an independent cause of
action against the Borrowers for the currency deficit.
(e) If for purposes of obtaining judgment in any court it
becomes necessary to convert any currency due hereunder into any other currency,
the Borrowers will pay such additional amount, if any, as may be necessary to
ensure that the amount paid in respect of such judgment is the amount in such
other currency which, when converted at the Agent's spot rate of exchange
prevailing on the date of payment, would yield the same amount of the currency
due hereunder. Any amount due from the Borrowers under this Section 3.3(e) will
be due as a separate debt and shall not be affected by judgment being obtained
for any other sum due under or in respect of this Agreement.
3.4 No Setoff or Deduction.
(a) All such payments shall be made free and clear of any
present or future taxes or withholdings and without any set-off or counter claim
or any restriction or condition or deduction whatsoever. The Designated Borrower
shall indemnify the Agent and each Bank against any taxes or charges (other than
taxes imposed on net overall income of the Bank or the Agent, by the
jurisdiction, or by any political subdivision or taxing authority of any such
jurisdiction, in which any Bank or the Agent, as the case may be, has its
principal office) which may be claimed from it in respect of the Advances or any
of them or any sum payable by the Borrowers or any of them hereunder and against
any costs, charges and expenses or liabilities in respect of such claim and such
indemnity shall survive the termination of the Commitments.
(b) If at any time any Borrower is required by law or by any
directive or order of any court of competent jurisdiction to make any deduction
or withholding of whatsoever nature from any payment due under this Agreement or
any of the Loan Documents, such Borrower will ensure that the same does not
exceed the minimum liability therefor and will (a) pay to any Bank on request
such additional amount as such Bank certifies will result in the net amount
received by it after all deductions being equal to the full amount which would
have been receivable had there been no deduction or withholding and (b) pay
forthwith to the relevant authorities the full amount of the deduction or
withholding and deliver to the Agent such an official receipt, certificate or
other proof evidencing the amount paid in respect of such deduction or
withholding. Any additional amount paid under this sub-clause shall not be
treated as interest but as agreed compensation.
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(c) If any payment by any Borrower is made to or for the
account of any Bank after deduction for or on account of tax, and additional
payments are made by the Designated Borrower then, if any Bank shall receive or
be granted a credit against or remission for such tax, such Bank shall, to the
extent that it can do so without prejudice to the retention of the amount of
such credit or remission, reimburse to the Designated Borrower such amount as
such Bank shall, in its absolute opinion, have concluded to be attributable to
the relevant tax or deduction or withholding. Nothing herein contained shall
interfere with the right of any Bank to arrange its affairs in whatever manner
it thinks fit and, in particular, the Banks shall not be under any obligation to
claim relief from its corporation profits or similar tax liability in respect of
such tax in priority to any other claims, reliefs, credits or deductions
available to it nor oblige any Bank to disclose any information relating to its
tax affairs. Such reimbursement shall be made as soon as reasonably practical
upon such Bank certifying that the amount of such credit or remission has been
received by it.
3.5 Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any installment
of principal of, or interest on, any Loan or any other amount due hereunder
becomes due and payable on a day which is not a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day and, in the case
of any installment of principal, interest shall be payable thereon at the rate
per annum determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days, 365 or 366 days, as determined by the
Agent to be the custom and practice in the relevant market, for the actual
number of days elapsed, including the first day but excluding the last day of
the relevant period.
3.6 Additional Costs.
(a) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to any Bank or the Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or the Agent
with any directive of any such authority (whether or not having the force of
law), shall (i) affect the basis of taxation of payments to any Bank or the
Agent of any amounts payable by any Borrower under this Agreement (other than
taxes imposed on the overall net income of the Bank or the Agent, by the
jurisdiction, or by any political subdivision or taxing authority of any such
jurisdiction, in which any Bank or the Agent, as the case may be, has its
principal office), or (ii) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by any Bank or the Agent, as the case may be,
or (iii) shall impose any other condition with respect to this Agreement, the
Commitments, the Notes or the Advances, and the result of any of the foregoing
is to increase the cost to any Bank or the Agent, as the case may be, of making,
funding or maintaining any Fixed Rate Loan or to reduce the amount of any sum
receivable by any Bank or the Agent, thereon, then the Borrowers shall pay to
such Bank or the Agent, as the case may be, from time to time, upon request by
such Bank (with a copy of such request to be provided to the
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Agent) or the Agent, additional amounts sufficient to compensate such Bank or
the Agent, as the case may be, for such increased cost or reduced sum receivable
to the extent, in the case of any Fixed Rate Loan, such Bank or the Agent, as
the case may be, is not compensated therefor in the computation of the interest
rate applicable to such Fixed Rate Loan. Each Bank or the Agent, as the case may
be, seeking compensation hereunder shall deliver to the Borrowers a statement
setting forth (i) such increased cost or reduced sum receivable as such Bank or
the Agent, as the case may be, has calculated in good faith, (ii) a description
of the event giving rise thereto, (iii) a calculation in reasonable detail of
the amounts requested and (iv) a statement that such Bank or the Agent, as the
case may be, has not allocated to its Commitment, Borrowings or outstanding
Loans a proportionately greater amount than is attributable to each of its other
credit extensions that are affected similarly by compliance by such Bank or the
Agent, as the case may be, whether or not such Bank or the Agent, as the case
may be, allocates any portion of such amount to such other commitments or credit
extensions. Such statement as to the amount of such increased cost or reduced
sum receivable, prepared in good faith and in reasonable detail by such Bank or
the Agent, as the case may be, and submitted by such Bank or the Agent, as the
case may be, to the Borrowers, shall be conclusive and binding for all purposes
absent manifest error in computation.
(b) In the event that any applicable law, treaty, rule or
regulation (whether domestic or foreign) now or hereafter in effect and whether
or not presently applicable to any Bank or the Agent, but applicable to banks or
financial institutions generally, or any interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by any Bank or the Agent with any
directive of any such authority (whether or not having the force of law),
including any risk-based capital guidelines, affects the amount of capital
required or expected to be maintained by such Bank or the Agent (or any
corporation controlling such Bank or the Agent) and such Bank or the Agent, as
the case may be, determines that the amount of such capital is increased by or
based upon the existence of such Bank's or the Agent's obligations hereunder and
such increase has the effect of reducing the rate of return on such Bank's or
the Agent's (or such controlling corporation's) capital as a consequence of such
obligations hereunder to a level below that which such Bank or the Agent (or
such controlling corporation) could have achieved but for such circumstances
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank or the Agent to be material, then the Borrowers shall
pay to such Bank or the Agent, as the case may be, from time to time, upon
request by such Bank (with a copy of such request to be provided to the Agent)
or the Agent, additional amounts sufficient to compensate such Bank or the Agent
(or such controlling corporation) for any reduced rate of return which such Bank
or the Agent reasonably determines to be allocable to the existence of such
Bank's or the Agent's obligations hereunder. Each Bank or the Agent, as the case
may be, seeking compensation hereunder shall deliver to the Borrowers a
statement setting forth (i) such increased cost or reduced sum receivable as
such Bank or the Agent, as the case may be, has calculated in good faith, (ii) a
description of the event giving rise thereto, (iii) a calculation in reasonable
detail of the amounts requested and (iv) a statement that such Bank or the
Agent, as the case may be, has not allocated to its Commitment, Borrowings or
outstanding Loans a proportionately greater amount than is attributable to each
of its other credit extensions that are affected similarly by compliance by such
Bank or the Agent, as the case may be, whether or not such Bank or the Agent, as
the case may be, allocates any portion of such amount to such other
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commitments or credit extensions. Such statement as to the amount of such
compensation, prepared in good faith and in reasonable detail by such Bank or
the Agent, as the case may be, and submitted by such Bank or the Agent to the
Borrowers, shall be conclusive and binding for all purposes absent manifest
error in computation.
3.7 Illegality and Impossibility. In the event that any applicable law,
treaty, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Bank, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank
with any directive of such authority (whether or not having the force of law),
including without limitation exchange controls, shall make it unlawful or
impossible for any Bank to maintain any Fixed Rate Loan under this Agreement or
shall make it impracticable, unlawful or impossible for, or shall in any way
limit or impair the ability of, any Borrower to make or any Bank to receive any
payment under this Agreement at the place specified for payment hereunder, or to
freely convert any amount paid into Dollars at market rates of exchange or to
transfer any amount paid or so converted to the address of its principal office
specified in Section 8.2, the Borrowers shall upon receipt of notice thereof
from such Bank, repay in full the then outstanding principal amount of each
Fixed Rate Loan so affected, together with all accrued interest thereon to the
date of payment and all amounts owing to such Bank under Section 3.8, (a) on the
last day of the then current Interest Period applicable to such Loan if such
Bank may lawfully continue to maintain such Loan to such day, or (b) immediately
if such Bank may not continue to maintain such Loan to such day.
3.8 Indemnification. If any Borrower makes any payment of principal
with respect to any Loan on any other date than the last day of an Interest
Period applicable thereto, (whether pursuant to Section 3.7 or Section 6.2 or
otherwise), or if any Borrower fails to borrow, continue or convert any Loan
after notice has been given to the Banks in accordance with Section 2.6 or
Section 2.9, the Borrowers shall reimburse each Bank on demand for any resulting
net loss or expense incurred by each such Bank after giving credit for any
earnings or other quantifiable financial benefit to such Bank from such Bank's
investment or other amounts prepaid or not reborrowed, including without
limitation any loss incurred in obtaining, liquidating or employing deposits
from third parties, whether or not such Bank shall have funded or committed to
fund such Loan. A statement as to the amount of such loss or expense, prepared
in good faith and in reasonable detail by such Bank and submitted by such Bank
to the Borrowers, shall be conclusive and binding for all purposes absent
manifest error in computation, provided that before delivery of such statement,
each Bank shall use reasonable efforts in accordance with its normal practices
and procedures to reduce amounts payable under this Section. Calculation of all
amounts payable to such Bank under this Section 3.8 shall be made as though such
Bank shall have actually funded or committed to fund the relevant Loan through
the purchase of an underlying deposit in an amount equal to the amount of such
Loan and having a maturity comparable to the related Interest Period; provided,
however, that such Bank may fund any Loan in any manner it sees fit and the
foregoing assumption shall be utilized only for the purpose of calculation of
amounts payable under this Section 3.8.
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3.9 Right of Banks to Fund Through Other Offices. Each Bank may perform
its Commitment to fund its pro rata share of any Loan or, with respect to the
Agent, any Swing Line Loan to the Borrowers by causing an affiliate of such Bank
to provide such funds in accordance with the terms of this Agreement. For all
purposes of this Agreement, any amounts so advanced shall be deemed to have been
advanced by such Bank, and the obligation of the Borrowers to repay such amounts
shall be as provided in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Agent and the Banks that:
4.1 Corporate Existence and Power. Each Borrower is a Person duly
organized, validly existing and in good standing under the laws of the state or
other political subdivision of its jurisdiction of incorporation or
organization, as the case may be, and is duly qualified to do business, and is
in good standing, in all additional jurisdictions where such qualification is
necessary under applicable law, except where the failure to be so qualified
would not have a material adverse effect on the business and financial condition
of the Company and its Subsidiaries taken as a whole. Each Borrower has all
requisite corporate power to own or lease the properties used in its business
and to carry on its business as now being conducted and as proposed to be
conducted, and to execute and deliver the Loan Documents to which it is a party
and to engage in the transactions contemplated by the Loan Documents.
4.2 Corporate Authority. The execution, delivery and performance by
each Borrower of the Loan Documents to which it is a party have been duly
authorized by all necessary corporate action and are not in contravention of any
material law, rule or regulation, or any judgment, decree, writ, injunction,
order or award of any arbitrator, court or governmental authority, or of the
terms of such Borrower's charter or by-laws, or of any material contract or
undertaking to which the Borrower is a party or by which the Borrower or its
property is bound or affected and do not result in the imposition of any Lien
except for Permitted Liens.
4.3 Binding Effect. The Loan Documents when delivered hereunder will
be, legal, valid and binding obligations of each Borrower party thereto
enforceable against each Borrower in accordance with their respective terms;
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
and except that the remedy of specific performance and injunctive and other
forms of equitable relief are subject to equitable defenses and to the
discretion of the court before which any proceedings may be brought.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the
corporate name, jurisdiction of incorporation and ownership of each Subsidiary
of the Company. Each Subsidiary and each corporation becoming a Subsidiary of
the Company after the date hereof is and will be a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and is and will be duly qualified to do business in each
additional
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jurisdiction where such qualification is or may be necessary under applicable
law, except where the failure to be so qualified would not have a material
adverse effect on the business or financial condition of the Company and its
Subsidiaries taken as a whole.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of each Borrower's knowledge,
threatened against or affecting any Borrower or any of their respective
Subsidiaries before or by any court, governmental authority or arbitrator, which
if adversely decided would result, either individually or collectively, in any
material adverse change in the business, properties, operations or financial
condition of the Company and its Subsidiaries taken as a whole or in any
material adverse effect on the legality, validity or enforceability of any Loan
Document and, to the best of the Company's knowledge, there is no basis for any
such action, suit or proceeding.
4.6 Financial Condition. The consolidated balance sheet of the Company
and its Subsidiaries and the consolidated statements of income and cash flow of
the Company and its Subsidiaries for the fiscal year ended December 31, 1996 and
reported on by Ernst & Young, independent certified public accountants, and the
interim consolidated statements of income, retained earnings and cash flow of
the Company and its Subsidiaries as of or for the six-month period ended June
30, 1997 and the earnings release of the Company and its Subsidiaries as of and
for the nine-month period ended September 30, 1997, copies of which have been
furnished to the Banks, fairly present, and the subsequent financial statements
of the Company and its Subsidiaries delivered pursuant to Section 5.1(d) will
fairly present the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof, and the consolidated results of
operations of the Company and its Subsidiaries for the respective periods
indicated, all in accordance with generally accepted accounting principles
consistently applied (subject, in the case of said interim statements, to normal
year-end adjustments). There has been no material adverse change in the
financial condition of the Company and its Subsidiaries taken as a whole since
September 30, 1997. There is no material Contingent Liability of the Company
that is not reflected in such financial statements or in the notes thereto.
4.7 Use of Loans. Each Borrower will use the proceeds of the Loans for
its general corporate purposes, including repayment of certain Indebtedness
under the Existing Loan Agreements and Acquisitions negotiated between the
Company and prospective sellers.
4.8 Consents, Etc. Except for such consents, approvals, authorizations,
declarations, registrations or filings delivered by the Company pursuant to
Section 2.7(g), if any, each of which is in full force and effect, no consent,
approval or authorization of or declaration, registration or filing with any
governmental authority or any nongovernmental person, including without
limitation any creditor, lessor or stockholder of any Borrower, is required on
the part of any Borrower in connection with the execution, delivery and
performance of the Loan Documents or the transactions contemplated hereby or as
a condition to the legality, validity or enforceability of the Loan Documents,
except where the failure to obtain such consents, approvals, authorizations,
declarations, registrations or filings would not have a material adverse effect
on the Company and its Subsidiaries, taken as a whole.
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4.9 Taxes. The Company has filed all material tax returns (federal,
state and local) required to be filed and have paid all taxes shown thereon to
be due, including interest and penalties, or have established adequate financial
reserves on their respective books and records for payment thereof, except where
the failure to file such returns, pay such taxes or establish such reserves
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
4.10 Title to Properties. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to this Agreement, the Company or one or more
of its Subsidiaries have good and marketable fee simple title to all of the real
property to the best of the Company's knowledge absent manifest error, and a
valid and indefeasible ownership interest in all of the other properties and
assets reflected in said balance sheet or subsequently acquired by the Company
or any such Subsidiary material to the business or financial condition of the
Company and its Subsidiaries taken as a whole, except for title defects that do
not have a material adverse effect. All of such properties and assets are free
and clear of any Lien, except for Permitted Liens.
4.11 ERISA. The Borrowers, their respective Subsidiaries, their ERISA
Affiliates and their respective Plans are in substantial compliance in all
material respects with those provisions of ERISA and of the Code which are
applicable with respect to any Plan. No Prohibited Transaction and no Reportable
Event has occurred with respect to any such Plan which would cause an Event of
Default. No Borrower, any of their respective Subsidiaries nor any of their
ERISA Affiliates is an employer with respect to any Multiemployer Plan. The
Borrowers, their respective Subsidiaries and their ERISA Affiliates have met the
minimum funding requirements under ERISA and the Code with respect to each of
their respective Plans, if any, and have not incurred any liability to the PBGC,
other than premiums which are not yet due and payable. The execution, delivery
and performance of the Loan Documents does not constitute a Prohibited
Transaction. There is no material unfunded benefit liability, determined in
accordance with Section 4001(a)(18) of ERISA, with respect to any Plan of any
Borrower, their respective Subsidiaries or their ERISA Affiliates.
4.12 Environmental and Safety Matters. Except as disclosed on Schedule
4.12, to the best of each Borrower's knowledge, each Borrower and each
Subsidiary of each Borrower is in substantial compliance with all material
federal, state and local laws, ordinances and regulations relating to safety and
industrial hygiene or to the environmental condition, including without
limitation all material Environmental Laws in jurisdictions in which any
Borrower or any such Subsidiary owns or operates, or has owned or operated, a
facility or site, or arranges or has arranged for disposal or treatment of
hazardous substances, solid waste, or other wastes, accepts or has accepted for
transport any hazardous substances, solid wastes or other wastes or holds or has
held any interest in real property or otherwise. Except as disclosed on Schedule
4.12, no written demand, claim, notice, suit, suit in equity, action,
administrative action, investigation or inquiry whether brought by any
governmental authority, private person or otherwise, arising under, relating to
or in connection with any Environmental Laws is pending or, to the best of each
Borrower's knowledge, threatened against any Borrower or any such Subsidiary,
any real property in which any Borrower or any such Subsidiary holds or has held
an interest or any past or present operation of any Borrower or any such
Subsidiary which would have a material
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adverse effect on the Company and its Subsidiaries, taken as a whole. Neither
any Borrower nor any Subsidiary of any Borrower (a) is the subject of any
federal or state investigation evaluating whether any remedial action is needed
to respond to a release of any toxic substances, radioactive materials,
hazardous wastes or related materials into the environment, or (b) has received
any notice of any toxic substances, radioactive materials, hazardous waste or
related materials in, or upon any of its properties in violation of any
Environmental Laws. As to such matters disclosed on Schedule 4.12, to the best
of each Borrower's knowledge, none will have a material adverse effect on the
financial condition or business of the Company and its Subsidiaries taken as a
whole. Except as set forth on Schedule 4.12, to the best of each Borrower's
knowledge, no release, threatened release or disposal of hazardous waste, solid
waste or other wastes is occurring or has occurred on, under or to any real
property in which any Borrower or any of their respective Subsidiaries holds any
interest or performs any of its operations, in material violation of any
Environmental Law.
4.13 No Material Adverse Change. Neither the Company nor any of its
Subsidiaries has received any notice, citation or communication of the nature
referred to in Section 5.1(d)(i), except in respect of such matters as have been
or are being remediated in all material respects or are being contested or
remediated in good faith, and, in the case of any such matter being so contested
or remediated, and as of the date of this Agreement, adequate provision for all
material costs of any remediation is reflected in the financial statements
referred to in Section 4.6 of this Agreement, and in respect of any such notice,
citation or communication received after the date of this Agreement, will be
reflected in the subsequent financial statements furnished to the Agent and the
Banks pursuant to Sections 5.1(d)(ii) and 5.1(d)(iii).
ARTICLE V
COVENANTS
5.1 Affirmative Covenants. Each Borrower covenants and agrees that,
until the Termination Date and thereafter until irrevocable payment in full of
the principal of and accrued interest on the Notes and the performance of all
other obligations of the Borrowers under this Agreement, unless the Required
Banks shall otherwise consent in writing, it shall, and shall cause each of its
Subsidiaries to:
(a) Preservation of Corporate Existence, Etc. Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except to the extent permitted by Section 5.2(h),
and its qualification as a foreign corporation in good standing in each
jurisdiction in which such qualification is necessary under applicable law,
other than where failure to so qualify will not have a material adverse effect
on the Company and its Subsidiaries taken as a whole.
(b) Compliance with Laws, Etc. Comply in all material respects
with all applicable laws, rules, regulations and orders of any governmental
authority, whether federal, state, local or foreign (including without
limitation ERISA, the Code and Environmental Laws), in effect from time to time;
and pay and discharge promptly when due all taxes, assessments and
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governmental charges or levies imposed upon it or upon its income, revenues or
property, before the same shall become delinquent or in default, as well as all
lawful claims for labor, materials and supplies or otherwise, which, if unpaid,
might give rise to Liens upon such properties or any portion thereof, except to
the extent that payment of any of the foregoing is then being contested in good
faith by appropriate legal proceedings, and except where failure to comply would
not have a material adverse effect on the Company and its Subsidiaries taken as
a whole.
(c) Maintenance of Properties; Insurance. Maintain, preserve
and protect all property that is material to the conduct of the business of any
Borrower or any of their respective Subsidiaries and keep such property in good
repair, working order and condition and from time to time make, or cause to be
made all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times in accordance with
customary and prudent business practices for similar businesses; and, maintain
in full force and effect insurance with responsible and reputable insurance
companies or associations in such amounts, on such terms and covering such
risks, as is usually carried by companies engaged in similar businesses and
owning similar properties similarly situated and maintain in full force and
effect public liability insurance, insurance against claims for personal injury
or death or property damage occurring in connection with any of its activities
or any properties owned, occupied or controlled by it, in such amount as it
shall reasonably deem necessary.
(d) Reporting Requirements. Furnish to the Banks and the Agent
the following:
(i) Promptly and in any event within five
calendar days after becoming aware of the occurrence of (A) any Event of Default
or Default, or (B) the commencement of any material litigation against, by or
affecting any Borrower or any of their respective Subsidiaries which the Company
would be required to report to the Securities and Exchange Commission, a
statement of the chief financial officer of the Company setting forth details of
such Event of Default or Default or such litigation and the action which such
Borrower or such Subsidiary, as the case may be, has taken and proposes to take
with respect thereto;
(ii) As soon as available and in any event within
50 days after the end of each of the first three fiscal quarters of each fiscal
year of the Company, the consolidated balance sheet of the Company and its
Subsidiaries as of the end of such quarter, and the related consolidated
statements of income and cash flow for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter, setting forth in
each case in comparative form the corresponding figures for the corresponding
date or period of the preceding fiscal year, all in reasonable detail and duly
certified (subject to normal year-end adjustments) by the chief financial
officer of the Company as having been prepared in accordance with generally
accepted accounting principles, together with a certificate of the chief
financial officer of the Company stating (A) that no Event of Default or Default
has occurred and is continuing or, if an Event of Default or Default has
occurred and is continuing, a statement setting forth the details thereof and
the action which the Company has taken and proposes to take with respect
thereto, and (B) that a computation (which computation shall accompany such
certificate and shall be in
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reasonable detail) showing compliance with Section 5.2(a), (b) and (c) hereof is
in conformity with the terms of this Agreement;
(iii) As soon as available and in any event within
90 days after the end of each fiscal year of the Company, a copy of the
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income and cash flow
of the Company and its Subsidiaries for such fiscal year, with a customary audit
report of Ernst & Young, or other independent certified public accountants
selected by the Company and acceptable to the Required Banks, without
qualifications unacceptable to the Required Banks, together with (A) either (I)
a written statement of the accountants that is making the examination necessary
for their report or opinion they obtained no knowledge of the occurrence of any
Default or Event of Default under this Agreement or (II) if they know of any
Default or Event of Default, their written disclosure of its nature and status,
provided that, the accountants shall not be liable directly or indirectly to
anyone for any failure to obtain knowledge of any Default or Event of Default
under this Agreement, and (B) a certificate of the chief financial officer of
the Company stating (I) that no Event of Default or Default has occurred and is
continuing or, if an Event of Default or Default has occurred and is continuing,
a statement setting forth the details thereof and the action which the Company
has taken and proposes to take with respect thereto, and (II) that a computation
(which computation shall accompany such certificate and shall be in reasonable
detail) showing compliance with Section 5.2(a), (b) and (c) hereof is in
conformity with the terms of this Agreement;
(iv) Promptly after the sending or filing
thereof, copies of all reports, proxy statements and financial statements which
the Company sends to or files with any of their respective security holders or
any securities exchange or the Securities and Exchange Commission or any
successor agency thereof;
(v) Promptly and in any event within 10 calendar
days after receiving or becoming aware thereof (A) a copy of any notice of
intent to terminate any Plan of any Borrower, their respective Subsidiaries or
any ERISA Affiliate filed with the PBGC, (B) a statement of the chief financial
officer of such Borrower setting forth the details of the occurrence of any
Reportable Event with respect to any such Plan, (C) a copy of any notice that
any Borrower, any of their respective Subsidiaries or any ERISA Affiliate may
receive from the PBGC relating to the intention of the PBGC to terminate any
such Plan or to appoint a trustee to administer any such Plan, or (D) a copy of
any notice of failure to make a required installment or other payment within the
meaning of Section 412(n) of the Code or Section 302(f) of ERISA with respect to
any such Plan; and
(vi) Promptly, such other information respecting
the business, properties, operations or condition, financial or otherwise, of
any Borrower or any of their respective Subsidiaries as any Bank or the Agent
may from time to time reasonably request.
(e) Accounting; Access to Records, Books, Etc. Maintain a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in accordance
with generally accepted accounting principles
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and to comply with the requirements of this Agreement and, on and after an Event
of Default, at any reasonable time and from time to time with prior notice to
the Company, permit any Bank or the Agent or any agents or representatives
thereof to examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, the Borrowers and their respective
Subsidiaries, and to discuss the affairs, finances and accounts of the Borrowers
and their respective Subsidiaries with their respective directors, officers,
employees and independent auditors, provided that representatives of the Company
selected by the Company are present during any such visit or discussion, and by
this provision the Company does hereby authorize such persons to discuss such
affairs, finances and accounts with any Bank or the Agent subject to the above
terms and conditions.
(f) Stamp Taxes. The Company will pay all stamp taxes and
similar taxes, if any, including interest and penalties, if any, payable in
respect of the Notes. The efficacy of this subsection shall survive the payment
in full of the Notes.
(g) Further Assurances. Will execute and deliver within 30
days after request therefor by the Required Banks or the Agent, all further
instruments and documents and take all further action that may be necessary, in
order to give effect to, and to aid in the exercise and enforcement of the
rights and remedies of the Banks and the Agent under, this Agreement and the
Notes. In addition, the Company agrees to deliver to the Agent and the Banks on
each anniversary of the Effective Date supplements to Schedule 4.4 listing any
Subsidiary not listed in Schedule 4.4 hereto.
5.2 Negative Covenants. Until the Termination Date and thereafter until
irrevocable payment in full of the principal of and accrued interest on the
Notes and the performance of all other obligations of each Borrower under this
Agreement, the Company agrees that, unless the Required Banks shall otherwise
consent in writing it shall not:
(a) Interest Coverage Ratio. Permit or suffer the Interest
Coverage Ratio to be less than (i) during any quarter in which the ratio of
Consolidated Funded Debt of the Company and its Subsidiaries to Consolidated
Total Capitalization of the Company and its Subsidiaries is greater than 0.575
to 1.00 but less than 0.65 to 1.00, 2.25 to 1.0 and (ii) at all other times, 3.0
to 1.0; in each case calculated as of the end of each fiscal quarter for the
four immediately preceding fiscal quarters.
(b) Net Worth. Permit or suffer Consolidated Net Worth of the
Company and its Subsidiaries at any time to be less than $200,000,000 plus 50%
of Cumulative Consolidated Net Income of the Company and its Subsidiaries for
each fiscal year of the Company commencing with the fiscal year ending December
31, 1998. For the purpose of calculating "Net Worth" under this Section 5.2 (b)
only (but not for calculating Net Worth for any other purpose under this
Agreement, including without limitation calculation of the Applicable Margin),
an amount shall be added back to Net Worth equal to the aggregate amount of
capital stock repurchases by the Company, not to exceed $100,000,000.
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(c) Funded Debt to Total Capitalization. Permit or suffer the
ratio of Consolidated Funded Debt of the Company and its Subsidiaries to
Consolidated Total Capitalization of the Company and its Subsidiaries to exceed
.65 to 1.0.
(d) Liens. Create, incur or suffer to exist any Lien on any of
the assets, rights, revenues or property, real, personal or mixed, tangible or
intangible, whether now owned or hereafter acquired, of the Company or any of
its Subsidiaries (except Unrestricted Margin Stock), other than:
(i) Liens for taxes not delinquent or for taxes
being contested in good faith by appropriate proceedings and as to which
adequate financial reserves have been established on its books and records;
(ii) Liens (other than any Lien imposed by ERISA)
created and maintained in the ordinary course of business which are not material
in the aggregate, and which would not have a material adverse effect on the
business or operations of the Company and its Subsidiaries taken as a whole and
which constitute (A) pledges or deposits under worker's compensation laws,
unemployment insurance laws or similar legislation, (B) good faith deposits in
connection with bids, tenders, contracts or leases to which the Company or any
of its Subsidiaries is a party for a purpose other than borrowing money or
obtaining credit, including rent security deposits, (C) liens imposed by law,
such as those of carriers, warehousemen and mechanics, if payment of the
obligation secured thereby is not yet due, (D) Liens securing taxes, assessments
or other governmental charges or levies not yet subject to penalties for
nonpayment, and (E) pledges or deposits to secure public or statutory
obligations of the Company or any of its Subsidiaries, or surety, customs or
appeal bonds to which the Company or any of its Subsidiaries is a party;
(iii) Liens affecting real property which
constitute minor survey exceptions or defects or irregularities in title, minor
encumbrances, easements or reservations of, or rights of others for, rights of
way, sewers, electric lines, telegraph and telephone lines and other similar
purposes, or zoning or other restrictions as to the use of such real property,
provided that all of the foregoing, in the aggregate, do not at any time
materially detract from the value of said properties or materially impair their
use in the operation of the businesses of the Company and its Subsidiaries taken
as a whole;
(iv) Liens existing on the date hereof upon the
same terms as the date hereof, but no extensions, renewals and replacements
thereof shall be permitted, with each existing Lien securing Indebtedness in
excess of $5,000,000 described in Schedule 5.2 hereto;
(v) Liens granted by any Subsidiary in favor of
the Company or any other Subsidiary;
(vi) The interest or title of a lessor under any
lease otherwise permitted under this Agreement with respect to the property
subject to such lease to the extent performance of the obligations of the
Company or its Subsidiary thereunder is not delinquent;
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(vii) Liens existing on property at the time of
its acquisition (other than any such Lien created in contemplation of such
acquisition), provided that the Company promptly forwards a schedule of such
Liens to the Agent after any such acquisition; and
(viii) Liens, other than Liens described in clauses
(i) through (vii) above, securing Indebtedness in an aggregate amount not to
exceed 10% of Consolidated Net Worth.
(e) Merger; Etc. Merge or consolidate or amalgamate with any
other person or take any other action having a similar effect, provided,
however, (i) a Subsidiary of the Company may merge with the Company, provided
that the Company shall be the surviving corporation, (ii) a Subsidiary of the
Company may merge or consolidate with another Subsidiary of the Company and
(iii) this Section 5.2(e) shall not prohibit any merger if the Company shall be
the surviving or continuing corporation and, immediately after such merger, no
Default or Event of Default shall exist or shall have occurred and be
continuing.
