<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NUMBER 0-20165
STERIS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
OHIO 34-1482024
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NO.)
5960 HEISLEY ROAD 216-354-2600
MENTOR, OHIO 44060 (REGISTRANT'S TELEPHONE NUMBER
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE)
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT:
COMMON SHARES, WITHOUT PAR VALUE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant, computed by reference to the average of the bid and ask price of
such stock as of May 31, 1996: $1,081,472,906
The number of Common Shares outstanding as of May 31, 1996: 33,144,380
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 1996 Annual Meeting -- Part III
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART I
ITEM 1. BUSINESS
DESCRIPTION OF BUSINESS
STERIS Corporation (the "Company" or "STERIS") develops, manufactures, and
markets infection prevention systems and related consumables, accessories, and
services for the worldwide health care market.
On May 13, 1996, STERIS acquired AMSCO International, Inc. ("AMSCO")
pursuant to a merger in which AMSCO became a wholly-owned subsidiary of STERIS.
Because the merger, which was accounted for as a pooling of interests, occurred
subsequent to March 31, 1996, the information presented in this Annual Report on
Form 10-K does not give effect to the impact of the merger. Consequently, unless
otherwise expressly stated, the information presented relates to the Company
prior to the merger.
The Company's products address a number of trends in the health care
industry: the growth in numbers and types of minimally invasive procedures (such
as laparoscopic cholecystectomy and colonoscopy) that use delicate and expensive
devices; heightened public and professional concern regarding the transmission
of infectious diseases such as AIDS, hepatitis, and tuberculosis; the growth in
the provision of health care services in non-hospital settings; and concern
regarding the handling and disposal of biohazardous materials. These trends have
expanded the demand for rapid, safe, and efficient infection prevention systems
for critical tasks such as the sterile processing of devices and the
destruction, decontamination, and disposal of potentially infectious
biohazardous waste.
The Company's systems support cost containment, productivity, and risk
reduction in health care institutions through process standardization, automatic
monitoring and documentation, decentralization, and reduced processing time.
STERIS SYSTEM 1TM, the Company's site-of-care sterile processing system, enables
health care professionals to safely and economically sterilize immersible
surgical and diagnostic devices between patient procedures in less than thirty
minutes. The Company recently introduced two newly developed systems relating to
the containment and safe disposal of potentially infectious waste. EcoCycle 10TM
is a complete system for the destruction and decontamination of potentially
infectious solid waste at or near the point of generation. SafeCycle 40TM is
designed for the safe collection, containment, and disposal of blood and other
potentially infectious fluid waste generated in surgical and diagnostic
procedures. Each major product line addresses a specific infection prevention
challenge.
Since commercially introducing STERIS SYSTEM 1 in November 1988, the
Company has sold over 9,000 STERIS SYSTEM 1 units to more than 3,750 health care
facilities, including hospitals, medical centers, ambulatory facilities, and
physician offices. EcoCycle 10 and SafeCycle 40 are in the early stages of
market introduction. The Company plans to introduce EcoCycle 10 in international
markets where it has appropriate regulatory clearances while pursuing further
state clearance in the United States. SafeCycle 40 can be sold in all fifty
states and the Company is pursuing regulatory clearance in international
markets. Other potential products are in various stages of development and
regulatory review.
The Company's proprietary anti-microbial chemistry technology destroys
microorganisms on inanimate surfaces rapidly and safely at low temperatures. The
Company's strategy is to employ this technology in commercial applications with
a focus on sterile processing, biohazardous waste processing, and other
applications in the health care industry. The technology also has potential
applications in a wide variety of other settings where cleanliness or low
temperature destruction of microorganisms is important.
RECENT DEVELOPMENTS
On January 11, 1996, STERIS announced the January 8, 1996 acquisition of
Ecomed, Inc. ("Ecomed"), a privately held company located in Indianapolis,
Indiana. Previously, STERIS and Ecomed worked jointly, under a business
development agreement, to produce EcoCycle 10. With the acquisition, STERIS
obtained all rights on a worldwide basis to Ecomed's proprietary technology and
the manufacture and distribution of EcoCycle 10. On January 25, 1995, STERIS
received notification from the U.S. Environmental Protection Agency ("EPA") of
the acceptance of expanded claims for STERIS's proprietary anti-microbial
chemistry relating to the operation of EcoCycle 10.
2
<PAGE> 3
On December 18, 1995, STERIS and AMSCO announced that their respective
Boards of Directors had approved a definitive merger agreement pursuant to which
STERIS would acquire AMSCO in exchange for shares of STERIS. The merger was
consummated on May 13, 1996. Under the terms of the agreement, AMSCO
stockholders received 0.46 share of STERIS Common Shares for each outstanding
share of AMSCO common stock. The merger qualified as a tax-free reorganization
and as a pooling of interests for accounting purposes.
The merger brought together two of the most recognized names in health
care, infection prevention, and surgical support markets. AMSCO -- a 100-year
old sterilization, infection control, and surgical products pioneer -- is the
premier manufacturer of large scale, high quality central processing systems.
PRINCIPAL PRODUCTS AND SERVICES
The fundamental technology of STERIS is the rapid, safe, low temperature
chemical destruction of microorganisms on inanimate surfaces. The Company
focused its initial development of this technology on sterile processing
applications in the health care industry, such as the sterile processing of heat
sensitive, sophisticated devices used for minimally invasive surgical and
diagnostic procedures. In addition, STERIS manufactures products utilizing
anti-microbial chemistry technology which address the safe handling of
potentially infectious solid and fluid waste at the point of generation.
The Company's principal product line is STERIS SYSTEM 1, a complete system
for just-in-time sterile processing at or near the site of patient care.
STERIS SYSTEM 1 consists of a tabletop microprocessor-controlled unit, a
patented single-use sterilant, and multiple adapter trays and containers. The
Company's sterilant, STERIS 20TM, combines a chemical biocidal agent with a
proprietary anti-corrosion formulation to provide low temperature destruction of
microorganisms. The Company's process significantly reduces environmental and
human safety risks associated with conventional low temperature sterilization
and disinfection systems.
The Company has recently introduced two new product lines into the market.
ECOCYCLE 10 is an innovative waste processing system employing proven
STERIS anti-microbial technology to eliminate potentially infectious solid waste
at or near the site of generation. The system simultaneously grinds and
decontaminates biohazardous waste, rendering it safe and unrecognizable in less
than 15 minutes. Solid waste volumes are reduced up to 80% and can be handled as
clean refuse. Decontaminated liquids are automatically separated and safely
disposed into the sanitary sewer system. EcoCycle 10 is compact, inexpensive to
operate, and satisfies recognized guidelines for safe and effective operation.
SAFECYCLE 40 is a self-contained fluid waste management system designed to
collect, contain, transport, and safely dispose of potentially infectious fluid
waste such as that generated during surgical procedures. The system eliminates
the need for up to 13 suction canisters while significantly reducing the
possibility of exposure to biologically contaminated fluids.
All three systems -- STERIS SYSTEM 1, EcoCycle 10, and SafeCycle 40 -- are
conceptually similar. Each system addresses a specific infection prevention
challenge. The components of each system include a processor priced at under
$20,000, processing chambers, a proprietary single use chemical package, and a
variety of accessory items. The only installation requirements for all systems
are tap water, electricity, and a drain. All systems are easy to use, have
relatively short processing cycles, and are designed to be installed and
operated at or near the site of patient care.
3
<PAGE> 4
The following table shows revenues (in thousands) attributable to the
Company's principal product lines and associated percentages of net revenue for
the last three fiscal years:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
-------------------------------------------------------------
1996 1995 1994
----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Systems.................... $44,401 48.7% $31,929 49.7% $26,315 57.5%
Sterilant and
decontaminant............ 23,495 25.8 14,969 23.3 8,358 18.2
Consumables, services, sup-
plies, and accessories... 23,093 25.3 15,227 23.7 10,517 22.9
Other...................... 203 .2 2,147 3.3 632 1.4
------- ----- ------- ----- ------- -----
$91,192 100.0% $64,272 100.0% $45,822 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
MANUFACTURING
The Company performs the final assembly, packaging, and quality assurance
of the key elements of all systems including processors, trays and containers,
and proprietary chemistry products. STERIS intends to control the packaging of
chemicals and the quality assurance of key elements of other systems and new
products. Various sub-assemblies, parts, raw chemicals, and accessories are
obtained from multiple sources. STERIS's subsidiary, Ecomed, provides the
finished processor and chamber components of the solid waste system.
THE MARKETS AND METHODS OF DISTRIBUTION
A significant element in the operation of all health care facilities is the
sterilization or disinfection of reusable surgical instruments. Conventional
sterile processing regimens for medical instruments involve high temperatures
(such as steam and dry heat units) or chemicals (such as ethylene oxide gas) and
are typically performed at central processing sites in health care facilities.
Central processing requires multiple handling of instruments and time-consuming
transportation to and from the site of patient care. Disinfection regimens use
chemicals such as glutaraldehyde that create hazardous chemical waste and may
require special disposal. The safety and environmental risks and economic
disadvantages implicit in these processes, together with a number of trends in
the health care industry, have created a market opportunity for new sterile
processing regimens.
The Company emphasizes sales of STERIS SYSTEM 1 for use in hospital
operating rooms. In addition, the Company's sales force targets
ambulatory-outpatient surgery centers, endoscopy programs, non-hospital surgery
and urgent care centers, and office-based physician groups. The sales force also
focuses on sales of additional units to existing Customers. New products, such
as EcoCycle 10 and SafeCycle 40, are intended to be targeted at a similar
current and potential customer base.
STERIS has, as of March 31, 1996, 63 direct sales representatives and 12
regional sales managers in North America, all of whom have experience either in
health care sales or in nursing or operating room management. The sales
representatives reside in major metropolitan market areas throughout the U.S.
and Canada. STERIS also has, as of March 31, 1996, 62 field service
representatives, who are supported by an in-house service and field support
department and provide on-site service in Customer facilities in the U.S. and
Canada.
Customer training is one of the most important aspects of the STERIS
marketing plan. In addition to on-site training, STERIS provides a two-day
course for Customer operators at the Company's Training and Education Center in
Mentor, Ohio. The program enables the Customer representative to understand
fully the fundamentals of the STERIS PROCESS and the theory and operation of
STERIS SYSTEM 1. The Operator Training Program is approved by the Ohio Nurses
Association to offer contact hours for continuing education to eligible course
participants. The Ohio Nurses Association has been authorized by the American
Nurses Credentialing Center's Commission on Accreditation to approve continuing
education programs that meet standards established by the Commission. The
program was implemented in July 1991, and, as of March 31, 1996, more than 7,000
Customer representatives, primarily nurses and department managers, have
received training at STERIS. The Company provides a separate training program
for biomedical engineers
4
<PAGE> 5
employed by the Company's Customers on a fee basis. As of March 31, 1996, more
than 600 biomedical engineers have received training at STERIS.
The Company has adopted a strategy focused on employing direct sales,
service, and support personnel in top international markets while contracting
with distributors in other selected markets. STERIS currently has subsidiaries
and support personnel in Belgium, Canada, Germany, Hong Kong, Italy, and the
United Kingdom. STERIS has distribution agreements with medical supply
distributors in Australia, and various countries in Asia, Europe, and the Middle
East.
In 1995, STERIS opened a new office and training center in Hong Kong to
support its direct sales and distribution efforts throughout Asia. The Company
also opened a new office, distribution, and training center in
Orsingen-Nenzingen, Germany for its direct operations in Germany. It has
representative offices in Belgium, Korea, and Singapore.
The Company believes that one of its strengths is its broad Customer base
with no single Customer accounting for a significant percentage of sales during
the twelve-month period ended March 31, 1996.
COMPETITION
A number of methodologies and commercial products are available for general
sterilization purposes. Castle Division of MDT Corporation, J&J Medical, Inc. (a
subsidiary of Johnson & Johnson), and the Medical-Surgical Products Division of
3M Corporation are well-known U.S. companies offering products for general
sterilization and disinfection. Competition in the market served by the Company
is based upon product design and quality, product innovation, and product
serviceability that results in the greatest overall value to the customer. In
addition, there is significant price competition among various instrument
preparation processes.
In October, 1993, J&J Medical announced that it had received market
clearance from the U.S. Food and Drug Administration ("FDA") for its
sterilization product. This product is based on a vapor-phase hydrogen peroxide
technology which can address the low temperature sterilization market.