(f) Disposition of Assets; Etc. Sell, lease, license,
transfer, assign or otherwise dispose of all or a substantial portion of its
business, assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether in one or a series of transactions, other than
inventory sold in the ordinary course of business upon customary credit terms
and sales of scrap or obsolete material or equipment and Unrestricted Margin
Stock, provided, however, that this Section 5.2(f) shall not prohibit (i) any
sale of the receivable portfolio of Invacare Credit Corporation, a wholly-owned
Subsidiary of the Company; or (ii) any such sale, lease, license, transfer,
assignment or other disposition if the aggregate book value (disregarding any
write-downs of such book value other than ordinary depreciation and
amortization) of all of the business, assets, rights, revenues and property
disposed of after the date of this Agreement shall be less than 33% of the
Consolidated Net Worth of the Company and its Subsidiaries, and if immediately
after such transaction, no Default or Event of Default shall exist or shall have
occurred and be continuing.
(g) Nature of Business. Engage in any business if, as a
result, the general nature of the business, taken on a consolidated basis, which
would then be engaged in by the Company and its Subsidiaries would be
substantially changed from the general nature of the business engaged in by the
Company and its Subsidiaries on the date of this Agreement which is the
manufacture, sale or lease of home medical and extended care equipment and
related products.
(h) Negative Pledge Limitation. Enter into any agreement, with
any person, other than the Banks pursuant hereto, which prohibits or limits the
ability of any Borrower or any Guarantor to create, incur, assume or suffer to
exist any Lien upon any of its assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, whether now owned or hereafter
acquired, other than agreements evidencing Indebtedness in an aggregate amount
less than $5,000,000 or any Indebtedness assumed in connection with any
acquisition (provided that the Company shall provide notice to the Agent upon
the assumption of any Indebtedness in an
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aggregate amount exceeding $5,000,000 containing any such prohibition or
limitation), but no renewal of such assumed Indebtedness containing such
restriction shall be permitted.
ARTICLE VI
DEFAULT
6.1 Events of Default. The occurrence of any one of the following
events or conditions shall be deemed an "Event of Default" hereunder unless
waived by the Required Banks or the Banks, as required pursuant to Section 8.1:
(a) Nonpayment of Principal. Any Borrower shall fail to pay
when due any principal of the Notes and such failure shall remain unremedied for
five days; or
(b) Nonpayment of Interest. Any Borrower shall fail to pay
when due any interest or any fees or any other amount payable hereunder and such
failure shall remain unremedied for five days; or
(c) Misrepresentation. Any representation or warranty made by
any Borrower in Article IV hereof, any other Loan Document or any other
certificate, report, financial statement or other document furnished by or on
behalf of any Borrower in connection with this Agreement shall prove to have
been incorrect in any material respect when made or deemed made; or
(d) Certain Covenants. Any Borrower shall fail to perform or
observe any term, covenant or agreement contained in Section 5.2(a), (e) or (f)
hereof; or
(e) Other Defaults. Any Borrower shall fail to perform or
observe any other term, covenant or agreement contained in this Agreement or any
other Loan Document, and any such failure shall remain unremedied for 30
calendar days; or
(f) Cross Default. Any Borrower or any of their respective
Subsidiaries shall fail to pay any part of the principal of, the premium, if
any, or the interest on, or any other payment of money due under any of its
Indebtedness (other than Indebtedness hereunder), beyond any period of grace
provided with respect thereto, which individually or together with other such
Indebtedness as to which any such failure exists has an aggregate outstanding
principal amount in excess of $5,000,000; or any Borrower or any of their
respective Subsidiaries shall fail to perform or observe any other term,
covenant or agreement contained in any agreement, document or instrument
evidencing or securing any such Indebtedness having such aggregate outstanding
principal amount, or under which any such Indebtedness was issued or created,
beyond any period of grace, if any, provided with respect thereto and such
Borrower or such Subsidiary has been notified by the creditor of such default;
and the effect of any such failure is either (i) to cause, or permit the holders
of such Indebtedness (or a trustee on behalf of such holders) to cause, any
payment of such Indebtedness to become due prior to its due date or
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(ii) to permit the holders of such Indebtedness (or a trustee on behalf of such
holders) to elect a majority of the board of directors of the Company; or
(g) Judgments. One or more judgments or orders shall be
rendered against or shall affect any Borrower or any of their respective
Subsidiaries which causes or could cause a material adverse change in the
financial condition of the Company and its Subsidiaries taken as a whole or
which does or could have a material adverse effect on the legality, validity or
enforceability of any Loan Document, and either (i) such judgment or order shall
have remained unsatisfied or uninsured for a period of 21 days and such Borrower
or such Subsidiary shall not have taken action necessary to stay enforcement
thereof by reason of pending appeal or otherwise, prior to the expiration of the
applicable period of limitations for taking such action or, if such action shall
have been taken, a final order denying such stay shall have been rendered, or
(ii) enforcement proceedings shall have been commenced by any creditor upon any
such judgment or order; or
(h) ERISA. The occurrence of a Reportable Event that results
in or could result in material liability of any Borrower, any Subsidiary of any
Borrower or their ERISA Affiliates to the PBGC or to any Plan and such
Reportable Event is not corrected within thirty (30) days after the occurrence
thereof; or the occurrence of any Reportable Event which could constitute
grounds for termination of any Plan of any Borrower, their respective
Subsidiaries or their ERISA Affiliates by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer any such
Plan and such Reportable Event is not corrected within thirty (30) days after
the occurrence thereof; or the filing by any Borrower, any Subsidiary of any
Borrower or any of their ERISA Affiliates of a notice of intent to terminate a
Plan or the institution of other proceedings to terminate a Plan; or any
Borrower, any Subsidiary of any Borrower or any of their ERISA Affiliates shall
fail to pay when due any material liability to the PBGC or to a Plan; or the
PBGC shall have instituted proceedings to terminate, or to cause a trustee to be
appointed to administer, any Plan of any Borrower, their respective Subsidiaries
or their ERISA Affiliates; or any person engages in a Prohibited Transaction
with respect to any Plan which results in or could result in material liability
of the any Borrower, any Subsidiary of any Borrower, any of their ERISA
Affiliates, any Plan of any Borrower, their respective Subsidiaries or their
ERISA Affiliates or fiduciary of any such Plan; or failure by any Borrower, any
Subsidiary of any Borrower or any of their ERISA Affiliates to make a required
installment or other payment to any Plan within the meaning of Section 302(f) of
ERISA or Section 412(n) of the Code that results in or could result in liability
of any Borrower, any Subsidiary of any Borrower or any of their ERISA Affiliates
to the PBGC or any Plan; or the withdrawal of any Borrower, any of their
respective Subsidiaries or any of their ERISA Affiliates from a Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(9a)(2) of ERISA; or any Borrower, any of their respective Subsidiaries or
any of their ERISA Affiliates becomes an employer with respect to any
Multiemployer Plan without the prior written consent of the Required Banks; or
(i) Insolvency, Etc. Any Borrower shall be dissolved or
liquidated (or any judgment, order or decree therefor shall be entered), except
as otherwise provided pursuant to Section 5.2(e), or shall generally not pay its
debts as they become due, or shall admit in writing
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its inability to pay its debts generally, or shall make a general assignment for
the benefit of creditors, or shall institute, or there shall be instituted
against any Borrower, any proceeding or case seeking to adjudicate it a bankrupt
or insolvent or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief or protection of
debtors or seeking the entry of an order for relief, or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its assets, rights, revenues or property, and, if such
proceeding is instituted against any Borrower and is being contested by such
Borrower in good faith by appropriate proceedings, such proceeding shall remain
undismissed or unstayed for a period of 60 days; or any Borrower shall take any
action (corporate or other) to authorize or further any of the actions described
above in this subsection; provided, however, that none of the foregoing acts or
occurrences in this Section 6.1(i) with respect to any Borrowing Subsidiary
shall constitute an Event of Default so long as there are no Advances
outstanding to such Borrowing Subsidiary at the time of such act or occurrence,
provided, that, the Commitment of the Banks to such Borrowing Subsidiary shall
automatically terminate without notice; or
(j) Change of Control. The Company shall experience a Change
of Control. For purposes of this Section 6.1(j), a "Change of Control" shall
occur if during any twelve-month period (i) any person or group of persons
(within the meaning of Section 13 or 14 of the Securities Exchange Act of 1934,
as amended) shall have acquired beneficial ownership (within the meaning of Rule
13D-3 promulgated by the Securities and Exchange Commission under said Act) of
50% or more in voting power of the voting shares of the Company that were
outstanding as of the date of this Agreement and (ii) a majority of the board of
directors of the Company shall cease for any reason to consist of individuals
who as of a date twelve months prior to any date compliance herewith is
determined were directors of the Company.
6.2 Remedies.
(a) Upon the occurrence and during the continuance of any
Event of Default, the Agent may and, upon being directed to do so by the
Required Banks, shall by notice to the Company (i) terminate the Commitments or
(ii) declare the outstanding principal of, and accrued interest on, the Notes
and all other amounts owing under this Agreement to be immediately due and
payable, or (iii) demand immediate delivery of cash collateral, and the
Borrowers agree to deliver such cash collateral upon demand, in an amount equal
to the maximum amount that may be available to be drawn at any time prior to the
stated expiry of all outstanding Letters of Credit, or any one or more of the
foregoing, whereupon the Commitments shall terminate forthwith and all such
amounts, including cash collateral, shall become immediately due and payable,
provided that in the case of any event or condition described in Section 6.1(i)
with respect to any Borrower, the Commitments shall automatically terminate
forthwith and all such amounts, including cash collateral, shall automatically
become immediately due and payable without notice; in all cases without demand,
presentment, protest, diligence, notice of dishonor or other formality, all of
which are hereby expressly waived. Such cash collateral delivered in respect of
outstanding Letters of Credit shall be deposited in a special cash collateral
account to be held by the Agent as collateral security for the payment and
performance of the Borrowers' obligations under this Agreement to the Banks and
the Agent.
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(b) The Agent may and, upon being directed to do so by the
Required Banks, shall, in addition to the remedies provided in Section 6.2(a),
exercise and enforce any and all other rights and remedies available to it or
the Banks, whether arising under this Agreement, the Notes or under applicable
law, in any manner deemed appropriate by the Agent, including suit in equity,
action at law, or other appropriate proceedings, whether for the specific
performance (to the extent permitted by law) of any covenant or agreement
contained in this Agreement or in the Notes or in aid of the exercise of any
power granted in this Agreement or the Notes.
(c) Upon the occurrence and during the continuance of any
Event of Default, each Bank may at any time and from time to time exercise any
of its rights of set off or bankers lien that it may possess by common law or
statute without prior notice to the Borrowers, provided that each Bank may also
set off against any deposit whether or not it is then matured. Each Bank agrees
to promptly notify the Company after any such setoff and application, provided
that the failure to give such notice shall not effect the validity of such
setoff and application. The rights of such Bank under this Section 6.2(c) are in
addition to other rights and remedies which such Bank may have.
ARTICLE VII
THE AGENT AND THE BANKS
7.1 Appointment and Authorization. Each Bank hereby irrevocably
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement and the Notes as are delegated to
the Agent by the terms hereof or thereof, together with all such powers as are
reasonably incidental thereto. The provisions of this Article VII are solely for
the benefit of the Agent and the Banks, and the Borrowers shall not have any
rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as agent of the Banks and does not assume and shall not be deemed to have
assumed any obligation towards or relationship of agency or trust with or for
the Borrowers.
7.2 Agent and Affiliates. NBD Bank in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and may
exercise or refrain from exercising the same as though it were not the Agent.
NBD Bank and its affiliates may (without having to account therefor to any Bank)
accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with any Borrower or any
Subsidiary of any Borrower as if it were not acting as Agent hereunder, and may
accept fees and other consideration therefor without having to account for the
same to the Banks.
7.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of this Agreement, have a fiduciary relationship with any Bank, and no
implied covenants, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or shall otherwise exist against the Agent. As to any
matters not expressly provided for by this Agreement (including, without
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limitation, collection and enforcement actions under the Notes), the Agent shall
not be required to exercise any discretion or take any action, but the Agent
shall take such action or omit to take any action pursuant to the written
instructions of the Required Banks and may request instructions from the
Required Banks. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, pursuant to the written instructions of the Required
Banks, which instructions and any action or omission pursuant thereto shall be
binding upon all of the Banks; provided, however, that the Agent shall not be
required to act or omit to act if, in the judgment of the Agent, such action or
omission may expose the Agent to personal liability or is contrary to this
Agreement, the Notes or applicable law.
7.4 Reliance by Agent. The Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it to
be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder thereof
unless and until the Agent receives written notice of the assignment thereof
pursuant to the terms of this Agreement signed by such payee and the Agent
receives the written agreement of the assignee that such assignee is bound
hereby to the same extent as if it had been an original party hereto. The Agent
may employ agents (including without limitation collateral agents) and may
consult with legal counsel (who may be counsel for the Borrowers), independent
public accountants and other experts selected by it and shall not be liable to
the Banks, except as to money or property received by it or its authorized
agents, for the negligence or misconduct of any such agent selected by it with
reasonable care or for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
7.5 Default. The Agent shall not be deemed to have knowledge of the
occurrence of any Default or Event of Default, unless the Agent has received
written notice from a Bank or a Borrower specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event that
the Agent receives such a notice, the Agent shall give written notice thereof to
the Banks.
7.6 Liability of Agent. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to the Banks for any action taken
or not taken by it or them in connection herewith with the consent or at the
request of the Required Banks or in the absence of its or their own gross
negligence or willful misconduct. Except for duties expressly accepted by the
Agent hereunder, neither the Agent nor any of its directors, officers, agents or
employees shall be responsible for or have any duty to ascertain, inquire into
or verify (i) any recital, statement, warranty or representation contained in
this Agreement or any Note or any Guaranty, or in any certificate, report,
financial statement or other document furnished in connection with this
Agreement, (ii) the performance or observance of any of the covenants or
agreements of any Borrower or any Guarantor, (iii) the satisfaction of any
condition specified in Article II hereof, or (iv) the validity, effectiveness,
legal enforceability, value or genuineness of this Agreement or the Notes or any
collateral subject thereto or any other instrument or document furnished in
connection herewith.
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7.7 Nonreliance on Agent and Other Banks. Each Bank acknowledges and
agrees that it has, independently and without reliance on the Agent or any other
Bank, and based on such documents and information as it has deemed appropriate,
made its own credit analysis of the Borrowers and decision to enter into this
Agreement and that it will, independently and without reliance upon the Agent or
any other Bank, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decision in
taking or not taking action under this Agreement. The Agent shall not be
required to keep itself informed as to the performance or observance by any
Borrower or any Guarantor of this Agreement, the Notes or any other documents
referred to or provided for herein or to inspect the properties or books of any
Borrower or any Guarantor and, except for notices, reports and other documents
and information expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any information concerning the affairs, financial condition or
business of the Borrowers or any of their respective Subsidiaries which may come
into the possession of the Agent or any of its affiliates.
7.8 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Borrowers, but without limiting any obligation of
the Borrowers to make such reimbursement), ratably according to the respective
principal amounts of the Advances then outstanding made by each of them (or if
no Advances are at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all claims, damages,
losses, liabilities, costs or expenses of any kind or nature whatsoever
(including, without limitation, fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against the Agent in any way relating to or
arising out of this Agreement or the transactions contemplated hereby or any
action taken or omitted by the Agent under this Agreement, provided, however,
that no Bank shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including without limitation fees and expenses of
counsel) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, to the extent that
the Agent is not reimbursed for such expenses by the Borrowers, but without
limiting the obligation of the Borrowers to make such reimbursement. Each Bank
agrees to reimburse the Agent promptly upon demand for its ratable share of any
amounts owing to the Agent by the Banks pursuant to this Section. If the
indemnity furnished to the Agent under this Section shall, in the judgment of
the Agent, be insufficient or become impaired, the Agent may call for additional
indemnity from the Banks and cease, or not commence, to take any action until
such additional indemnity is furnished.
7.9 Resignation of Agent. The Agent may resign as such at any time upon
thirty days' prior written notice to the Borrowers and the Banks. In the event
of any such resignation, the Company shall, by an instrument in writing
delivered to the Banks and the Agent, appoint a successor, which shall be a Bank
or any other commercial bank organized under the laws of the United States or
any State thereof and having a combined capital and surplus of at least
$500,000,000. If a successor is not so appointed or does not accept such
appointment before the
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Agent's resignation becomes effective, the resigning Agent may appoint a
temporary successor to act until such appointment by the Company is made and
accepted any successor to the Agent shall execute and deliver to the Borrowers
and the Banks an instrument accepting such appointment and thereupon such
successor Agent, without further act, deed, conveyance or transfer shall become
vested with all of the properties, rights, interests, powers, authorities and
obligations of its predecessor hereunder with like effect as if originally named
as Agent hereunder. Upon request of such successor Agent, the Borrowers and the
resigning Agent shall execute and deliver such instruments of conveyance,
assignment and further assurance and do such other things as may reasonably be
required for more fully and certainly vesting and confirming in such successor
Agent all such properties, rights, interests, powers, authorities and
obligations. The provisions of this Article VII shall thereafter remain
effective for such resigning Agent with respect to any actions taken or omitted
to be taken by such Agent while acting as the Agent hereunder.
7.10 Sharing of Payments. The Banks agree among themselves that, in the
event that any Bank shall obtain payment in respect of any Advance or any other
obligation owing to the Banks under this Agreement through the exercise of a
right of set-off, banker's lien, counterclaim or otherwise in excess of its
ratable share of payments received by all of the Banks on account of the
Advances and other obligations (or if no Advances are outstanding, ratably
according to the respective amounts of the Commitments), such Bank shall
promptly purchase from the other Banks participations in such Advances and other
obligations in such amounts, and make such other adjustments from time to time,
as shall be equitable to the end that all of the Banks share such payment in
accordance with such ratable shares. The Banks further agree among themselves
that if payment to a Bank obtained by such Bank through the exercise of a right
of set-off, banker's lien, counterclaim or otherwise as aforesaid shall be
rescinded or must otherwise be restored, each Bank which shall have shared the
benefit of such payment shall, by repurchase of participations theretofore sold,
return its share of that benefit to each Bank whose payment shall have been
rescinded or otherwise restored. The Borrowers agree that any Bank so purchasing
such a participation may, to the fullest extent permitted by law, exercise all
rights of payment, including set-off, banker's lien or counterclaim, with
respect to such participation as fully as if such Bank were a holder of such
Advance or other obligation in the amount of such participation. The Banks
further agree among themselves that, in the event that amounts received by the
Banks and the Agent hereunder are insufficient to pay all such obligations or
insufficient to pay all such obligations when due, the fees and other amounts
owing to the Agent in such capacity shall be paid therefrom before payment of
obligations owing to the Banks under this Agreement, other than agency fees
payable pursuant to Section 2.5(d) of this Agreement which shall be paid on a
pro rata basis with amounts owing to the Banks. Except as otherwise expressly
provided in this Agreement, if any Bank or the Agent shall fail to remit to the
Agent or any other Bank an amount payable by such Bank or the Agent to the Agent
or such other Bank pursuant to this Agreement on the date when such amount is
due, such payments shall be made together with interest thereon for each date
from the date such amount is due until the date such amount is paid to the Agent
or such other Bank at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Banks and the Agent that if the Agent or any
Bank shall engage in any other transactions with any Borrower and shall have the
benefit of any collateral or security therefor
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which does not expressly secure the obligations arising under this Agreement
except by virtue of a so-called dragnet clause or comparable provision, the
Agent or such Bank shall be entitled to apply any proceeds of such collateral or
security first in respect of the obligations arising in connection with such
other transaction before application to the obligations arising under this
Agreement.
7.11 Local Custom. Notwithstanding anything herein to the contrary, if
requested by the Required Banks, all Loans made hereunder shall be made in
compliance with local market custom and legal practice as determined solely by
the Agent, whether or not such custom and legal practices have the force of law.
7.12 Withholding Tax Exemption. Each Bank that is not organized and
incorporated under the laws of the United States or any State thereof agrees to
file with the Agent and the Company, in duplicate, (a) on or before the later of
(i) the Effective Date and (ii) the date such Bank becomes a Bank under this
Agreement and (b) thereafter, for each taxable year of such Bank (in the case of
a Form 4224) or for each third taxable year of such Bank (in the case of any
other form) during which interest or fees arising under this Agreement and the
Notes are received, unless not legally able to do so as a result of a change in
United States income tax enacted, or treaty promulgated, after the date
specified in the preceding clause (a), on or prior to the immediately following
due date of any payment by the Company hereunder, a properly completed and
executed copy of either Internal Revenue Service Form 4224 or Internal Revenue
Service Form 1001 and Internal Revenue Service Form W-8 or Internal Revenue
Service Form W-9 and any additional form necessary for claiming complete
exemption from United States withholding taxes (or such other form as is
required to claim complete exemption from United States withholding taxes), if
and as provided by the Code or other pronouncements of the United States
Internal Revenue Service, and such Bank warrants to the Company that the form so
filed will be true and complete; provided that such Bank's failure to complete
and execute such Form 4224 or Form 1001, or Form W-8 or Form W-9, as the case
may be, and any such additional form (or any successor form or forms) shall not
relieve the Company of any of its obligations under this Agreement, except as
otherwise provided in Section 3.4.
7.13 Co-Agent. The Co-Agent shall have all of the duties which may be
agreed upon or assigned to it from time to time by the Agent. In the event any
such duties are assigned to the Co-Agent, the Co-Agent shall be entitled to the
same indemnifications and other protections and held to the same standard of
care as provided in this Article VII for the Agent.
ARTICLE VIII
MISCELLANEOUS
8.1 Amendments, Etc.
(a) No amendment, modification, termination or waiver of any
provision of this Agreement nor any consent to any departure therefrom shall be
effective unless the same shall be in writing and signed by the Borrowers and
the Required Banks and, to the extent any
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rights or duties of the Agent may be affected thereby, the Agent, provided,
however, that no such amendment, modification, termination, waiver or consent
shall, without the consent of the Agent and all of the Banks, (i) authorize or
permit the extension of time for, or any reduction of the amount of, any payment
of the principal of, or interest on, the Advances or any Letter of Credit
reimbursement obligation, or any fees or other amount payable hereunder, (ii)
amend or terminate the respective Commitment of any Bank set forth on the
signature pages hereof or modify the provisions of this Section regarding the
taking of any action under this Section or the provisions of Section 7.10,
Section 8.6(a) or the definition of Required Banks or (iii) amend or modify the
Guaranty (other than any amendment solely for the purpose of adding or deleting
a Borrowing Subsidiary) or provide for the release or discharge of the Company's
obligations under the Guaranty.
(b) Any such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, no Bank
that is in default of any of its obligations, covenants or agreements under this
Agreement shall be entitled to vote (whether to consent or to withhold its
consent) with respect to any amendment, modification, termination or waiver of
any provision of this Agreement or any departure therefrom or any direction from
the Banks to the Agent, and, for purposes of determining the Required Banks at
any time when any Bank is in default under this Agreement, the Commitments and
Advances of such defaulting Banks shall be disregarded.
8.2 Notices.
(a) Except as otherwise provided in Section 8.2(c) hereof, all
notices and other communications hereunder shall be in writing and shall be
delivered or sent to the Borrowers in case of the Treasury Manager at One
Invacare Way, Elyria, Ohio 44035, Attention: Chief Financial Officer, Facsimile
No. (440) 366-9672, and to the Agent and the Banks at the respective addresses
and numbers for notices set forth on the signatures pages hereof, or to such
other address as may be designated by any Borrower, the Agent or any Bank by
notice to the other parties hereto. All notices and other communications shall
be deemed to have been given at the time of actual delivery thereof to such
address, or if sent by certified or registered mail, postage prepaid, to such
address, on the third day after the date of mailing, or if deposited prepaid
with Federal Express or other nationally recognized overnight delivery service
prior to the deadline for next day delivery, on the Business Day next following
such deposit, provided, however, that notices to the Agent shall not be
effective until received.
(b) Notices by the Treasury Manager or a Borrower to the Agent
with respect to terminations or reductions of the Commitments pursuant to
Section 2.4, requests for Advances pursuant to Section 2.6, requests for
continuations or conversions of Loans pursuant to Section 2.9 and notices of
prepayment pursuant to Section 3.1 shall be irrevocable and binding on the
Borrowers.
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(c) Any notice to be given by the Treasury Manager or a
Borrower to the Agent pursuant to Sections 2.6 or 2.9 and any notice to be given
by the Agent or any Bank hereunder, may be given by telephone, and all such
notices given by the Treasury Manager or a Borrower must be immediately
confirmed in writing in the manner provided in Section 8.2(a). Any such notice
given by telephone shall be deemed effective upon receipt thereof by the party
to whom such notice is to be given.
8.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on
the part of the Agent or any Bank, nor any delay or failure on the part of the
Agent or any Bank in exercising any right, power or privilege hereunder shall
operate as a waiver of such right, power or privilege or otherwise prejudice the
Agent's or such Bank's rights and remedies hereunder; nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other right, power or privilege. No right or remedy conferred upon or
reserved to the Agent or any Bank under this Agreement or the Notes or any
Guaranty is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative, except as limited by this Agreement, and
in addition to every other right or remedy granted thereunder or now or
hereafter existing under any applicable law. Every right and remedy granted by
this Agreement or the Notes or any Guaranty or by applicable law to the Agent or
any Bank may be exercised from time to time and as often as may be deemed
expedient by the Agent or any Bank and, unless contrary to the express
provisions of this Agreement or the Notes or such Guaranty, irrespective of the
occurrence or continuance of any Default or Event of Default.
8.4 Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of any Borrower or any
Guarantor made herein, in any Guaranty or in any certificate, report, financial
statement or other document furnished by or on behalf of any Borrower or any
Guarantor in connection with this Agreement shall be deemed to be material and
to have been relied upon by the Banks, notwithstanding any investigation
heretofore or hereafter made by any Bank or on such Bank's behalf, and those
covenants and agreements of the Borrowers set forth in Sections 3.6, 3.8, 5.1(f)
and 8.5 hereof shall survive the repayment in full of the Advances and the
termination of the Commitments for a period of one year from such repayment or
termination.
8.5 Expenses; Indemnification. (a) The Company agrees to pay, or
reimburse the Agent for the payment of, on demand, (i) the reasonable fees,
without premium, and expenses of counsel to the Agent, including without
limitation the reasonable fees and expenses of Dickinson, Wright, Moon, Van
Dusen & Freeman as agreed upon with the Company in connection with the
preparation, execution, delivery and administration of the Loan Documents and
the consummation of the transactions contemplated hereby, and in connection with
advising the Agent as to its rights and responsibilities with respect thereto,
and in connection with any amendments, waivers or consents in connection
therewith, and (ii) all stamp and other taxes and fees payable or determined to
be payable in connection with the execution, delivery, filing or recording of
this Agreement, the Notes and the consummation of the transactions contemplated
hereby, and any and all liabilities with respect to or resulting from any delay
in paying or omitting to pay such taxes or fees, and (iii) all reasonable costs
and expenses of the Agent (including without limitation reasonable fees and
expenses of counsel, which counsel shall be
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acceptable to the Required Banks, including without limitation counsel who are
employees of the Agent, and whether incurred through negotiations, legal
proceedings or otherwise) in connection with any Default or Event of Default or
the enforcement of, or the exercise or preservation of any rights under the Loan
Documents or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement and (iv) all reasonable costs and
expenses of the Agent and the Banks (including reasonable fees and expenses of
counsel) in connection with any action or proceeding relating to a court order,
injunction or other process or decree restraining or seeking to restrain the
Agent from paying any amount under, or otherwise relating in any way to, any
Letter of Credit and any and all costs and expenses which any of them may incur
relative to any payment under any Letter of Credit.
(b) Each Borrower hereby indemnifies and agrees to hold harmless the
Banks and the Agent, and their respective officers, directors, employees and
agents, from and against any and all claims, damages, losses, liabilities, costs
or expenses of any kind or nature whatsoever which the Banks or the Agent or any
such person may incur or which may be claimed against any of them by reason of
or in connection with entering into this Agreement or the transactions
contemplated hereby; provided, however, that no Borrower shall be required to
indemnify any such Bank and the Agent or such other person, to the extent, but
only to the extent, that such claim, damage, loss, liability, cost or expense is
attributable to the gross negligence or willful misconduct of such Bank or the
Agent, as the case may be.
8.6 Successors and Assigns; Additional Banks. (a) This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no Borrower may, without the
prior consent of the Banks, assign its rights or obligations hereunder or under
the Notes and the Banks shall not be obligated to make any Loan hereunder to any
entity other than the Borrowers.
(b) Any Bank may, without the prior consent of the Company
sell to any financial institution or institutions, and such financial
institution or institutions may further sell, a participation interest
(undivided or divided) in, the Loans and such Bank's rights and benefits under
this Agreement and the Notes, and to the extent of that participation interest
such participant or participants shall have the same rights and benefits against
the Borrowers under Section 3.6, 3.8 and 6.2(c) as it or they would have had if
such participant or participants were the Bank making the Loans to the Borrowers
hereunder, provided, however, that (i) such Bank's obligations under this
Agreement shall remain unmodified and fully effective and enforceable against
such Bank, (ii) such Bank shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) such Bank shall remain the
holder of its Notes for all purposes of this Agreement, (iv) the Borrowers, the
Agent and the other Banks shall continue to deal solely and directly with such
Bank in connection with such Bank's rights and obligations under this Agreement,
and (v) such Bank shall not grant to its participant any rights to consent or
withhold consent to any action taken by such Bank or the Agent under this
Agreement other than action requiring the consent of all of the Banks hereunder.
(c) The Agent from time to time in its sole discretion may
appoint agents for the purpose of servicing and administering this Agreement and
the transactions contemplated
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hereby and enforcing or exercising any rights or remedies of the Agent provided
under this Agreement, the Notes or otherwise. In furtherance of such agency, the
Agent may from time to time direct that the Borrowers provide notices, reports
and other documents contemplated by this Agreement (or duplicates thereof) to
such agent. Each Borrower hereby consents to the appointment of such agent and
agrees to provide all such notices, reports and other documents and to otherwise
deal with such agent acting on behalf of the Agent in the same manner as would
be required if dealing with the Agent itself.
(d) Each Bank may, with the prior consent of the Company and
the Agent (which consent, in each case, will not be unreasonably withheld),
assign to one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Loans owing to it and the Note or Notes held by
it); provided, however, that (i) each such assignment shall be of a uniform, and
not a varying, percentage of all rights and obligations, (ii) except in the case
of an assignment of all of a Bank's rights and obligations under this Agreement,
(A) the amount of the Commitment of the assigning Bank being assigned pursuant
to each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$5,000,000, and in integral multiples of $1,000,000 thereafter, or such lesser
amount as the Company and the Agent may consent to and (B) after giving effect
to each such assignment, the amount of the Commitment of the assigning Bank
shall in no event be less than $3,000,000, (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance in the form of Exhibit L
hereto (an "Assignment and Acceptance"), together with any Note or Notes subject
to such assignment and a processing and recordation fee of $4,000, and (iv) any
Bank may without the consent of the Company or the Agent, and without paying any
fee, assign or sell a participation interest to any Affiliate of such Bank that
is a bank or financial institution all or a portion of its rights and
obligations under this Agreement. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and (y) the Bank assignor thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all of
the remaining portion of an assigning Bank's rights and obligations under this
Agreement, such Bank shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance,
the Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of any Borrower or the performance or observance by any Borrower of
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any of its obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.6 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Bank or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the Agent by the terms hereof, together with
such powers and discretion as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations that by the terms of this Agreement are required to be performed by
it as a Bank.
(f) The Agent shall maintain at its address designated on the
signature pages hereof a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Banks and the Commitment of, and principal amount of the Loans owing to,
each Bank from time to time (the "Register"). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and the
Company, the Borrowing Subsidiaries, the Agent and the Banks may treat each
person whose name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Company or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and an assignee, together with any Note or Notes subject to
such assignment, the Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Company. Within five (5) Business Days after its receipt of such
notice, the Borrowers, at their own expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes a new Note to the order of
such assignee in an amount equal to the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Bank has retained a
Commitment hereunder, a new Note to the order of the assigning Bank in an amount
equal to the Commitment retained by it hereunder. Such new Note or Notes shall
be in an aggregate principal amount equal to the aggregate principal amount of
such surrendered Note or Notes, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form of
Exhibit L hereto.
(h) No Borrower shall be liable for any costs or expenses of
any Bank in effectuating any participation or assignment under this Section 8.6.
(i) In addition, the Company and the Agent may from time to
time designate additional financial institutions (the "Additional Banks") to be
parties to this Agreement and to become a Bank hereunder upon the execution and
delivery to the Agent of an Assumption Agreement in the form of Exhibit M hereto
(an "Assumption Agreement"). Any Additional
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Bank shall become a party to this Agreement and be considered a Bank hereunder
for all purposes if (a) it shall execute and deliver to the Agent an Assumption
Agreement, (b) it shall make Revolving Credit Advances to the Borrowers in the
principal amount which bears the same ratio to the amounts of the Revolving
Credit Advances of the other Banks then outstanding as the Commitment of such
Additional Bank bears to the then Commitments of such other Banks, and (c) a
copy of such Assumption Agreement and evidence satisfactory to the Agent of the
making of such Revolving Credit Advances hall be furnished to the Banks,
together with a schedule showing the Commitment amount of each Bank and the new
Percentage of Total Commitment of each Bank. In connection with adding
Additional Banks, the aggregate Total Commitments may be increased to an amount
not to exceed $425,000,000 with the consent of the Company and the Agent and
without the consent of any Bank.
(j) The Banks may, in connection with any assignment,
participation or addition of a bank or proposed assignment, participation or
addition pursuant to this Section 8.6, disclose to the assignee, participant or
Additional Bank or proposed assignee, participant or Additional Bank any
information relating to the Borrowers.
(k) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in, or assign,
all or any portion of its rights under this Agreement (including, without
limitation, the Loans owing to it and the Note or Notes held by it) in favor of
any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System; provided that such creation of a
security interest or assignment shall not release such Bank from its obligations
under this Agreement.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart.
8.8 Governing Law; Consent to Jurisdiction. This Agreement is a
contract made under, and shall be governed by and construed in accordance with,
the law of the State of Michigan applicable to contracts made and to be
performed entirely within such State and without giving effect to choice of law
principles of such State. Each Borrower further agrees that any legal action or
proceeding with respect to this Agreement or the Notes or the transactions
contemplated hereby shall be brought in any court of the State of Michigan, or
in any court of the United States of America sitting in Michigan, and each
Borrower hereby irrevocably submits to and accepts generally and unconditionally
the jurisdiction of those courts with respect to its person and property, and
irrevocably appoints Thomas R. Miklich, whose address is set forth in Section
8.2, as its agent for service of process and irrevocably consents to the service
of process in connection with any such action or proceeding by personal delivery
to such agent or to the Borrowers or by the mailing thereof by registered or
certified mail, postage prepaid to the Borrowers at the address set forth in
Section 8.2. Nothing in this paragraph shall affect the right of the Banks and
the Agent to serve process in any other manner permitted by law or limit the
right of the Banks or the Agent to bring any such action or proceeding against
the Borrowers or property in the courts of any other jurisdiction. Each Borrower
hereby irrevocably waives any objection to the laying of venue of any such suit
or proceeding in the above described courts.
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8.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
8.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any person, or which such person
is prohibited from taking, such provision shall be applicable whether such
action is taken directly or indirectly by such person, whether or not expressly
specified in such provision.
8.11 Integration and Severability. This Agreement and the Notes embody
the entire agreement and understanding between the Borrowers and the Agent and
the Banks, and supersede all prior agreements and understandings, relating to
the subject matter hereof. In case any one or more of the obligations of any
Borrower under this Agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of such Borrower and the other Borrowers shall not in
any way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of the Borrowers under this Agreement or the
Notes in any other jurisdiction.
8.12 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to, or
would be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default or an Event of Default if such action is taken or
such condition exists.
8.13 Interest Rate Limitation. Notwithstanding any provisions of this
Agreement or the Notes, in no event shall the amount of interest paid or agreed
to be paid by any Borrower exceed an amount computed at the highest rate of
interest permissible under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Agreement or the Notes at the
time performance of such provision shall be due, shall involve exceeding the
interest rate limitation validly prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligations to be
fulfilled shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of such Bank's Advances outstanding hereunder (whether or not then
due and payable) and not to the payment of interest, or shall be refunded to the
Borrowers if such principal and all other obligations of the Borrowers to such
Bank have been paid in full.
8.14 Confidentiality. The Banks and the Agent shall hold all
confidential information obtained pursuant to the requirements of this Agreement
which has been identified as such by the Company in accordance with their
customary procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices and in any event may make
disclosure to its examiners, affiliates, outside auditors, counsel and other
professional advisors in connection with this Agreement or as reasonably
required by any bona fide transferee
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or participant in connection with the contemplated transfer of any Note or
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process. Without limiting the
foregoing, it is expressly understood that such confidential information shall
not include information which, at the time of disclosure is in the public domain
or, which after disclosure, becomes part of the public domain or information
which is obtained by any Bank or the Agent prior to the time of disclosure and
identification by the Company under this Section, or information received by any
Bank or the Agent from a third party. Nothing in this Section or otherwise shall
prohibit any Bank or the Agent from disclosing any confidential information to
the other Banks or the Agent or render any of them liable in connection with any
such disclosure.
8.15 Relationship of this Agreement to the Existing Loan Agreements.
This Agreement shall become effective on the Effective Date. On the Effective
Date, all amounts outstanding under the Existing Loan Agreements shall be
considered a part of the Advances under this Agreement for all purposes, as if
made in accordance with and pursuant to the terms of this Agreement. On and
after the Effective Date, (i) no further fees shall accrue to the Agent or Banks
under the Existing Loan Agreements and all fees accrued under the Existing Loan
Agreements to (but excluding) the Effective Date shall constitute accrued fees
hereunder and be payable in accordance with the terms hereof and (ii) the rights
and obligations of the parties hereto shall be governed solely by this
Agreement, except in respect of any rights or obligations arising prior to the
Effective Date and which shall survive the Effective Date. This Agreement amends
and restates in full the terms and provisions of the 1994 Loan Agreement and the
1997 Loan Agreement and is not intended to constitute a novation or satisfaction
of or a renunciation or cancellation or other discharge or the indebtedness and
other liabilities and obligations created under and evidenced by the Existing
Loan Agreements.
8.16 Waiver of Jury Trial. The Borrowers, the Banks and the Agent,
after consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right either of them may have
to a trial by jury in any litigation based upon or arising out of this Agreement
or any other Loan Document or any of the transactions contemplated by this
Agreement or any course of conduct, dealing, statements (whether oral or
written) or actions of any of them. Neither any Borrower, any Bank nor the Agent
shall seek to consolidate, by counterclaim or otherwise, any such action in
which a jury trial has been waived with any other action in which a jury trial
cannot be or has not been waived. These provisions shall not be deemed to have
been modified in any respect or relinquished by any party hereto except by a
written instrument executed by such party.
8.17 Unification of Certain Currencies. If the "Euro" (or some other
similar unit of account) becomes a currency in its own right in connection with
the European Monetary Union contemplated by the Maastricht Treaty, then each of
the Borrowers, the Banks, the Agent and the Co-Agent agrees to negotiate in good
faith any required amendment or modification to this Agreement satisfactory in
form and substance to the Borrowers, the Banks, the Agent and the Co-Agent to
account therefor.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the 18th day of November, 1997, which shall be
the Effective Date of this Agreement, notwithstanding the day and year first
above written.
INVACARE CORPORATION
By: /s/ Thomas R. Miklich
Its: Chief Financial Officer
INVACARE INTERNATIONAL CORPORATION
By: /s/ Thomas R. Miklich
Its: Treasurer and Secretary
INVACARE (UK) LIMITED
By: /s/ Thomas R. Miklich
Its: Director
INVACARE (DEUTSCHLAND) GmbH
By: /s/ Otmar Sackerlotzky
Its: Director
BENCRAFT LIMITED
By: /s/ Thomas R. Miklich
Its: Director
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KUSCHALL DESIGN AG
By: /s/ Gerald B. Blouch
Its: President
INVACARE AUSTRALIA PTY. LTD.
By: /s/ Thomas R. Miklich
Its: Director
INVACARE CANADA INC.
By: /s/ Thomas R. Miklich
Its: Treasurer and Secretary
QUANTRIX CONSULTANTS LIMITED
By: /s/ Thomas R. Miklich
Its: Director
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DYNAMIC CONTROLS LIMITED
By: /s/ Thomas R. Miklich
Its: Director
POIRIER GROUPE INVACARE
By: /s/ Frederic M. Dyevre
Its: Director
REHADAP S.A.
By: /s/ Frederic M. Dyevre
Its: Director
CONTROLS DYNAMIC LIMITED
By: /s/ Otmar Sackerlotzky
Its: Director
INVACARE AB
By: /s/ Gerald B. Blouch
Its: Director
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Address for Notices: NBD BANK, as a Bank and as Agent
611 Woodward Avenue By: /s/ Ronald Rueve
Detroit, Michigan 48226
Attention: Commercial and Institutional Its: Vice President
Banking
Facsimile No.: (313) 225-1671
Telephone No.: (313) 225-1313
Commitment Amount: $85,000,000
Initial Percentage of
Total Commitments: 23.62%
Address for Notices: KEYBANK NATIONAL ASSOCIATION, as
Co-Agent and as a Bank
127 Public Square, 6th Floor By: /s/ Richard A. Pohle
Cleveland, Ohio 44114-1306
Attention: Brendan Lawler Its: Vice President
Facsimile No.: (216) 689-4981
Telephone No.: (216) 689-5642
Commitment Amount: $75,000,000
Initial Percentage of
Total Commitments: 20.84%
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Address for Notices: NATIONAL CITY BANK
1900 E. 9th, 10th Floor By: /s/ Michael P. McCuen
Cleveland, Ohio 44114
Attention: Michael McCuen Its: Vice President
Facsimile No.: (216) 575-9396
Telephone No.: (216) 575-9401
Commitment Amount: $50,000,000
Initial Percentage of
Total Commitments: 13.9%
Address for Notices: SOCIETE GENERALE
181 W. Madison, Suite 3400 By: /s/ Joseph A. Philbin
Chicago, Illinois 60602
Attention: Joseph Philbin Its: Vice President
Facsimile No.: (312) 578-5099
Telephone No.: (312) 578-5005
Commitment Amount: $25,000,000
Initial Percentage of
Total Commitments: 6.94%
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Address for Notices: SUN TRUST BANK, CENTRAL FLORIDA, N.A.
200 S. Orange Avenue By: /s/ Ronald Rueve
Orlando, Florida 32801
Attention: Steve Leister Its: Vice President
Facsimile No.: (407) 237-6894
Telephone No.: (407) 237-4705
Commitment Amount: $25,000,000
Initial Percentage of
Total Commitments: 6.94%
Address for Notices: WACHOVIA BANK OF GEORGIA, NA
191 Peachtree Street, NE By: /s/ Holger B. Ebert
Atlanta, GA 30303
Attention: Eero Maki Its: Senior Vice President
Facsimile No.: (404) 332-6898
Telephone No.: (404) 332-5275
Commitment Amount: $25,000,000
Initial Percentage of
Total Commitments: 6.94%
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Address for Notices: PNC BANK, NATIONAL ASSOCIATION
1375 E. Ninth Street, #1250 By: /s/ Byron A. Pike
Cleveland, OH 44114
Attention: Bryon Pike Its: Vice President
Facsimile No.: (216) 348-8594
Telephone No.: (216) 348-8560
Commitment Amount: $25,000,000
Initial Percentage of
Total Commitments: 6.94%
Address for Notices: COMMERZBANK, AKTIENGESELLSCHAFT,
CHICAGO BRANCH
311 S. Wacker Drive By: /s/ Arne Jahn
Chicago, IL 60606 Its: Assistant Treasurer
Attention: William Binder /s/ William J. Binder
Its: Vice President
Facsimile No.: (312) 435-1486
Telephone No.: (312) 408-6920
Commitment Amount: $25,000,000
Initial Percentage of
Total Commitments: 6.94%
67
<PAGE> 73
Address for Notices: THE BANK OF NEW YORK
One Wall Street, 22ND Floor By: /s/ Edward J. Dougherty III
New York, New York 10286
Attention: Ed Dougherty Its: Vice President
Facsimile No.: (212) 635-6434
Telephone No.: (212) 635-1066
Commitment Amount: $25,000,000
Initial Percentage of
Total Commitments: 6.94%
Total Commitment of all of the Banks:
$360,000,000
<PAGE> 74
EXHIBIT A
BID-OPTION NOTE
November __, 1997
Detroit, Michigan
For value received, _________________________, a ______________
corporation (the "Borrower"), promises to pay to the order of
___________________________________ (the "Bank"), the unpaid principal amount of
each Bid-Option Loan made by the Bank to the Company pursuant to the Loan
Agreement referred to below, on the last day of the Interest Period relating to
such Loan. The Borrower further promises to pay interest on the aggregate unpaid
principal amount of such Bid-Option Loans on the dates and at the rates
negotiated as provided in the Loan Agreement. All such payments of principal and
interest with respect to Bid-Option Loans shall be made in Dollars in
immediately available funds at the Agent's principal office in Detroit,
Michigan.
Presentment, demand for payment, notice of non-payment, protest and
further notice or demand of any kind in connection with this Bid-Option Note are
hereby expressly waived by the Borrower and each endorser or guarantor hereof.
This Bid-Option Note evidences one or more Bid-Option Loans made under the
Loan Agreement, dated as of November __, 1997, as amended, supplemented or
otherwise modified from time to time (the "Loan Agreement"), by and among the
Borrower, certain other Borrowers designated therein from time to time, the
banks (including the Bank) party thereto, NBD Bank, as Agent, and KeyBank
National Association, as Co-Agent, to which reference is hereby made for a
statement of the circumstances under which this Bid-Option Note is subject to
prepayment and under which its due date may be accelerated. Capitalized terms
used but not defined in this Bid-Option Note shall have the respective meanings
ascribed thereto in the Loan Agreement.
This Bid-Option Note is made under, and shall be governed by and construed
in accordance with, the laws of the State of Michigan applicable to contracts
made and to be performed entirely within such State and without giving effect to
choice of law principles of such State.
____________________________
By: ____________________________________
Its: __________________________________
<PAGE> 75
EXHIBIT B
AGREEMENT
Reference is made to the Loan Agreement dated as of November __, 1997
(as now or hereafter amended or modified from time to time, the "Loan
Agreement") among INVACARE CORPORATION, an Ohio corporation (the "Company"),
certain borrowing subsidiaries designated therein from time to time (the
"Borrowing Subsidiaries, and collectively with the Company, the "Borrowing
Subsidiaries"), the banks named therein (the "Banks"), NBD BANK, as agent for
the Banks, and KEYBANK NATIONAL ASSOCIATION, as co-agent for the Banks (the
"Agent"). Terms defined in the Loan Agreement are used herein with the same
meaning.
1. __________________, a ___________ corporation (the "New Borrowing
Subsidiary") has decided to become a Borrowing Subsidiary under the Loan
Agreement, with its address for notice as described next to its signature below.
The New Borrowing Subsidiary (i) confirms that it has received a copy of the
Loan Agreement, together with copies of documents and information as it has
deemed appropriate to make its own decision to enter into this Agreement; (ii)
agrees that it will perform in accordance with all of the obligations and comply
with all of the covenants that by the terms of the Loan Agreement and the other
Loan Documents are required to be performed by or complied with by it as a
Borrowing Subsidiary; (iii) confirms that the representations and warranties
contained in Article IV of the Loan Agreement and in any other Loan Agreement
applicable to a Borrowing Subsidiary are true and correct as of the date hereof
as to the New Borrowing Subsidiary and (iv) authorizes Invacare Corporation, as
Treasury Manager, to act as its manager under the Loan Agreement pursuant to
Section 2.12 of the Loan Agreement.
2. Upon execution and delivery of this Agreement to the Agent together
with all other items required pursuant to paragraph 3, the New Borrowing
Subsidiary shall be a party to the Loan Agreement and have the rights and
obligations of a Borrowing Subsidiary thereunder.
3. This Agreement shall not become effective and the New Borrowing
Subsidiary shall not become a Borrowing Subsidiary under the Loan Agreement
until receipt by the Agent of the following documents and completion of the
following matters, in form and substance reasonably satisfactory to the Agent:
(a) A certificate of incumbency of the Company and the New
Borrowing Subsidiary containing, and attesting to the genuineness of, the
signatures of those officers authorized to act on behalf of the New Borrowing
Subsidiary in connection with this Agreement, the Loan Agreement and the Notes
and on behalf of the Company in connection with this Agreement and the
consummation by the New Borrowing Subsidiary and the Company of the transactions
contemplated herein, certified as true and correct as of the effective date of
this Agreement by a duly authorized officer of the New Borrowing Subsidiary and
the Company, respectively; and
<PAGE> 76
(b) The Notes, duly executed on behalf of the New Borrowing
Subsidiary, for each Bank;
4. The Company (a) fully consents to the New Borrowing Subsidiary
becoming a Borrowing Subsidiary; (b) agrees that the Guaranty with respect to
the indebtedness, obligations and liabilities of the Borrowing Subsidiaries
dated as of November ___, 1997 in favor of the Agent and the Banks is ratified
and confirmed and shall remain in full force and effect; and (c) confirms that
all indebtedness, obligations and liabilities of the Borrowing Subsidiaries,
including the New Borrowing Subsidiary, are guaranteed by the Guaranty.
5. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Michigan.
6. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
7. Upon delivery of this executed Agreement to the Agent, the Agent
shall deliver a copy of this Agreement to each Bank, together with the original
Notes payable to each such Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officer thereunto duly authorized as of the
day and year first above written.
______________________ [NEW BORROWING SUBSIDIARY]
______________________________
______________________________
Attention: ___________________ By:________________________________
Facsimile No. (___) ___-____
Its:______________________________
INVACARE CORPORATION
By:________________________________
Its:______________________________
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<PAGE> 77
NBD BANK, as Agent
By: _______________________________
Its: _____________________________
-3-
<PAGE> 78
EXHIBIT C
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT, dated as of November ___, 1997 (this
"Guaranty") made by INVACARE CORPORATION, an Ohio corporation (the "Guarantor"),
in favor of the banks which are parties to the Loan Agreement hereinafter
defined (the "Banks"), NBD BANK, a Michigan banking corporation, as agent (in
such capacity, the "Agent") for such Banks under the Loan Agreement, and KEYBANK
NATIONAL ASSOCIATION, as co-agent for such Banks under the Loan Agreement (in
such capacity, the Co-Agent).
W I T N E S S E T H:
A. The Guarantor and certain subsidiaries of the Guarantor set
forth on Schedule A hereto (the "Subsidiaries"), have entered into a Loan
Agreement, dated as of even date herewith (as amended or modified from time to
time, the "Loan Agreement") with the Agent, the Co-Agent and the Banks, pursuant
to which the Banks have agreed to make Advances to the Subsidiaries and, in
their sole discretion, other subsidiaries of the Guarantor (such subsidiaries
and the Subsidiaries being collectively referred to herein as the "Borrowing
Subsidiaries"), subject to the terms and conditions of the Loan Agreement; and
B. As a condition to the obligation of the Banks under the
Loan Agreement, the Guarantor is required to fully and unconditionally
guarantee, among other things, the Advances and other obligations of the
Borrowing Subsidiaries;
NOW, THEREFORE, as an inducement to the Banks to enter into
the transactions contemplated by the Loan Agreement, the Guarantor agrees with
the Banks and the Agent as follows:
1. Guarantee of Obligations. The Guarantor hereby (i)
guarantees, as principal obligor and not as surety only, to the Banks the prompt
payment of the principal of and any and all accrued and unpaid interest
(including interest which otherwise may cease to accrue by operation of any
insolvency law, rule, regulation or interpretation thereof) on (x) the Advances
made to any of the Borrowing Subsidiaries, (y) reimbursement of all amounts due
to the Banks upon issuance of letters of credit for the benefit of any of the
Borrowing Subsidiaries, and (z) all other loans or advances by any Bank to any
of the Borrowing Subsidiaries, or other obligations of any of the Borrowing
Subsidiaries to the Agent and the Banks, including without limitation foreign
exchange loans and advances which are not made pursuant to the terms of the Loan
Agreement, all when due, whether by scheduled maturity, acceleration or
otherwise, all in accordance with the terms of the Loan Agreement or such other
documents or instruments evidencing such loans, advances or obligations (the
"Other Loan Documents"), and any and all other amounts which may be payable by
any of the Borrowing Subsidiaries to any Bank or the Agent in connection with or
pursuant to the Loan Agreement and the Other Loan Documents, including, without
limitation, default interest,
<PAGE> 79
indemnification payments and all reasonable costs and expenses incurred by the
Banks and the Agent in connection with enforcing any obligations of the
Borrowing Subsidiaries thereunder, including without limitation the reasonable
fees and disbursements of counsel, (ii) guarantees the prompt and punctual
performance and observance of each and every term, covenant or agreement
contained in the Loan Agreement and the Other Loan Documents to be performed or
observed on the part of any of the Borrowing Subsidiaries, and (iii) agrees to
make prompt payment, on demand, of any and all reasonable costs and expenses
incurred by the Banks or the Agent in connection with enforcing the obligations
of the Guarantor hereunder, including, without limitation, the reasonable fees
and disbursements of counsel (all of the foregoing being collectively referred
to as the "Guaranteed Obligations", and the Loan Agreement and the Other Loan
Documents are sometimes collectively referred to as the "Loan Agreements").
(a) If for any reason any duty, agreement or
obligation of any of the Borrowing Subsidiaries contained in the Loan Agreements
shall not be performed or observed by the relevant Borrowing Subsidiary as
provided therein, or if any amount payable under or in connection with the Loan
Agreements shall not be paid in full when the same becomes due and payable, the
Guarantor undertakes to perform or cause to be performed promptly each of such
duties, agreements and obligations and to pay forthwith each such amount to the
Agent for the account of the Banks regardless of any defense or setoff or
counterclaim which any of the Borrowing Subsidiaries may have or assert, and
regardless of any other condition or contingency.
(b) The date and amount of advances of principal made
by the Banks in respect of the Loans made to the Borrowing Subsidiaries and the
aggregate principal amount thereof and accrued interest thereon shown upon the
books and records of each respective Bank and in any certificate delivered by
any Bank to the Guarantor in respect thereof, shall be prima facie evidence of
the principal amount and accrued interest owing and unpaid on such Loans. The
failure to record any such information on such books and records shall not,
however, limit or otherwise affect the obligations of any of the Borrowing
Subsidiaries to repay the principal amount of such Loans together with accrued
interest thereon or the obligations of the Guarantor hereunder with respect
thereto.
2. Nature of Guaranty. This Guaranty is an absolute and
unconditional and irrevocable guaranty of payment and not a guaranty of
collection and is wholly independent of and in addition to other rights and
remedies of the Banks and the Agent and is not contingent upon the pursuit by
the Banks and the Agent of any such rights and remedies, such pursuit being
hereby waived by the Guarantor.
3. Waivers and Other Agreements. The Guarantor hereby
unconditionally (a) waives any requirement that the Banks or the Agent, upon the
occurrence of an "Event of Default" (as defined in the Loan Agreement) or an
event of default under any of the Other Loan Documents by any of the Borrowing
Subsidiaries, first make demand upon, or seek to enforce remedies against,
GUARANTY AGREEMENT
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<PAGE> 80
any or all of the Borrowing Subsidiaries before demanding payment under or
seeking to enforce this Guaranty, (b) covenants that this Guaranty will not be
discharged except by complete performance of all obligations of the Borrowing
Subsidiaries contained in the Loan Agreements, (c) agrees that this Guaranty
shall remain in full force and effect without regard to, and shall not be
affected or impaired, without limitation, by any invalidity, irregularity or
unenforceability in whole or in part of the Loan Agreements, or any limitation
on the liability of any of the Borrowing Subsidiaries thereunder, or any
limitation on the method or terms of payment thereunder which may now or
hereafter be caused or imposed in any manner whatsoever, (d) waives diligence,
presentment and protest with respect to, and any notice of default or dishonor
in the payment of any amount at any time payable by any of the Borrowing
Subsidiaries under or in connection with the Loan Agreements, and further waives
any requirement of notice of acceptance of, or other formality relating to, this
Guaranty and (e) agrees that the Guaranteed Obligations shall include any
amounts paid by any of the Borrowing Subsidiaries to any Bank or the Agent which
may be required to be returned to any of the Borrowing Subsidiaries, or to its
representative or to a trustee, custodian or receiver for any of the Borrowing
Subsidiaries.
4. Obligations Absolute. The obligations, covenants,
agreements and duties of the Guarantor under this Guaranty shall not be
released, affected or impaired by any of the following whether or not undertaken
with notice to or consent of the Guarantor: (a) any assignment or transfer, in
whole or in part, of the Loans made to the Borrowing Subsidiaries or the Loan
Agreements although made without notice to or consent of the Guarantor, or (b)
any waiver by any Bank or the Agent, or by any other person, of the performance
or observance by any of the Borrowing Subsidiaries of any of the agreements,
covenants, terms or conditions contained in the Loan Agreements, or (c) any
indulgence in or the extension of the time for payment by any of the Borrowing
Subsidiaries of any amounts payable under or in connection with the Loan
Agreements, or of the time for performance by any of the Borrowing Subsidiaries
of any other obligations under or arising out of the Loan Agreements, or the
extension or renewal thereof, or (d) the modification, amendment or waiver
(whether material or otherwise) of any duty, agreement or obligation of any of
the Borrowing Subsidiaries set forth in the Loan Agreements (the modification,
amendment or waiver from time to time of the Loan Agreements being expressly
authorized without further notice to or consent of the Guarantor), or (e) the
voluntary or involuntary liquidation, sale or other disposition of all or
substantially all of the assets of any of the Borrowing Subsidiaries, or any
receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings, affecting any of the Borrowing Subsidiaries or any of their assets,
or (f) the merger or consolidation of any of the Borrowing Subsidiaries or the
Guarantor with any other person, or (g) the release or discharge of any of the
Borrowing Subsidiaries or the Guarantor from the performance or observance of
any agreement, covenant, term or condition contained in the Loan Agreements, by
operation of law, or (h) any other cause whether similar or dissimilar to the
foregoing which would release, affect or impair the obligations, covenants,
agreements or duties of the Guarantor hereunder.
5. Foreign Currency. This Guaranty arises in the context of an
international
GUARANTY AGREEMENT
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<PAGE> 81
transaction, and the specification of payment in foreign currency to the Agent
and the Banks pursuant to the Loan Agreement is of the essence. The foreign
currency shall be the currency of account and payment under the Loan Agreements.
The obligation of the Guarantor shall not be discharged by an amount paid in any
other currency or at another place, whether pursuant to a judgment or otherwise,
to the extent that the amount so paid, on prompt conversion into the foreign
currency and transfer to the Agent and the Banks under normal banking procedure,
does not yield the amount of foreign currency due under this Guaranty. In the
event that any payment, whether pursuant to a judgment or otherwise, upon
conversion and transfer, does not result in payment of the amount of foreign
currency due under this Guaranty, the Agent and the Banks shall have an
independent cause of action against the Guarantor for the foreign currency
deficiency.
6. Events of Default. The occurrence of any "Event of Default"
(as defined in the Loan Agreement) shall be deemed an "event of default"
hereunder unless waived by the Banks pursuant to paragraph 8.
7. Remedies. Upon the occurrence and during the continuance of
such event of default, the Agent may, and upon being directed to do so by the
Required Banks, shall enforce its rights either by suit in equity, or by action
at law, or by other appropriate proceedings, whether for the specific
performance (to the extent permitted by law) of any covenant or agreement
contained in this Guaranty or in aid of the exercise of any power granted in
this Guaranty and may enforce payment under this Guaranty and any of its other
rights available at law or in equity.
8. Amendments, Etc. This Guaranty may be amended from time to
time and any provision hereof may be waived in accordance with the requirements
of Section 8.1 of the Loan Agreement. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by the Guarantor therefrom shall be
effective unless the same shall be in writing and signed by the Required Banks
or all of the Banks, as the case may be, and, to the extent any rights or duties
of the Agent may be affected, the Agent, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
9. Notices. All notices and other communications hereunder
shall be in writing and made in accordance with Section 8.2 of the Loan
Agreement.
10. Conduct No Waiver; Remedies Cumulative. The obligations of
the Guarantor under this Guaranty are continuing obligations and a fresh cause
of action shall arise in respect of each event of default hereunder. No course
of dealing on the part of any Bank or the Agent, nor any delay or failure on the
part of any Bank or the Agent in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice any Bank or the Agent's rights and remedies hereunder; nor
shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other right, power or privilege. No right or
remedy conferred upon or reserved to the Banks or the Agent under this
GUARANTY AGREEMENT
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<PAGE> 82
Guaranty is intended to be exclusive of any other right or remedy, and every
right and remedy shall be cumulative and in addition to every other right or
remedy given hereunder or now or hereafter existing under any applicable law.
Every right and remedy given by this Guaranty or by applicable law to the Banks
or the Agent may be exercised from time to time and as often as may be deemed
expedient by them.
11. Reliance on and Survival of Various Provisions. All terms,
covenants, agreements, representations and warranties of the Guarantor made
herein or in any certificate or other document delivered pursuant hereto shall
be deemed to be material and to have been relied upon by the Banks or the Agent,
notwithstanding any investigation heretofore or hereafter made by the Banks or
the Agent or on their behalf.
12. No Investigation by the Banks or the Agent. The Guarantor
hereby waives unconditionally any obligation which, in the absence of such
provision, the Banks or the Agent might otherwise have to investigate or to
assure that there has been compliance with the law of any jurisdiction with
respect to the Guaranteed Obligations recognizing that, to save both time and
expense, the Guarantor has requested that the Banks and the Agent not undertake
such investigation. The Guarantor hereby expressly confirms that the obligations
of the Guarantor hereunder shall remain in full force and effect without regard
to compliance or noncompliance with any such law and irrespective of any
investigation or knowledge of any Bank or the Agent of any such law.
13. Governing Law. This Guaranty is a contract made under, and
the rights and obligations of the parties hereunder, shall be governed by and
construed in accordance with, the laws of the State of Michigan applicable to
contracts to be made and to be performed entirely with such State without regard
to the choice of law principles of such State.