On January 1, 1995, Abtox, Inc. announced that it entered the U.S.
healthcare sterilization market with its PlazlyteTM Sterilization System. The
system, successfully introduced in Canada and Europe in 1993, received clearance
for sales in the United States by the FDA. This product is based on peracetic
acid in vapor phase which can address the low temperature sterilization market.
Other smaller, early-stage companies are believed to be working with a
variety of other technologies and sterilizing agents, including microwave,
ozone, plasma, chlorine dioxide, peracids, and formaldehyde. In addition, a
number of companies have developed disposable medical instruments and other
devices designed to address the risk of contamination.
STERIS anticipates that it may face increased competition in the future as
new sterile processing systems enter the market. There can be no assurance that
new products developed by the Company's competitors will not be more
commercially successful than those currently developed by STERIS or that may be
developed by STERIS. In addition, some of STERIS's existing or potential
competitors have substantially greater financial, technical, and human resources
than the Company. Accordingly, the Company's competitors may succeed in
developing and commercializing products more rapidly than the Company.
GOVERNMENT REGULATION
Under the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"),
certain chemical germicides are subject to regulation by the EPA. Pursuant to
the requirements of FIFRA, the Company has provided the EPA with toxicity,
product chemistry, and efficacy data relating to STERIS 20, STERIS SW, and
STERIS LW. Based on this data, the EPA has registered STERIS 20, STERIS LW, and
STERIS SW and has accepted the Company's labeling as accurately representing the
toxicity and potential hazards of these products. By virtue of this
registration, the EPA is authorized to inspect and sample STERIS 20, STERIS SW,
and STERIS LW as it deems necessary. In addition, the sterilant solution that is
discharged at the end of each STERIS SYSTEM 1 cycle has passed fish toxicity
tests as required by the State of California.
5
<PAGE> 6
Certain of the Company's products are regulated by the FDA and state and
foreign governmental authorities. These regulations govern introduction of new
medical devices, compliance with FDA Good Manufacturing Practices in the
manufacture of these devices, observance of certain labeling standards,
maintenance of certain records, and reporting of potential product defects to
the FDA. The Company's regulated products are also subject to inspection by the
FDA after they receive market clearance. The Company, its production facilities,
and certain chemicals used by the Company in its production processes are
subject to other environmental, health and safety, and transportation
regulations of various federal, state, and local agencies.
The Company has completed the FDA 510(k) review, Underwriters'
Laboratories, and Canadian Standards Association processes for STERIS SYSTEM 1,
EcoCycle 10, and SafeCycle 40, and believes that it has completed the necessary
EPA and state environmental protection agency registrations for STERIS 20
sterilant. STERIS SYSTEM 1 has completed the TUV/VDE (Europe) approval. In
addition, STERIS SYSTEM 1 has the CE mark (European conformity) for the EMC
Directive. As part of these processes, the Company has successfully completed
testing required by the EPA and state environmental protection agencies and the
FDA, including biocidal tests (Association of Analytical Chemists sporicidal,
bacterial, fungicidal, virucidal, and tuberculocidal), toxicology tests, and
materials compatibility tests. SafeCycle 40 has been cleared for marketing for
its intended use by the FDA. The EPA has accepted expanded claims for STERIS's
proprietary anti-microbial chemistry for EcoCycle 10.
The regulatory approval and product acceptance processes in foreign
countries are highly variable and localized. The Company intends to comply with
relevant regulations through its independent efforts and those of its foreign
distributors.
EMPLOYEES
As of March 31, 1996, the Company employed 560 employees. As of that date,
none of the Company's employees were covered by collective bargaining
agreements. Management considers its relations with employees to be good.
PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY
The Company protects its technology by, among other means, filing U.S. and
foreign (Australia, Canada, Europe, and Japan) patent applications for
technology that it considers important to its business. The Company also relies
upon trade secrets and technical know-how and continuing technological
innovation to develop and maintain its competitive position. The U.S. Patent
Office has, as of March 31, 1996, issued 16 patents covering the sterile
processing method, various components of the complete system, and the chemical
sterilant formulation and potential future products. The Company's U.S. patents
expire between 2005 and 2014. The Company, as of March 31, 1996, has 18 U.S.
patents pending. The Company has 87 foreign patents with 28 additional foreign
patents pending. The Company's foreign patents expire between 2007 and 2012.
"STERIS" is registered as a trademark and as a service mark with the United
States Patent and Trademark Office. "STERIS" has also been registered as a
trademark in 28 foreign countries. Additional trademark registrations are
pending in 12 countries.
RESEARCH AND DEVELOPMENT
The Company expended approximately $8.3 million, $6.6 million, and $4.4
million on research and development in fiscal years 1996, 1995, and 1994,
respectively. The Company's research and development is primarily directed
toward application of the Company's anti-microbial chemistry technology.
6
<PAGE> 7
ITEM 2. PROPERTIES
OWNED PROPERTIES
The Company owns the properties shown in the following table:
<TABLE>
<CAPTION>
PROPERTY USE LOCATION SQUARE FEET
--------------------------------------------------- ------------- -----------
<S> <C> <C>
Corporate and division offices, distribution,
sales, administration, and Customer supported
training Mentor, Ohio 86,000
Product packaging Mentor, Ohio 26,000
Production space and product packaging Mentor, Ohio 40,000
</TABLE>
LEASED PROPERTIES
The Company leases the properties shown in the following table:
<TABLE>
<CAPTION>
PROPERTY USE LOCATION LEASE EXPIRATION SQUARE FEET
------------------------------------ --------------- ----------------- -----------
<S> <C> <C> <C>
Offices, laboratory and production Mentor, Ohio May, 1999 42,000
space
Sales, service, and support offices Brussels, Month-to-Month 500
Belgium
Sales, service, and support offices Mississauga, September, 1997 2,300
Ontario, Canada
Sales, service, and support offices Hong Kong December, 1996 4,000
Sales, service, and support offices Singapore Month-to-Month 500
Warehouse Aartselaar, The Month-to-Month 100
Netherlands
Sales, service, and support offices Orsingen- September, 2000 7,000
Nenzingen,
Germany
Sales, service, and support offices Asti, Italy March, 2002 7,000
Sales, service, and support offices Oxfordshire, June, 2006 10,000
United Kingdom
Warehouse Canada September, 1997 2,000
Offices, production and warehouse Indianapolis, November, 1999 20,000
space Indiana
</TABLE>
The Company is confident that, if needed, it will be able to acquire
additional facilities at commercially reasonable rates.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to any material litigation or environmental
regulation proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the Company's 1996 fiscal year.
7
<PAGE> 8
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the executive
officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
-------------------------------------- --- --------------------------------------
<S> <C> <C>
Bill R. Sanford....................... 52 Chairman of the Board of Directors,
President, and Chief Executive Officer
J. Lloyd Breedlove.................... 48 Senior Vice President
Michael A. Keresman, III.............. 38 Senior Vice President, Chief Financial
Officer, and Secretary
Roy K. Malkin......................... 50 Senior Vice President
Craig E. Herrod....................... 39 Vice President
William A. O'Riordan.................. 37 Vice President
Gerard J. Reis........................ 44 Vice President
Paul A. Zamecnik...................... 36 Vice President
Dennis P. Patton...................... 47 Treasurer
</TABLE>
The following is a brief account of the business experience during the past
five years of each such executive officer.
BILL R. SANFORD has served as Chairman of the Board of Directors,
President, and Chief Executive Officer since April 1, 1987.
J. LLOYD BREEDLOVE joined the Company as Executive Vice President in
August 1991. He now serves as a Senior Vice President of the Company and
President of the Company's Americas Division that was established in
November 1993. Prior to joining the Company, Mr. Breedlove was employed by
Catheter Research, Inc. as Vice President of Sales and Marketing from
November 1989 to October 1990, and President from October 1990 to August
1991.
MICHAEL A. KERESMAN, III joined the Company in January 1988 as
Director of Finance and has held positions as Vice President of Finance,
Vice President of Finance and Administration, Vice President of Finance and
Operations, and Vice President Business Development. He currently serves as
a Senior Vice President, Chief Financial Officer, and Secretary.
ROY K. MALKIN joined the Company in July 1994 as a Senior Vice
President with responsibility for directing and managing the Discovery &
Development Division. Prior to joining the Company, Mr. Malkin served from
June 1984 through July 1994 as President of RKM Enterprises Ltd. which
provided consulting services to STERIS and other multinational corporations
in sales, marketing, product development, and distribution.
CRAIG E. HERROD joined the Company in June 1989 as Director of Sales
and was promoted to Vice President in August 1989. He currently serves as a
Vice President of the Company and President of the Company's International
Division. He was appointed as an executive officer of the Company in July
1995.
WILLIAM A. O'RIORDAN joined the Company in June 1991 as Systems
Support Manager. Mr. O'Riordan has also served as Director of Customer
Support. He currently serves as a Vice President with responsibility for
Operations. He was appointed as an executive officer of the Company in July
1995.
GERARD J. REIS joined the Company in 1994 as a Vice President with
responsibility for Administration and Human Resources. He was appointed as
an executive officer of the Company in July 1995. Prior to joining the
Company, Mr. Reis served as Vice President for Student Services/College
Development at Lakeland Community College from 1989 to 1994.
PAUL A. ZAMECNIK joined the Company in July 1992 as Director of
Marketing and was promoted to Vice President in November 1993. He currently
serves as a Vice President with responsibility for Regulatory Affairs and
Quality Systems. He was appointed as an executive officer of the Company in
July 1995. Prior to joining the Company, Mr. Zamecnik served from July 1987
through June 1992 as an Engagement Manager with McKinsey & Company.
8
<PAGE> 9
DENNIS P. PATTON joined the Company in November 1993 as Director of
Finance. He currently serves as the Treasurer. He was appointed as an
executive officer of the Company in July 1995. Prior to joining the
Company, Mr. Patton was with the National Office of Ernst & Young LLP from
1988 to 1991 and was a Principal with Hillow, Gornik & Company, Certified
Public Accountants, from 1991 to 1993.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
MARKET INFORMATION AND DIVIDENDS
The Company's Common Shares are traded on the NASDAQ National Market System
under the symbol "STRL." The following table sets forth, for the periods
indicated, the high and low sale prices for the Company's Common Shares as
quoted by NASDAQ. These prices have been adjusted to reflect a 2-for-1 stock
split by means of a 100% stock dividend on STERIS Common Shares that was
effective August 24, 1995. These prices do not include retail markups,
markdowns, or commissions.
<TABLE>
<CAPTION>
FISCAL 1996 HIGH LOW
------------------------------------------------------------- ---- ----
<S> <C> <C>
1st Quarter.................................................. $28 1/2 $18 1/4
2nd Quarter.................................................. 43 22 7/8
3rd Quarter.................................................. 45 28 3/4
4th Quarter.................................................. 36 1/2 28 7/8
</TABLE>
<TABLE>
<CAPTION>
FISCAL 1995 HIGH LOW
------------------------------------------------------------- ---- ----
<S> <C> <C>
1st Quarter.................................................. $14 $ 9
2nd Quarter.................................................. 13 3/8 8 3/8
3rd Quarter.................................................. 20 12 3/8
4th Quarter.................................................. 22 1/8 14 7/8
</TABLE>
The Company has not paid any dividends on its Common Shares since its
inception and does not anticipate paying any such dividends in the foreseeable
future. The Company has entered into a credit agreement which includes
operational conditions and financial ratio covenants that, in certain
circumstances, could limit the Company's ability to pay dividends. The Company
currently intends to retain all of its earnings for the operation and expansion
of its business.
At May 31, 1996, there were approximately 2,412 holders of record of the
Company's Common Shares.
9
<PAGE> 10
ITEM 6. SELECTED FINANCIAL DATA
The data set forth below should be read in conjunction with the financial
statements and related notes included herein.