14. Headings. The headings of the various subdivisions hereof
are for convenience of reference only and shall in no way modify any of its
terms or provisions hereof.
15. Construction of Certain Provisions. If any provision of
this Guaranty refers to any action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person, whether or not
expressly specified in such provision.
16. Integration and Severability. This Guaranty embodies the
entire agreement and understanding between the Guarantor, the Banks and the
Agent, and supersedes all prior all agreements and understandings, relating to
the subject matter hereof. In any case one or more of the obligations of the
Guarantor under this Guaranty shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Guarantor shall not in any way be affected or impaired
thereby, and such invalidity, illegality or
GUARANTY AGREEMENT
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<PAGE> 83
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of the Guarantor under this Guaranty in any
other jurisdiction.
17. Indemnity. As a separate, additional and continuing
obligation, the Guarantor unconditionally and irrevocably undertakes and agrees
with the Banks and the Agent that, should the Guaranteed Obligations not be
recoverable from the Guarantor under paragraph 1 for any reason whatsoever
(including, without limitation, by reason of any provision of the Loan Agreement
or any other agreement or instrument executed in connection therewith being or
becoming void, unenforceable, or otherwise invalid under any applicable law)
then, notwithstanding any knowledge thereof by any Bank or the Agent at any
time, the Guarantor as sole, original and independent obligor, upon demand by
the Agent, will make payment to the Agent for the account of the Banks and the
Agent of the Guaranteed Obligations by way of a full indemnity in such currency
and otherwise in such manner as is provided in the Loan Agreement or such other
agreement or instrument, as the case may be.
18. Subordination, Subrogation, Etc. The Guarantor agrees that
any present or future indebtedness, obligations or liabilities of any Borrowing
Subsidiary to the Guarantor shall be fully subordinate and junior in right and
priority of payment to any present or future indebtedness, obligations or
liabilities of any Borrowing Subsidiary to the Banks and the Agent, and the
Guarantor shall not exercise any right of subrogation, reimbursement or
indemnity whatsoever nor any right of recourse to security for the debts and
obligations of any Borrowing Subsidiary, until all of the Guaranteed Obligations
have been paid in full and are not subject to any right of revocation or
rescission.
19. Jurisdiction and Venue. The Guarantor agrees that any
legal action or proceeding with respect to this Guaranty or the Loan Agreement
or the transactions contemplated thereby may be brought only in any court in the
State of Michigan, or any court of the United States of America sitting in the
State of Michigan, and the Guarantor hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property, and irrevocably consents to the service of process in connection with
any such action or proceeding by personal delivery to the Guarantor or by
mailing thereof by registered or certified mail, postage prepaid, to the
Guarantor at its address as provided by it from time to time under the Loan
Agreements. Nothing in this paragraph shall affect the right of the Agent or any
Bank to serve process in any other manner permitted by law or limit the right of
the Agent or any Bank to bring any such action or proceeding against the
Guarantor or its property in the courts of any other jurisdiction. The Guarantor
hereby irrevocably waives any objection to the laying of venue of any such suit
or proceeding in the above-described courts.
20. Waiver of Jury Trial. The Agent, the Banks and the
Guarantor, after consulting or having had the opportunity to consult with
counsel, knowingly, voluntarily and intentionally waive any right any of them
may have to a trial by jury in any litigation based upon or
GUARANTY AGREEMENT
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<PAGE> 84
arising out of this Guaranty or any related instrument or agreement or any of
the transactions contemplated by this Guaranty. Neither the Agent, any Bank nor
the Guarantor shall seek to consolidate, by counterclaim or otherwise, any such
action in which a jury trial has been waived with any other action in which a
jury trial cannot be or has not been waived. These provisions shall not be
deemed to have been modified in any respect or relinquished by the Agent, any
Bank or the Guarantor except by a written instrument executed by all of them.
21. Inapplicability of Surety Provisions. The parties hereby
agree that the Guarantor is not a surety within the meaning of Section 1341.03
of the Ohio Revised Code.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be duly executed and delivered as of this ___ day of November, 1997.
INVACARE CORPORATION
By: _______________________________
Its: _____________________________
The undersigned hereby executes this Guaranty for the purpose
of accepting it and agreeing to paragraph 20 hereof.
NBD BANK, as Agent
By: _______________________________
Its: ___________________________
Dated: November ___, 1997
GUARANTY AGREEMENT
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<PAGE> 85
EXHIBIT D
REVOLVING CREDIT NOTE
November __,1997
Detroit, Michigan
FOR VALUE RECEIVED, ____________________, a ____________
corporation (the "Borrower"), hereby promises to pay to the order of
_________________________, a ________________ (the "Bank"), at the place and
currency and manner designated in the Loan Agreement referred to below and in
immediately available funds, the unpaid principal amount of all Revolving Credit
Loans as is recorded in the books and records of the Bank, on, with respect to
Revolving Credit Loans, the Termination Date and, with respect to Term Loans,
the Maturity Date; and to pay interest on the unpaid principal balance hereof
from time to time outstanding, in like money and funds, for the period from the
date hereof until the Revolving Credit Loans evidenced hereby shall be paid in
full, at the rates per annum and on the dates provided in the Loan Agreement
referred to below.
The Bank is hereby authorized by the Borrower to record on its
books and records, the date, currency, amount and type of each Revolving Credit
Loan, the duration of the related Interest Period (if applicable), the amount of
each payment or prepayment of principal thereon and the other information
provided for in such books and records, which such books and records shall
constitute prima facie evidence of the information so recorded, provided,
however, that any failure by the Bank to record any such information shall not
relieve the Borrower of its obligation to repay the outstanding principal amount
of such Revolving Credit Loans, all accrued interest thereon and any amount
payable with respect thereto in accordance with the terms of this Revolving
Credit Note and the Loan Agreement.
The Borrower and each endorser or guarantor hereof waives
demand, presentment, protest, diligence, notice of dishonor and any other
formality in connection with this Revolving Credit Note. Should the indebtedness
evidenced by this Revolving Credit Note or any part thereof be collected in any
proceeding or be placed in the hands of attorneys for collection, the Borrower
agrees to pay, in addition to the principal, interest and other sums due and
payable hereon, all costs of collecting this Revolving Credit Note, including
attorneys' fees and expenses (including without limitation allocated costs and
expenses of attorneys who are employees of the Bank).
This Revolving Credit Note evidences one or more Revolving
Credit Loans made under a Loan Agreement, dated as of November __, 1997 (as
amended or modified from time to time, the "Loan Agreement"), by and among
Invacare Corporation, an Ohio corporation (the "Company"), certain Borrowing
Subsidiaries designated therein from time to time (collectively with the
Company, the "Borrowers"), the banks (including the Bank) named therein, NBD
Bank, as agent for the banks, and KeyBank National Association, as co-agent for
the banks, to which
<PAGE> 86
reference is hereby made for a statement of the circumstances under which this
Revolving Credit Note is subject to prepayment and under which its due date may
be accelerated. Capitalized terms used but not defined in this Revolving Credit
Note shall have the respective meanings assigned to them in the Loan Agreement.
This Revolving Credit Note is made under, and shall be
governed by and construed in accordance with, the laws of the State of Michigan
in the same manner applicable to contracts made and to be performed entirely
within such State and without giving effect to choice of law principles of such
State.
___________________________
By:________________________________
Its:______________________________
REVOLVING CREDIT NOTE
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<PAGE> 87
EXHIBIT E
SWING LINE NOTE
November __, 1997
Detroit, Michigan
FOR VALUE RECEIVED, ________________________, a __________
corporation (the "Borrower"), promises to pay to the order of NBD Bank, a
Michigan banking corporation (the "Bank"), at the place and in the currency and
manner designated in the Loan Agreement referred to below and in immediately
available funds, the unpaid principal amount of Swing Line Loans as is recorded
in the books and records of the Bank, on the Termination Date; and to pay
interest on the unpaid principal balance hereof from time to time outstanding,
in like money and funds, for the period from the date hereof until the Swing
Line Loans evidenced hereby shall be paid in full, at the rates per annum and on
the dates provided in the Loan Agreement referred to below.
The Bank is hereby authorized by the Borrower to record on its
books and records, the date, currency, amount and type of each Swing Line Loan,
the duration of the related Interest Period (if applicable), the amount of each
payment or prepayment of principal thereon and the other information provided
for on such schedule, which schedule or such books and records, as the case may
be, shall constitute prima facie evidence of the information so recorded,
provided, however, that any failure by the Bank to record any such information
shall not relieve the Borrower of its obligation to repay the outstanding
principal amount of such Swing Line Loans, all accrued interest thereon and any
amount payable with respect thereto in accordance with the terms of this Swing
Line Note and the Loan Agreement.
The Borrower and each endorser or guarantor hereof waives
demand, presentment, protest, diligence, notice of dishonor and any other
formality in connection with this Swing Line Note. Should the indebtedness
evidenced by this Swing Line Note or any part thereof be collected in any
proceeding or be placed in the hands of attorneys for collection, the Borrower
agrees to pay, in addition to the principal, interest and other sums due and
payable hereon, all costs of collecting this Swing Line Note, including
attorneys' fees and expenses.
This Swing Line Note evidences one or more Swing Line Loans
made under a Loan Agreement, dated as of November __, 1997 (as amended or
modified from time to time, the "Loan Agreement"), by and among Invacare
Corporation, an Ohio corporation (the "Company"), the Borrowing Subsidiaries
designated therein from time to time (collectively with the Company, the
SWING LINE NOTE
-1-
<PAGE> 88
"Borrowers"), the banks (including the Bank) named therein, NBD Bank, as agent
for the banks, and KeyBank National Association, as co-agent for the Banks, to
which reference is hereby made for a statement of the circumstances under which
this Swing Line Note is subject to prepayment and under which its due date may
be accelerated. Capitalized terms used but not defined in this Swing Line Note
shall have the respective meanings assigned to them in the Loan Agreement.
This Swing Line Note is made under, and shall be governed by
and construed in accordance with, the laws of the State of Michigan in the same
manner applicable to contracts made and to be performed entirely within such
State and without giving effect to choice of law principles of such State.
___________________________________
By:________________________________
Its:_____________________________
SWING LINE NOTE
-2-
<PAGE> 89
EXHIBIT F
BID-OPTION QUOTE REQUEST
[Date]
NBD Bank,
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Corporate and Institutional Banking
Invacare Corporation (the "Treasury Manager") on behalf of the
Borrowers referred to below, hereby requests offers to make Bid-Option Loans
comprising the Bid-Option Borrowing(s) described below pursuant to Section
2.2(b) of the Loan Agreement, dated as of November ___, 1997, as amended,
supplemented or otherwise modified (the "Loan Agreement"), by and among INVACARE
CORPORATION, an Ohio corporation (the "Company"), certain Borrowing Subsidiaries
designated therein from time to time (collectively with the Company, the
"Borrowers"), the Banks, NBD BANK, as Agent, and KEYBANK NATIONAL ASSOCIATION,
as Co-Agent. Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
Date of Bid-Option Borrowing(s): ________, 19__
Designated Borrower: _____________________
Aggregate Amount of each Bid-Option Borrowing: (a) _______________*
(b) ______________
(c) ______________
Interest Period: (a) ______________**
(b) ______________
(c) ______________
INVACARE CORPORATION
By:_________________________
Its:____________________
*Must be (a) $5,000,000 or a larger multiple of $1,000,000.
**Must comply with the definition of the term "Bid-Option Interest Period."
<PAGE> 90
EXHIBIT G
INVITATION FOR BID-OPTION QUOTES
[Date]
To: [Name of Bank]
Attention: ____________________
Reference is made to the Loan Agreement, dated as of November ___,
1997, as amended, supplemented or otherwise modified (the "Loan Agreement"), by
and among INVACARE CORPORATION, an Ohio corporation (the "Company") certain
Borrowing Subsidiaries designated therein from time to time (collectively with
the Company, the "Borrowers"), the Banks, NBD BANK, as Agent, and KEYBANK
NATIONAL ASSOCIATION, as Co-Agent. Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Loan Agreement.
Pursuant to Section 2.2(c) of the Loan Agreement, NBD Bank, as Agent,
is pleased on behalf of the Borrowers to invite you to submit Bid-Option Quotes
to the Borrowers for the Bid-Option Borrowing(s) described below.
Date of Bid-Option Borrowing(s): ________, 19__
Designated Borrower: ____________________
Aggregate Amount of Each
Bid-Option Borrowing: Interest Period:
(a) ____________________ (a) ________________
(b) ____________________ (b) ________________
(c) ____________________ (c) ________________
Please respond to this invitation by no later than 9:00 a.m.
(Detroit time) on _________________, 19__.*
NBD BANK, as Agent
By: _______________________________
Its: _____________________________
* Insert date of Bid-Option Borrowing
<PAGE> 91
EXHIBIT H
BID-OPTION QUOTE
[Date]
NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Corporate and Institutional Banking
Reference is made to the Loan Agreement, dated as of November ___,
1997, as amended, supplemented or otherwise modified (the "Loan Agreement"), by
and among INVACARE CORPORATION, an Ohio corporation (the "Company"), certain
Borrowing Subsidiaries designated therein from time to time (collectively with
the Company, the "Borrowers"), the Banks, NBD BANK, as Agent, and KEYBANK
NATIONAL ASSOCIATION, as Co-Agent. Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Loan Agreement.
In response to your Invitation for Bid-Option Quotes dated _____, 19__,
_________________________ (the "Bank"), hereby makes the following offer[s] to
make [a] Bid-Option Loan[s]:
1. Quoting Bank: ____________________________
Contact Person: _________________________
2. Date of proposed Borrowing: __________, 19__*
3. Quotes:
<PAGE> 92
<TABLE>
<CAPTION>
Principal Bid-Option Interest
Amount** Rate*** Period ****
-------- ------- -----------
<S> <C> <C>
(a) _________ ___________ ___________
(b) _________ ___________ ___________
(c) _________ ___________ ___________
</TABLE>
4. The aggregate amount of Bid-Option Loans which may be accepted by
the Borrowers pursuant to this Bid-Option Quote shall not exceed $_____________.
The Bank acknowledges and agrees that this Bid-Option Quote (a) is
irrevocable and (b), subject to the terms and conditions of the Loan Agreement,
obligates it to make a Bid-Option Loan for which any quote is accepted, in whole
or in part.
[Name of Bank]
By: _______________________________
Its: _____________________________
* As specified in the related Invitation for Bid-Option Quotes.
** The principal amount (a) must be $5,000,000 or a larger multiple of
$1,000,000 and (b) may not exceed the aggregate amount of the related
Bid-Option Borrowing specified in the related Invitation for Bid-Option
Quotes.
*** Specify rate of interest per annum (rounded up to the nearest 1/100th
of 1%) or applicable margin, which may be positive or negative,
expressed as a percentage (rounded up to the nearest 1/100th of 1%), as
the case may be.
**** As specified in the related Invitation for Bid-Option Quotes.
<PAGE> 93
EXHIBIT I
REQUEST FOR REVOLVING CREDIT ADVANCE
To each Bank party to
the referenced Loan Agreement
c/o NBD Bank, as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Corporate & Institutional Banking
Invacare Corporation, (the "Treasury Manager"), on behalf of
the Borrowers referred to below, hereby requests a [insert Revolving Credit Loan
or Letter of Credit Advance] pursuant to Section 2.6 of the Loan Agreement,
dated as of November ___, 1997 (as amended or modified from time to time, the
"Loan Agreement"), among Invacare Corporation, an Ohio corporation (the
"Company"), the Borrowing Subsidiaries designated from time to time
(collectively with the Company, the "Borrowers"), the Banks referenced therein,
you, as Agent for the Banks, and KeyBank National Association, as Co-Agent for
the Banks.
[A Revolving Credit Loan is requested to be made in the amount
of _________ (specify amount of Dollars or the relevant Permitted Currency), to
be made on ____________, 19___ for the account of ____________ (specify
Designated Borrower) and evidenced by the Borrowers' Revolving Credit Notes.
Such Loan shall be a [insert Interbank Offered Rate Revolving Credit Loan,
Negotiated Rate Loan or Floating Rate Loan] and the initial Interest Period, if
such requested Loan is a Fixed Rate Revolving Credit Loan, shall be [insert
permitted Interest Period].]
[Such Letter of Credit Advance shall be made by the issuance
by the Agent of its Letter of Credit for the account of ____________ (specify
Designated Borrower) in the maximum stated amount of $___________ to and for the
benefit of ________________ with a stated expiry date of _________________,
199__, and containing the further terms and conditions set forth in the attached
letter of credit application to the Agent.]
In support of this request, the Treasury Manager, on behalf of
the Borrowers, hereby represents and warrants to the Agent and the Banks that:
1. The representations and warranties contained in Article IV
of the Credit Agreement are true and correct in all material respects on and as
of the date hereof, and will be true and correct in all material respects on the
date such Advance is made (both before and after such Advance is made), as if
such representations and warranties were made on and as of such dates.
2. No Event of Default or Default has occurred and is
continuing or will exist on the date such Advance is made and such Advance shall
not cause an Event of Default or Default.
<PAGE> 94
Acceptance of the proceeds of such Advance by the Designated Borrower shall be
deemed to be a further representation and warranty by the Borrowers that the
representations and warranties made herein are true and correct in all material
respects at the time such proceeds are disbursed.
Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Loan Agreement.
INVACARE CORPORATION
By: _______________________________
Its: _____________________________
Dated: ________________, 199_
REQUEST FOR REVOLVING CREDIT ADVANCE
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<PAGE> 95
EXHIBIT J
OPINION OF COUNSEL
November ___, 1997
NBD Bank
KeyBank National Association
National City Bank
Societe Generale, Chicago Branch
Sun Trust Bank, Central Florida, NA
Wachovia Bank of Georgia, NA
PNC Bank, NA
Commerzbank Aktiengesellschaft, Chicago Branch
The Bank of New York
c/o NBD Bank, as Agent
611 Woodward Avenue
Detroit, Michigan 48226
Ladies and Gentlemen:
We refer to the Loan Agreement dated as of November ___, 1997 (the
"Loan Agreement") by and among Invacare Corporation, an Ohio corporation (the
"Company"), certain subsidiaries designated therein (the "Borrowing
Subsidiaries" and collectively with the Company, the "Borrowers"), the banks
parties thereto (the "Banks"), NBD Bank, a Michigan corporation, as agent for
the Banks (in such capacity, the "Agent") and KeyBank National Association, as
co-agent for the Banks. We have been requested by the Company and the Borrowing
Subsidiaries listed on Schedule A attached hereto (the "Domestic Borrowing
Subsidiaries") to give our opinion pursuant to Section 2.6(f) of the Loan
Agreement and, for purposes of this opinion, the terms used in this opinion,
which are not defined herein, shall have the respective meanings set forth in
the Loan Agreement.
We have examined the following documents and instruments: (i) the Loan
Agreement, (ii) the Notes, (iii) the Guaranty, and (iv) other documents relating
to the transactions contemplated by the Loan Agreement (collectively, items (i)
through (iv) are referred to as the "Loan Documents"). We have also examined and
relied upon certified copies of the Company's and each Domestic Borrowing
Subsidiary's articles of incorporation, by-laws and board of directors
resolutions authorizing the Company's and each Domestic Borrowing Subsidiary's
participation in the transactions contemplated by the Loan Agreement. We have
also copies of all such documents and records of the Company and the Domestic
Borrowing Subsidiaries and all such other documents and records, and have made
such investigations of law, as we have deemed necessary and relevant as a basis
for our opinion. With respect to material factual matters not independently
established by us, we have relied upon certificates of officers of the Company
and the Domestic Borrowing Subsidiaries, which reliance we deemed appropriate in
the circumstances.
Based upon the foregoing, it is our opinion that:
<PAGE> 96
November ___, 1997
Page 2
1. Each of the Company and each Domestic Borrowing Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its respective organization or incorporation, and each is duly
qualified to do business, and is in good standing, in all additional
jurisdictions where such qualification is necessary under applicable law, except
where the failure to so qualify to be so would not have a material adverse
effect on the business and financial condition of the Company and its
Subsidiaries taken as a whole. Each of the Company and each Domestic Borrowing
Subsidiary has all requisite corporate power to own or lease the properties used
in its business and to carry on its business as now being conducted. The Company
and each Domestic Borrowing Subsidiary has all requisite corporate power to
execute and deliver the Loan Documents to which it is a party and to engage in
the transactions contemplated by the Loan Documents.
2. The execution, delivery and performance by the Company and each
Domestic Borrowing Subsidiary of the Loan Documents have been duly authorized by
all necessary corporate action and are not in contravention of any law, rule or
regulation, or any judgment, decree, writ, injunction, order or award of any
arbitrator, court or governmental authority, or of the terms of the Company's or
any Domestic Borrowing Subsidiary's charter or by-laws, or of any material
contract or undertaking to which the Company or any Domestic Borrowing
Subsidiary is a party or by which the Company or any Domestic Borrowing
Subsidiary or any of their respective property may be bound or affected, and
will not result in the imposition of any Lien except for Permitted Liens.
3. The Loan Documents to which the Company or any Domestic Borrowing
Subsidiary is a party are the legal, valid and binding obligations of the
Company and each Domestic Borrowing Subsidiary enforceable against the Company
and each Domestic Borrowing Subsidiary in accordance with their respective
terms.
4. Schedule 4.4 of the Loan Agreement correctly sets forth the
corporate name, jurisdiction of incorporation and ownership of each Subsidiary
of the Company.
5. To the best of our knowledge and except as set forth in Schedule 4.5
of the Loan Agreement, there is no action, suit or proceeding pending or
threatened against or affecting the Company or any of its Subsidiaries before or
by any court, governmental authority or arbitrator, which if adversely decided
might result, either individually or collectively, in any material adverse
change in the business, properties, operations or financial condition of the
Company or any of its Subsidiaries taken as a whole or in any material adverse
effect on the legality, validity or enforceability of any Loan Agreement and, to
the best of the Company's knowledge, there is no basis for any such action, suit
or proceeding.
6. No consent, approval or authorization of or declaration,
registration or filing with any governmental authority or any nongovernmental
person or entity, including without limitation any creditor, lessor or
stockholder of the Company or any of its Subsidiaries, is required on the part
of the Company or any Subsidiary in connection with the execution, delivery and
performance of the Loan Documents or the transactions contemplated thereby or as
a condition to the legality, validity or enforceability of the Loan Documents,
except where the failure to obtain such consents, approvals, authorizations,
declarations, registrations or filings would not have a material adverse effect
on the Company and its Subsidiaries, taken as a whole.
<PAGE> 97
November ___, 1997
Page 3
This opinion is subject to the qualifications that the enforcement of
the rights and remedies set forth in the Loan Documents are subject to the
effect of applicable bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors' rights generally, and general principles of equity,
whether applied in a proceeding at law or in equity.
Very truly yours,
<PAGE> 98
EXHIBIT K
REQUEST FOR CONTINUATION OR
CONVERSION OF REVOLVING CREDIT LOAN
[Date]
To each Bank party to
the referenced Loan Agreement
c/o NBD Bank
as Agent for the Banks
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Corporate & Institutional Banking
Invacare Corporation, (the "Treasury Manager") on behalf of
the Borrowers referred to below, hereby requests that ____________ (specify
amount of Dollars or relevant Permitted Currency) of the principal amount of the
Revolving Credit Loan originally made on ____________, 19__, which Revolving
Credit Loan is currently a [insert type of Loan], be continued as or converted
to, as the case may be, a [insert type of Loan requested] denominated in
_____________ (specify Dollars or relevant Permitted Currency) on
______________, 19__. If such Loan is requested to be converted to an Interbank
Offered Rate Revolving Credit Loan or a Negotiated Rate Loan, the Borrower
hereby elects an Interest Period for such Loan of [insert permitted Interest
Period].
In support of this request, the Treasury Manager, on behalf of
the Borrowers, hereby represents and warrants to the Agent and the Banks that:
1. The representations and warranties contained in Article IV
of the Loan Agreement are true and correct in all material respects on and as of
the date hereof, and will be true and correct in all material respects on the
date such Loan is [continued][converted] (both before and after such Loan is
[continued][converted]), as if such representations and warranties were made on
and as of such dates.
2. No Event of Default or Default has occurred and is
continuing or will exist on the date such [Loan][Advance] is
[continued][converted] (whether before or after such Loan is
[continued][converted]).
Acceptance of the proceeds of such [continued][converted] Loan by the Designated
Borrower shall be deemed to be a further representation and warranty that the
representations and warranties made herein are true and correct in all material
respects at the time of such [continuation] [conversion].
<PAGE> 99
Capitalized terms used but not defined herein shall have the
respective meanings assigned to them in the Loan Agreement, dated as of November
___, 1997 among Invacare Corporation, an Ohio corporation (the "Company"), the
Borrowing Subsidiaries designated therein from time to time (collectively with
the Company, the "Borrowers"), the banks named therein, you, as Agent for the
Banks, and KeyBank National Association, as Co-Agent for the Banks.
INVACARE CORPORATION
By: __________________________________
Its: _______________________________
REQUEST FOR CONTINUATION OR
CONVERSION OF REVOLVING CREDIT LOAN
-2-
<PAGE> 100
EXHIBIT L
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Loan Agreement dated as of November
___, 1997 (the "Loan Agreement") among Invacare Corporation, an Ohio corporation
(the "Company"), certain Borrowing Subsidiaries designated therein from time to
time (collectively with the Company, the "Borrowers"), the banks named therein
(the "Banks"), NBD Bank, as Agent for the Banks (the "Agent") and KeyBank
National Association, as Co-Agent for the Banks. Terms defined in the Loan
Agreement are used herein with the same meaning.
The "Assignor" and the "Assignee" referred to on Schedule 1
agree as follows:
1. The Assignor hereby sells and assigns (without recourse) to
the Assignee, and the Assignee hereby purchases and assumes from the Assignor,
an interest in and to the Assignor's rights and obligations under the Loan
Agreement as of the date hereof equal to the percentage interest specified on
Schedule 1 of all outstanding rights and obligations under the Loan Agreement.
After giving effect to such sale and assignment, the Assignee's Commitments and
the amounts of the Advances owing to the Assignee will be as set forth on
Schedule 1.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Agreement or any other instrument or document
furnished pursuant thereto; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Borrower or the performance or observance by any Borrower of any of its
obligations under the Loan Agreement or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Note or Notes held by the
Assignor and requests that the Agent exchange such Note or Notes for a new Note
or Notes payable to the order of the Assignee in an amount equal to the
Commitments assumed by the Assignee pursuant hereto and the Assignor in an
amount equal to the Commitments retained by the Assignor under the Loan
Agreement, respectively, as specified on Schedule 1.
3. The Assignee (i) confirms that it has received a copy of
the Loan Agreement, together with copies of the financial statements referred to
in Section 4.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will, independently and without
reliance upon the Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Agreement; (iii) appoints and authorizes the Agent to take such action as agent
on its behalf and to exercise such powers and discretion under the Loan
Agreement as are delegated to the Agent by the terms thereof, together with such
powers and
<PAGE> 101
discretion as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms of all of the obligations that by the
terms of the Loan Agreement are required to be performed by it as a Bank; and
(v) if the Assignee is organized under the laws of a jurisdiction outside the
United States, attaches the forms prescribed by the Internal Revenue Service of
the United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Loan Agreement and the Notes or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.
4. Following the execution of this Assignment and Acceptance,
it will be delivered to the Agent for acceptance and recording by the Agent. The
effective date for this Assignment and Acceptance (the "Effective Date") shall
be the date of acceptance hereof by the Agent, unless otherwise specified on
Schedule 1.
5. Upon such acceptance and recording by the Agent, as of the
Effective Date, (i) the Assignee shall be a party to the Loan Agreement and, to
the extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Agreement.
6. Upon such acceptance and recording by the Agent, from and
after the Effective Date, the Agent shall make all payments under the Loan
Agreement and the Notes in respect of the interest assigned hereby (including,
without limitation, all payments of principal, interest and commitment fees with
respect thereto) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Loan Agreement and the Notes for
periods prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of Michigan.
8. This Assignment and Acceptance may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart of
this Assignment and Acceptance.
ASSIGNMENT AND ACCEPTANCE
-2-
<PAGE> 102
IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.
[ASSIGNOR]
BY:________________________________
ITS:____________________________
[ASSIGNEE]
___________________________________
BY:________________________________
ITS:______________________________
ASSIGNMENT AND ACCEPTANCE
-3-
<PAGE> 103
EXHIBIT M
ASSUMPTION AGREEMENT
Reference is made to the Loan Agreement dated as of November ____, 1997
(as now or hereafter amended or modified from time to time, the "Loan
Agreement") among INVACARE CORPORATION, an Ohio Corporation (the "Company"),
each of the Borrowing Subsidiaries designated therein from time to time
(collectively with the Company, the "Borrowers" and each individually a
"Borrower"), the Banks named therein (the "Banks"), NBD BANK, as agent for the
Banks (the "Agent") and KEYBANK NATIONAL ASSOCIATION, as co-agent for the Banks.
Terms defined in the Loan Agreement are used herein with the same meaning.
1. __________________, a _____________________ ("New Bank") has decided
to become a Bank under the Loan Agreement, with its Commitment, Percentage of
Total Commitments and address for notice as described next to its signature
below. The New Bank (i) confirms that it has received a copy of the Loan
Agreement, together with copies of the financial statements referred to in
Section 4.6 thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assumption Agreement; (ii) agrees that it will, independently and without
reliance upon the Agent, the Co-Agent or any Bank and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Agreement;
(iii) appoints and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers and discretion under the Loan Agreement as
are delegated to the Agent by the terms thereof, together with such powers and
discretion as are reasonably incidental thereto; (iv) agrees that it will
perform in accordance with their terms of all of the obligations that by the
terms of the Loan Agreement are required to be performed by it as a Bank; and
(v) if the New Bank is organized under the laws of a jurisdiction outside the
United States, attaches the forms prescribed by the Internal Revenue Service of
the United States certifying as to the New Bank's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the New Bank under the Loan Agreement and the Notes or
such other documents as are necessary to indicate that all such payments are
subject to such taxes at a rate reduced by an applicable tax treaty.
2. Following the execution of this Assumption Agreement, it will be
delivered to the Agent and the Company for acceptance by the Agent and the
Company and recording by the Agent. The effective date for this Assumption
Agreement (the "Effective Date") shall be the date of acceptance hereof by the
Agent and the Company.
3. Upon such acceptance by the Agent and the Company and recording by
the Agent,
-1-
<PAGE> 104
as of the Effective Date, the New Bank shall be a party to the Loan
Agreement and, to the extent provided in this Assumption Agreement, have the
rights and obligations of a Bank thereunder. On the Effective Date, the New Bank
shall, in fulfillment of its obligations as a Bank under the Loan Agreement,
fund its share of outstanding Revolving Credit Advances in accordance with its
Percentage of Total Commitment by making available such amount to the Agent in
immediately available funds at the principal office of the Agent. The Agent
shall promptly adjust the balance of outstanding Revolving Credit Advances owing
to each Bank in accordance with each Bank's new Percentage of Total Commitment
and promptly remit to each Bank any repayment due such Bank as a result of such
adjustment. In the event any Eurodollar Rate Loans are outstanding on the
Effective Date and the repayment of such Eurodollar Rate Loans prior to the last
day of the applicable Eurodollar Interest Period would result in costs and
expenses to any Bank as described in Section 3.8 of the Loan Agreement, the New
Bank shall purchase a participation interest in any outstanding Eurodollar Rate
Loans from each Bank which would suffer such costs and expenses. The amount of
the participation interest purchased by the New Bank from any Bank under this
paragraph shall be equal to the amount of the repayment such Bank would have
received with respect to such Eurodollar Rate Loan as a result of the adjustment
described in this paragraph.