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
-------------------------------------------------------
1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONAL DATA:
Net sales.............................. $91,192 $64,272 $45,822 $26,662 $12,943
Gross profit........................... 57,320 40,377 27,926 15,592 7,071
Income (loss) from operations.......... 20,279 13,226 7,983 2,261 (14)
Net income(1).......................... 12,794 8,736 6,366 2,508 36
Net income (loss) per share(2)......... $0.66 $ 0.46 $ 0.34 $ 0.16 $ (0.10)
Shares used in computing net income
(loss) per share(3)................. 19,504 19,008 18,694 16,074 4,344
BALANCE SHEET DATA:
Working capital........................ $33,088 $29,489 $30,289 $24,855 $ 3,796
Total assets........................... 85,367 54,893 42,715 30,862 7,964
Long-term debt......................... 300 400 0 0 14
Total liabilities...................... 22,973 10,298 7,557 3,972 2,758
Redeemable preferred shares............ 0 0 0 0 11,352
Total shareholders' equity (deficit)... $62,394 $44,595 $35,158 $26,890 $(6,146)
</TABLE>
- ---------------
(1) Effective April 1, 1993, the Company was required to adopt SFAS No. 109,
Accounting for Income Taxes. This adjustment related primarily to the
recording of available net operating loss carryforwards which were used by
year end. The cumulative effect of this change in method of accounting for
income taxes increased net income by $1,220,000 as reflected in the March
31, 1994 financial statements.
(2) In 1992, net loss per share resulted in periods where there was net income
because of preferred share dividend requirements. The 1994 net income per
share included $0.06 as a result of the change in method of accounting for
income taxes.
(3) On July 25, 1995, the Company announced a 2-for-1 stock split by means of a
100% stock dividend on STERIS Common Shares. The stock split was effective
August 24, 1995 to shareholders of record as of August 7, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company was established in August 1985 under the name of Innovative
Medical Technologies, Corp. During its first two years of existence, the Company
had only one full-time and one part-time employee, both of whom concentrated on
research efforts. In 1987, the Company changed its name to STERIS Corporation,
completed its first venture capital financing, added an experienced management
team, and expanded its research efforts.
In 1988, the Company's chemical sterilant, STERIS 20, was successfully
registered with the EPA and the Company's first product line, STERIS SYSTEM 1,
received market clearance from the FDA. The Company began commercial shipments
of STERIS SYSTEM 1 with deliveries to hospitals in November 1988.
The Company has a direct North American sales force of 63 direct sales
representatives as of March 31, 1996, all of whom have experience either in
health care sales or in nursing or operating room management.
10
<PAGE> 11
The Company also employs 62 field service representatives as of March 31, 1996.
Additionally, the Company has entered into distribution agreements with medical
supply distributors in Asia, Australia, Europe, and the Middle East. The
Company's wholly-owned Belgium subsidiary is used to distribute products in
Belgium and support European distributors. The Company provides direct sales,
service, and Customer support in Canada. The Company's Hong Kong office is used
to support Asia Pacific distributors and end users. The Company has established
direct operations through its wholly-owned subsidiaries in Germany, Italy, and
the United Kingdom.
Several developing trends have created market opportunities for low
temperature, rapid sterilization, cleaning, and decontamination processes that
surmount the practical difficulties associated with such regimens. These trends
include heightened public and professional concern regarding the transmission of
infectious diseases such as AIDS, hepatitis, and tuberculosis; increased use of
endoscopic devices for minimally invasive surgical procedures that enter body
cavities where infection would be catastrophic; increasing pressure facing the
health care industry to contain costs and increase productivity; increased
decentralization of the delivery of patient care; and public concern regarding
the handling and disposal of biohazardous waste. The Company believes these
factors will increase the demand for low temperature, rapid, safe, and
standardized infection prevention systems such as STERIS SYSTEM 1, EcoCycle 10,
and SafeCycle 40.
FISCAL YEAR 1996 COMPARED TO FISCAL YEAR 1995
Net sales increased by 41.9% to $91.2 million in fiscal 1996 from $64.3
million in fiscal 1995. Sales of systems increased by 39.1% to $44.4 million in
fiscal 1996 from $31.9 million in fiscal 1995. Sales of sterilant and
decontaminant increased by 57.0% to $23.5 million in fiscal 1996 from $15.0
million in fiscal 1995. Other revenue (accessories, consumables, services,
supplies, and other) increased by 33.9% to $23.3 million in fiscal 1996 from
$17.4 million in fiscal 1995. The increased revenue from sales of sterilant,
other consumables, services, accessories, and supplies resulted primarily from
the greater number and higher utilization of installed systems units. In
aggregate, changes of prices of products sold accounted for less than 2% of the
increase in net revenue in fiscal 1996 compared to fiscal 1995.
The cost of products and services sold increased by 41.8% to $33.9 million
in fiscal 1996 from $23.9 million in fiscal 1995. The cost of products and
services as a percentage of net sales was 37.1% in fiscal 1996 versus 37.2% in
fiscal 1995. The decrease was due primarily to lower per unit material costs.
Selling, general, and administrative expenses increased by 40.0% to $28.8
million in fiscal 1996 from $20.6 million in fiscal 1995. Additional costs were
incurred due to increases in personnel, systems, and related expenses to support
increased sales volume. As a percent of net sales, selling, general, and
administrative expenses decreased to 31.6% in fiscal 1996 from 32.0% in fiscal
1995.
Research and development expenses increased by 25.3% to $8.3 million in
fiscal 1996 from $6.6 million in fiscal 1995. The increase was primarily due to
additional product and application development expenditures and increased
activity in the Company's Device Testing Program. Research and development
expenditures as a percentage of net sales decreased to 9.0% in fiscal 1996
compared to 10.3% in fiscal 1995.
Net interest income increased by 19.2% to $756,000 in fiscal 1996 from
$634,000 in fiscal 1995. The increase was primarily due to higher yields on U.S.
Government securities.
As a result of the foregoing factors, income before taxes increased by
51.7% to $21.0 million in fiscal 1996 from $13.9 million in fiscal 1995.
Income taxes increased by 60.8% to $8.2 million in fiscal 1996 from $5.1
million in fiscal 1995.
As a result of the foregoing factors, net income increased by 46.4% to
$12.8 million in fiscal 1996 from $8.7 million in fiscal 1995.
11
<PAGE> 12
FISCAL YEAR 1995 COMPARED TO FISCAL YEAR 1994
Net sales increased by 40.3% to $64.3 million in fiscal 1995 from $45.8
million in fiscal 1994. Sales of STERIS SYSTEM 1 increased by 21.3% to $31.9
million in fiscal 1995 from $26.3 million in fiscal 1994. Sales of STERIS 20
increased by 79.1% to $15.0 million in fiscal 1995 from $8.4 million in fiscal
1994. Other revenue (accessories, consumables, services, and supplies) increased
by 55.8% to $17.4 million in fiscal 1995 from $11.2 million in fiscal 1994. The
increased revenue from sales of sterilant, other consumables, services,
accessories, and supplies resulted primarily from the greater number and higher
utilization of installed STERIS SYSTEM 1 units. In aggregate, changes of prices
of products sold accounted for less than 1% of the increase in net revenue in
fiscal 1995 compared to fiscal 1994.
The cost of products and services sold increased by 33.5% to $23.9 million
in fiscal 1995 from $17.9 million in fiscal 1994. The cost of products and
services as a percentage of net sales was 37.2% in fiscal 1995 versus 39.1% in
fiscal 1994. The decrease was due primarily to lower per unit material and
overhead costs resulting from higher production levels to support increased
sales.
Selling, general, and administrative expenses increased by 31.9% to $20.6
million in fiscal 1995 from $15.6 million in fiscal 1994. Additional costs were
incurred due to increases in personnel, systems, and related expenses to support
increased sales volume. As a percent of net sales, selling, general, and
administrative expenses decreased to 32.0% in fiscal 1995 from 34.0% in fiscal
1994.
Research and development expenses increased by 51.2% to $6.6 million in
fiscal 1995 from $4.4 million in fiscal 1994. The increase was primarily due to
additional product and application development expenditures and increased
activity in the Company's Device Testing Program. Research and development
expenditures as a percentage of net sales increased to 10.3% in fiscal 1995
compared to 9.5% in fiscal 1994.
Net interest income increased by 11.5% to $634,000 in fiscal 1995 from
$570,000 in fiscal 1994. The increase was primarily due to investing in U.S.
Government securities with higher yields.
As a result of the foregoing factors, income before taxes and before the
adoption of Statements of Financial Accounting Standards ("SFAS") No. 109
increased by 62.1% to $13.9 million in fiscal 1995 from $8.6 million in fiscal
1994.
Income taxes increased by 50.4% to $5.1 million in fiscal 1995 from $3.4
million in fiscal 1994. In fiscal 1994, the Company was required to adopt SFAS
No. 109, "Accounting for Income Taxes" in the quarter ended June 30, 1993. This
adjustment of $1.2 million related primarily to the recording of available tax
net operating loss carryforwards which were used by year end.
As a result of the foregoing factors, net income increased by 37.2% to $8.7
million in fiscal 1995 from $6.4 million in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
From its inception through the completion of its initial public offering in
June 1992, the Company was financed primarily through private placements of
equity securities totaling $11.9 million. Redeemable Preferred Shares issued
during that period were converted into Common Shares in connection with the
initial public offering. Net of offering expenses and the payment of $1.6
million of accrued dividends on the Redeemable Preferred Shares, the Company
received approximately $12.2 million from the sale of its Common Shares in the
initial public offering. Net of offering expenses, the Company received
approximately $6.8 million from the sale of 575,000 additional Common Shares in
a second primary public offering on March 2, 1993.
At March 31, 1996, the Company had approximately $9.4 million in cash, cash
equivalents, and marketable securities. At March 31,1996, the Company had a $10
million revolving credit/term loan facility. Interest was at prime or, at the
Company's option, the LIBOR rate plus 100 basis points under an unsecured
revolving credit/term loan facility. Borrowings under the line of credit were
payable over 16 quarters.
12
<PAGE> 13
At March 31, 1996, the Company had accounts receivable of $26.2 million and
$10.7 million in inventory compared to $17.3 million and $4.4 million,
respectively, at March 31, 1995. The increase in accounts receivable was due
primarily to the increased sales volume and an increase in international sales
which generally take longer to collect. The inventory increase was due to
additional product line inventory including EcoCycle 10, SafeCycle 40, and the
various international versions of SYSTEM 1.
Property, plant, and equipment increased from $11.2 million at March 31,
1995 to $19.2 million at March 31, 1996 primarily due to the addition of new
facilities and related equipment to increase production and chemical packaging
capacity.
Product and technology rights increased from $3.3 million at March 31, 1995
to $11.5 million at March 31, 1996 principally due to the acquisition of
technology rights through the purchase of Ecomed.
The Company believes that its cash requirements will increase due to
increased sales requiring more working capital, accelerated research and
development, and potential acquisitions or investments in complementary
businesses. However, the Company believes that its available cash, cash flow
from operations, and sources of credit, will be adequate to satisfy its capital
needs for the foreseeable future.
The overall effects of inflation on the Company's business during the
periods discussed have not been significant. The Company monitors the prices it
charges for its products on an ongoing basis and believes that it will be able
to adjust those prices to take into account future changes in the rate of
inflation.
13
<PAGE> 14
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
STERIS Corporation
We have audited the accompanying consolidated balance sheets of STERIS
Corporation and subsidiaries as of March 31, 1996 and 1995, and the related
consolidated statements of income, shareholders' equity, and cash flows for each
of the three years in the period ended March 31, 1996. Our audits also included
the financial statement schedule listed in the Index at Item 14(a)2. These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of STERIS
Corporation and subsidiaries at March 31, 1996 and 1995, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended March 31, 1996, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.
As discussed in Note H to the consolidated financial statements, effective
April 1, 1993, the Company adopted Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes.
ERNST & YOUNG LLP
Cleveland, Ohio
April 22, 1996
14
<PAGE> 15
STERIS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31
-------------------
1996 1995
------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 158 $ 1,630
Marketable securities................................................ 9,193 13,087
Accounts receivable, less allowance of $350 in 1996 and $238 in
1995.............................................................. 26,201 17,259
Inventories.......................................................... 10,660 4,401
Prepaid expenses and other assets.................................... 6,243 2,652
------- -------
TOTAL CURRENT ASSETS................................................... 52,455 39,029
Property, plant, and equipment, net.................................... 19,237 11,230
Other assets:
Product and technology rights........................................ 11,518 3,302
Other................................................................ 2,157 1,332
------- -------
13,675 4,634
------- -------
TOTAL ASSETS........................................................... $85,367 $54,893
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $10,670 $ 4,765
Accrued expenses and other........................................... 8,697 4,775
------- -------
TOTAL CURRENT LIABILITIES.............................................. 19,367 9,540
Other liabilities...................................................... 3,606 758
------- -------
TOTAL LIABILITIES...................................................... 22,973 10,298
Shareholders' equity:
Serial preferred shares, without par value, 3,000 shares authorized,
no shares outstanding
Common shares, without par value, 30,000 shares authorized; issued
and outstanding shares of 17,944 in 1996 and 17,522 in 1995....... 38,436 33,431
Retained earnings.................................................... 23,958 11,164
------- -------
TOTAL SHAREHOLDERS' EQUITY............................................. 62,394 44,595
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................. $85,367 $54,893
======= =======
</TABLE>
See notes to consolidated financial statements.