4. This Assumption Agreement shall be governed by, and construed in
accordance with, the laws of the State of Michigan.
5. This Assumption Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
6. Upon acceptance and recording by the Agent, the Agent shall notify
each Bank and the Company of the Percentage of Total Commitments of each Bank,
which shall be binding on all parties.
-2-
<PAGE> 105
IN WITNESS WHEREOF, the New Bank has caused this Assumption Agreement
to be executed by its officer thereunto duly authorized as of the date specified
thereon.
______________________________ [NEW BANK]
______________________________
______________________________
Attention: ___________________ By: _______________________________
Facsimile No. (___) ___-____
Its: _____________________________
Commitment Amount $___________
Percentage of Total Commitments: ___%
Accepted and Agreed:
NBD BANK, as Agent
By: _______________________________
Its: _____________________________
INVACARE CORPORATION, as Treasury
Manager on behalf of the Borrowers
By: _______________________________
Its: _____________________________
-3-
<PAGE> 1
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
between
Invacare Corporation
Inva Acquisition Corp.
And
Suburban Ostomy Supply Co., Inc.
Dated as of December 17, 1997
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TABLE OF CONTENTS
ARTICLE I THE OFFER...........................................................2
1.1 The Offer.........................................................2
1.2 Action by The Company.............................................3
ARTICLE II THE MERGER.........................................................6
2.1. The Merger.......................................................6
2.2. Closing..........................................................6
2.3. Effective Time of the Merger.....................................6
2.4. Effects of the Merger............................................6
2.5. Certificate of Incorporation; By-Laws............................7
2.6. Directors........................................................7
2.7. Officers.........................................................7
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS..........................................7
3.1. Effect on Capital Stock..........................................7
3.2. Stock Plans......................................................8
3.3. Exchange of Certificates.........................................9
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................11
4.1 Organization, Standing and Corporate Power.......................11
4.2 Subsidiaries.....................................................11
4.3 Capital Structure................................................11
4.4 Authority; Noncontravention......................................13
4.5 SEC Documents; Undisclosed Liabilities...........................14
4.6 Information Supplied.............................................14
4.7 Absence of Certain Changes or Events.............................15
4.8 Litigation; Labor Matters; Compliance with Laws..................15
4.9 Employee Benefit Plans...........................................16
4.10 Taxes...........................................................18
4.11 Environmental matters...........................................18
4.12 Material Contracts..............................................20
4.13 Brokers.........................................................20
4.14 Opinion of Financial Advisor....................................21
4.15 Board Recommendation............................................21
4.16 Required Company Vote...........................................21
4.17 State Takeover Statutes.........................................21
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4.18 Intellectual Property...........................................21
4.19 Related Party Transactions......................................22
4.20 Permits.........................................................22
4.21 Insurance Policies..............................................22
4.22 Certain Business Practices......................................23
4.23 Suppliers and Customers.........................................23
4.24 Product Warranties..............................................23
4.25 Sole Representations............................................23
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGERCO...............23
5.1 Organization, Standing and Corporate Power.......................23
5.2 Subsidiaries.....................................................24
5.3 Capital Structure................................................24
5.4 Authority; Noncontravention......................................24
5.5 Brokers..........................................................25
5.6 Financing........................................................25
5.7 Offer Documents and Schedule 14D-9...............................25
5.8 Information Supplied.............................................25
5.9 Sole Representations.............................................25
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER.........26
6.1 Conduct of Business of the Company...............................26
6.2 Changes in Employment Arrangements...............................28
6.3 Severance........................................................28
6.4 WARN.............................................................28
ARTICLE VII ADDITIONAL AGREEMENTS............................................28
7.1. Preparation of Proxy Statement: Stockholder Meeting.............28
7.2. Access to Information, Confidentiality..........................29
7.3. Reasonable Best Efforts.........................................30
7.4 Indemnification..................................................30
7.5 Public Announcements.............................................31
7.6 No Solicitation..................................................31
7.7 Resignation of Directors.........................................33
7.8 Employee Benefits................................................33
7.9 Notification of Certain Matters.................................34
7.10 State Takeover Laws.............................................34
7.11 Indemnification Agreements......................................34
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ARTICLE VIII CONDITIONS PRECEDENT.............................................35
8.1 Conditions to Each Party's Obligation............................35
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.................................35
9.1 Termination......................................................35
9.2 Effect of Termination............................................36
9.3 Amendment........................................................36
9.4 Extension; Waiver................................................36
9.5 Procedure for Termination, Amendment, Extension or Waiver........37
ARTICLE X GENERAL PROVISIONS..................................................37
10.1 Nonsurvival of Representations and Warranties...................37
10.2 Fees and Expenses...............................................37
10.3 Notices.........................................................38
10.4 Definitions.....................................................39
10.5 Interpretation..................................................40
10.6 Counterparts....................................................40
10.7 Entire Agreement; No Third-Party Beneficiaries..................40
10.8 Governing Law...................................................40
10.9 Assignment......................................................41
10.10 Enforcement....................................................41
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is entered into as of this 17th day
of December, 1997 by and between Invacare Corporation, an Ohio corporation (the
"Buyer"), Inva Acquisition Corp., a Massachusetts corporation and wholly-owned
subsidiary of Buyer ("MergerCo"), and Suburban Ostomy Supply Co., Inc., a
Massachusetts corporation (the "Company").
WHEREAS, the respective Boards of Directors of the Company, the Buyer
and MergerCo have determined that the merger of MergerCo with and into the
Company (the "Merger"), upon the terms and subject to the conditions set forth
in this Agreement, would be advisable and in the best interests of their
respective companies and stockholders, and such Boards of Directors have
approved such Merger, pursuant to which each share of common stock, no par value
per share, of the Company ("Company Common Stock") issued and outstanding
immediately prior to the Effective Time of the Merger (as defined in Section
1.3) will be converted into the right to receive cash, other than (a) shares of
Company Common Stock owned, directly or indirectly, by the Company or any
subsidiary (as defined in Section 10.4) of the Company and (b) Dissenting Shares
(as defined in Section 3. l(d));
WHEREAS, subject to the terms and conditions of this Agreement and in
furtherance of the Merger, the Buyer will make, or will cause MergerCo to make,
a tender offer (the "Offer") to acquire any and all shares of Company Common
Stock;
WHEREAS, the Merger and this Agreement require the vote of two-thirds
in interest of the issued and outstanding shares of Company Common Stock for the
approval thereof (the "Company Stockholder Approval");
WHEREAS, simultaneously with the execution hereof, certain stockholders
of the Company have executed and delivered to Buyer and MergerCo a Stockholders
Agreement of even date herewith (the "Stockholders Agreement") pursuant to which
such stockholders have agreed to tender their shares of Company Common Stock
pursuant to the Offer and to vote for the Merger described herein, which
Stockholders Agreement has been relied upon by Buyer and MergerCo in their
decision to execute this Agreement; and
WHEREAS, Buyer, MergerCo and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various terms of and conditions to
the Offer and the Merger; and
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
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ARTICLE I
THE OFFER
---------
1.1 THE OFFER.
1.1.1 GENERAL. Provided that this Agreement shall not have
been terminated in accordance with Article IX, the Buyer shall commence, or
shall cause MergerCo to commence, the Offer to acquire any and all shares of
Company Common Stock for a cash price per share equal to the Merger
Consideration (as defined in Section 3.1(c)), as promptly as reasonably
practicable after the date hereof, but in no event later than five (5) business
days after the initial public announcement of Offeror's intention to commence
the Offer. For purposes of this Article I, the party which makes the Offer,
whether the Buyer or MergerCo, shall be referred to as the "Offeror." Offeror
may not accept any shares of Company Common Stock tendered for purchase in
response to the Offer unless it accepts all such shares that are properly
tendered in accordance with the terms thereof. Acceptance by Offeror of shares
of Company Common Stock for payment pursuant to the Offer shall be irrevocable.
The Offer shall be subject: (i) to the condition that there shall be validly
tendered in accordance with the terms of the Offer prior to the expiration date
of the Offer and not withdrawn a number of shares of Company Common Stock which,
together with the shares of Company Common Stock then owned by the Buyer, and
MergerCo, represents at least two-thirds of the total number of outstanding
shares of the Company Common Stock, assuming the exercise of all outstanding
options, rights and convertible securities (if any) and the issuance of all
shares of Company Common Stock that the Company is then obligated to issue (such
total number of outstanding or issuable shares of Company Common Stock being
hereinafter referred to as the "Fully Diluted Shares") (the "Minimum Condition")
and (ii) to the other conditions set forth in Annex I attached hereto
(collectively, the "Offer Conditions"). The Buyer and MergerCo expressly reserve
the right to waive any of the conditions to the Offer, including but not limited
to, the satisfaction of the Minimum Condition. The expiration date of the Offer
shall be twenty (20) business days after commencement. Buyer and MergerCo agree
that if all of the Offer Conditions are not satisfied on such initial expiration
date of the Offer then, provided that the Offeror determines that all such
Conditions are reasonably capable of being satisfied and subject to SEC rules
with respect to extension of time periods, Offeror shall extend the Offer from
time to time until such Conditions are satisfied or waived; provided, that
Offeror shall not be required to extend the offer beyond January 31, 1998. Buyer
and MergerCo agree that upon the initial expiration date of the Offer, as the
same may be extended in accordance with the immediately preceding sentence, if
the Offer Conditions have been satisfied, Offeror shall accept the shares of
Company Common Stock properly tendered for purchase, subject to the right to
extend the Offer not more than ten (10) business days in the aggregate if less
than 90% of the Fully Diluted Shares have been properly tendered. Without the
prior written consent of the Company, no change may be made by Offeror which
reduces the maximum number of shares of Company Common Stock to be purchased in
the Offer or which changes the form of consideration or makes any other change
in the terms and conditions of the Offer, except as may be required pursuant to
SEC rules with respect to extension of time periods, in any manner which is
adverse to the holders of shares of Company Common Stock or which imposes
conditions to the Offer in addition to those set forth above; provided, however,
that if on a scheduled expiration date of the Offer (as it may be
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extended in accordance with the terms hereof), all conditions to the Offer shall
not have been satisfied or waived, the Offer may be extended from time to time
without the consent of the Company for such period of time as is reasonably
expected to be necessary to satisfy the unsatisfied conditions and provided
further that if, as of a scheduled expiration date all of the conditions to the
Offer have been satisfied, but less than 90% of the Fully Diluted Shares have
been properly tendered, Offeror may extend the Offer up to an aggregate of an
additional ten (10) business days. The Merger Consideration shall, subject to
applicable withholding of taxes, be net to the seller in cash, payable upon the
terms and subject to the conditions of the Offer. Subject to the terms and
conditions of the Offer, Offeror shall pay, as promptly as practicable after
expiration of the Offer, for all shares of Company Common Stock validly tendered
and not withdrawn. At or prior to the expiration of the Offer, Offeror will take
all steps necessary to provide its paying agent any funds necessary to make the
payments contemplated by the Offer. Upon the execution of this Agreement, the
Merger Consideration shall be the amount set forth in Section 3.1(c) payable
without interest thereon, and such initial Merger Consideration shall be
adjusted only in accordance with the following provisions. The Merger
Consideration payable in connection with the Offer shall automatically be
adjusted appropriately for any stock dividend, split or any conversion or
reclassification in respect of the Company Common Stock occurring after the date
hereof and prior to the date of consummation of the Offer, which shall occur
only in accordance with the terms of this Agreement. MergerCo shall have the
right to increase the Merger Consideration in effect hereunder at any time.
1.1.2 SECURITIES LAW COMPLIANCE. On the date of commencement
of the Offer, Offeror shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 shall contain or
shall incorporate by reference an offer to purchase (the "Offer to Purchase")
and forms of the related letter of transmittal and any related summary
advertisement (the Schedule 14D-1, the Offer to Purchase and such other
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "Offer Documents"). Offeror and the Company agree
to promptly correct any information provided by either of them for use in the
Offer Documents which shall have become false or misleading, and Offeror further
agrees to take all steps necessary to cause the Schedule 14D-1 as so corrected
to be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of shares of the Company Common Stock, in each case as
and to the extent required by applicable federal securities laws. Offeror agrees
to provide the Company with a written copy of any comments it or its counsel may
receive from time to time from the SEC or its staff with respect to the Schedule
14D-1 promptly after receipt of such comments.
1.1.3 TERMINATION OF THE OFFER. Offeror shall not, without the
prior written consent of the Company, (i) terminate the Offer (except in
accordance with the terms of Annex I attached hereto), or (ii) extend the
Expiration Date to a date later than March 31, 1998.
1.2 ACTION BY THE COMPANY.
1.2.1 APPROVAL AND RECOMMENDATION OF THE BOARD. The Company
hereby approves of and consents to the making of the Offer and represents that
(a) the Board of
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Directors of the Company, at a meeting duly called and held on December 16,
1997, has unanimously (i) determined that the Merger and the Offer, taken
together, are fair to, and in the best interests of, the Company and the holders
of the Company Common Stock, (ii) advised, authorized and approved this
Agreement and approved the Merger and the other transactions contemplated hereby
(including but not limited to the Offer), (iii) recommended that the
stockholders of the Company accept the Offer and authorize and approve this
Agreement and the transactions contemplated hereby, and (iv) agreed to recommend
that holders of Company Common Stock tender their shares of Company Common Stock
pursuant to the Offer, and (b) Bear, Stearns & Co., Inc. has delivered to the
Board an oral opinion on December 16, 1997, which will be confirmed promptly in
writing, to the effect that, as of such date, the consideration to be received
by the holders of shares of Company Common Stock pursuant to the Offer and the
Merger, taken together, is fair to the holders of shares of Company Common Stock
from a financial point of view. Subject to the provisions of Section 7.6 hereof
and the other provisions of this Agreement, the Company hereby consents to the
inclusion in the Offer Documents prepared in connection with the Offer of the
recommendation of the Board of Directors of the Company described in the
immediately preceding sentence.
1.2.2 SECURITIES LAW COMPLIANCE. On the date of commencement
of the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing, subject to the provisions of Section
6.6 hereof and the other provisions of this Agreement, the recommendation of the
Board of Directors of the Company described in Section 1.2.1 and shall mail the
Schedule 14D-9 to the stockholders of the Company. The Company and Offeror agree
to correct promptly any information provided by any of them for use in the
Schedule 14D-9 which shall have become false or misleading, and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and disseminated to holders of shares of the
Company Common Stock, in each case as and to the extent required by applicable
federal securities laws. The Company agrees to provide Offeror with a written
copy of any comments it or its counsel may receive from time to time from the
SEC or its staff with respect to the Schedule 14D-9, promptly after receipt of
such comments.
1.2.3 STOCKHOLDER LISTS. In connection with the Offer and the
Merger, the Company shall furnish Offeror with mailing labels containing the
names and addresses of all record holders of shares of Company Common Stock and
with security position listings of shares of Company Common Stock held in stock
depositories, each as of a recent date, and of those persons becoming record
holders subsequent to such date. The Company shall furnish Offeror with all such
additional information (including, but not limited to, updated lists of holders
of shares of Company Common Stock and their addresses, mailing labels and lists
of security positions) and such other assistance as Offeror or its agents may
reasonably request in communicating the Offer to the record and beneficial
owners of shares of the Company Common Stock. Subject to the requirements of
applicable law, and except for such steps as are necessary to disseminate the
Offer Documents and any other documents necessary to consummate the Offer or the
Merger, Offeror shall hold in confidence the information contained in such
labels, listings and files, shall use such information only in connection with
the Offer and the Merger, and, if
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this Agreement shall be terminated in accordance with Section 9, shall deliver
to the Company all copies of such information then in its or any of its
affiliate's possession.
1.2.4 DIRECTORS.
(a) Effective upon the acceptance for payment by Offeror of
shares pursuant to the Offer such that Buyer or MergerCo shall own at least a
majority of the Fully Diluted Shares, the Offeror shall be entitled to designate
the number of Directors, rounded up to the next whole number, on the Company's
Board of Directors that equals the product of (i) the total number of directors
on the Company's Board of Directors (giving effect to the election of any
additional directors pursuant to this Section) and (ii) the percentage that the
number of shares of Company Common Stock owned by Offeror (including shares of
Company Common Stock accepted for payment) bears to the total number of Shares
of Company Common Stock outstanding, and the Company shall take all action
necessary to cause Offeror's designees to be elected or appointed to the
Company's Board of Directors, including, without limitation, increasing the
number of directors, and seeking and accepting resignations of incumbent
directors. At such times, the Company will use its best efforts to cause
individuals designated by Offeror to constitute the same percentage as such
individuals represent on the Company's Board of Directors of (x) each committee
of the Board (other than any committee of the Board established to take action
under this Agreement), (y) each board of directors of each Subsidiary of the
Company and (z) each committee of each such board. provided; however, that in
the event that Offeror's designees are elected to the Board of Directors of the
Company, until the Effective Time, such Board of Directors shall have at least
two directors who are directors of the Company on the date of this Agreement and
who are not officers of the Company or any of its subsidiaries (the "Independent
Directors") and; provided further that, in such event, if the number of
Independent Directors shall be reduced below two for any reason whatsoever, the
remaining Independent Director shall designate a person to fill such vacancy who
shall be deemed to be an Independent Director for purposes of this Agreement or,
if no Independent Directors then remain, the other directors of the Company on
the date hereof shall designate two persons to fill such vacancies who shall not
be officers or affiliates of the Company or any of its Subsidiaries, or officers
or affiliates of Buyer or any of its subsidiaries, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement.
Notwithstanding anything in this Agreement to the contrary, the affirmative vote
of the majority of the Independent Directors shall be required to (i) amend or
otherwise modify the Articles of Organization of the Company, (ii) approve any
amendment, modification or waiver by the Company of any provisions of this
Agreement or (iii) approve any other action by the Company that materially
adversely affects the interests of the stockholders of the Company (other than
Buyer or MergerCo) with respect to the transactions contemplated hereby,
including without limitation, any actions which would constitute a breach by the
Company of its representations, warranties or covenants contained herein.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. Subject to applicable law, the Company shall
promptly take all action requested by Offeror necessary to effect any such
election, including mailing to its stockholders the information statement
containing the information required by Section 14(f) of the Exchange Act and
Rule
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14f-1 promulgated thereunder, and the Company agrees to make such mailing with
the mailing of the Schedule 14D-9 (provided that Offeror shall have provided to
the Company on a timely basis all information required to be included in the
Information Statement with respect to Offeror's designees). In connection with
the foregoing, the Company will promptly, at the option of Offeror, either
increase the size of the Company's Board of Directors and/or obtain the
resignation of such number of its current directors as is necessary to enable
Offeror's designees to be elected or appointed to, and to constitute a majority
of the Company's Board of Directors as provided above.
Offeror will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the Massachusetts Business
Corporation Law, MergerCo shall be merged with and into the Company at the
Effective Time of the Merger (as hereafter defined). Upon the Effective Time of
the Merger, the separate existence of MergerCo shall cease, and the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
shall continue under the name ["Suburban Ostomy Supply Co., Inc."].
2.2 CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 9.1 and subject to the satisfaction or waiver of the conditions set
forth in Article VIII, the closing of the Merger (the "Closing") will take place
at 10:00 a.m. on the second business day after satisfaction or waiver of the
conditions set forth in Article VIII (the "Closing Date"), at the offices of
Hutchins, Wheeler & Dittmar, A Professional Corporation, unless another date,
time or place is agreed to in writing by the parties hereto.
2.3 EFFECTIVE TIME OF THE MERGER. On the Closing Date, the parties
shall file a certificate or certificates of merger and other appropriate
documents (the "Certificate of Merger") executed in accordance with the relevant
provisions of the Massachusetts law and shall make all other filings or
recordings required under the Massachusetts Business Corporation Law in
connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is duly filed with the Secretary of State of the
Commonwealth at Massachusetts or at such other time as is specified in the
Certificate of Merger and the Articles of Merger in accordance with the
Massachusetts Corporation Business Law and as MergerCo and the Company shall
agree should be specified in the Certificate of Merger (the time the Merger
becomes effective being the "Effective Time of the Merger").
2.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the Massachusetts Business Corporation Law.
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2.5 CERTIFICATE OF INCORPORATION; BY-LAWS. (a) The Articles of
Organization of MergerCo, as in effect immediately prior to the Effective Time
of the Merger, shall be amended to change the name of the Surviving Corporation
to "Suburban Ostomy Supply Co., Inc.", and, as so amended, until thereafter
further amended as provided therein and under the Massachusetts Business
Corporation Law, it shall be the Articles of Organization of the Surviving
Corporation following the Merger.
(b) The By-laws of MergerCo as in effect at the Effective Time of
the Merger shall be the By-laws of the Company following the Merger until
thereafter changed or amended as provided therein or by applicable law.
2.6 DIRECTORS. The directors of MergerCo at the Effective Time of
the Merger shall be the directors of the Company following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
2.7 Officers. The officers of the Company at the Effective Time of
the Merger shall be the officers of the Company following the Merger, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
3.1 EFFECT ON CAPITAL STOCK. As of the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of the holder
of any shares of Company Common Stock or any shares of capital stock of
MergerCo:
(a) Common Stock of MergerCo Each share of common stock of
MergerCo issued and outstanding immediately prior to the Effective Time of the
Merger shall be converted into one share of the common stock, no par value per
share, of the Company.
(b) Cancellation of Treasury Stock. Each share of Company Common
Stock that is owned by the Company or by any wholly owned subsidiary of the
Company shall automatically be canceled and retired and shall cease to exist,
and no cash or other consideration shall be delivered or deliverable in exchange
therefor.
(c) Conversion of Company Common Stock. Except as otherwise
provided herein and subject to Section 3.3, each issued and outstanding share of
Company Common Stock, other than shares owned by Buyer, MergerCo or any other
direct or indirect subsidiary of Buyer (collectively, the "Excluded Shares"),
and other than Dissenting Shares and treasury stock, shall be converted into the
right to receive in cash from the Company following the Merger an amount equal
to $11.75 (the "Merger Consideration"). Contextually, the term "Merger
Consideration" shall mean the per share amount in reference to the consideration
designated on a per share basis, and otherwise shall refer to the aggregate
consideration represented by the per share amount multiplied by the total number
of shares of Company Common Stock then outstanding.
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(d) Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Company Common Stock issued and outstanding
immediately prior to the Effective Time of the Merger held by a holder who has
the right to demand payment for and an appraisal of such shares in accordance
with the Massachusetts Business Corporation Law Chapter 156B (or any successor
provision) ("Dissenting Shares") shall not be converted into the right to
receive Merger Consideration unless such holder fails to perfect or otherwise
withdraws, forfeits or loses such holder's right to such payment or appraisal,
if any. If, after the Effective Time of the Merger, such holder fails to perfect
or withdraws, forfeits or loses any such right to appraisal, each share of such
holder shall be treated as a share that had been converted as of the Effective
Time of the Merger into the right to receive Merger Consideration in accordance
with this Section 3.1. The Company shall give prompt notice to MergerCo of any
demands received by the Company for appraisal of shares of Company Common Stock,
and MergerCo shall have the right to participate in and, at MergerCo's
reasonable discretion, to direct all communications, negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of MergerCo, make any payment with respect to, or settle
or offer to settle, any such demands.
(e) Cancellation and Retirement of Excluded Shares. Each Excluded
Share issued and outstanding immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(f) Cancellation and Retirement of Company Common Stock. As of the
Effective Time of the Merger, all shares of Company Common Stock (other than
shares referred to in Section 3.1(b)) issued and outstanding immediately prior
to the Effective Time of the Merger, shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common Stock shall, to
the extent such certificate represents such shares, cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
applicable thereto, upon surrender of such certificate in accordance with
Section 3.3.
3.2 STOCK PLANS; BANK WARRANT. (a) As soon as practicable
following the date of this Agreement, the Board of Directors of the Company (or,
if appropriate, any committee administering the Stock Plans (as defined below))
shall adopt such resolutions or take such other actions as may be required to
effect the following:
(i) cause written notification of the Merger to be given to
each holder of a Company Stock Option (as defined below) by the Board
of Directors as provided in the Stock Plans to the effect that each
such holder of a Company Stock Option may exercise such Company Stock
Option (whether or not such Company Stock Option was exercisable
immediately before such notification was given) no later than thirty
days from the date of such notification (the "Exercise Period"); and
(ii) adjust the terms of all outstanding employee stock
options to purchase shares of Company Common Stock ("Company Stock
Options") granted under the
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Company's 1995 Stock Option Plan (the "Stock Option Plan") to
provide that, at the Effective Time of the Merger each Company
Stock Option outstanding immediately prior to the Effective Time
of the Merger shall vest as a consequence of the Merger and shall
be canceled in exchange for a payment from the Company after the
Merger (subject to any applicable withholding taxes) equal to the
product of (1) the total number of shares of Company Common Stock
subject to such Company Stock Option and (2) the excess of $11.75
over the exercise price per share of Company Common Stock subject
to such Company Stock Option and applicable withholding taxes,
payable in cash immediately following the Effective Time of the
Merger;
(iii) cause the cancellation of the Bank Warrant (as defined
below) by causing a "Redemption Event" (as defined in the Bank Warrant)
to occur and taking such other steps as may be necessary in order to
cause such cancellation, including making all payments required to be
made in connection therewith;
(iv) except as provided herein or as otherwise agreed to by
the parties, the Stock Option Plan and any other plan, program or
arrangement providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any subsidiary shall
terminate as of the Effective Time of the Merger, and the Company shall
ensure that following the Effective Time of the Merger no holder of a
Company Stock Option nor any participant in any Stock Option Plan shall
have any right thereunder to acquire equity securities of the Company
following the Merger.
(b) The Company hereby represents and warrants that upon taking of
the actions specified above, immediately following the Effective Time of the
Merger, and after giving effect to the payments described in this Section 3.2,
no holder of a Company Stock Option nor any participant in any Stock Option Plan
nor the holder of any warrant to purchase Company Common Stock (including the
Bank Warrant) shall have the right thereunder to acquire equity securities of
the Company, or any other benefit, after the Merger.
3.3 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. At or prior to the Effective Time of the
Merger, Buyer shall deposit or cause to be deposited with the Exchange Agent
(who shall be appointed by the Company prior to the Closing and shall be
reasonably acceptable to MergerCo), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article III, the
aggregate Merger Consideration. Promptly after the Effective Time, the Exchange
Agent shall mail to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented shares of Company Common Stock (the "Certificates"), a letter
of transmittal and instructions for use in effecting the surrender of the
Certificates for payment therefor (or such other documents as may reasonably be
required in connection with such surrender) in customary form to be agreed by
MergerCo and the Company prior thereto.
(b) Exchange Procedures. (i) After the Effective Time of the
Merger, each holder of an outstanding Certificate or Certificates shall, upon
surrender to the Exchange Agent of such
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Certificate or Certificates and acceptance thereof by the Exchange Agent, be
entitled to receive the amount of cash into which such Certificate or
Certificates surrendered shall have been converted pursuant to this Agreement.
(ii) After the Effective Time of the Merger, there shall be no
further transfer on the records of the Company or its transfer agent of
Certificates, and if Certificates are presented to the Company for transfer,
they shall be canceled against delivery of cash. If cash is to be remitted to a
name other than that in which the Certificate surrendered for exchange is
registered, it shall be a condition of such exchange that the Certificate so
surrendered shall be properly endorsed, with signature guaranteed, or otherwise
in proper form for transfer and that the person requesting such exchange shall
pay to the Company or its transfer agent any transfer or other taxes required or
establish to the satisfaction of the Company or its transfer agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 3.3(b), each Certificate shall be deemed at any time after the Effective
Time of the Merger to represent only the right to receive upon such surrender
the Merger Consideration applicable thereto as contemplated by Section 3.1. No
interest will be paid or will accrue on any cash payable as Merger Consideration
or in lieu of any fractional shares of Company Common Stock.
(iii) In the event that any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
Buyer, the posting by such person of a bond in such amount as Buyer may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, or the provision of other reasonable assurances requested by Buyer,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof pursuant to
this Agreement.
(c) No Further Ownership Rights in Company Common Stock Exchanged
For Cash. All cash paid upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been issued
and paid in full satisfaction of all rights pertaining to such shares.
(d) Termination of Exchange Fund. Any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this Section 3.3
(the "Exchange Fund") which remains undistributed to the holders of the
Certificates for six months after the Effective Time of the Merger shall be
delivered to the Company, upon demand, and any holders of shares of Company
Common Stock prior to the Merger who have not theretofore complied with this
Article II shall thereafter look only to the Company and only as general
creditors thereof for payment of their claim for cash, if any, to which such
holders may be entitled.
(e) No Liability. None of Buyer, MergerCo, the Company or the
Exchange Agent shall be liable to any person in respect of any cash from the
Exchange Fund delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not have
been surrendered prior to the later of (i) one year after the Effective Time of
the Merger and (ii) immediately prior to such date on which any cash, if any, in
respect of such Certificate would otherwise escheat to or become the property of
any Governmental
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Entity (as defined in Section 3.4), any such cash, dividends or distributions in
respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Company, free and clear of all claims or interest of
any person previously entitled thereto.
(f) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by the Company, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer and MergerCo as
follows:
4.1 Organization, Standing and Corporate Power. Each of the
Company and each of its Subsidiaries (as defined in Section 4.2) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate power
and authority to carry on its business as now being conducted. Each of the
Company and each of its Subsidiaries is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect (as defined in Section 10.4) with respect to the
Company. Attached as Section 4.1 of the disclosure schedule ("Disclosure
Schedule") delivered to MergerCo by the Company at the time of execution of this
Agreement are complete and correct copies of the Restated Articles of
Organization, as amended, and bylaws, as amended, of the Company. The Company
has delivered to MergerCo complete and correct copies of the articles of
organization and by-laws (or other comparable organizational documents) of each
of its Subsidiaries, in each case as amended to the date of this Agreement.
4.2 Subsidiaries. The only direct or indirect subsidiaries of the
Company are those listed in Section 4.2 of the Disclosure Schedule (the
"Subsidiaries"). All the outstanding shares of capital stock of each such
Subsidiary have been validly issued and are fully paid and nonassessable and are
owned (of record and beneficially) by the Company, by another wholly owned
Subsidiary of the Company or by the Company and another such wholly owned
Subsidiary, free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens").
Except for the ownership interests set forth in Section 4.2 of the Disclosure
Schedule, the Company does not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, partnership, business association,
joint venture or other entity.