15
<PAGE> 16
STERIS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net sales..................................................... $ 91,192 $ 64,272 $ 45,822
Cost of products sold......................................... 33,872 23,895 17,896
-------- -------- --------
GROSS PROFIT.................................................. 57,320 40,377 27,926
Cost and expenses:
Selling, general, and administrative........................ 28,789 20,563 15,585
Research and development.................................... 8,252 6,588 4,358
-------- -------- --------
37,041 27,151 19,943
-------- -------- --------
INCOME FROM OPERATIONS........................................ 20,279 13,226 7,983
Interest income............................................... 756 634 570
-------- -------- --------
INCOME BEFORE INCOME TAXES AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE........................................... 21,035 13,860 8,553
Income taxes.................................................. 8,241 5,124 3,407
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT OF ACCOUNTING CHANGE.......... 12,794 8,736 5,146
Cumulative effect as of April 1, 1993 of change in method of
accounting for income taxes................................. 0 0 1,220
-------- -------- --------
NET INCOME.................................................... $ 12,794 $ 8,736 $ 6,366
======= ======= =======
Earnings per share:
Income before cumulative effect of accounting change........ $ 0.66 $ 0.46 $ 0.28
Cumulative effect of accounting change...................... 0.00 0.00 0.06
-------- -------- --------
NET INCOME.................................................... $ 0.66 $ 0.46 $ 0.34
======= ======= =======
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING USED IN
COMPUTING EARNINGS PER SHARE................................ 19,504 19,008 18,694
======= ======= =======
</TABLE>
See notes to consolidated financial statements.
16
<PAGE> 17
STERIS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
----------------------------
1996 1995 1994
------- -------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income....................................................... $12,794 $ 8,736 $ 6,366
Adjustments to reconcile net income to net cash provided by
operating activities:
Cumulative effect adjustment................................... (1,220)
Depreciation and amortization.................................. 1,765 1,153 699
Deferred income taxes.......................................... (668) (88) 1,415
Other.......................................................... (171) 16 75
Changes in operating assets and liabilities:
Accounts receivable......................................... (9,080) (5,554) (4,870)
Inventories................................................. (6,867) (738) (1,149)
Other assets................................................ (2,532) (103) (833)
Accounts payable............................................ 5,785 1,221 950
Other liabilities........................................... 4,338 393 1,499
------- -------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................ 5,364 5,036 2,932
INVESTING ACTIVITIES
Purchases of property, plant, equipment, and patents............. (10,033) (8,787) (2,675)
Investment in business, net of cash acquired..................... (5,096) (2,500) (889)
Purchases of marketable securities............................... (12,678) (9,242) (26,055)
Proceeds from sales of marketable securities..................... 16,749 13,646 8,371
------- -------- -------
NET CASH USED IN INVESTING ACTIVITIES............................ (11,058) (6,883) (21,248)
FINANCING ACTIVITIES
Payments on notes payable........................................ (600) (150) (313)
Proceeds from exercise of stock options.......................... 1,032 171 446
Tax benefits from exercise of options............................ 3,790 707 1,056
------- -------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES........................ 4,222 728 1,189
------- -------- -------
DECREASE IN CASH AND CASH EQUIVALENTS............................ (1,472) (1,119) (17,127)
Cash and cash equivalents at beginning of period................. 1,630 2,749 19,876
------- -------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....................... $ 158 $ 1,630 $ 2,749
======= ======== =======
Non-cash transactions:
Notes payable related to acquisition........................... $ 400 $ 1,000
</TABLE>
See notes to consolidated financial statements.
17
<PAGE> 18
STERIS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NUMBER RETAINED TOTAL
OF COMMON EARNINGS SHAREHOLDERS'
SHARES SHARES (DEFICIT) EQUITY
------ ------- -------- -------------
<S> <C> <C> <C> <C>
BALANCE AT MARCH 31, 1993............................... 17,070 $30,828 $ (3,938) $26,890
Tax benefit of stock options exercised in prior years --
cumulative effect of accounting change................ 400 400
Tax benefit of stock options exercised.................. 1,056 1,056
Stock options exercised................................. 300 446 446
Net income.............................................. 6,366 6,366
------ ------- ------- -------
BALANCE AT MARCH 31, 1994............................... 17,370 32,730 2,428 35,158
Tax benefits of stock options exercised................. 707 707
Stock options exercised................................. 152 171 171
Unrealized loss on marketable securities, net of tax.... (177) (177)
Net income.............................................. 8,736 8,736
------ ------- ------- -------
BALANCE AT MARCH 31, 1995............................... 17,522 33,431 11,164 44,595
Tax benefits of stock options exercised................. 3,790 3,790
Stock options exercised................................. 422 1,098 1,098
Unrealized gain on marketable securities, net of tax.... 117 117
Net income.............................................. 12,794 12,794
------ ------- ------- -------
BALANCE AT MARCH 31, 1996............................... 17,944 $38,436 $ 23,958 $62,394
====== ======= ======= =======
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 19
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
A. ACCOUNTING POLICIES
STERIS Corporation (the "Company") markets, develops and manufactures
infection prevention systems and related consumables, accessories, and services
for the worldwide healthcare market. It operates in a single business segment
and derives approximately 92.3 percent of its revenues from the domestic market.
CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All intercompany accounts and transactions have been
eliminated upon consolidation.
CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents. Cash and cash
equivalents consist exclusively of interest-bearing savings accounts and U.S.
government securities.
MARKETABLE SECURITIES
At April 1, 1994, the Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity
Securities. The Company has classified all investments in marketable securities
as "available-for-sale." Marketable securities represent short-term investments,
exclusively United States government agency securities, with a gross unrealized
holding loss as of March 31, 1996 of $95.
INVENTORIES
Inventories are stated at the lower of cost or market with cost generally
determined by the first-in, first-out method.
INTANGIBLE ASSETS
Costs incurred to obtain product technology rights, including patents, have
been capitalized and are being amortized over their estimated useful lives of
five to seventeen years using the straight-line method. During the fourth
quarter of 1996, the Company's acquisition of Ecomed, Inc. (see Note J) resulted
in an increase in intangible assets of approximately $8,000. Accumulated
amortization of product and technology rights was $166 and $118 at March 31,
1996 and 1995, respectively.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Depreciation is computed
by the straight-line method. The cost of buildings is depreciated over forty
years and machinery, equipment, and furniture principally over three to seven
years.
In March 1995, SFAS No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of, was issued. SFAS No. 121
requires long-lived assets to be reviewed for impairment losses whenever events
or changes in circumstances indicate the carrying amount may not be recovered
through future net cash flows generated by the assets. The Company must adopt
SFAS No. 121 in 1997 and believes the effect of adoption will not be material.
19
<PAGE> 20
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
REVENUE RECOGNITION
The Company recognizes revenue principally at the time of shipment of
product or delivery of service to the Customer.
CREDIT CONCENTRATION
The Company performs periodic credit evaluations of its Customers'
financial condition and generally does not require collateral on sales. The
Company principally sells to health care institutions with no one Customer
representing a significant percentage of sales.
EARNINGS PER SHARE
The Company uses the treasury stock method to determine the equivalent
share amounts for outstanding stock options which, when added to the weighted
average common shares outstanding, were used to calculate earnings per share.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions in certain circumstances that affect the amounts reported in the
accompanying consolidated financial statements and notes. Actual results could
differ from these estimates.
B. INVENTORIES
The components of inventories consisted of the following:
<TABLE>
<CAPTION>
MARCH 31
-------------------
1996 1995
------- -------
<S> <C> <C>
Raw materials............................................ $ 5,980 $ 3,136
Work in process.......................................... 1,031 364
Finished goods........................................... 3,649 901
------- -------
$10,660 $ 4,401
------- -------
</TABLE>
C. PROPERTY, PLANT, AND EQUIPMENT
Investment in property, plant, and equipment consisted of the following:
<TABLE>
<CAPTION>
MARCH 31
-------------------
1996 1995
------- -------
<S> <C> <C>
Land, building, and leasehold improvements............... $12,645 $ 6,903
Research, development, and manufacturing equipment....... 3,850 2,903
Furniture, fixtures, and equipment....................... 6,727 3,835
------- -------
23,222 13,641
Accumulated depreciation................................. 3,985 2,411
------- -------
$19,237 $11,230
======= =======
</TABLE>
20
<PAGE> 21
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
D. FINANCING ARRANGEMENTS
The Company has a $10,000 revolving line of credit with a bank under which
draws may be made through May 1998. The unsecured line bears interest at prime
or, at the borrower's option, the LIBOR rate plus 100 basis points. The line has
certain operational conditions and financial ratio covenants. The Company is in
compliance with all such covenants at March 31, 1996. No borrowings on the line
are outstanding as of March 31, 1996.
The Company leases office and production space and certain equipment under
noncancelable operating lease agreements. Expenses related to operating leases
were $902, $689, and $684 during the years ended March 31, 1996, 1995, and 1994,
respectively. Future commitments under operating leases are $928 in 1997, $715
in 1998, $708 in 1999, $333 in 2000, $224 in 2001, and $756 thereafter. Certain
leases have renewal clauses at the option of the Company.
E. ACCRUED EXPENSES AND OTHER
Accrued expenses and other consisted of the following:
<TABLE>
<CAPTION>
MARCH 31
------------------
1996 1995
------- -------
<S> <C> <C>
Accrued warranty and extended service costs.................... $ 2,334 $ 1,668
Accrued income taxes........................................... 2,722 181
Accrued compensation........................................... 2,421 1,964
Notes payable related to investment in businesses.............. 100 600
Other.......................................................... 1,120 362
------ ------
$ 8,697 $ 4,775
====== ======
</TABLE>
F. SHAREHOLDERS' EQUITY
On July 25, 1995, the Company announced a 2-for-1 stock split by means of a
100% stock dividend on STERIS Common Shares. The stock split was effective
August 24, 1995, to shareholders of record on August 7, 1995. The net income per
common share and the weighted average number of common shares outstanding as
well as number of shares issued and outstanding for all periods shown on the
Consolidated Financial Statements and footnotes have been adjusted to reflect
this stock split.
21
<PAGE> 22
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
G. STOCK OPTIONS
The Company provides for the granting of options to eligible employees and
certain nonemployee directors of the Company for the purchase of common shares.
Information regarding stock options is as follows:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
----------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Options outstanding at beginning of period........... 2,358 1,982 1,990
Granted during period................................ 332 528 330
Canceled during period............................... (108) (38)
Exercised during period (at $.46 to $19.13 per
share)............................................. (422) (152) (330)
------ ------ ------
OPTIONS OUTSTANDING AT END OF PERIOD................. 2,160 2,358 1,982
====== ====== ======
Options price range at end of period................. $ .46 $ .46 $ .46
to to to
$26.63 $13.13 $10.06
Options exercisable at end of period................. 1,406 1,550 1,530
Options available for grant at end of period......... 943 1,166 496
</TABLE>
In October 1995, SFAS No. 123, Accounting for Stock-Based Compensation, was
issued to become effective for fiscal years beginning after December 15, 1995.
Under the new rules, companies will be required to provide additional footnote
disclosures relating to stock-based awards. Additionally, companies are
encouraged, but not required, to recognize expense for stock-based awards based
on their fair value on the date of grant. As permitted by SFAS No. 123, the
Company intends to continue to account for such compensation using the intrinsic
value method in accordance with Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees ("APB No. 25") in accounting for its
employee stock. Under APB No. 25, if the option is fixed and the exercise price
of the underlying stock equals the market price on the date of the grant, no
compensation expense is recognized. Adoption of the new standard in this form
will have no impact on reported income in future years. Pro forma disclosures as
required by this pronouncement will apply to stock-based awards granted on or
after April 1, 1995 and will first be disclosed in financial statements for
fiscal 1997.
H. INCOME TAXES
Effective April 1, 1993, the Company adopted SFAS No. 109, Accounting for
Income Taxes, and recorded a cumulative effect adjustment of $1,220 in the
income statement. The adjustment consisted mainly of the recognition of tax
benefits for $4,300 of tax net operating loss (NOL) carryforwards. In addition,
the Company recorded a $400 credit to Common Shares for the tax effect of stock
options exercised in the previous fiscal year. The Company did not restate prior
periods. Previously the Company followed the provisions of SFAS No. 96.
22
<PAGE> 23
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The Company paid income taxes of $2,417 in 1996 and $4,800 in 1995.
Income taxes consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
----------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Taxes currently payable-federal...................... $4,070 $3,661 $ 581
Taxes currently payable-state........................ 1,049 844 355
Deferred tax expense-federal......................... (668) (88) (46)
Taxes allocated to contributed capital for stock
options exercised.................................. 3,790 707 1,056
Tax effect of NOL realized........................... 1,461
------ ------ ------
TAX EXPENSE.......................................... $8,241 $5,124 $3,407
====== ====== ======
</TABLE>
The reasons for the difference between income tax expense and the amount
computed by applying the statutory federal income tax rate to income before
income taxes, are as follows:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
----------------------------
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Tax expense at federal statutory rate................ 35% 35% 34%
State, net of federal benefit........................ 3 5 4
Research and development credits..................... (2) (1)
Other................................................ 1 (1) 3
------ ------ ------
EFFECTIVE TAX RATE................................... 39% 37% 40%
====== ====== ======
</TABLE>
Deferred taxes consisted of the following:
<TABLE>
<CAPTION>
MARCH 31
---------------------
1996 1995
------- -------
<S> <C> <C>
Deferred tax assets, principally for accruals and net
operating loss carryforwards............................. $ 2,925 $ 780
Deferred tax liabilities, principally for product and
technology rights........................................ (3,403) (392)
Valuation allowance........................................ (555)
------- -------
NET DEFERRED TAX ASSETS (LIABILITIES)...................... $(1,033) $ 388
======= =======
</TABLE>
The valuation allowance relates to net operating loss carryforwards of
approximately $1,517 which are related to the Company's start-up foreign
operations in several countries.
23
<PAGE> 24
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
I. REVENUES BY PRINCIPAL PRODUCTS
The following table shows revenues attributable to the Company's principal
products and associated percentages of net revenue for the last three fiscal
years:
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
----------------------------------------------------------
1996 1995 1994
---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Systems....................... $44,401 48.7% $31,929 49.7% $26,315 57.5%
Sterilant and decontaminant... 23,495 25.8 14,969 23.3 8,358 18.2
Consumables, services,
supplies, and accessories... 23,093 25.3 15,227 23.7 10,517 22.9
Other......................... 203 .2 2,147 3.3 632 1.4
------- ----- ------- ----- ------- -----
$91,192 100.0% $64,272 100.0% $45,822 100.0%
======= ===== ======= ===== ======= =====
</TABLE>
J. ACQUISITIONS
Effective January 8, 1996, the Company acquired all of the remaining
capital stock of Ecomed, Inc., an Indiana corporation ("Ecomed") for cash and
the assumption of notes of approximately $4,500. Prior to the acquisition, the
Company owned a minority interest in Ecomed. Ecomed previously worked jointly
with the Company under a business development agreement, to produce EcoCycle
10TM, a low cost biohazardous waste destruction and decontamination system for
use at or near the site of patient care. With the acquisition, the Company
obtained all rights on a worldwide basis to Ecomed's proprietary technology and
to the manufacture and distribution of EcoCycle 10. The acquisition amount was
treated as a purchase and the results of Ecomed's operations were not material
to the Company for 1996.
On August 22, 1994, the Company purchased Medical & Environmental Designs,
Inc. ("MED Inc.") for approximately $2,500 of cash and notes. MED Inc. was a
development stage company. MED Inc. had developed a proprietary patented system
and related technology for the safe collection and disposal of blood and other
potentially infectious fluid waste generated in surgical and diagnostic
procedures. The results of MED Inc.'s operations were not material to the
Company for 1995. In connection with the purchase of MED Inc., the Company
agreed to pay contingent amounts based upon future revenues of acquired product
lines. Through 1999, payments are equal to 5 percent of the quarterly revenues
that are in excess of $500. For the years 2000 through 2010, payments are equal
to 5 percent of quarterly revenues. The total of the contingent payments is
limited to $9,500.
K. SUBSEQUENT EVENT -- MERGER AGREEMENT AND RELATED FINANCING
On December 16, 1995, the Company and AMSCO International, Inc. ("AMSCO")
entered into a Merger Agreement pursuant to which a newly-formed, wholly-owned
subsidiary of the Company will be merged with and into AMSCO, with AMSCO being
the corporation surviving the merger and becoming a wholly-owned subsidiary of
the Company. Holders of AMSCO common stock and holders of AMSCO unexercised
options, will, subject to the terms and conditions of the merger agreement, be
entitled to receive 0.46 Company common share for each outstanding share of
AMSCO common stock and 0.46 Company unexercised option for each AMSCO
unexercised option, respectively. The conversion ratio of 0.46 is not subject to
change based upon any changes in market prices of either the Company's common
shares or shares of AMSCO common stock.
The transaction will be accounted for as a pooling of interests for
accounting and financial reporting purposes and is intended to be a tax-free
reorganization within the meaning of Section 368 of the Internal
24
<PAGE> 25
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Revenue Code of 1986, as amended. The Merger Agreement is subject to certain
regulatory approvals, as well as approval by the shareholders of both the
Company and AMSCO. The Company has received a commitment of $125,000 of
borrowing capacity from several banks, subject to the successful completion of
the above merger.
As provided in the Merger Agreement, certain actions by either the Company
or AMSCO may result in the payment of a $20 million termination fee to the other
party. The Merger Agreement also provides that the Company or AMSCO may be
required to reimburse the other party for out-of-pocket expenses and fees
incurred should either party's shareholders fail to approve the Merger
Agreement, or should other specified circumstances occur. In addition, in
certain circumstances, the Company is provided an option to purchase 17.6
percent of the outstanding shares of AMSCO common stock, at prices specified in
a stock option agreement, dated December 16, 1995, between the Company and
AMSCO.
The Merger Agreement is described in the Company's Form S-4 Registration
Statement relating to the merger, which was declared effective by the Securities
and Exchange Commission on April 1, 1996.
The Merger Agreement when completed, will result in all previous years
being restated as if the two companies had always been combined. Unaudited pro
forma information combining STERIS's March 31, 1996 results with AMSCO's
December 31, 1995 results follow:
<TABLE>
<CAPTION>
1996
--------------
(In thousand
except per
share amounts)
<S> <C>
Revenues............................................... $545,268
Net income............................................. $ 44,701
Earnings per share..................................... $ 1.29
</TABLE>
25
<PAGE> 26
STERIS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
I. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31 DECEMBER 31 SEPTEMBER 30 JUNE 30
- ---------------------------------------------------- -------- ----------- ------------ -------
<S> <C> <C> <C> <C>
1996
- ----
Net sales........................................... $25,624 $24,156 $ 21,594 $19,818
Gross profit........................................ 16,374 15,072 13,430 12,444
Percentage of sales................................. 64% 62% 62% 63%
NET INCOME.......................................... $ 3,901 $ 3,472 $ 2,945 $ 2,476
======= ========= ========== =======
Earnings per share: Net income...................... $ .20 $ .18 $ .15 $ .13
======= ========= ========== =======
Market price:
High.............................................. $ 36.50 $ 45.00 $ 43.00 $ 28.50
Low............................................... 28.88 28.75 22.88 18.25
1995
- ----
Net sales........................................... $19,550 $16,520 $ 15,158 $13,044
Gross profit........................................ 12,277 10,443 9,448 8,209
Percentage of sales................................. 63% 63% 62% 63%
NET INCOME.......................................... $ 2,660 $ 2,355 $ 1,944 $ 1,777
======= ========= ========== =======
Earnings per share: Net income...................... $ .14 $ .13 $ .10 $ .09
======= ========= ========== =======
Market price:
High.............................................. $ 22.13 $ 20.00 $ 13.38 $ 14.00
Low............................................... 14.88 12.38 8.38 9.00
</TABLE>
26
<PAGE> 27
STERIS CORPORATION AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
COL. A COL. B COL. C COL. D COL. E COL. F
- -------------------------------------- ------------ ----------- ------------ ------------- ----------
ADDITIONS
--------------------------
CHARGES TO BALANCE AT
BEGINNING OF COSTS AND CHARGES TO END OF
DESCRIPTION PERIOD EXPENSES(1) OTHER ACCTS. DEDUCTIONS(2) PERIOD
- -------------------------------------- ------------ ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1996
Deducted from asset accounts:
Allowance for doubtful
accounts......................... $238 $ 112 $0 $ 0 $350
==== ==== == === ====
Year ended March 31, 1995
Deducted from asset accounts:
Allowance for doubtful
accounts......................... $234 $ 65 $0 $61 $238
==== ==== == === ====
Year ended March 31, 1994
Deducted from asset accounts:
Allowance for doubtful
accounts......................... $132 $ 102 $0 $ 0 $234
==== ==== == === ====
</TABLE>
- ---------------
(1) Charges to costs and expenses during the periods reflect an increase in
allowances to support larger receivable balances.
(2) Amounts were deducted due to Customers' inability to pay.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE.
27
<PAGE> 28
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company incorporates herein by reference the information appearing
under the caption "Board of Directors" of the Company's definitive Proxy
Statement to be filed with the Securities and Exchange Commission on or about
June 25, 1996.
Executive officers of the Company serve for a term of one year from the
date of election to the next organizational meeting of the Board of Directors
and until their respective successors are elected and qualified, except in the
case of death, resignation, or removal. Information concerning executive
officers of the Company is contained in Part I of this report under the caption
"Executive Officers of the Registrant."
ITEM 11. EXECUTIVE COMPENSATION
The Company incorporates herein by reference the information appearing
under the caption "Compensation of Executive Officers" of the Company's
definitive Proxy Statement to be filed with the Securities and Exchange
Commission on or about June 25, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company incorporates herein by reference the information appearing
under the caption "Ownership of Voting Securities" of the Company's definitive
Proxy Statement to be filed with the Securities and Exchange Commission on or
about June 25, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions between related parties during the
year ended March 31, 1996.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K
LIST OF CONSOLIDATED FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULE
(a)(1) The following consolidated financial statements of STERIS
Corporation and subsidiaries are included in Item 8:
Consolidated Balance Sheets -- March 31, 1996 and 1995
Consolidated Statements of Income -- Years ended March 31, 1996, 1995,
and 1994.
Consolidated Statements of Cash Flows -- Years ended March 31, 1996,
1995, and 1994.
Consolidated Statements of Shareholders' Equity -- Years ended March
31, 1996, 1995, and 1994.
Notes to Consolidated Financial Statements -- March 31, 1996.
(a)(2) The following consolidated financial statement schedule of STERIS
Corporation and subsidiaries is included in Item 8:
Schedule II -- Valuation and Qualifying Accounts.
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore, have been
omitted.
28
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- -------- -------------------------------------------------------------------------------------
<S> <C>
3.1 1992 Amended Articles of Incorporation of STERIS Corporation, amended as of May 13,
1996 (filed as Exhibit 4.2 to the Registration Statement on Form S-3 filed June 21,
1996, and incorporated herein by reference).
3.2 1992 Amended Regulations of STERIS Corporation (filed as Exhibit 3(b).4(b) to Form
10-Q filed for the quarter ended June 30, 1992, and incorporated herein by
reference).
4.1 Specimen form of Common Stock Certificate (filed as Exhibit 4.1 to Amendment No. 1 to
the Registration Statement on Form S-1 filed April 30, 1992, and incorporated herein
by reference).
4.2 Indenture governing the 4 1/2%/6 1/2% Step-Up Convertible Subordinated Debentures due
2002, including the form of 4 1/2%/6 1/2% Step-Up Convertible Debenture due 2002
(incorporated by reference to Exhibit 2.1 of the Registration Statement on Form 8-A
of AMSCO International, Inc., filed on September 10, 1992 and amended on October 16,
1992).