4.3 Capital Structure. The authorized capital stock of the Company
consists of (i) 40,000,000 shares of Company Common Stock, no par value, and
(ii) 1,000,000 shares of preferred stock. Subject to any Permitted Changes (as
defined in Section 6.1(d)) there are, as of the close of business on December
16, 1997: (i) 10,538,622 shares of Company Common Stock
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<PAGE> 16
issued and outstanding; (ii) no shares of Company Common Stock are held in the
treasury of the Company; (iii) no shares of Company Common Stock are reserved
for issuance upon exercise of authorized but unissued Company Stock Options
pursuant to the Stock Option Plan including any increases pursuant to existing
contractual obligations; (iv) 795,895 shares of Company Common Stock issuable
upon exercise of outstanding Company Stock Options; and (v) 86,180 shares of
Company Common Stock issuable upon exercise of an outstanding warrant (the "Bank
Warrant"). Section 4.3 of the Disclosure Schedule sets forth the exercise price
for the outstanding Company Stock Options and the Bank Warrant. Except as set
forth above or in Section 3.3 of the Disclosure Schedule, no shares of capital
stock or other equity securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Stock Option Plan
including any increases pursuant to existing contractual obligations and the
Bank Warrant will be, when issued, duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. Except as set forth on
Section 4.3 of the Disclosure Schedule, there are no outstanding bonds,
debentures, notes or other indebtedness or other securities of the Company
having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which stockholders of the Company
may vote. Except as set forth above, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or any of its Subsidiaries is a
party or by which any of them is bound obligating the Company or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other equity or voting securities of
the Company or of any of its Subsidiaries or obligating the Company or any of
its Subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
Other than as disclosed in the most recent balance sheet of the Company included
in the SEC Documents (as defined below) or as set forth in Section 4.3 of the
Disclosure Schedule, no indebtedness for borrowed money of the Company or its
Subsidiaries contains any restriction upon the incurrence of indebtedness for
borrowed money by the Company or any of its Subsidiaries or restricts the
ability of the Company or any of its Subsidiaries to grant any Liens on its
properties or assets. Other than the Company Stock Options and other than as
disclosed in Section 4.3 of the Disclosure Schedule, (i) there are no
outstanding contractual obligations, commitments, understandings or arrangements
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire or make any payment in respect of any shares of capital stock of the
Company or any of its Subsidiaries and (ii) to the knowledge of the Company,
there are no irrevocable proxies with respect to shares of capital stock of the
Company or any subsidiary of the Company. Section 4.3 of the Disclosure Schedule
sets forth the record and, to the knowledge of the Company, beneficial ownership
of, and voting power in respect of, the capital stock of the Company held by the
Company's directors, officers and stockholders owning five percent (5%) or more
of the Company's outstanding common stock. Except as set forth on Section 4.3 of
the Disclosure Schedule, there are no agreements or arrangements pursuant to
which the Company is or could be required to register shares of Company Common
Stock or other securities under the Securities Act of 1933, as amended (the
"Securities Act") or other agreements or arrangements with or among any security
holders of the Company with respect to securities of the Company.
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<PAGE> 17
4.4 Authority; Noncontravention. The Company has the requisite
corporate and other power and authority to enter into this Agreement and,
subject to the Company Stockholder Approval with respect to the consummation of
the Merger, to consummate the transactions contemplated hereby. The Offer, the
execution and delivery of this Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
authorized by the Company's Board of Directors, which constitutes all necessary
corporate action on the part of the Company, subject, in the case of the Merger,
to the Company Stockholder Approval. This Agreement has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms subject,
as to enforceability, to bankruptcy, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general principles of equity. Except for the Company's credit facility and
except as disclosed in Section 4.4 of the Disclosure Schedule, the execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated by the Offer and this Agreement and compliance with the provisions
hereof will not, conflict with, or result in (a) any breach or violation of, or
default (with or without notice or lapse of time, or both) under, or right of
termination, cancellation, acceleration or "put", with respect to any obligation
or (b) the loss of a benefit or other right or (c) the creation of any Lien upon
any of the properties or assets of the Company or any of its Subsidiaries under,
(i) the Restated Articles of Organization, as amended, or By-laws, as amended,
of the Company or the comparable organizational documents of any of its
Subsidiaries, (ii) any loan or credit agreement, note, note purchase agreement,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
Subsidiaries or their respective properties or assets or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order, decree, statute, law, ordinance, rule, regulation or
arbitration award applicable to the Company or any of its Subsidiaries or their
respective properties or assets, other than, in the case of clauses (i), (ii)
and (iii), any such conflicts, breaches, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not have a Material Adverse
Effect with respect to the Company or would not prevent, hinder or materially
delay the ability of the Company and/or MergerCo to consummate the transactions
contemplated by this Agreement if not cured or waived by the Closing Date. No
consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any Federal, state or local government or any court,
administrative agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), or any other person under any
material agreement, indenture or other instrument to which the Company or any
Subsidiary is a party or to which any of its properties is subject, is required
by or with respect to the Company or any of its Subsidiaries in connection with
the execution and delivery of this Agreement by the Company or the consummation
by the Company of the transactions contemplated hereby, except for (i) the
filing of a pre-merger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing with the SEC of (x) a proxy statement relating to the
Company Stockholder Approval (such proxy statement as amended or supplemented
from time to time, the "Proxy Statement"), and (y) such reports under the
Exchange Act as may be required in connection with the Offer and this Agreement
and the transactions contemplated by this Agreement, (iii) the filing of the
Certificate of Merger with the Secretary of the Commonwealth of Massachusetts
and appropriate documents
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with the relevant authorities of other states in which the Company is qualified
to do business and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations, filings or notices as are set forth in Section 4.4
of the Disclosure Schedule.
4.5 SEC Documents; Undisclosed Liabilities. The Company has timely
filed all required reports, schedules, forms, statements and other documents
with the Securities and Exchange Commission ("SEC") since October 9, 1996
(collectively, and in each case including all exhibits and schedules thereto and
documents incorporated by reference therein, as amended, the "SEC Documents").
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act, or the Exchange Act, as
the case may be, and the rules and regulations of the SEC promulgated thereunder
applicable to such SEC Documents, and none of the SEC Documents (including any
and all financial statements included therein) as of such dates contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Except to the extent revised or superseded by a subsequent filing with the SEC
(a copy of which has been provided to MergerCo prior to the date of this
Agreement), none of the SEC Documents filed by the Company since May 31, 1997
and prior to the date of this Agreement (the "Recent SEC Documents") contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The consolidated financial statements of the Company included in all
SEC Documents filed since October 9, 1996 (the "SEC Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited consolidated quarterly statements,
as permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and fairly
present the consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited quarterly statements, to normal year-end audit adjustments, none of
which, individually or in the aggregate is material). Except as provided for in
the balance sheet contained in the most recent audited financial statements of
the Company included in the Recent SEC Documents (the "Year End Balance Sheet")
and except as disclosed in Section 4.5 of the Disclosure Schedule, neither the
Company nor any Subsidiary has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) except (x) liabilities
incurred in the ordinary and usual course of business and consistent with past
practice, (y) liabilities specifically incurred in connection with the
transactions contemplated by this Agreement, and (z) other liabilities which
will not exceed $2,000,000 in the aggregate, exclusive of obligations under
Section 10.2 hereof.
4.6 Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in the
Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Stockholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the
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circumstances under which they are made, not misleading, except that no
representation or warranty is made by the Company with respect to the
information supplied by MergerCo or any affiliate of MergerCo in writing
specifically for inclusion in the Proxy Statement. The Proxy Statement will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder. Neither the Schedule
14D-9 nor any information supplied by the Company for inclusion in the Offer
Documents will, at the respective times the Schedule 14D-9, the Offer Documents
or any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders of the Company, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein, in the
light of the circumstances under which they were made, not misleading (except to
the extent information contained therein is based upon information supplied
solely by the Buyer or MergerCo). The Schedule 14D-9 shall comply in all
material respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder.
4.7 Absence of Certain Changes or Events. Except as disclosed in
the Recent SEC Documents or on Section 4.7 of the Disclosure Schedule, since the
date of the Year End Balance Sheet, the Company has conducted its business only
in the ordinary course consistent with past practice, and there is not and has
not been: (i) any Material Adverse Change with respect to the Company; (ii) any
condition, event or occurrence which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect or give rise to a
Material Adverse Change with respect to the Company; (iii) any event which, if
it had taken place following the execution of this Agreement, would not have
been permitted by Section 6.1 without the prior consent of MergerCo; or (iv) any
condition, event or occurrence which would reasonably be expected to prevent,
hinder or materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement.
4.8 Litigation; Labor Matters; Compliance with Laws. (a) Except as
disclosed in the Recent SEC Documents, there is (i) no suit, action or
proceeding or investigation pending and, (ii) to the knowledge of the Company,
no suit, action or proceeding or investigation threatened against or affecting
the Company or any of its Subsidiaries that, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect with respect to
the Company or prevent, hinder or materially delay the ability of the Company to
consummate the transactions contemplated by this Agreement nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Company or any of its Subsidiaries having, or
which in the future could have, any such effect.
(b) Except as disclosed in Section 4.8 of the Disclosure Schedule,
(i) neither the Company nor any of its Subsidiaries is a party to, or bound by,
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization; (ii) neither the Company
nor any of its Subsidiaries is the subject of any proceeding asserting that it
or any subsidiary has committed an unfair labor practice or seeking to compel it
to bargain with any labor organization as to wages or conditions of employment;
(iii) there is no strike, work stoppage or other labor dispute involving it or
any of its Subsidiaries pending or, to its knowledge, threatened; and (iv) the
Company is not liable for any severance pay. or other
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payments to any employee or former employee, or any other person, arising from
the termination of employment, or other change in the legal relationship with
such person, under any benefit or severance policy, practice, agreement, plan,
or program of the Company, nor will the Company have any liability which exists
or arises, or may be deemed to exist or arise, under any applicable law or
otherwise, as a result of or in connection with the transactions contemplated
hereunder or as a result of the termination by the Company of any persons
employed by the Company or any of its Subsidiaries on or prior to the Effective
Time of the Merger.
(c) The ownership of the assets of and the conduct of the business
of the Company and each of its Subsidiaries have not been in violation of, and
comply with all statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees or arbitration awards applicable thereto, except for violations
or failures so to comply, if any, that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect with respect to the
Company.
4.9 Employee Benefit Plans. With respect to the employee benefit
plans (as that phrase is defined in section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and any other benefit or
compensation plan, program, or arrangement maintained for the benefit of any
current or former employee, officer, or director of the Company or any ERISA
Affiliate (as defined below) ("Benefit Plans"), except as set forth in Section
4.9 of the Disclosure Schedule:
(i) none of the Benefit Plans is a "multiemployer plan"
within the meaning of ERISA nor has the Company ever maintained or contributed
to such a Plan;
(ii) none of the Benefit Plans promises or provides
retiree medical or life insurance benefits to any person;
(iii) none of the Benefit Plans or any other agreement
with any employee of the Company or its Subsidiaries provides for payment of a
benefit, the increase of a benefit amount, the payment of a contingent
benefit, or the acceleration of the payment or vesting of a benefit by reason
of the execution of this Agreement or the consummation of the transactions
contemplated by this Agreement;
(iv) each Benefit Plan intended to be qualified under
section 401 (a) of the Internal Revenue Code of 1986, as amended ("Code") has
received a favorable determination letter from the Internal Revenue Service
that it is so qualified and nothing has occurred since the date of such letter
that could reasonably be expected to result in the revocation of such
determination letter;
(v) each Benefit Plan has been operated in all respects in
accordance with its terms and the requirements of all applicable law except
where the failure to do so would not have a Material Adverse Effect and all
premiums payable to the Pension Benefits Guarantee Corporation have been paid
in full;
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(vi) neither the Company nor any ERISA Affiliate has
liability under Title IV of ERISA in connection with the termination of, or
withdrawal from, any Benefit Plan; and
(vii) the Company has provided to Buyer or MergerCo (x)
true and complete copies of all Benefit Plans, (y) the most recent annual
actuarial valuation, if any, prepared for each Benefit Plan, and (z) the most
recent annual report (Form 5500), if any, required under ERISA with respect to
each Benefit Plan;
(viii) no payment that is owed or may become due to any
director, officer, employee, or agent of the Company will be non-deductible to
the Company or subject to tax under I.R.C. ss.280G or ss.4999, respectively,
nor will the Company be required to "gross up" or otherwise compensate any
such person because of the imposition of any excise tax on a payment to such
person;
(ix) as of the date hereof, subject to the requirements of
Section 412 of the Code or Section 302 of ERISA, no Pension Plan has incurred
an accumulated funding deficiency nor has any sponsor of such a Pension Plan
obtained a funding waiver (as such terms are defined in such applicable
sections and any regulations thereunder) with respect thereto;
(x) neither the Company nor any ERISA Affiliates has
engaged in, and neither the Company nor any Affiliate knows of any other
person who or which has engaged in, any "prohibited transaction" (within the
meaning of Section 406 of ERISA or Section 4975 of the Code, excluding any
transactions which are exempt under Section 408 of ERISA or Section 4975 of
the Code) with respect to any Benefit Plan, which could reasonably be expected
to subject the Company or any Subsidiary or Buyer or MergerCo to any material
liability;
(xi) no reportable event (as defined in ERISA and the
regulations thereunder, but excluding any such event for which the thirty (30)
day notice requirement has been waived) has occurred or is continuing with
respect to any Benefit Plan;
(xii) there are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of the Company, any
actions, suits or claims (other than routine claims for benefits) which can
reasonably be expected to be asserted, against the Company with respect to any
Benefit Plan or other plan or arrangement, or against any such Benefit Plan or
other plan or the assets thereof;
(xiii) the Company and each ERISA Affiliate is, and at all
relevant times, has been in material compliance with the provisions of COBRA
(as defined below); and
(xiv) except as specifically set forth herein, the Company
has not taken any action or made any statement, promise or representation to,
or agreement with, any of its employees, officers or directors that after the
Closing, Buyer will continue or establish any Benefit Plan or other plan or
arrangement or provide any particular benefits or compensation to employees.
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For purposes of this Agreement, "ERISA Affiliate" shall mean any corporation,
trade or business which controls, is controlled by, or is under common control
with, the Company within the meaning of Sections 414(b), 414(c), 414(m) or
414(o) of the Code or Section 4001(a)(14) of ERISA and "COBRA" shall mean Part 6
of Subtitle B of Title I of ERISA and Section 4980B(f) of the Code.
Schedule 4.9 of the Disclosure Schedule sets forth a complete and
accurate list of all Benefit Plans currently in effect.
4.10 Taxes. Except as disclosed in Section 4.10 of the Disclosure
Schedule, the Company and each of its Subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which the Company or
any of its Subsidiaries is or has been a member (a "Consolidated Group") has
timely filed all Tax Returns required to be filed by it (except for certain Tax
Returns, each of which is immaterial in amount and scope, involving aggregate
liability for Taxes of no more than $100,000, which may not have been timely
filed), has paid all Taxes shown thereon to be due and has provided adequate
reserves in its financial statements for any material Taxes that have not been
Paid, whether or not shown as being due on any Tax Returns. Except as disclosed
in Section 4.10 of the Disclosure Schedule, (i) no claim for unpaid Taxes has
become a lien against the property of the Company or any of its Subsidiaries or
is being asserted against the Company or any of its Subsidiaries; (ii) no audit
of any Tax Return of the Company or any of its Subsidiaries is being conducted
by a Tax authority; (iii) no extension of the statute of limitations on the
assessment of any Taxes has been granted by the Company or any of its
Subsidiaries and is currently in effect and (iv) there is no tax sharing
arrangement that will require any payment by the Company or any of its
Subsidiaries after the date of this Agreement. As used herein, "Taxes" shall
mean all taxes of any kind, including, without limitation, those on or measured
by or referred to as income, gross receipts, sales, use, ad valorem, franchise,
profits, license, withholding, back-up withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes. Except as set
forth on Schedule 4.10, there are no written or, to its knowledge, oral proposed
assessments of Taxes against the Company or any of its Subsidiaries or written
or, to its knowledge, oral proposed adjustments to any Tax Return filed, pending
against the Company or any of its Subsidiaries, or written or, to its knowledge,
oral proposed adjustments to the manner in which any Tax of the Company or any
of its Subsidiaries is determined.
4.11 Environmental matters. Except as disclosed in Section 4.11 of
the Disclosure Schedule, which disclosed items of non-compliance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect with respect to the Company:
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(a) The Company and its Subsidiaries hold and formerly held, and
are, and have been, in material compliance with, all Environmental Permits, and
the Company and its Subsidiaries are, and have been, otherwise in material
compliance with all applicable Environmental Laws;
(b) None of the Company or its Subsidiaries has received any
Environmental Claim, and none of the Company or its Subsidiaries is aware, after
diligent inquiry, of any threatened Environmental Claim or of any circumstances,
conditions or events that could reasonably be expected to give rise to a
material Environmental Claim, against the Company or any of its Subsidiaries;
(c) There are no (i) underground storage tanks, (ii)
polychlorinated biphenyls, (iii) asbestos or asbestos-containing materials, (iv)
urea-formaldehyde insulation, (v) sumps, (vi) surface impoundments, (vii)
landfills, (viii) sewers or septic systems or (ix) Hazardous Materials present
at any facility currently or owned, leased, operated or otherwise used or, to
the knowledge of the Company, formerly owned, leased, operated or otherwise
used, by the Company or any of its Subsidiaries that could reasonably be
expected to give rise to liability of the Company or any of its Subsidiaries
under any Environmental Laws which liability could reasonably be expected to
have a Material Adverse Effect on the Company;
(d) No modification, revocation, reissuance, alteration, transfer,
or amendment of the Environmental Permits, or any review by, or approval of, any
third party of the Environmental Permits is required in connection with the
execution or delivery of this Agreement or the consummation of the transactions
contemplated hereby or the continuation of the business of the Company or its
Subsidiaries following such consummation;
(e) Hazardous Materials have not been generated, transported,
treated, stored, disposed of, released or threatened to be released at, on, from
or under any of the properties or facilities currently or owned, leased or
otherwise used or, to the knowledge of the Company, formerly owned, leased,
operated or otherwise used, including without limitation for receipt of the
Company's wastes, by the Company or any of its Subsidiaries, in violation of or
in a manner or to a location that could give rise to liability under any
Environmental Laws which liability could reasonably be expected to have Material
Adverse Effect on the Company;
(f) The Company and its Subsidiaries have not assumed,
contractually or by operation of law, any liabilities or obligations under any
Environmental Laws except, in the case of those assumed by operation of law,
those assumed which in and of themselves (and irrespective of any contribution
or indemnification rights) could not reasonably be expected to have a Material
Adverse Effect on the Company.
(g) For purposes of this Agreement, the following terms shall have
the following meanings:
"Environmental Claim" means any written or oral notice, claim, demand,
action, complaint, proceeding, request for information or other communication by
any person alleging liability or potential liability (including without
limitation liability or potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resource damages,
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property damage, personal injury, fines or penalties) arising out of, relating
to, based on or resulting from (i) the presence, discharge, emission, release
or threatened release of any Hazardous Materials at any location, whether or
not owned, leased or operated by the Company or any of its Subsidiaries or
(ii) circumstances forming the basis of any violation or alleged violation of
any Environmental Law or Environmental Permit or (iii) otherwise relating to
obligations or liabilities under any Environmental Laws.
"Environmental Permits" means all permits, licenses, registrations and
other governmental authorizations required for the Company and its Subsidiaries
and the operations of the Company's and its Subsidiaries', facilities and
otherwise to conduct its business under Environmental Laws.
"Environmental Laws" means all applicable domestic and foreign federal,
state and local statutes, rules, regulations, ordinances, orders, decrees and
common law relating in any manner to contamination, pollution or protection of
human health or the environment, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, the Solid Waste Disposal
Act, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act,
the Occupational Safety and Health Act, the Emergency Planning and
Community-Right-to-Know Act, the Safe Drinking Water Act, all as amended, and
similar state and local laws.
"Hazardous Materials" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction thereof)
and petroleum products, asbestos and asbestos-containing materials, pollutants,
contaminants and all other materials, substances and forces, including but not
limited to electromagnetic fields, regulated pursuant to, or that could form the
basis of liability under, any Environmental Law.
4.12 Material Contracts. The Company has provided or made available
to MergerCo true and complete copies of all written contracts, agreements
(including, but not limited to, distribution agreements and licensing
agreements), commitments, arrangements, leases (including with respect to
personal property), policies and other instruments to which it or any of its
Subsidiaries is a party or by which it or any such Subsidiary is bound which is
or was required to be filed as an exhibit to the SEC Documents ("Material
Contracts"). Neither the Company nor any of its Subsidiaries is, or has received
any notice or has any knowledge that any other party is, in breach or default in
any respect under any such Material Contract, except for those breaches or
defaults which would not reasonably be likely, either individually or in the
aggregate, to have a Material Adverse Effect with respect to the Company; and
there has not occurred any event that with the lapse of time or the giving of
notice or both would constitute such a material breach or default. Except as set
forth on Section 4.12 of the Disclosure Schedule and subject to Section 4.23,
all Material Contracts are valid and subsisting and in full force and effect in
accordance with their terms, and the Company has duly performed its obligations
thereunder in all material respects to the extent such obligations have
occurred.
4.13 Brokers. No broker, investment banker, financial advisor or
other person, other than Bear, Stearns & Co., Inc., the fees and expenses of
which will be paid by the Company (pursuant to a fee agreement, a copy of which
has been provided to MergerCo), is entitled to any
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broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The aggregate fees payable
to Bear, Stearns & Co., Inc. pursuant to such arrangement shall not exceed
$1,600,000.
4.14 Opinion of Financial Advisor. The Company has received the
opinion of Bear, Stearns & Co., Inc. dated the date hereof, to the effect that
the consideration to be received in the Offer and the Merger by the Company's
stockholders (other than as contemplated by Section 3. 1 (b)) is fair to the
holders of Company Common Stock from a financial point of view, a signed copy of
which opinion has been delivered to MergerCo.
4.15 Board Recommendation. The Board of Directors of the Company,
at a meeting duly called and held, has (a) determined that the Offer, this
Agreement and the transactions contemplated hereby, taken together, are
advisable and in the best interests of the Company and the stockholders of the
Company, and (b) subject to the other provisions hereof, resolved to recommend
that the holders of the shares of Company Common Stock approve the Offer, this
Agreement and the transactions contemplated herein, including the Merger.
4.16 Required Company Vote. The Company Stockholder Approval, being
the affirmative vote of two-thirds in interest of the shares of the Company
Common Stock, is the only vote of the holders of any class or series of the
Company's securities necessary to approve this Agreement, the Merger and the
other transactions contemplated hereby.
4.17 State Takeover Statutes. No state takeover statute or similar
statute or regulation of Massachusetts (and, to the knowledge of the Company
after due inquiry, of any other state or jurisdiction) applies or purports to
apply to the Company or any of its Subsidiaries, or to this Agreement, the
Offer, the Merger, or any of the other transactions contemplated hereby, except
any such statutes or regulations which are no longer applicable in any respect
upon the execution of this Agreement. Neither the Company nor any of its
Subsidiaries has any rights plan, preferred stock or similar arrangement which
have any of the aforementioned consequences in respect of the transactions
contemplated hereby.
4.18 Intellectual Property. All patents, patent applications,
registered and unregistered copyrights, trade names, registered and unregistered
trademarks and trademark applications, trade secrets, formulas, customer lists
and other proprietary information of the Company or any of its Subsidiaries
("Intellectual Property") are owned by or licensed to the Company or any of its
Subsidiaries, free and clear of all Liens. All of the Company's and its
Subsidiaries' Intellectual Property consisting of patents and trademarks have
been duly registered in, filed in or issued by the United States Patent Office
or the corresponding offices of other countries wherein use of such patent or
trademark is made, and have been properly maintained and renewed in accordance
with all applicable laws and regulations in the United States and each such
country, except where the failure to be so registered, filed, issued or
maintained would not have a Material Adverse Effect on the Company. Except as
set forth in Section 4.18 of the Disclosure Schedule, use of the Intellectual
Property by the Company and its Subsidiaries does not require the consent of any
other person and the same are freely transferable (except as otherwise provided
by law).
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Except as set forth in Section 4.18 of the Disclosure Schedule, (a) no
other person has an interest in or right or license to use, or the right to
license any other person to use, any of the Intellectual Property, (b) there are
no claims or demands of any other person pertaining thereto and no proceedings
have been instituted, or are pending or, to the knowledge of the Company,
threatened, which challenge the Company's or its Subsidiaries' rights in respect
thereof and (c) none of the Intellectual Property is being infringed by another
person or is subject to any outstanding order, decree, ruling, charge,
injunction, judgment or stipulation.
4.19 Related Party Transactions. Except as set forth in Section
4.19 of the Disclosure Schedule hereto, no director, officer, partner, employee,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company or any of its Subsidiaries (i) has borrowed any
monies from or has outstanding any indebtedness or other similar obligations to
the Company or any of its Subsidiaries; (ii) owns any direct or indirect
interest of any kind in, or is a director, officer, employee, partner, affiliate
or associate of, or consultant or lender to, or borrower from, or has the right
to participate in the management, operations or profits of, any person or entity
which is (1) a competitor, supplier, customer, distributor, lessor, tenant,
creditor or debtor of the Company or any of its Subsidiaries, (2) engaged in a
business related to the business of the Company or any of its Subsidiaries, or
(3) participating in any transaction to which the Company or any of its
Subsidiaries is a party; or (iii) is otherwise a party to any contract,
arrangement or understanding with the Company or any of its Subsidiaries.
Section 4.20 Permits. The Company and its Subsidiaries have all
Permits, except for those Permits the failure to have would not, individually or
in the aggregate, have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole ("Material Permits"). Schedule 4.20 of the
Disclosure Schedule contains a complete list of the Material Permits, indicating
which of such Material Permits require the consent or approval of any third
party as a result of the transactions contemplated by this Agreement, exclusive
of any environmental Permits and Permits with respect to state or local sales,
use or other Taxes. All of the Permits are in full force and effect. No
outstanding written notice or, to the knowledge of the Company, oral notice of
cancellation or termination has been delivered to the Company or any subsidiary
in connection with any such Permit nor has any such cancellation or termination
been threatened. No application, action or proceeding for the modification of
any such Permits is pending or, to the knowledge of the Company, threatened that
may result in the revocation of such Permit.
Section 4.21 Insurance Policies. Schedule 4.21 of the Disclosure
Schedule contains a list of all insurance policies of the Company and its
Subsidiaries and each such policy is in full force and effect. All premiums with
respect to the insurance policies listed on Schedule 4.21 which are due and
payable prior to the Effective Time have been paid or will be paid prior to the
Effective Time, and no written notice of cancellation or termination has been
received by the Company with respect to any such policy. To the Company's
knowledge, there are no pending claims against such insurance by the Company or
any Subsidiary as to which the insurers have denied coverage or otherwise
reserved rights. To the Company's knowledge, neither the Company nor any
Subsidiary has been refused any insurance with respect to its assets or
operations during the past five years.
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Section 4.22 Certain Business Practices. Neither the Company, any of
its Subsidiaries, nor to the Company's knowledge (after inquiry from the
Company) any directors, officers, agents or employees of the Company or any of
its Subsidiaries (i) has used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity; (ii) has
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; (iii)
has made any other payment prohibited by applicable Law; or (iv) in the case of
the Company, any of its Subsidiaries or any of its officers or key employees, is
a party to or bound by any noncompetition or similar agreement or obligation
with any third party, which restricts its or his or her business practices.
Section 4.23 Suppliers and Customers. As of the date hereof, and except
as set forth in Section 4.23 of the Disclosure Schedule, the Company has
received no written notice from or, to its knowledge, any oral notice from any
significant supplier to or customer of the Company's business of such supplier's
or customer's intention to materially and adversely alter its existing business
relationship with the Company; provided, however, that subject to the Company's
obligations under Sections 6.1 and 7.3, no representation or warranty is made
hereunder (or under Section 4.12) with respect to any changes after the date
hereof in the relationship between the Company and any customer or supplier, so
long as any such change is not attributable to or does not arise from a breach
by the Company of any of its representations, warranties or covenants contained
in this Agreement.
Section 4.24 Product Warranties. Section 4.24 of the Disclosure
Schedule sets forth complete and accurate copies of the written, and
descriptions of all oral, product warranties and guaranties by the Company or
any of its Subsidiaries currently in effect. None of the salesmen, employees,
distributors or agents of the Company or any of its Subsidiaries is authorized
to undertake obligations to any customer or to other third parties in excess of
such warranties or guaranties and, to the knowledge of the Company, there have
not been any material deviations from such warranties and guaranties.
Section 4.25 Sole Representations. The representations and warranties
contained in this Agreement are the sole representations and warranties which
the Company is making in connection with the transactions contemplated herein.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER AND MERGERCO
Each of Buyer and MergerCo hereby, jointly and severally, represents
and warrants to the Company as follows:
5.1 Organization, Standing and Corporate Power. Buyer and MergerCo
are corporations duly organized, validly incorporated and in good standing in
the States of Ohio and Massachusetts, respectively, and each has the requisite
corporate power and authority to carry on its business as now being conducted.
Each of Buyer and MergerCo is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or
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the ownership or leasing of its properties makes such qualification or
licensing necessary. Each of Buyer and MergerCo has delivered to the Company
complete and correct copies of its certificate of incorporation (or other
organizational documents) and by-laws.
5.2 Subsidiaries. MergerCo has no direct or indirect subsidiaries.
5.3 Capital Structure. The authorized capital stock of MergerCo
consists of 200,000 shares of common stock, without par value, all of which have
been validly issued, are fully paid and nonassessable.
5.4 Authority; Noncontravention. Each of Buyer and MergerCo has
all requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by each of Buyer and MergerCo and the consummation by
each of Buyer and MergerCo of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of each
of Buyer and MergerCo. This Agreement has been duly executed and delivered by
and constitutes a valid and binding obligation of each of Buyer and MergerCo,
enforceable against each of them in accordance with its terms subject, as to
enforceability, to bankruptcy, insolvency, reorganization and other laws of
general application relating to or affecting creditors' rights and to general
principles of equity. Except as disclosed on Section 5.4 of the Disclosure
Schedule, the execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated by this Agreement and compliance
with the provisions of this Agreement will not, conflict with, or result in (a)
any breach or violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration or "put" with respect to any obligation or (b) the loss of a
benefit, or other right or the creation of any Lien upon any of the properties
or assets of either Buyer or MergerCo under, (i) the certificate of
incorporation or by-laws of either Buyer or MergerCo, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, lease or other agreement,
instrument, permit, concession, franchise or license applicable to either Buyer
or MergerCo or its properties or assets or (iii) subject to the governmental
filings and other matters referred to in the following sentence, any judgment,
order, decree, statute, law, ordinance, rule, regulation or arbitration award
applicable to either Buyer or MergerCo or its properties or assets, other than,
in the case of clauses (ii) and (iii), any such conflicts, breaches, violations,
defaults, rights, losses or Liens that individually or in the aggregate could
not have a Material Adverse Effect with respect to either Buyer or either Buyer
or MergerCo or could not prevent, hinder or materially delay the ability of
MergerCo to consummate the transactions contemplated by this Agreement. No
consent, approval, order or authorization of, or registration, declaration or
filing with, or notice to, any Governmental Entity or any other person under any
agreement, indenture or other instrument to which Buyer or MergerCo is a party
or to which any of its properties is subject, is required by or with respect to
either Buyer or MergerCo in connection with the execution and delivery of this
Agreement by either Buyer or MergerCo or the consummation by Buyer and MergerCo
of any of the transactions contemplated by this Agreement, except for (i) the
filing of a pre-merger notification and report form under the HSR Act, (ii) the
filing with the SEC of (y) the Offer Documents and the Proxy Statement and (z)
such reports under the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby, (iii) the
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filing of the Certificate of Merger with the Secretary of State of the
Commonwealth of Massachusetts and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business
and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations, filings or notices as may be required under the
"takeover" or "blue sky" laws of various states.