4.3 First Supplemental Indenture, dated May 13, 1996 among AMSCO International, Inc.,
STERIS Corporation and The Bank of New York.
10.1 Registration Rights Agreement, dated as of April 26, 1988 (filed as Exhibit 10.1 to
the Registration Statement on Form S-1 filed March 31, 1992, and incorporated herein
by reference).
10.2 First Amendment to Registration Rights Agreement, dated as of March 9, 1989 (filed as
Exhibit 10.2 to the Registration Statement on Form S-1 filed March 30, 1992, and
incorporated herein by reference).
10.3 Second Amendment to Registration Rights Agreement, dated as of May 13, 1991 (filed as
Exhibit 10.3 to the Registration Statement on Form S-1 filed March 30, 1992, and
incorporated herein by reference).
10.4 Amended Non-Qualified Stock Option Plan (filed as Exhibit 10.4 to Amendment No. 1 to
the Registration Statement on Form S-1 filed April 23, 1992, and incorporated herein
by reference).
10.5 Amended Non-Qualified Stock Option Agreement, dated April 26, 1988, between STERIS
Corporation and Bill R. Sanford (filed as Exhibit 10.5 to the Registration Statement
on Form S-1 filed March 30, 1992, and incorporated herein by reference).
10.6 STERIS Corporation 1994 Equity Compensation Plan (filed as Exhibit 99 to the
Registration Statement on Form S-8 filed April 21, 1995, and incorporated herein by
reference).
10.7 STERIS Corporation 1994 Nonemployee Directors Equity Compensation Plan (filed as
Exhibit 99 to the Registration Statement on Form S-8 filed April 21, 1995, and
incorporated herein by reference).
10.8 Management Incentive Compensation Plan FY 1996.
10.9.1 Lease Agreement, dated May 14, 1991, between D.E. Investments and STERIS Corporation
(filed as Exhibit 10.7 to the Registration Statement on Form S-1 filed March 30,
1992, and incorporated herein by reference).
10.9.2 Extension and modification of lease, dated May 13, 1994, between Developers
Diversified Realty Corporation (successor in interest to D.E. Investments) and STERIS
Corporation (filed as Exhibit 10.9.2 to the Annual Report on Form 10-K for the fiscal
year ended March 31, 1995, and incorporated herein by reference).
10.10 Revolving Credit/Term Loan Facility, dated May 5, 1995 between STERIS Corporation and
Bank One Cleveland, N.A. (filed as Exhibit 10.10 to the Annual Report on Form 10-K
for the fiscal year ended March 31, 1995, and incorporated herein by reference).
10.11 AMSCO International, Inc. Stock Option Plan (incorporated by reference to Exhibit 4.1
to the Registration Statement of AMSCO International, Inc. on Form S-8, Registration
No. 33-79566, filed on June 2, 1994).
10.12 Form of grant of Incentive Stock Option under AMSCO International, Inc. Stock Option
Plan (incorporated by reference to Exhibit 10.8 to the AMSCO International, Inc.
Annual Report on Form 10-K for the fiscal year ended December 31, 1991).
</TABLE>
29
<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- -------- -------------------------------------------------------------------------------------
<S> <C>
10.13 Form of grant of Non-Qualified Stock Option under the AMSCO International, Inc. Stock
Option Plan (incorporated by reference to Exhibit 10.9 to the AMSCO International,
Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 1991).
10.14 Credit Agreement, dated May 13, 1996, among STERIS Corporation, various financial
institutions and KeyBank National Association, as Agent.
11.1 STERIS Corporation Net Income per Common Share.
21.1 STERIS Corporation subsidiaries.
23.1 Consent of Ernst & Young LLP.
24 Powers of Attorney of the directors and certain officers of STERIS Corporation.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
No current reports on Form 8-K were filed by the corporation during the
quarter ended March 31, 1996.
30
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the date indicated.
STERIS CORPORATION
/s/ MICHAEL A. KERESMAN, III
--------------------------------------
Michael A. Keresman, III
Senior Vice President, Chief Financial
Officer,
and Secretary -- June 24, 1996
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, this Report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date indicated.
BILL R. SANFORD, Chairman of the Board of Directors, President, and Chief
Executive Officer (Principal Executive Officer); MICHAEL A. KERESMAN, III,
Senior Vice President, Chief Financial Officer, and Secretary (Principal
Financial Officer and Principal Accounting Officer); RAYMOND A. LANCASTER,
Director; THOMAS J. MAGULSKI, Director; J.B. RICHEY, Director; JERRY E.
ROBERTSON, Director; FRANK E. SAMUEL, JR., Director; LOYAL W. WILSON, Director;
and RUSSELL L. CARSON, Director.
STERIS CORPORATION
/s/ MICHAEL A. KERESMAN, III
--------------------------------------
Michael A. Keresman, III
Attorney-in-Fact
June 24, 1996
31
<PAGE> 32
<TABLE>
<CAPTION>
PAGINATION
BY
SEQUENTIAL
NUMBERING
EXHIBIT NUMBER EXHIBIT DESCRIPTION SYSTEM
-------------- ------------------------------------------------------------------- ---------
<C> <S> <C>
3.1 1992 Amended Articles of Incorporation of STERIS Corporation,
amended as of May 13, 1996 (filed as Exhibit 4.2 to the
Registration Statement on Form S-3 filed June 21, 1996, and
incorporated herein by reference).................................. *
3.2 1992 Amended Regulations of STERIS Corporation (filed as Exhibit
3(b).4(b) to Form 10-Q filed for the quarter ended June 30, 1992,
and incorporated herein by reference).............................. *
4.1 Specimen form of Common Stock Certificate (filed as Exhibit 4.1 to
Amendment No. 1 to the Registration Statement on Form S-1 filed
April 30, 1992, and incorporated herein by reference).............. *
4.2 Indenture governing the 4 1/2%/6 1/2% Step-Up Convertible
Subordinated Debentures due 2002, including the form of
4 1/2%/6 1/2% Step-Up Convertible Debenture due 2002 (incorporated
by reference to Exhibit 2.1 of the Registration Statement on Form
8-A of AMSCO International, Inc., filed on September 10, 1992 and
amended on October 16, 1992)....................................... *
4.3 First Supplemental Indenture, dated May 13, 1996 among AMSCO
International, Inc., STERIS Corporation and The Bank of New York... *
10.1 Registration Rights Agreement, dated as of April 26, 1988 (filed as
Exhibit 10.1 to the Registration Statement on Form S-1 filed March
31, 1992, and incorporated herein by reference).................... *
10.2 First Amendment to Registration Rights Agreement, dated as of March
9, 1989 (filed as Exhibit 10.2 to the Registration Statement on
Form S-1 filed March 30, 1992, and incorporated herein by
reference)......................................................... *
10.3 Second Amendment to Registration Rights Agreement, dated as of May
13, 1991 (filed as Exhibit 10.3 to the Registration Statement on
Form S-1 filed March 30, 1992, and incorporated herein by
reference)......................................................... *
10.4 Amended Non-Qualified Stock Option Plan (filed as Exhibit 10.4 to
Amendment No. 1 to the Registration Statement on Form S-1 filed
April 23, 1992, and incorporated herein by reference).............. *
10.5 Amended Non-Qualified Stock Option Agreement, dated April 26, 1988,
between STERIS Corporation and Bill R. Sanford (filed as Exhibit
10.5 to the Registration Statement on Form S-1 filed March 30,
1992, and incorporated herein by reference)........................ *
10.6 STERIS Corporation 1994 Equity Compensation Plan (filed as Exhibit
99 to the Registration Statement on Form S-8 filed April 21, 1995,
and incorporated herein by reference).............................. *
10.7 STERIS Corporation 1994 Nonemployee Directors Equity Compensation
Plan (filed as Exhibit 99 to the Registration Statement on Form S-8
filed April 21, 1995, and incorporated herein by reference)........ *
10.8 Management Incentive Compensation Plan FY 1996..................... *
10.9.1 Lease Agreement, dated May 14, 1991, between D.E. Investments and
STERIS Corporation (filed as Exhibit 10.7 to the Registration
Statement on Form S-1 filed March 30, 1992, and incorporated herein
by reference)...................................................... *
</TABLE>
32
<PAGE> 33
<TABLE>
<CAPTION>
PAGINATION
BY
SEQUENTIAL
NUMBERING
EXHIBIT NUMBER EXHIBIT DESCRIPTION SYSTEM
-------------- ------------------------------------------------------------------- ---------
<C> <S> <C>
10.9.2 Extension and modification of lease, dated May 13, 1994, between
Developers Diversified Realty Corporation and STERIS Corporation
(filed as Exhibit 10.9.2 to the Annual Report on Form 10-K for the
fiscal year ended March 31, 1995, and incorporated herein by
reference)......................................................... *
10.10 Revolving Credit/Term Loan Facility, dated May 5, 1995 between
STERIS Corporation and Bank One Cleveland, N.A. (filed as Exhibit
10.10 to the Annual Report on Form 10-K for the fiscal year ended
March 31, 1995, and incorporated herein by reference).............. *
10.11 AMSCO International, Inc. Stock Option Plan (incorporated by
reference to Exhibit 4.1 to the Registration Statement of AMSCO
International, Inc. on Form S-8, Registration No. 33-79566, filed
on June 2, 1994)................................................... *
10.12 Form of grant of Incentive Stock Option under AMSCO International,
Inc. Stock Option Plan (incorporated by reference to Exhibit 10.8
to the AMSCO International, Inc. Annual Report on Form 10-K for the
fiscal year ended December 31, 1991)............................... *
10.13 Form of grant of Non-Qualified Stock Option under the AMSCO
International, Inc. Stock Option Plan (incorporated by reference to
Exhibit 10.9 to the AMSCO International, Inc. Annual Report on Form
10-K for the fiscal year ended December 31, 1991).................. *
10.14 Credit Agreement, dated May 13, 1996, among STERIS Corporation,
various financial institutions and KeyBank National Association, as
Agent.............................................................. *
11.1 STERIS Corporation Net Income per Common Share..................... *
21.1 STERIS Corporation subsidiaries.................................... *
23.1 Consent of Ernst & Young LLP....................................... *
24 Powers of Attorney of the directors and certain officers of STERIS
Corporation........................................................ *
27 Financial Data Schedule............................................ *
</TABLE>
33
<PAGE> 1
EXHIBIT 4.3
FIRST SUPPLEMENTAL INDENTURE, dated as of May 13, 1996, among
AMSCO INTERNATIONAL, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware, having its principal office at Two
Chatham Center, Suite 1100, 112 Washington Place, Pittsburgh, Pennsylvania 15219
(the "Company"), STERIS CORPORATION, a corporation duly organized and validly
existing under the laws of the State of Ohio, having its principal office at
5960 Heisley Road, Mentor, Ohio 44060 ("STERIS"), and THE BANK OF NEW YORK, a
banking corporation duly organized and validly existing under the laws of the
State of New York, as Trustee (the "Trustee").
R E C I T A L S
WHEREAS, the Company has heretofore executed and delivered to the
Trustee a certain Indenture, dated as of October 15, 1992 (the "Indenture"),
providing for the issuance by the Company of $100,000,000 principal amount of
its 4 1/2% 6 1/2% Step-Up Convertible Subordinated Debentures due 2002 (the
"Securities");
WHEREAS, pursuant to a Restated Agreement and Plan of Merger dated
as of December 16, 1995 and restated as of March 28, 1996 (the "Merger
Agreement"), among STERIS, STERIS Acquisition Corporation, a newly-formed
wholly-owned subsidiary of STERIS ("STERIS Acquisition") and the Company, STERIS
Acquisition is merging with and into the Company (the "Merger") effective May
13, 1996 (or on such other date as the parties may agree) with the Company being
the survivor of the Merger and becoming a wholly-owned subsidiary of STERIS;
WHEREAS, Section 11.16 of the Indenture provides that if the
Company is a party to a merger which reclassifies or changes its outstanding
Common Stock, the successor corporation shall enter into a supplemental
indenture which provides for the conversion of the Securities;
WHEREAS, Section 9.01 of the Indenture provides that the Company
and the Trustee may enter into a supplemental indenture in a form satisfactory
to the Trustee without notice to or consent of any Securityholder in order to
comply with the provisions of Section 11.16 of the Indenture and to make any
other change that does not adversely affect the rights of any Securityholder;
and
WHEREAS, all things necessary to authorize the assumption by
STERIS as a joint and several obligor with the Company of the Company's
obligations under the Indenture and to make this First Supplemental Indenture,
when executed by the parties hereto, a valid and binding supplement to the
Indenture have been done and performed.