5.5 Brokers. No broker, investment banker, financial advisor or
other person, other than Wheat First Butcher & Singer, a division of Wheat,
First Securities, Inc., the fees and expenses of which will be paid by Buyer or
MergerCo, is entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or an behalf of MergerCo to its
affiliates.
5.6 Financing. As of the date of this Agreement, Buyer and
MergerCo have, and at all times through the expiration of the Offer and the
Effective Time, Buyer and MergerCo will have available all the funds necessary
for the acquisition of all Shares pursuant to the Offer and to perform their
respective obligations under this Agreement, including without limitation
payment in full for all shares of Company Common Stock validly tendered into the
Offer or outstanding at the Effective Time, the payment of all amounts payable
under Section 3.2, and the payment of all fees and expenses payable by Buyer and
Merger Co.
5.7 Offer Documents and Schedule 14D-9. The Offer Documents will
not, at the time the Offer Documents or any amendments or supplements thereto
are filed with the SEC or are first published, sent or given to stockholders of
the Company, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein, in the light of the circumstances under which they were made,
not misleading (except to the extent information contained therein is based upon
information supplied solely by the Company). The Offer Documents shall comply in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder.
5.8 Information Supplied. None of the information supplied or to
be supplied by MergerCo or its affiliates in writing specifically for inclusion
or incorporation by reference in the Proxy Statement will, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
5.9 Sole Representations. The representations and warranties
contained in this Agreement are the sole representations and warranties which
Buyer or MergerCo are making in connection with the transactions contemplated
herein.
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ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER
6.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as set forth in
Section 6.1 of the Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time of the Merger (except as otherwise specifically
required by the terms of this Agreement), the Company shall, and shall cause its
Subsidiaries to, act and carry on their respective businesses in the usual,
regular and ordinary course of business consistent with past practice and use
its and their respective reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, advertisers, distributors and others having
business dealings with them and to preserve goodwill. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time of the Merger, the Company shall not, and shall not permit
any of its Subsidiaries to, without the prior written consent of MergerCo:
(a) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, other than dividends and
distributions by a direct or indirect wholly owned subsidiary of the Company to
its parent in accordance with applicable law;
(b) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock;
(c) purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities, except for the acquisition of shares of Company Common Stock from
holders of Company Stock Options in full or partial payment of the exercise
price payable by such holder upon exercise of Company Stock Options outstanding
on the date of this Agreement;
(d) authorize for issuance, issue, deliver, sell, pledge or
otherwise encumber any shares of its capital stock or the capital stock of any
of its Subsidiaries, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares, voting
securities or convertible securities or any other securities or equity
equivalents (including without limitation stock appreciation rights) (other than
an increase in the number of shares subject to the Stock Option Plan pursuant to
existing contractual obligations and the issuance of Company Common Stock upon
the exercise of Company Stock Options outstanding on the date of this Agreement
and in accordance with their present terms (such issuances, together with the
acquisitions of shares of Company Common Stock permitted under clause (c) above,
being referred to herein as "Permitted Changes"));
(e) in the case of the Company, amend its articles of
organization, by-laws or other comparable charter or organizational documents;
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(f) acquire or agree to acquire by merging or consolidating with,
or by purchasing a substantial portion of the stock or assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof material to the
Company;
(g) other than as specifically permitted by Section 6.1 of the
Disclosure Schedule, sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
other than any such properties or assets the value of which do not exceed $1.0
million individually and $3.0 million in the aggregate, except sales of
inventory, in the ordinary course of business consistent with past practice;
(h) incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its Subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings and for lease
obligations, in each case incurred in the ordinary course of business consistent
with past practice;
(i) make any loans, advances or capital contributions to, or
investments in, any other person, other than to the Company or any direct or
indirect wholly owned subsidiary of the Company and other than loans to
employees in the ordinary course of business not to exceed $1,000 in any one
case or $25,000 in the aggregate;
(j) pay, discharge or satisfy any claims (including claims of
stockholders), liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction, (a) of liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as in
effect on the date hereof or (b) claims settled or compromised to the extent
permitted by Section 6. 1 (n), or waive, release, grant, or transfer any rights
of material value or modify or change in any material respect any existing
license, lease, Permit, contract or other document, other than in the ordinary
course of business consistent with past practice;
(k) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution, merger,
consolidation, restructuring, recapitalization or reorganization;
(1) enter into any new collective bargaining agreement;
(m) change any material accounting principle used by it;
(n) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) other than settlements or compromises of
litigation where the amount paid (after giving effect to insurance proceeds
actually received) in settlement or compromise is not material to the Company;
or
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(o) authorize any of, or commit or agree to take any of, the
foregoing actions.
6.2 CHANGES IN EMPLOYMENT ARRANGEMENTS. Except as set forth in
Section 6.2 of the Disclosure Schedule, neither the Company nor any of its
Subsidiaries shall adopt or amend (except as may be required by law) any bonus,
profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund
or other arrangement (including any Company Plan) for the benefit or welfare of
any employee, director or former director or employee, other than increases for
individuals other than officers and directors) in the ordinary course of
business consistent with. past practice or increase the compensation or fringe
benefits of any director, employee or former director or employee or pay any
benefit not required by any existing plan, arrangement or agreement.
6.3 SEVERANCE. Neither the Company nor any of its Subsidiaries
shall grant any new or modified severance or termination arrangement or increase
or accelerate any benefits payable under its severance or termination pay
policies in effect on the date hereof.
6.4 WARN. Neither the Company nor any of its Subsidiaries shall
effectuate a "plant closing" or "mass layoff", as those terms are defined in the
Worker Adjustment and Retraining Notification Act of 1988 or similar state law
("WARN") affecting in whole or in part any site of employment, facility,
operating unit or employee of the Company or any subsidiary, without the prior
written consent of MergerCo or its affiliates in advance and without complying
with the notice requirements and other provisions of WARN.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 PREPARATION OF PROXY STATEMENT: STOCKHOLDER MEETING.
(a) As promptly as practicable after Buyer or MergerCo first
purchases Shares pursuant to the Offer, and if required by applicable law, the
Company shall prepare the Proxy Statement. The Company will use its best efforts
to cause the Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after clearance thereof with the SEC. If, at any time
prior to the Stockholders Meeting, any event, with respect to the Company, its
Subsidiaries, directors, officers, and/or the Merger or the other transactions
contemplated hereby, shall occur, which is required to be described in the Proxy
Statement, the Company shall so describe such event and, to the extent required
by applicable law, shall cause it to be disseminated to the Company's
stockholders.
(b) The Company will immediately notify MergerCo and its
affiliates of (i) the receipt of any comments from the SEC regarding the Proxy
Statement and (ii) the approval of the Proxy Statement by the SEC. MergerCo
shall be given a reasonable opportunity to review and comment on all filings
with the SEC and all mailings to the Company's stockholders in
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connection with the Merger prior to the filing or mailing thereof, and the
Company shall use its best efforts to reflect all such reasonable comments.
(c) The Company will, as promptly as practicable following the
expiration of the Offer and in consultation with MergerCo, duly call, give
notice of, convene and hold a meeting of its stockholders (the "Stockholders
Meeting") for the purpose of approving this Agreement and the transactions
contemplated by this Agreement. The Company will, through its Board of
Directors, recommend to its stockholders approval of the foregoing matters and
seek to obtain all votes and approvals thereof by the stockholders, as set forth
in Section 4.15; PROVIDED, HOWEVER; that the obligations contained herein shall
be subject to the provisions of Section 7.6 of this Agreement. Subject to the
foregoing, such recommendation, together with a copy of the opinion referred to
in Section 4.14 shall be included in the Proxy Statement. The Company will use
its best efforts to hold such meetings as soon as practicable after the date
hereof. Notwithstanding the foregoing, if MergerCo shall acquire at least 90% of
the outstanding Company Common Stock pursuant to the Offer, MergerCo may, in its
sole discretion, and in lieu of completing the Merger in accordance with this
Agreement, cause the Company to be merged into Merger Co without a Stockholders
Meeting and in accordance with the Massachusetts Business Corporation Law;
provided, however, that in such event, the rights of stockholders of the Company
under this Agreement (including, without limitation, the right to receive the
Merger Consideration) shall not be adversely affected thereby (other than the
right to receive the Proxy Statement, attend the Stockholders Meeting and vote
on the Merger, which shall no longer be applicable).
(d) The Company will cause its transfer agent to make stock
transfer records relating to the Company available to the extent reasonably
necessary to effectuate the intent of this Agreement.
7.2 ACCESS TO INFORMATION, CONFIDENTIALITY.
The Company shall, and shall cause its Subsidiaries, officers,
employees, counsel, financial advisors and other representatives to, afford to
MergerCo and its representatives and to potential financing sources reasonable
access during normal business hours, in a manner initially coordinated with
Bear, Stearns & Co., Inc. and/or the chief executive officer, president or chief
financial officer of the Company, and thereafter coordinated with those persons
designated by the chief executive officer, during the period prior to the
Effective Time of the Merger to its properties, books, contracts, commitments,
personnel and records (including, without limitation, to the extent available,
the work papers of the Company's independent public accountants) and, during
such period, the Company shall, and shall cause its Subsidiaries, officers,
employees and representatives to, furnish promptly to MergerCo (i) a copy of
each report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state securities
laws and (ii) all other information concerning its business, properties,
financial condition, operations and personnel as MergerCo may from time to time
reasonably request. Except as required by law, each of the Company and MergerCo
will hold, and will cause its respective directors, officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to hold, any nonpublic information in confidence to the extent
required by and in accordance with that certain Confidentiality Agreement, dated
September 5,
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1997, by and between Bear, Stearns & Co., Inc., on behalf of the Company and
Buyer, the other terms of which Confidentiality Agreement are hereby
terminated.
7.3 REASONABLE BEST EFFORTS.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the Offer, the Merger and the other transactions
contemplated by this Agreement. The Buyer, MergerCo and the Company will use
their reasonable best efforts and cooperate with one another (i) in promptly
determining whether any filings are required to be made or consents, approvals,
waivers, licenses, Permits or authorizations are required to be obtained (or,
which if not obtained, would result in a breach or violation, or an event of
default, termination or acceleration of any agreement or any put right under any
agreement) under any applicable law or regulation or from any governmental
authorities or third parties, including parties to loan agreements or other debt
instruments, in connection with the transactions contemplated by this Agreement,
including the Offer, the Merger and (ii) in promptly making any such filings, in
furnishing information required in connection therewith and in timely seeking to
obtain any such consents, approvals, permits or authorizations. Notwithstanding
the foregoing, or any other covenant herein contained, in connection with the
receipt of any necessary approvals under the HSR Act, neither the Company nor
any of its Subsidiaries shall be entitled to divest or hold separate or
otherwise take or commit to take any action that limits its freedom of action
with respect to, or its ability to retain, the Company or any of its
Subsidiaries or any material portions thereof or any of the businesses, product
lines, properties or assets of the Company or any of its Subsidiaries, without
MergerCo's prior written consent.
(b) The Company shall make, subject to the condition that the
transactions contemplated herein actually occur, any undertakings (including
undertakings to make divestitures, provided, in any case, that such divestitures
need not themselves be effective or made until after the transactions
contemplated hereby actually occur) required in order to comply with the
antitrust requirements or laws of any governmental entity, including the HSR
Act, in connection with the transactions contemplated by this Agreement;
provided that no such divestiture or undertaking shall be made unless acceptable
to MergerCo.
(c) Each of the parties agrees to cooperate with each other in
taking, or causing to be taken, all actions necessary to delist Company Common
Stock from The NASDAQ National Stock Market ("NASDAQ"), provided that such
delisting shall not be effective until after the Effective Time of the Merger.
The parties also acknowledge that it is MergerCo's intent that Company Common
Stock following the Offer and the Merger will not be quoted on NASDAQ or listed
on any national securities exchange.
7.4 INDEMNIFICATION. For six years after the Effective Time of the
Merger, the Company and the Buyer shall indemnify all present and former
directors or officers of the Company and its Subsidiaries ("Indemnified
Parties") against any costs or expenses (including
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reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "Costs") incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time of the Merger, whether
asserted or claimed prior to, at or after the Effective Time of the Merger, to
the fullest extent as would have been permitted in their respective articles of
organization or by-laws consistent with applicable law, to the extent such Costs
have not been paid for by insurance and shall, in connection with defending
against any action for which indemnification is available hereunder, reimburse
such officers and directors, from time to time upon receipt of sufficient
supporting documentation, for any reasonable costs and expenses reasonably
incurred by such officers and directors; provided that such reimbursement shall
be conditioned upon such officer's or director's agreement promptly to return
such amounts to the Company if a court of competent jurisdiction shall
ultimately determine that indemnification of such officer or director is
prohibited by applicable law. The Company will maintain for a period of not less
than six years from the Effective Time of the Merger, the Company's current
directors' and officers, insurance and indemnification policy (or a policy
providing substantially similar coverage) to the extent that it provides
coverage for events occurring prior to the Effective Time of the Merger (the
"D&O Insurance") for all persons who are directors and officers of the Company
on the date of this Agreement; provided that the Company shall not be required
to spend as an annual premium for such D&O Insurance an amount in excess of 150%
of the annual premium paid for directors' and officers' insurance in effect
prior to the date of this Agreement; and provided further that the Company shall
nevertheless be obligated to provide such coverage as may be obtained for such
amount. The provisions of this Section are intended for the benefit of, and
shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
7.5 PUBLIC ANNOUNCEMENTS. Neither MergerCo or the Buyer, on the
one hand, nor the Company, on the other hand, will issue any press release or
public statement with respect to the transactions contemplated by this
Agreement, including the Offer and the Merger, without the other party's prior
consent, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with NASDAQ. In addition to the
foregoing, MergerCo and the Company will consult with each other before issuing,
and provide each other the opportunity to review and comment upon, any such
press release or other public statements with respect to such transactions. The
parties agree that the initial press release or releases to be issued with
respect to the transactions contemplated by this Agreement shall be mutually
agreed upon prior to the issuance thereof.
7.6 NO SOLICITATION. From and after the date hereof until the
termination of this Agreement neither the Company or any of its Subsidiaries,
nor any of their respective officers, directors, employees, representatives,
agents or affiliates (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries) will
directly or indirectly initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or take any other
action to facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to any Transaction Proposal
(as defined below), or enter into or maintain or continue discussions or
negotiate with any person or entity in furtherance of such inquiries or to
obtain a Transaction
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Proposal or agree to or endorse any Transaction Proposal or authorize or permit
any of its officers, directors or employees or any of its Subsidiaries or any
investment banker, financial advisor, attorney, accountant or other
representative retained by any of its Subsidiaries to take any such action,
provided, however, that nothing contained in this Agreement shall prohibit the
Board of Directors of the Company from, prior to the acceptance for payment of
Company Common Stock pursuant to the Offer (i) furnishing information to or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited written, bona fide proposal, to acquire the Company and/or its
Subsidiaries pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction and in
respect of which such person or entity has the necessary funds or commitments
therefor if, and only to the extent that: (A) the Board of Directors of the
Company, after consultation with their financial advisors and after consultation
with and based upon the advice of independent legal counsel (who may be the
Company's regularly engaged independent legal counsel) determines in good faith
that such action is necessary for the Board of Directors of the Company to
comply with its fiduciary duties to stockholders under applicable law and (B)
prior to taking such action the Company receives from such person or entity an
executed confidentiality agreement containing terms and provisions substantially
similar to those contained in the Confidentiality Agreement described in Section
7.2, (ii) failing to make or withdrawing or modifying its recommendation
referred to in Section 4.15 if there exists a Transaction Proposal and the Board
of Directors of the Company, after consultation with their financial advisors
and after consultation with and based upon the advice of independent legal
counsel (who may be the Company's regularly engaged independent counsel),
determines in good faith that such action is necessary for the Board of
Directors of the Company to comply with its fiduciary duties to stockholders
under applicable law in connection with such Transaction Proposal or (iii)
making to the Company's stockholders any recommendation and related filing with
the SEC as required by Rule 14e-2 and 14d-9 under the Exchange Act, with respect
to any tender offer, or taking any other legally required action with respect to
such tender offer (including, without limitation, the making of public
disclosures as may be necessary or reasonably advisable under applicable
securities laws) if the Board of Directors of the Company, after consultation
with their financial advisors and after consultation with and based upon the
advice of independent legal counsel (who may be the Company's regularly engaged
independent counsel), determines in good faith that such action is necessary for
the Board of Directors of the Company to comply with its fiduciary duties to
stockholders under applicable law; and PROVIDED FURTHER, HOWEVER, that, in the
event of an exercise of the Company's or it's Board of Director's (or the
Special Committee's) rights under clauses (i), (ii) or (iii) above and subject
to compliance with the next three sentences hereof, notwithstanding anything
contained in this Agreement to the contrary, such exercise of rights shall not
constitute a breach of this Agreement by the Company. The Company shall promptly
advise MergerCo orally and in writing of any request for nonpublic information
from, or discussions or negotiations with, any person or entity or of any
Transaction Proposal known to it, the material terms and conditions of such
request or Transaction Proposal and the identity of the person or entity making
such request or Transaction Proposal. The Company will promptly inform MergerCo
of any material change in the details (including amendments or proposed
amendments) of any such request for nonpublic information, the contents of any
discussions or negotiations or any material change in such Transaction Proposal.
Neither the Board of Directors of the Company nor any committee thereof shall
take any action pursuant to clauses (ii)
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or (iii) above until a time that is after the later of (x) the fourth business
day following MergerCo's receipt of written notice advising MergerCo that the
Board of Directors of the Company has received a Transaction Proposal,
specifying the material terms of such Transaction Proposal and identifying the
person making such Transaction Proposal and (y) in the event of any amendment to
the price or any material term of a Transaction Proposal, two business days
following MergerCo's receipt of written notice containing the material terms of
such amendment, including any change in price (it being understood that each
such further amendment to the price or any material terms of a Transaction
Proposal shall necessitate an additional written notice to MergerCo and an
additional two business day period prior to which the Company can take any
action set forth in clauses (ii) or (iii) above). For purposes of this
Agreement, "Transaction Proposal" shall mean any of the following (other than
the transactions between the Company and MergerCo contemplated by the Offer and
this Agreement) involving the Company or any of its Subsidiaries: (i) any
merger, consolidation, share exchange, recapitalization, business combination,
or other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 20% or more of the assets of the Company and
its Subsidiaries, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for, or the acquisition
(or right to acquire) of "beneficial ownership" by any person, "group" or entity
(as such terms are defined under Section 13 (d) of the Securities Exchange Act
of 1934), other than a person, group or entity which has signed the Stockholders
Agreement, of 20% or more of the outstanding shares of capital stock of the
Company or the filing of a registration statement under the Securities Act in
connection therewith; or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing.
7.7 RESIGNATION OF DIRECTORS. Prior to the Effective Time of the
Merger, the Company shall deliver to MergerCo evidence satisfactory to MergerCo
of the resignation of all directors of the Company, effective at the Effective
Time of the Merger.
7.8 EMPLOYEE BENEFITS. Except as contemplated by this Agreement,
Buyer agrees that, for a period of twelve (12) months following the Effective
Time, the Surviving Corporation shall maintain employee benefits plans and
arrangements (directly or in conjunction with Buyer) which, in the aggregate,
will provide a level of benefits to continuing employees of the Company and its
Subsidiaries substantially comparable in the aggregate to those provided under
the Benefit Plans set forth on Schedule 4.9 of the Disclosure Schedule
("Disclosed Benefits") as in effect immediately prior to the Effective Time
(other than discretionary benefits); provided, however, that Buyer may cause
modifications to be made to such Benefit Plans and arrangements to the extent
necessary to comply with applicable Law or to reflect widespread adjustments in
benefits (or costs thereof) provided to employees under compensation and benefit
plans of Buyer and its subsidiaries, and no specific compensation and Benefit
Plans need be provided. For purposes of determining eligibility and vesting with
respect to all Disclosed Benefits (except with respect to any defined benefit
plans), Buyer shall use the employee's hire date with the Company or such other
date as has been previously determined by the Company for credit for prior
employment with any ERISA Affiliate of the Company. Benefit Plans which provide
medical, dental, or life insurance benefits after the Effective Time to any
individual who is an active or former employee of the Company or any of its
Subsidiaries as of the Effective Time or a dependent of such an
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employee shall, with respect to such individuals, waive any waiting periods, any
pre-existing conditions, and any actively-at-work exclusions to the extent so
waived under present policy and shall provide that any expenses incurred on or
before the Effective Time by such individuals shall be taken into account under
such plans for purposes of satisfying applicable deductible, coinsurance, and
maximum out-of-pocket provisions to the extent taken into account under present
policy. Nothing in this Section 7.8 shall prohibit the Company from terminating
the employment of any employee at any time with or without cause (subject to,
and in accordance with the terms of any existing employment agreements), or
shall be construed or applied to restrict the ability of the Buyer or Surviving
Corporation and its Subsidiaries to establish such types and levels of
compensation and benefits as they determine to be appropriate. Buyer agrees to
cause the Surviving Corporation (or the applicable Subsidiary employer) to honor
the existing employment agreements that are set forth on Schedule 7.8 of the
Disclosure Schedule.
7.9 Notification of Certain Matters. The Company shall give prompt
notice to Buyer and MergerCo and Buyer and MergerCo shall give prompt notice to
the Company of: (i) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which does or would be likely to cause (A) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, or (B) any covenant, condition or agreement
contained in this Agreement not to be complied with or satisfied; and (ii) any
failure of the Company on the one hand, or Buyer or MergerCo on the other hand,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.9 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
7.10 State Takeover Laws. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, including the Offer or the
Merger, the Company and Buyer, and their respective Boards of Directors shall
use their reasonable best efforts to grant such approvals and to take such other
actions as are necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
shall otherwise use their reasonable best efforts to eliminate the effects of
any such statute or regulation on the transactions contemplated hereby.
7.11 INDEMNIFICATION AGREEMENTS. Prior to the expiration of the
Offer, the Company shall obtain the termination of all rights under certain
Indemnification Agreements (each, an "Indemnification Agreement") between the
Company and each of the Company's management listed on Section 7.11 of the
Disclosure Schedule (the "Indemnified Persons"), in form and substance
reasonably satisfactory to Buyer and its counsel. This covenant shall not impact
the obligations set forth in Section 7.4 hereof.
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ARTICLE VIII
CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligation of each party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following conditions:
(a) Company Stockholder Approval. The Company Stockholder Approval
shall have been obtained if required by applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any Governmental
Entity or other legal restraint or prohibition shall be in effect preventing or
prohibiting the acceptance for payment of, or payment for, shares of Common
Stock pursuant to the Offer, or the consummation of the Merger; provided,
however, that the parties hereto shall, subject to the last sentence of Section
7.3 (a) hereof, use their best efforts to have any such injunction, order,
restraint or prohibition vacated.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
9.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Effective Time of the Merger, whether before or after
approval of matters presented in connection with the Merger by the stockholders
of the Company:
(a) by mutual written consent of MergerCo and the Company; or
(b) by either MergerCo or the Company if any Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting or if there shall be
in effect any other legal restraint or prohibition preventing or prohibiting the
acceptance for payment of, or payment for, shares of Company Common Stock
pursuant to the Offer or the consummation of the Merger and such order, decree,
ruling or other action shall have become final and nonappealable (other than due
to the failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to the
Effective Time of the Merger); or
(c) by the Company if Offeror shall not have (i) commenced the
Offer within five (5) business days after the initial public announcement of
Buyer's intention to commence the Offer, or (ii) accepted for payment any shares
of Company Common Stock pursuant to the Offer prior to March 31, 1998 (other
than due to the failure of the Company to perform its obligations under this
Agreement); or
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(d) by the Company upon its execution, prior to Buyer's or
MergerCo's purchase of shares of Company Common Stock pursuant to the Offer, of
a binding agreement with a third party with respect to a Transaction Proposal,
provided that it has complied with all provisions of this Agreement, including
the notice provisions herein, and that it pays the Termination Fee as provided
by and defined in Section 10.2;
(e) by MergerCo in the event of a material breach or failure to
perform in any material respect by the Company of any representation, warranty,
covenant or other agreement contained in this Agreement which cannot be or has
not been cured within 20 days after the giving of written notice to the Company;
or
(f) by the Company in the event of a material breach or failure to
perform in any material respect by MergerCo or Buyer of any representation,
warranty, covenant or other agreement contained in this Agreement which cannot
be or has not been cured within 20 days after the giving of written notice to
MergerCo or Buyer.
(g) by MergerCo, if Offeror terminates the Offer in accordance
with the terms of Annex I.
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or MergerCo as provided in Section 9.1, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of MergerCo or the Company, other than the provisions
of Section 4.13, Section 5.5, the last sentence of Section 7.2, this Section
9.2, Section 10.2 and Section 10.7. Nothing contained in this Section shall
relieve any party for any breach of the representations, warranties, covenants
or agreements set forth in this Agreement.
9.3 AMENDMENT. This Agreement way be amended by the parties at any
time before or after any required approval of matters presented in connection
with the Merger by the stockholders of the Company; provided, however, that
after any such approval, there shall be made no amendment that by law requires
further approval by such stockholders without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time of
the Merger, the parties may (a) extend the time for the performance of any of
the obligations or other acts of the other parties, (b) waive any inaccuracies
in the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso of
Section 9.3, waive compliance with any of the agreements or conditions contained
in this Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to this Agreement to assert any
of its rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
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9.5 PROCEDURE FOR TERMINATION, AMENDMENT, EXTENSION OR WAIVER. A
termination of this Agreement pursuant to Section 9.1, an amendment of this
Agreement pursuant to Section 9.3 or an extension or waiver pursuant to Section
9.4 shall, in order to be effective, require in the case of MergerCo or the
Company, action by its Board of Directors or the duly authorized designee of its
Board of Directors.
ARTICLE X
GENERAL PROVISIONS
10.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time of the Merger and
all such representations and warranties will be extinguished on consummation of
the Merger and none of the Company, Buyer and MergerCo, nor any officer,
director or employee or shareholder thereof shall be under any liability
whatsoever with respect to any such representation or warranty after such time.
This Section 10.1 shall not limit any covenant or agreement of the parties which
by its terms contemplates performance after the Effective Time of the Merger.
10.2 FEES AND EXPENSES.
(a) In addition to any other amounts which may be payable or
become payable pursuant to any other paragraph of this Section 10.2, the Company
shall, simultaneously with the termination of this Agreement in any of the
circumstances described in Section 10.2(b), reimburse MergerCo for all
out-of-pocket expenses and fees, in an aggregate amount not to exceed $1.5
million (including, without limitation, fees payable to all banks, investment
banking firms and other financial institutions, and their respective agents and
counsel, and all fees of counsel, accountants, financial printers, experts and
consultants to MergerCo and its affiliates), whether incurred prior to, on or
after the date hereof, in connection with the Merger and the consummation of all
transactions contemplated by this Agreement, and the financing thereof.
(b) If any Person (other than MergerCo or any of its affiliates)
shall have made, proposed, communicated or disclosed a Transaction Proposal in a
manner which is or otherwise becomes public and this Agreement is terminated
pursuant to any of the following provisions:
(i) by the Company pursuant to Section 9.1(c) if
Offeror's failure to accept for payment shares of Company
Common Stock results from the failure of the Minimum Condition
to be satisfied or the occurrence of any of the events set
forth in subparagraph (c), other than a breach of the
representations in clauses (i) and (ii) of Section 4.7, or
subparagraphs (d) or (e) of Annex I;
(ii) by the Company pursuant to Section 9.1 (d);
(iii) by MergerCo pursuant to Section 9.1 (e) ),
other than a breach of the representations in clauses (i) and
(ii) of Section 4.7, or
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(iv) by MergerCo pursuant to Section 9.1(g) if
Offeror has terminated the Offer as a result of the failure of
the Minimum Condition to be satisfied or the occurrence of any
of the events set forth in subparagraphs (c), other than a
breach of the representations in clauses (i) and (ii) of
Section 4.7, or subparagraphs (d) or (e) of Annex I.
then the Company shall, simultaneously with such termination of this Agreement,
pay MergerCo a fee of 4.25% OF THE AGGREGATE MERGER CONSIDERATION in cash, which
amount shall be payable in same day funds. No termination of this Agreement at a
time when a fee is reasonably expected to be payable pursuant to this Section
10.2(b) shall be effective until such fee is paid. Only one fee in the aggregate
of 4.25% of the aggregate Merger Consideration shall be payable pursuant to this
Section 10.2(b). No amount payable pursuant to any of the other provisions of
this Section 10.2 shall reduce the amount of the fee payable pursuant to this
paragraph (b).
(c) Except as provided otherwise in paragraph (a) above, all costs
and expenses incurred in connection with this Agreement, and the transactions
contemplated hereby shall be paid by the party incurring such expenses,, except
that the Company shall pay all costs and expenses (i) in connection with
printing and mailing the Proxy Statement, as well as all SEC filing fees
relating to the transactions contemplated herein and (ii) of obtaining any
consents of any third party.
10.3 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to MergerCo or Buyer, to
Invacare Corporation
One Invacare Way
Elyria, Ohio 44035
Attention: Thomas R. Miklich
Chief Financial Officer, Secretary and Treasurer
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with a copy to:
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
Attn: Dale C. LaPorte, Esq.
(b) if to the Company, to
Suburban Ostomy Supply Co., Inc.
75 October Hill Road
Holliston, Massachusetts 01746
Attn: Herbert P. Gray, Chairman of the Board
with copies to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, MA 021 10
Attn: James Westra, Esq.
10.4 DEFINITIONS. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person;
(b) a "business day" means any day, other than Saturday, Sunday or
a federal holiday, and shall consist of the time period from 12:01 a.m. through
12:00 midnight Eastern time. In computing any time period under Section 14(d)(5)
or Section 14(d)(6) of the Exchange Act or under Regulation 14D or Regulation
14E, the date of the event which begins the running of such time period shall be
included except that if such event occurs on other than a business day such
period shall begin to run on and shall include the first business day
thereafter;
(c) "knowledge", with respect to the Company means the actual
knowledge of the following officers and employees (as well as any of their
successors) of the Company and its Subsidiaries: Herbert P. Gray, Donald
Benovitz, Stephen Aschettino, Patrick Bohan and John Manos and, without
duplication, the employees in charge of environmental, tax, labor, employee
benefits and real estate matters or any of the foregoing, in each case after
reasonable investigation and inquiry.
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(d) "Material Adverse Change" or "Material Adverse Effect" means,
when used in connection with the Company, any change or effect that either
individually or in the aggregate with all other such changes or effects is
materially adverse to the business, financial condition, prospects or results of
operations of the Company and its Subsidiaries taken as a whole and the terms
"material" and "materially" shall have correlative meanings; provided, however,
that no Material Adverse Change or Material Adverse Effect shall be deemed to
have occurred as a result solely of any one or more of: (i) those matters
described in a separate writing dated the date of this Agreement and
specifically referencing this Section delivered by the Company to the Buyer,
(ii) general economic conditions affecting generally the industry in which the
Company competes and general market conditions in the United States, or (iii)
changes after the date hereof in the relationship between the Company and any
customer or supplier, so long as any such change is not attributable to or does
not arise from a breach by the Company of any of its representations, warranties
or covenants contained in this Agreement.
(e) "person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity; and
(f) a "subsidiary" of any person means another person, an amount
of the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors
(or other governing body) or, if there are no such voting interests, 50% or more
of the equity interests of which is owned directly or indirectly by such first
person.
10.5 INTERPRETATION. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words -without
limitation".
10.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
10.7 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
and the other agreements referred to herein constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement. This
Agreement, other than Sections 7.4 and 10.2, is not intended to confer upon any
Person other than the parties any rights or remedies.
10.8 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICTS OF LAWS.
40
<PAGE> 45
10.9 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of law or otherwise by any of the parties without the prior
written consent of the other parties; provided, however, that Buyer or MergerCo
may, without the Company's prior written consent, assign its rights under this
Agreement to any financial institution that requires such assignment in
connection with such financial institution's agreement to provide financing to
either Buyer or MergerCo Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties and
their respective successors and assigns.
10.10 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement.
[Remainder of Page Intentionally Left Blank]
41
<PAGE> 46
IN WITNESS WHEREOF, Buyer, MergerCo and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
INVA ACQUISITION CORP.
By: /s/ Thomas R. Miklich
-----------------------------------
Name: Thomas R. Miklich
Title: Director
SUBURBAN OSTOMY SUPPLY CO., INC.
By: /s/ Herbert P. Gray
-----------------------------------
Name: Herbert P. Gray
Title: Chairman
INVACARE CORPORATION
By: /s/ Thomas R. Miklich
-----------------------------------
Name: Thomas R. Miklich
Title: CFO
42
<PAGE> 47
Annex I
-------
CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer or this
Agreement, and subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) relating to MergerCo's obligation to pay for or return
tendered shares after termination of the Offer, MergerCo shall not be required
to accept for payment or pay for any shares of Company Common Stock tendered
pursuant to the Offer and may terminate the Offer at any time after January 31,
1998, if (i) less than two-thirds of the Fully Diluted Shares of Company Common
Stock has been tendered pursuant to the Offer by the expiration of the Offer and
not withdrawn (the "Minimum Condition"); (ii) any applicable waiting period
under the HSR Act has not expired or terminated; or (iii) at any time after the
date of this Agreement, and before acceptance for payment of any shares of
Company Common Stock, any of the following events shall occur and be continuing:
(a) there shall be instituted or pending by any
Governmental Entity any suit, action or proceeding (i)
challenging the acquisition by Buyer or MergerCo of any shares
of Company Common Stock under the Offer, or seeking to
restrain or prohibit the making or consummation of the Offer
or the Merger, (ii) seeking to prohibit or materially limit
the ownership or operation by the Company, Buyer or any of
Buyer's subsidiaries of a material portion of the business or
assets of the Company or Buyer and its subsidiaries, taken as
a whole, or to compel the Company or Buyer to dispose of or
hold separate any material portion of the business or assets
of the Company or Buyer and its subsidiaries, taken as a
whole, in each case as a result of the Offer or the Merger or
(iii) seeking to impose material limitations on the ability of
Buyer or MergerCo to acquire or hold, or exercise full rights
of ownership of, any shares of Company Common Stock to be
accepted for payment pursuant to the Offer including, without
limitation, the right to vote such shares of Company Common
Stock on all matters properly presented to the stockholders of
the Company or (iv) seeking to prohibit Buyer or any of its
subsidiaries from effectively controlling in any material
respect any material portion of the business or operations of
the Company;
(b) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, entered, enforced,
promulgated or deemed applicable to the Offer or the Merger,
by any Governmental Entity or court, other than the
application to the Offer or the Merger of applicable waiting
periods under the HSR Act, that would result in any of the
consequences referred to in clauses (i) through (iv) of
paragraph (a) above;
43
<PAGE> 48
(c) any of the representations and warranties of the
Company and its Subsidiaries contained in this Agreement shall
not be true and correct at and as of the date of consummation
of the Offer (except to the extent such representations and
warranties speak to an earlier date), as if made at and as of
the date of consummation of the Offer, in each case except as
contemplated or permitted by this Agreement and except, in the
case of any such breach when such breach would not have,
individually or in the aggregate, a Material Adverse Effect
with respect to the Company or materially affect the ability
of the Company to consummate the Merger or the Offeror to
accept for payment or pay for shares of Company Common Stock
pursuant to the Offer;
(d) the Company shall have failed to perform the
obligations required to be performed by it under this
Agreement at or prior to the date of expiration of the Offer,
including but not limited to its obligations pursuant to
Section 7.6 hereof, except for such failures to perform as
have not had or would not individually or in the aggregate,
have a Material Adverse Effect with respect to the Company or
materially adversely affect the ability of the Company to
consummate the Merger or the Offeror to accept for payment or
pay for shares of Company Common Stock pursuant to the Offer;
(e) the Board of Directors of the Company or any
committee thereof shall have (i) withdrawn, modified or
amended in any respect adverse to Buyer or MergerCo its
approval or recommendation of the Offer or the Merger, (ii)
recommended or approved any Transaction Proposal from a person
other than Buyer, MergerCo or any of their respective
affiliates (iii) failed to publicly announce, within ten (10)
business days after the occurrence of a Transaction Proposal,
its opposition to such Transaction Proposal, or amended,
modified or withdrawn its opposition to any Transaction
Proposal in any manner adverse to Buyer or MergerCo or (iv)
resolved to do any of the foregoing;
(f) this Agreement shall have been terminated in
accordance with its terms; or
which, in the good faith judgment of Buyer or MergerCo, in its sole discretion,
make it inadvisable to proceed with such acceptance of shares of Company Common
Stock for payment or the payment therefor.
44
<PAGE> 1
Exhibit (c)(2)
[Bear Stearns logo]
Bear, Stearns & Co. Inc.
245 Park Avenue
New York, New York 10167
(212) 272-2000
September 5, 1997
Invacare Corporation
899 Cleveland Street
Elyria, OH 44036
Attention: Thomas Miklich
Chief Financial Officer
You have requested that Suburban Ostomy Supply Co., Inc. (the
"Company"), provide you with financial, operating and other information
concerning the Company, which may include confidential information which has not
been generally disclosed to the public, for use in connection with a possible
transaction (a "Transaction") between you and the Company and/or its
shareholders.
It is acknowledged that it would be in the best interests of the
Company that, if a Transaction is to proceed, confidential information be made
available to you for purposes of evaluating and/or implementing a Transaction.
Therefore, subject to the terms and conditions hereof, and to the extent which
the Company in its sole discretion considers advisable in the circumstances, the
Company agrees to provide certain Information (as defined below) to you for the
purpose of evaluating a possible Transaction.
All information relating to the Company and its affiliates now or
hereafter furnished to you by the Company or its affiliates or their respective
directors, officers, employees, agents or representatives, and all analyses,
compilations, or other documents prepared by you or your directors, officers,
employees, agents or representatives (collectively, your "Representatives"),
containing or based upon, in whole or in pan, any such information is referred
to herein as the "Information"). As a condition to the agreement and consent of
the Company herein contained, you and the Company agree as follows:
Except as may be permitted pursuant to this Agreement, you will not,
and will direct your Representatives not to, disclose to any other person that
the Information has been made available
<PAGE> 2
Invacare Corporation
09/05/97
Page 2
to you, that discussions or negotiations are taking place concerning a potential
Transaction, or any of the terms, conditions or other facts with respect to any
such Transaction. The term "person" as used in this Agreement shall be broadly
interpreted to include, without limitation, any individual, corporation,
company, group, partnership or other entity.
You will keep the Information confidential and will not, without the
prior written consent of the Company, disclose in any manner whatsoever, in
whole or in part, and will not use directly or indirectly, the Information other
than to evaluate a potential Transaction, You agree to transmit the Information
only to those of your Representatives who need to know the Information in order
to assist you in evaluating a potential Transaction, who shall be informed by
you of the confidential nature of the Information and who agree to be bound by
the terms of this Agreement. You agree to be responsible for any breach of this
Agreement by any of your Representatives. You shall make all reasonable,
necessary or appropriate efforts to safeguard the Information from disclosure to
anyone other than as permitted hereby.
If you determine that you do not wish to be involved in a Transaction,
you will promptly advise the Company of that fact. If the Company requests for
any reason whatsoever, you will promptly re-deliver to the Company or destroy
all documents furnished by the Company or its representatives to you or your
Representatives or derived by you or your Representatives therefrom constituting
the Information, without retaining copies thereof.
The obligations imposed on you hereunder shall not apply to any
Information (i) which is or becomes generally available to the public other than
as a result of a disclosure by your or your Representatives; (ii) which becomes
available to you on a non-confidential basis from a source other than the
Company or its affiliates of their respective representatives, provided that to
your knowledge, such source is not bound by a confidentiality agreement with the
Company or its affiliates or is not otherwise prohibited from transmitting the
Information to you by a contractual, legal or fiduciary obligation; or (iii)
which was known to you on a non-confidential basis prior to disclosure to you by
the Company or its affiliates or their respective representatives, provided that
such information is not known by you to be subject to another confidentiality
agreement with or other obligation of secrecy of the Company or another party.
Although you understand that the Company will attempt to include in the
Information those materials which are believed to be reliable and relevant to
assist you in evaluating a potential Transaction, you acknowledge that neither
the Company nor any of its representatives makes any representation or Warranty
as to the accuracy or completeness of the Information, or shall have any
liability with respect thereto, except as otherwise provided in a definitive
agreement with the Company entered into in connection with the Transaction which
provides specific representations or warranties and only to the extent of such
specific representations or warranties.
In the event that you or any of your Representatives becomes legally
compelled (by oral questions, interrogations, requests for information or
documents, subpoena, civil investigative
<PAGE> 3
Invacare Corporation
09/05/97
Page 3
demand or similar process) to disclose any of the Information, you will provide
the Company with prompt notice so that the Company may seek a protective order
or other appropriate remedy or waive compliance with the provisions of this
Agreement. You will cooperate with the Company on a reasonable basis in its
efforts to obtain a protective order or other remedy. In the event that such
protective order or other remedy is not obtained or the Company waives
compliance with the provisions of this Agreement, you or your Representatives
will furnish only that portion of the Information which is legally required and
you will exercise reasonable efforts to obtain reliable assurances that
confidential treatment will be accorded the Information.
You acknowledge that you are aware, and you will advise your
Representatives, that securities laws prohibit any person who has received from
an issuer material non-public information concerning the matters which are the
subject of this Agreement from purchasing or selling securities of such issuer
or selling securities of such issuer or from communicating such information to
any other person.
During the period of two years from the date hereof, you and your
affiliates shall not, without the prior written authorization of the board of
directors of the Company: (i) acquire or agree to acquire or make any proposal
to acquire, in any manner, any securities or property of the Company or its
affiliates, (ii) assist, advise or encourage any other persons to acquire or
agree to acquire, in any manner, any securities or property of the Company or
its affiliates; (iii) solicit proxies of the Company's shareholders, or form,
join or in any way participate in a proxy group; (iv) seek any modification to
or waiver of your agreements and obligations under this Agreement, or (v) make
any public announcement with respect to the foregoing, except as may be required
by applicable law or regulatory authorities. Nothing herein shall be deemed to
prohibit you or your affiliates from acquiring an indirect interest in the
Company through the investment in a public mutual fund which has invested in the
Company.
Without the prior written consent of the Company, you agree that you
shall not, for a period of two years from the date hereof, solicit to employ or
employ any person who is now employed by the Company and who is identified by
you in connection with your evaluation of a potential Transaction.
You acknowledge and agree that the Company would not have an adequate
remedy at law and would be irreparably harmed in the event that any of the
provisions of this Agreement were not performed by you in accordance with their
specific terms or were otherwise breached by you in accordance with their
specific terms or were otherwise breached by you. Accordingly, you agree that
the Company shall be entitled to injunctive relief to prevent breaches of this
Agreement and to specifically enforce the terms and provisions hereof in
addition to any other remedy to which the company may be entitled at law or in
equity. The prevailing party in any such litigation will be entitled to payment
of its legal fees and disbursements, court costs and other expenses of
enforcing, defending or otherwise protecting its interest hereunder.
<PAGE> 4
Invacare Corporation
09/05/97
Page 4
It is further understood and agreed that no failure or delay by the
Company in exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or future exercise of any right, power or privilege
hereunder.
You agree that unless and until a definitive Agreement between the
Company and you with respect to a Transaction has been executed and delivered,
neither the Company nor you will be under any legal obligation of any kind
whatsoever with respect to such Transaction by virtue of this or any written or
oral expression with respect to such a Transaction by any of the Company's
directors, officers, employees, agents or other representatives except, in the
case of this letter, for the matters specifically agreed to herein. You
acknowledge and agree that (a) the Company and its advisors are free to conduct
a process which may lead the Company to conclude the Transaction as it in its
sole discretion may determine, (b) the Company reserves the right, in its sole
discretion, to change the procedures relating to its consideration of a
Transaction at any time without prior notice to you (including, without
limitation, by negotiation with a third party with respect to a business
transaction and entering into a definitive agreement relating thereto) to reject
any and all proposals made with regard to a Transaction and to terminate
discussions and negotiations at any time for any reason.
You agree that unless otherwise consented to by the Company, all
requests for Information, and any questions related thereto, will be directed to
Bear, Steams & Co. Inc., 245 Park Avenue, New York, NY 10167, (212)272-2000,
Attention: Robert Yedid.
This Agreement shall insure for the benefit of and be binding upon each
of the parties and/or their respective successors and assigns. This Agreement
shall constitute the entire Agreement between the parties with respect to the
subject matter hereof and may not be modified or amended except by written
consent of those parties hereto. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts and
the Federal court located in Boston, Massachusetts.
<PAGE> 5
Invacare Corporation
09/05/97
Page 5
If you are in agreement with the foregoing, please so indicate by
signing and returning one copy of this letter whereupon this letter will
constitute our agreement with respect to the subject matter hereof.
Very truly yours,
BEAR, STEARNS & CO. INC.
for itself and on behalf of Suburban Ostomy
Supply Company, Inc.
By: /s/ (illegible)
-------------------------------------
Managing Director
Confirmed and Agreed to
this 5 day of September, 1997
Invacare Corporation
By: /s/ Thomas R. Miklich
---------------------------
Name: Thomas R. Miklich
Title: CFO
<PAGE> 1
Exhibit (c)(3)
STOCKHOLDERS AGREEMENT
AGREEMENT, dated as of December 17, 1997, among Invacare Corporation, an Ohio
corporation (the "Buyer"), Inva Acquisition Corp., a Massachusetts corporation
and a wholly owned subsidiary of Buyer (the "MergerCo."), and the stockholders
identified on the signature page hereof (the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently with the execution and delivery of this Agreement, Buyer,
MergerCo., and Suburban Ostomy Supply Co., Inc., a Massachusetts corporation
(the "Company"), have entered into an Agreement and Plan of Merger (as such
agreement may hereafter be amended from time to time, the "Merger Agreement"),
pursuant to which MergerCo. will be merged with and into the Company (the
"Merger");
WHEREAS, in furtherance of the Merger, Buyer, MergerCo. and the Company desire
that as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, MergerCo. shall commence
a cash tender offer (the "Offer") to purchase at a price of $11.75 per share all
outstanding shares of Common Stock (as defined in Section 1 hereof) of the
Company, including all of the Shares (as defined in Section 2 hereof)
beneficially owned by the Stockholders; and
WHEREAS, as an inducement and a condition to entering into the Merger Agreement,
Buyer and MergerCo. have required that the Stockholders agree, and Stockholders
have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
(a) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having beneficial ownership of such securities as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of the
same securities by the same holder, securities Beneficially Owned by a Person
shall include securities Beneficially Owned by all other Persons with whom such
Person would constitute a "group" as within the meaning of Section 13(d)(3) of
the Exchange Act.
(b) "Common Stock" shall mean at any time the Common Stock, no
par value, of the Company.
(c) "Permitted Transferee" means, as to any Stockholder, any
one or more of the following Persons to whom such Stockholder transfers Shares:
(i) the spouse, child, grandchild or parent of such Stockholder, (ii) a trust
created for the exclusive benefit of the Stockholder and any one or more of the
Persons identified in clause (i), or (iii) a charitable organization or trust
created for the exclusive benefit of a charitable organization.
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<PAGE> 2
(d) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(e) Capitalized terms used and not defined herein have the
respective meanings ascribed to them in the Merger Agreement.
2. TENDER OF SHARES.
(a) In order to induce Buyer and MergerCo. to enter into the
Merger Agreement, the Stockholders hereby agree to validly tender (or cause the
record owner of such shares to validly tender), and not to withdraw, pursuant to
and in accordance with the terms of the Offer, not later than the fifteenth
business day after commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares of
Common Stock set forth opposite the Stockholder's name on Schedule I hereto (the
"Existing Shares"), all of which are Beneficially Owned by such Stockholder, and
any shares of Common Stock acquired by such Stockholder in any capacity after
the date hereof and prior to the termination of this Agreement by means of
purchase, dividend, distribution or in any other way (such shares of Common
Stock, together with the Existing Shares, the "Shares"). The Stockholders hereby
acknowledge and agree that MergerCo.'s obligation to accept for payment and pay
for the Shares in the Offer, including the Shares Beneficially Owned by the
Stockholders, is subject to the terms and conditions of the Offer.
(b) The Stockholders hereby permit Buyer and MergerCo. to
publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC), their identity and ownership of
the Shares, and the nature of their commitments, arrangements and understandings
under this Agreement.
3. ADDITIONAL AGREEMENTS.
(a) VOTING AGREEMENT. Each Stockholder shall, at any meeting
of the holders of Common Stock, however called, or in connection with any
written consent of the holders of Common Stock, vote (or cause to be voted) the
Shares (if any) then held of record or Beneficially Owned by such Stockholder,
(i) in favor of the Merger, the execution and delivery by the Company of the
Merger Agreement and the approval of the terms thereof and each of the other
actions contemplated by the Merger Agreement and this Agreement and any actions
required in furtherance thereof and hereof; and (ii) against any Transaction
Proposal and against any action or agreement that would impede, frustrate,
prevent or nullify this Agreement, or result in a breach in any respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or which would result in any of the
conditions set forth in Annex I to the Merger Agreement or set forth in Article
VIII of the Merger Agreement not being fulfilled.
(b) NO INCONSISTENT ARRANGEMENTS. Each Stockholder hereby
covenants and agrees that, except as contemplated by this Agreement and the
Merger Agreement, such Stockholder shall not (i) transfer (which term shall
include, without limitation, any sale, gift, pledge or other disposition), or
consent to any transfer of, any or all of the Shares or any interest therein,
(ii) enter into any contract, option or other agreement or understanding with
respect to any transfer of any or all of the Shares or any interest therein,
(iii) grant any proxy,
2
<PAGE> 3
power-of-attorney or other authorization in or with respect to the Shares, (iv)
deposit the Shares into a voting trust or enter into a voting agreement or
arrangement with respect to the Shares or (v) take any other action that would
in any way restrict, limit or interfere with the performance of such
Stockholder's obligations hereunder or the transactions contemplated hereby or
by the Merger Agreement. Notwithstanding the foregoing, a Stockholder may
transfer Shares to a Permitted Transferee if prior to such transfer such
Permitted Transferee executes a counterpart of this Agreement in form
satisfactory to Buyer agreeing to be bound by all of the terms hereof as if such
Permitted Transferee were an original signatory of this Agreement.
(c) GRANT OF IRREVOCABLE LIMITED PROXY; APPOINTMENT OF LIMITED
PROXY. (i) Each Stockholder hereby irrevocably grants to, and appoints, Buyer
and Thomas R. Miklich and Thomas J. Buckley, or any one of them, in their
respective capacities as officers of Buyer, and any individual who shall
hereafter succeed to any such office held by such individuals with Buyer, and
each of them individually, the Stockholder's limited proxy and attorney-in-fact
(with full power of substitution), for and in the name, place and stead of the
Stockholder, solely for the purpose of voting the Shares, or granting a consent
or approval in respect of the Shares in favor of the Merger and against any
Transaction Proposal, (ii) Each Stockholder represents that any proxies
heretofore given in respect of such Stockholder's Shares are not irrevocable,
and that any such proxies are hereby revoked; (iii) Each Stockholder understands
and acknowledges that Buyer and MergerCo. are entering into the Merger Agreement
in reliance upon such Stockholder's execution and delivery of this Agreement.
Each Stockholder hereby affirms that the irrevocable limited proxy set forth in
this Section 3(c) is given in connection with the execution of the Merger
Agreement, and that such irrevocable limited proxy is given to secure the
performance of the duties of such Stockholder under this Agreement. Each
Stockholder hereby further affirms that the irrevocable limited proxy is coupled
with an interest and may under no circumstances be revoked except upon
termination in accordance with the provisions of Section 8. Each Stockholder
hereby ratifies and confirms all that such irrevocable limited proxy holder may
lawfully do or cause to be done by virtue hereof. Such irrevocable limited proxy
is executed and intended to be irrevocable in accordance with the provisions of
Chapter 156B, Section 41 of the Massachusetts General Laws.
(d) NO SOLICITATION. The Stockholders hereby agree, in their
capacities as Stockholders of the Company, that neither the Stockholders nor any
of their subsidiaries or affiliates shall (and each Stockholder shall cause its
officers, directors, employees, representatives and agents, including, but not
limited to, investment bankers, attorneys and accountants, not to), directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than Buyer, any of its affiliates or
representatives) concerning any Transaction Proposal. The Stockholders will
immediately cease any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Transaction Proposal. The
Stockholders will immediately communicate to Buyer the terms of any proposal,
discussion, negotiation or inquiry (and will disclose any written materials
received by any Stockholder in connection with such proposal, discussion,
negotiation or inquiry) and the identity of the party making such proposal or
inquiry which any Stockholder may receive in respect of any such transaction.
Any action taken by the Company or any member of the Board of Directors of the
Company in accordance with Section 7.6 of the Merger Agreement shall be deemed
not to violate this Section 3(d).
3
<PAGE> 4
(e) CONSULTATION. Each party shall promptly consult with the
others and provide any necessary information and material with respect to all
filings made by such party with any governmental entity in connection with this
Agreement and the Merger Agreement, the Offer and the transactions contemplated
hereby and thereby.
4. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS. Each Stockholder hereby
separately represents and warrants (solely with respect to such Stockholder and
not with respect to any other Stockholder) to Buyer and MergerCo. as follows:
(a) OWNERSHIP OF SHARES. The Stockholder is the record and
Beneficial Owner of the Existing Shares, as set forth on Schedule I. On the date
hereof, the Existing Shares constitute all of the Shares owned of record or
Beneficially Owned by the Stockholders. The Stockholder has sole voting power
and sole power to issue instructions with respect to the matters set forth in
Sections 2, 3 and 4 hereof, sole power of disposition and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to all
of the Existing Shares with no limitations, qualifications or restrictions on
such rights, subject to applicable securities laws and the terms of this
Agreement.
(b) POWER; BINDING AGREEMENT. The Stockholder has the power
(corporate, partnership or other) and authority to enter into and perform all of
such Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which the Stockholder is a party including, without limitation, any
voting agreement, proxy arrangement, pledge agreement, stockholders agreement or
voting trust. This Agreement has been duly and validly executed and delivered by
the Stockholder and constitutes a valid and binding agreement of the
Stockholder, enforceable against the Stockholder in accordance with its terms.
There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder is a trustee whose consent is
required for the execution and delivery of this Agreement or the consummation by
the Stockholder of the transactions contemplated hereby.
(c) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act (i) no filing with, and no permit, authorization, consent or
approval of, any governmental entity is necessary for the execution of this
Agreement by the Stockholder and the consummation by the Stockholder of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by the Stockholder, the consummation by the Stockholder of the
transactions contemplated hereby or compliance by the Stockholder with any of
the provisions hereof shall (A) conflict with or result in any breach of any
organizational documents applicable to the Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, material modification or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of kind to which the Stockholder is a party or by which
the Stockholder or any of its properties or assets may be bound, or (C) violate
any order, writ, injunction, decree, judgment, order, statute, rule or
regulation applicable to the Stockholder or any of its properties or assets.
(d) NO ENCUMBRANCES. Except as permitted by this Agreement,
the Existing
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Shares and the certificates representing the Existing Shares are now, and at all
times during the term hereof will be, held by the Stockholder, or by a nominee
or custodian for the benefit of the Stockholder, free and clear of all liens,
claims, charges or encumbrances ("Encumbrances"), proxies, voting trusts or
agreements, understandings or arrangements or any other rights whatsoever,
except for any such Encumbrances or proxies arising hereunder.
(e) NO FINDER'S FEES. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(f) RELIANCE BY BUYER AND MERGERCO. The Stockholder
understands and acknowledges that Buyer and MergerCo. are entering into the
Merger Agreement and commencing the Offer in reliance upon the Stockholder's
execution and delivery of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND THE MERGERCO. Each of Buyer and
MergerCo. hereby represents and warrants to the Stockholders as follows:
(a) POWER; BINDING AGREEMENT. Buyer and MergerCo. each has the
corporate power and authority to enter into and perform all of its obligations
under this Agreement. The execution, delivery and performance of this Agreement
by each of Buyer and MergerCo. will not violate any other agreement to which
either of them is a party. This Agreement has been duly and validly executed and
delivered by each of Buyer and MergerCo. and constitutes a valid and binding
agreement of each of Buyer and the Purchaser, enforceable against each of Buyer
and MergerCo. in accordance with its terms.
(b) NO CONFLICTS. Except for filings under the HSR Act and the
Exchange Act, (i) no filing with, and no permit, authorization, consent or
approval of, any governmental entity is necessary for the execution of this
Agreement by each of Buyer and MergerCo. and the consummation by each of Buyer
and MergerCo. of the transactions contemplated hereby and (ii) none of the
execution and delivery of this Agreement by each of Buyer and MergerCo., the
consummation by each of Buyer and MergerCo. of the transactions contemplated
hereby or compliance by each of Buyer and MergerCo. with any of the provisions
hereof shall (A) conflict with or result in any breach of any organizational
documents applicable to either of Buyer or MergerCo., (B) result in a violation
or breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which either of Buyer or MergerCo. is a party or by
which either of Buyer or MergerCo. or any of their properties or assets may be
bound, or (C) violate any order, writ, injunction, decree, judgment, order,
statute, rule or regulation applicable to either of Buyer or MergerCo. or any of
their properties or assets.
6. FURTHER ASSURANCES. From time to time, at the other party's request and
without further consideration, each party hereto shall execute and deliver such
additional documents and take all such further lawful action as may be necessary
or desirable to consummate and make effective the agreements set forth in
Sections 2 and 3 of this Agreement.
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7. STOP TRANSFER. No Stockholder shall request that the Company register the
transfer (book-entry or otherwise) of any certificate or uncertificated interest
representing any of the Shares, unless such transfer is made in compliance with
this Agreement. In the event of a stock dividend or distribution, or any change
in the Common Stock by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall refer to
and include the Shares as well as all such stock dividends and distributions and
any shares into which or for which any or all of the Shares may be changed or
exchanged.
8. TERMINATION. The covenants, agreements and proxy contained herein with
respect to the Shares, and all other obligations of the Stockholders hereunder,
shall terminate upon the termination of the Merger Agreement in accordance with
its terms.
9. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all other prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
(b) BINDING AGREEMENT. This Agreement and the obligations
hereunder shall attach to the Shares and shall be binding upon any person or
entity to which legal or beneficial ownership of the Shares shall pass, whether
by operation of law or otherwise, including, without limitation, any
Stockholder's administrators or successors. Notwithstanding any transfer of
Shares, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.
(c) ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
parties hereto; provided that Buyer or MergerCo. may assign, in its sole
discretion, its rights and obligations hereunder to any direct or indirect
wholly owned subsidiary of Buyer, but no such assignment shall relieve Buyer or
MergerCo. of its obligations hereunder if such assignee does not perform such
obligations.
(d) AMENDMENTS, WAIVERS, ETC. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto
(e) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder, to the address set forth on Schedule I hereto,
with a copy to:
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
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Boston, MA 02110
Attn: James Westra
Telephone No.: (617) 951-6600
Telecopy No.: (617) 951-1295
If to Buyer or MergerCo.,
Invacare Corporation
One Invacare Way
Elyria, Ohio 44035
Attention: Thomas R. Miklich
Chief Financial Officer, Secretary and Treasurer
Telephone No.: (440) 329-6111
Telecopy No.: (440) 366-9008
with a copy to:
Calfee, Halter & Griswold LLP
1400 McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114-2688
Attn: Dale C. LaPorte
Telephone No.: (216) 622-8200
Telecopy No.: (216) 241-0816
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) SEVERABILITY. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) NO WAIVER. The failure of any party hereto to exercise any
right, power or
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remedy provided under this Agreement or otherwise available in respect hereof at
law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such party of its right
to exercise any such or other right, power or remedy or to demand such
compliance.
(j) NO THIRD PARTY BENEFICIARIES. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the principles of conflicts of law thereof; PROVIDED,
however, that the laws of the respective jurisdictions of incorporation of each
of the parties shall govern the relative rights, obligations, powers, duties and
other internal affairs of such party and its board of directors.
(l) WAIVER OF JURY TRIAL. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) DESCRIPTIVE HEADINGS. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
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<PAGE> 9
IN WITNESS WHEREOF, Buyer and MergerCo. have caused this Agreement to
be duly executed as of the day and year first above written.
BUYER: STOCKHOLDERS:
INVACARE CORPORATION /s/ Herbert Gray
By: /s/ Thomas R. Miklich ----------------------------------
-------------------------------- Herbert Gray
Name: Thomas R. Miklich
----------------------------
Title: CFO /s/ Donald Benovitz
---------------------------- ----------------------------------
Donald Benovitz
SUMMIT VENTURES III, L.P.
MERGERCO.: By: Summit Partners III, L.P.,
Its General Partner
INVA ACQUISITION CORP. By: Stamps, Woodsum & Co. III,
By: /s/ Thomas R. Miklich Its General Partner
-------------------------------
Name: Thomas R. Miklich By: /s/ illegible
---------------------------- ------------------------------
Title: Director General Partner
----------------------------
SUMMIT INVESTORS II, L.P.
By: /s/ illegible
------------------------------
Authorized Signatory
SUMMIT SUBORDINATED DEBT
FUND, L.P.
By: Summit Partners SD, L.P.,
Its General Partner
By: Stamps, Woodsum & Co. III,
Its General Partner
By:/s/ illegible
-------------------------------
General Partner
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SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF SHARES BENEFICIALLY OWNED
-----------------------------------
ADDRESS
STOCKHOLDER OPTIONS DIRECT OWNERSHIP
- ----------- ------- ----------------
<S> <C> <C> <C>
Herbert Gray 300 Boylston St. Apt 5-10 620,000 (as individual) 186,000
Boston, MA 02116 33,634 (as trustee)
Donald Benovitz One Everett Terrace 245,366 (as individual) 124,000
South Natick, MA 01760 33,634 (as trustee)
Summit Ventures III, L.P. 600 Atlantic Ave. Suite 2800 3,357,509
Boston, MA 02110-2227
Summit Investors II, L.P. 600 Atlantic Ave. Suite 2800 78,696
Boston, MA 02110-2227
Summit Subordinated 600 Atlantic Ave. Suite 2800 498,626
Debt Fund, L.P. Boston, MA 02110-2227
</TABLE>
10