NOW, THEREFORE, for and in consideration of the premises and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby mutually covenant and agree as
follows:
SECTION 1. ASSUMPTION OF OBLIGATIONS. STERIS hereby expressly
assumes as a joint and several obligor with the Company, from and after the
Effective Time
<PAGE> 2
(as defined in the Merger Agreement), the due and punctual payment of the
principal of and interest on all the Securities and the performance of every
covenant of the Indenture on the part of the Company to be performed or
observed. The Holders of the Outstanding Securities as of the date hereof shall
have the right hereafter to receive securities of STERIS in exchange for such
Securities with a Market Value equal to the principal amount of such Securities.
SECTION 2. CONVERSION PRIVILEGE. Sections 11.01 through 11.15 of
the Indenture providing for the conversion of the Securities into Common Stock
of the Company are hereby replaced in their entirety by the following privilege
of conversion of Securities into STERIS Common Shares, without par value
("STERIS Common Shares" or "Common Shares"). As of the date hereof, the Holders
of the Securities shall have the right hereafter to convert such Securities into
STERIS Common Shares, at any time during the period stated in paragraph 8 of the
Securities. The number of STERIS Common Shares issuable upon conversion of the
Securities by a Holder is determined by dividing the principal amount to be
converted by the conversion price in effect on the conversion date, rounding the
result to the nearest 1/100th of a share.
The initial conversion price is $65.43 principal amount per STERIS
Common Share. The conversion price is subject to adjustment in accordance with
(e) through (j) below.
A Holder may convert a portion of a Security if the portion is
$1,000 or a whole multiple of $1,000. Provisions of the Indenture and this First
Supplemental Indenture that apply to conversion of all of a Security also apply
to conversion of a portion of it.
(a) CONVERSION PROCEDURE. To convert a Security a Holder must
satisfy the requirements in paragraph 8 of the Securities. The date on which the
Holder satisfies all those requirements is the conversion date. As soon as
practicable, STERIS shall deliver to the Holder through the Conversion Agent a
certificate for the number of whole Common Shares issuable upon the conversion
and a check in lieu of any fractional share that would otherwise be issued. The
person in whose name the certificate is registered shall be treated as a
shareholder of record on and after the conversion date.
Except as provided below, no adjustment will be made on conversion
of a Security for interest accrued thereon or for dividends on Common Shares
issued on conversion. STERIS's delivery to the Holder of the fixed number of
Common Shares (and any cash in lieu of fractional shares) into which the
Security is convertible shall be deemed to satisfy the obligation of STERIS and
the Company to pay the principal amount of the Security and all accrued interest
and original issue discount that has not previously been paid. The Common Shares
so delivered shall be treated as issued first in payment of accrued interest and
original issue discount and then in payment of principal. Thus, accrued interest
and original issue discount shall be treated as paid rather than cancelled,
extinguished or forfeited. If a Security is surrendered for conversion after the
close of business on any regular record date for payment of interest and before
the opening of business on the
-2-
<PAGE> 3
corresponding interest payment date, then (i) notwithstanding such conversion,
the interest payable on such interest payment date will be paid in cash to the
Person in whose name the Security is registered at the close of business on such
record date, and (ii) (other than a Security or a portion of a Security that has
been called for redemption on a Redemption Date occurring either (x) during such
period or (y) after such period, but with respect to which the last day on which
a Security may be converted occurs during such period) when so surrendered for
conversion, the Security must be accompanied by payment of an amount equal to
the interest payable on such interest payment date. The interest payment with
respect to a Security (or portion of a Security) called for redemption on a
Redemption Date occurring on a date during the period after the close of
business on a date that would be any regular record date (if a call for
redemption had not been made) next preceding a date that would be any interest
payment date (if a call for redemption had not been made) to the close of
business on the fifth day after the corresponding interest payment date and
converted during such period, shall be payable in cash on such interest payment
date to the Holder of such Security at the close of business on such regular
record date; the Holder shall not be required to pay an amount equal to the
interest payable on such interest payment date upon conversion except under the
circumstances in which (1) the Holder converts the Security after the close of
business on the regular record date for such interest payment and before the
opening of business on such interest payment date and (2) the last date on which
the Security may be converted occurs on or after such interest payment date. A
Holder may convert a portion of a Security if the portion is $1,000 principal
amount or an integral multiple thereof.
If a Holder converts more than one Security at the same time, the
number of full shares issuable upon the conversion shall be based on the total
principal amount of the Securities converted.
Upon surrender of a Security that is converted in part the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unconverted portion of the Security surrendered.
If the last day on which a Security may be converted is a Legal
Holiday in a place where the Conversion Agent is located, the Security may be
surrendered to that Conversion Agent on the next succeeding day that is not a
Legal Holiday.
In the event that any Holder pays any amount to the Trustee as
Conversion Agent pursuant to this Section the Trustee shall promptly pay such
amount to STERIS or the Company.
(b) FRACTIONAL SHARES. STERIS will not issue a fractional Common
Share upon conversion of a Security. Instead STERIS will deliver its check for
the current market value of the fractional share. The current market value of a
fraction of a share is determined as follows: Multiply the Closing Price on the
business day next preceding the date of conversion of a whole Common Share by
the fraction. Round the result to the nearest cent.
-3-
<PAGE> 4
(c) TAXES ON CONVERSION. If a Holder of a Security converts it,
STERIS or the Company shall pay any documentary, stamp or similar issue or
transfer tax due on the issue of Common Shares upon the conversion. However, the
Holder shall pay any such tax which is due because the shares are issued in a
name other than the Holder's name.
(d) STERIS TO PROVIDE COMMON SHARES. STERIS shall reserve out of
its authorized but unissued Common Shares or its Common Shares held in treasury
enough Common Shares to permit the conversion of all of the Securities.
All Common Shares which may be issued upon conversion of the
Securities shall be validly issued, fully paid and non-assessable.
STERIS and the Company will endeavor to comply with all securities
laws regulating the offer and delivery of the Common Shares upon conversion of
Securities and will endeavor to list such shares on The National Association of
Securities Dealers Automated Quotation National Market ("NASDAQ National
Market").
(e) ADJUSTMENT FOR CHANGE IN COMMON SHARES. If STERIS:
1. pays a dividend or makes a distribution on its Common Shares in
the form of its Common Shares;
2. subdivides its outstanding Common Shares into a greater number
of shares;
3. combines its outstanding Common Shares into a smaller number of
shares;
4. pays a dividend or makes a distribution on its Common Shares in
the form of preferred shares; or
5. issues by reclassification of its Common Shares any Common or
Preferred Shares,
then the conversion privilege and the conversion price in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of Common Shares which he would have
owned immediately following such action if he had converted the Security
immediately prior to such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a Holder of a Security upon conversion of
it may receive shares of two or more classes of capital stock of STERIS, the
Board of Directors of
-4-
<PAGE> 5
STERIS shall in good faith determine the allocation of the adjusted conversion
price between the classes of capital stock. After such allocation, the
conversion privilege and the conversion price of each class of capital stock
shall thereafter be subject to adjustment on terms comparable to those
applicable to the Common Shares in this Section.
(f) ADJUSTMENT FOR COMMON SHARES ISSUED BELOW MARKET PRICE.
(1) Subject to item (2) below, if STERIS issues Common Shares
(other than pursuant to conversion of the Securities or the exercise, conversion
or exchange of other securities (including any stock option) exercisable,
convertible or exchangeable into Common Shares) or rights, options or warrants
to subscribe for or purchase Common Shares, or any securities convertible into
or exchangeable for Common Shares, or rights, options or warrants to subscribe
for or purchase such convertible or exchangeable securities (excluding Common
Shares, rights, options, warrants therefor or convertible or exchangeable
securities or rights, options or warrants therefor issued in transactions
described in Subsection (g)) at a Price Per Share (as defined and determined
according to the formula given below) lower than the Current Market Price (as
determined pursuant to Subsection (i)) on the date of such issuance, the
conversion price shall be adjusted in accordance with the following formula:
R
-
AC = CC x O + M
-----
O + N
where
AC = the adjusted conversion price.
CC = the then current conversion price.
O = the number of Common Shares outstanding immediately prior to such
issuance. The number of Common Shares at any time outstanding shall not
include shares held in the treasury of STERIS but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions
of Common Shares.
N = the "Number of Shares," which (i) in the case of Common Shares is the
number of shares issued; (ii) in the case of rights, options or
warrants to subscribe for or purchase Common Shares or of securities
convertible into or exchangeable for Common Shares, is the maximum
number of Common Shares initially issuable upon exercise, conversion or
exchange thereof; and (iii) in the case of rights, options or warrants
to subscribe for or purchase convertible or exchangeable securities, is
the maximum number of Common Shares initially issuable upon the
conversion or exchange of the convertible or exchangeable securities
issuable upon the exercise of such rights, options or warrants.
R = the aggregate proceeds received or receivable by STERIS which (i) in
the case of Common Shares is the total amount received or receivable by
STERIS in
-5-
<PAGE> 6
consideration for the sale and/or issuance of the Common Shares; (ii)
in the case of rights, options or warrants to subscribe for or purchase
Common Shares or of securities convertible into or exchangeable for
Common Shares, is the total amount received or receivable by STERIS in
consideration for the sale and/or issuance of such rights, options,
warrants or convertible or exchangeable securities, plus the minimum
aggregate amount of additional consideration payable to STERIS upon
exercise, conversion or exchange thereof; and (iii) in the case of
rights, options or warrants to subscribe for or purchase convertible or
exchangeable securities, is the total amount received or receivable by
STERIS in consideration for the sale and/or issuance of such rights,
options or warrants, plus the minimum aggregate consideration payable
to STERIS upon the exercise thereof, plus the minimum aggregate amount
of additional consideration payable upon the conversion or exchange of
the convertible or exchangeable securities; PROVIDED that in each case
the proceeds received or receivable by STERIS shall be deemed to be the
amount of gross cash proceeds without deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing
similar services or any expenses incurred in connection therewith.
M = the Current Market Price for one Common Share on the date of issue of
the Common Shares or the rights, options or warrants to subscribe for
or purchase Common Shares or the securities convertible into or
exchangeable for Common Shares or the rights, options or warrants to
subscribe for or purchase convertible or exchangeable securities.
"Price Per Share" shall be defined and determined according to the
following formula:
P = R
-
N
where
P = Price Per Share
and R and N have the meanings assigned above.
If STERIS shall issue its Common Shares or rights, options,
warrants or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash (including personal
services) the amount of such consideration shall be determined in good faith by
the Board of Directors whose determination shall be conclusive and evidenced by
a resolution of the Board of Directors filed with the Trustee.
The adjustment shall be made successively whenever any such
additional Common Shares or such rights, options, warrants or convertible or
exchangeable securities are issued, and shall become effective immediately after
the date of issue of such shares, rights, options, warrants or convertible or
exchangeable securities.
-6-
<PAGE> 7
To the extent that such rights, options or warrants expire
unexercised or to the extent any convertible or exchangeable securities are
redeemed by STERIS or otherwise cease to be convertible or exchangeable into
Common Shares, the conversion price shall be readjusted to the conversion price
which would then be in effect had the adjustment made upon the date of issuance
of such rights, options, warrants or convertible or exchangeable securities been
made upon the basis of the issuance of rights, options or warrants to subscribe
for or purchase only the number of Common Shares as to which such rights,
options or warrants were actually exercised and the number of Common Shares that
were actually issued upon the conversion or exchange of the convertible or
exchangeable securities.
(2) No adjustment to the conversion price shall be made pursuant
to item (1) above in connection with the issuance of any Common Shares, any
rights, options or warrants to subscribe for or purchase Common Shares or any
securities convertible into or exchangeable for Common Shares, or any rights,
options or warrants to subscribe for or purchase such convertible or
exchangeable securities at a Price Per Share lower than the current market price
on the date of such issuance which are issued pursuant to any firm commitment or
best efforts underwritten public offering for cash.
(g) ADJUSTMENT FOR OTHER DISTRIBUTIONS. If STERIS distributes to
all holders of its Common Shares any of its assets or debt securities or any
rights or warrants to purchase assets or debt securities of STERIS, the
conversion price shall be adjusted in accordance with the formula:
AC = CC x (O X M) - F
----------
O x M
where:
AC = the adjusted conversion price.
CC = the then current conversion price.
O = the number of Common Shares outstanding on the record date mentioned
below.
M = the Current Market Price per Common Share on the record date mentioned
below.
F = the aggregate fair market value on the record date of the assets,
securities, rights or warrants distributed. The Board of Directors of
STERIS shall in good faith determine the fair market value.
The adjustment shall become effective immediately after the record
date for the determination of shareholders entitled to receive the distribution.
This Subsection does not apply to (i) cash dividends or
distributions in each case to the extent made from the retained earnings
(determined as of the end of the
-7-
<PAGE> 8
most recent period for which financial statements prepared in accordance with
generally accepted accounting principles are available) of STERIS, (ii) to
reclassifications or distributions referred to in subsection (e), or (iii)
distributions of securities referred to in subsection (f).
(h) ADJUSTMENT FOR CERTAIN TENDER OFFERS AND STOCK PURCHASES. In
case a tender offer made by STERIS or any Subsidiary of STERIS for all or any
portion of STERIS's Common Shares shall expire, or there shall be consummated a
purchase or series of related purchases (a "purchase") by STERIS or any
Subsidiary of STERIS of all or any portion of STERIS's Common Shares, and such
tender offer or purchase shall involve an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall
be made in good faith and shall be conclusive and described in a Board
Resolution) on the last time (the "Expiration Time") tenders may be made
pursuant to such tender offer, or immediately prior to the consummation of such
purchase, that, together with the aggregate of the cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
made in good faith and shall be conclusive and described in a Board Resolution),
as of the Expiration Time, of other consideration payable in respect of any
tender offer or purchase by STERIS or a Subsidiary of STERIS for or of any
portion of STERIS's Common Shares expiring within the 12 months preceding the
Expiration Time and in respect of which no conversion price adjustment pursuant
to this subsection (h) has been made, exceeds 12 1/2% of the product of the
Current Market Price of the Common Shares on the Expiration Time times the
number of Common Shares outstanding (including any tendered shares) on the
Expiration Time, the conversion price shall be reduced so that the same shall
equal the price determined by multiplying the conversion price in effect
immediately prior to the Expiration Time by a fraction of which the numerator
shall be (i) the product of the Current Market Price per share of the Common
Shares on the Expiration Time times the number of Common Shares outstanding
(including any tendered or purchased shares) on the Expiration Time minus (ii)
the fair market value (determined as aforesaid) of the aggregate consideration
paid or payable to shareholders pursuant to the tender offers or purchases
within the preceding 12 months as of the Expiration Time (the "Purchased
Shares") and the denominator shall be the product of (i) such Current Market
Price per share on the Expiration Time times (ii) such number of outstanding
shares on the Expiration Time less the number of Purchased Shares, such
reduction to become effective immediately prior to the opening of business on
the day following the Expiration Time. No adjustment pursuant to this subsection
(h) shall result in an increase in the conversion price.
(i) CURRENT MARKET PRICE. The current market price (the "Current
Market Price") per Common Share on any date shall be the average of the Closing
Prices for the five consecutive Business Days immediately preceding the date in
question.
(j) WHEN ADJUSTMENT MAY BE DEFERRED. No adjustment in the
conversion price need be made unless the adjustment would require an increase or
decrease of at least 1% in the conversion price. Any adjustments that are not
made shall be carried forward and taken into account in any subsequent
adjustment; PROVIDED that any adjustment
-8-
<PAGE> 9
carried forward shall be deferred not in excess of three years, whereupon any
adjustment to the conversion price will be effected.
All calculations under this Section shall be made to the nearest
cent or to the nearest 1/100th of a share, as the case may be.
(k) WHEN NO ADJUSTMENT REQUIRED. Except as set forth in Subsection
(f), no adjustment in the conversion price shall be made because STERIS issues,
in exchange for cash, property or services, Common Shares, or any securities
convertible into Common Shares, or securities carrying the right to purchase
Common Shares or such convertible securities.
No adjustment in the conversion price need be made for rights to
purchase Common Shares pursuant to a STERIS plan for reinvestment of dividends
or interest.
(l) NOTICE OF ADJUSTMENT. Whenever the conversion price is
adjusted, STERIS shall promptly mail to Securityholders a notice of the
adjustment setting forth the adjusted conversion price. STERIS shall file with
the Trustee an Officers' Certificate or a certificate from STERIS's independent
public accountants briefly stating the facts requiring the adjustment and the
manner of computing it. The certificate shall be conclusive evidence that the
adjustment is correct, absent manifest error, and the Trustee shall not be
deemed to have knowledge of facts that would require an adjustment unless and
until a Trust Officer has received a certificate describing the adjustment.
(m) NOTICE OF CERTAIN TRANSACTIONS. If:
(1) STERIS proposes to take any action that would require an
adjustment in the conversion price;
(2) STERIS proposes to take any action that would require a
further supplemental indenture pursuant to subsection (o); or
(3) there is a proposed liquidation or dissolution of STERIS,
STERIS shall mail to Securityholders a notice stating: (a) the proposed record
date for a dividend or distribution or if there is no record date, the date of
which the holders of Common Shares of record entitled thereto are to be
determined or (b) the proposed effective date of a subdivision, combination,
reclassification, consolidation, merger, transfer, lease, liquidation or
dissolution or (c) the date on which a tender offer commenced or a stock
purchase is agreed to or consummated, the date on which a tender offer is
scheduled to expire unless extended, the consideration offered and the other
material terms thereof (or the material terms of any amendment thereto). STERIS
shall mail the notice at least 15 days before such date. Failure to mail the
notice or any defect in it shall not affect the validity of the transaction.
-9-
<PAGE> 10
SECTION 3. JOINT AND SEVERAL OBLIGATION. STERIS and the Company,
from and after the Effective Time, by virtue of the aforesaid assumption by
STERIS and the delivery of this First Supplemental Indenture, shall be joint and
several obligors under the Indenture and each may exercise every right and power
of the Company under the Indenture with the same effect as if STERIS had been
named as a joint obligor with the Company in the Indenture.
SECTION 4. REPRESENTATIONS AND WARRANTIES. STERIS, as of the date
of execution of this First Supplemental Indenture, represents and warrants that:
(i) it is a corporation organized and existing under the laws of the State of
Ohio; (ii) it has full corporate power and authority to execute and deliver this
First Supplemental Indenture and to perform its obligations under this First
Supplemental Indenture in accordance with its terms; and (iii) the execution,
delivery and performance of this First Supplemental Indenture will not violate,
conflict with or constitute a breach of, or a default under, its Amended and
Restated Article of Incorporation or Regulations, or any other material
agreement or instrument to which it is a party or which is binding on it or its
assets, and will not result in the creation of any lien on, or security interest
in, any of its assets.
The Company, as of the date of execution of this First
Supplemental Indenture, represents and warrants that: (i) it is a corporation
organized and existing under the laws of the State of Delaware; (ii) it has full
corporate power and authority to execute and deliver this First Supplemental
Indenture and to perform its obligations under this First Supplemental Indenture
in accordance with its terms; and (iii) the execution, delivery and performance
of this First Supplemental Indenture will not violate, conflict with or
constitute a breach of, or a default under, its Certificate of Incorporation or
Bylaws, or any other material agreement or instrument to which it is a party or
which is binding on it or its assets, and will not result in the creation of any
lien on, or security interest in, any of its assets.
SECTION 5. COVENANTS. All covenants and agreements in this First
Supplemental Indenture by STERIS and the Company shall bind their respective
successors and assigns, whether so expressed or not.
SECTION 6. NOTICES. Pursuant to Section 12.02 of the Indenture,
any notices or other communications required or permitted under the Indenture
and this First Supplemental Indenture shall be given or furnished to, or filed
with the Company in care of STERIS at 5960 Heisley Road, Mentor, Ohio
44060-1868.
SECTION 7. SEPARABILITY. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
SECTION 8. NO THIRD PARTY BENEFITS. Nothing in this First
Supplemental Indenture, express or implied, shall give to any Person, other than
the parties hereto and their successors under the Indenture, and the Holders,
any benefit or any legal or equitable right, remedy or claim under the
Indenture.
-10-
<PAGE> 11
SECTION 9. CONTINUANCE OF INDENTURE. This First Supplemental
Indenture supplements the Indenture and shall be a part of and subject to all
the terms thereof. The Indenture, as supplemented by this First Supplemental
Indenture, shall continue in full force and effect. This First Supplemental
Indenture shall become effective at the Effective Time.
SECTION 10. GOVERNING LAW. This First Supplemental Indenture shall
be governed by and construed in accordance with the laws of the State of New
York.
SECTION 11. DEFINED TERMS. All capitalized terms used in this
First Supplemental Indenture which are defined in the Indenture but not
otherwise defined herein shall have the same meanings assigned to them in the
Indenture.
SECTION 12. COUNTERPARTS. This First Supplemental Indenture may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.
-11-
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
AMSCO INTERNATIONAL, INC.
By: /s/ STEVEN F. KREGER
--------------------
Name: Steven F. Kreger
Title: Vice President, Chief Financial Officer
Attest:
William J. Rieflin
- ------------------
STERIS CORPORATION
By: /s/ BILL R. SANFORD
-------------------
Name: Bill R. Sanford
Title: Chairman, President
& Chief Executive Officer
Attest:
Joseph M. Kamer
- ---------------
THE BANK OF NEW YORK, as
TRUSTEE
By: /s/ LUCILLE FIRRINCIELI
-----------------------
Name: Lucille Firrincieli
Title: Assistant Vice President
Attest:
Paul Schmalzel
- --------------
-12-
<PAGE> 1
EXHIBIT 10.8
STERIS CORPORATION
MANAGEMENT INCENTIVE COMPENSATION PLAN
FY 1996
OBJECTIVE
The objective of the STERIS Corporation Management Incentive Compensation
Plan (MICP) is to encourage greater initiative, resourcefulness, teamwork,
efficiency, and achievement of objectives on the part of key management whose
performance and responsibilities directly affect company profits.
GENERAL PROVISIONS
The MICP for FY 1996 may be reviewed and revised at the Chief Executive
Officer's discretion. Any incentive payouts under the terms of this Plan will be
limited by any governmental regulations that are in effect at the time of such
incentive payouts.
The incentive compensation fund available for disbursement to participants
shall be determined by achievement of the approved Annual Business Plan and
Division Business Plans.
Management Incentive Compensation will be calculated after the close of
each quarter and will be cumulative and retroactive. That is, deficiencies in
year-to-date (YTD) performance can be made up by over achievement in subsequent
quarters during the fiscal year.
A portion of the earned Management Incentive Compensation will be paid on a
quarterly basis with another portion held in an escrow account to be paid on an
annual basis. An accrual funding schedule will be developed and maintained by
the Finance Department to reserve adequate funds for the payment of earned
Management Incentive Compensation.
<PAGE> 2
Management Incentive Compensation Plan -- FY 1996
Page two
ELIGIBILITY
The management level classifications of individuals who may be eligible to
participate in the MICP are the following:
Chief Executive Officer
Sr. Vice President
Division President/Unit Head
Corporate Vice President
Div. VP/Corp. Director
Division Director
Manager
Supervisor/Professional
Incumbents holding a key management position with one of the above titles
are immediately eligible for participation. The incentive qualification
performance parameters for each participant will be the specific parameters of
the profit center, business unit, or corporate services group to which the
participant is assigned. New hires for an above titled position will begin
participation in the MICP during the first full fiscal quarter of employment
unless otherwise specified in the employment offer. An individual promoted to a
higher management level during a quarter will have MICP compensation for that
quarter at the management level held by the individual for the majority of the
quarter. An individual transferring from one profit center, business unit, or
corporate services group to another during a quarter will qualify under the
performance parameters of the profit center, business unit, or corporate
services group to which the participant is assigned for the majority of the
quarter.
Termination of employment of a participant shall result in his or her
forfeiture of all unpaid incentive earnings.
<PAGE> 3
Management Incentive Compensation Plan -- FY 1996
Page three
MICP FY96 PARTICIPANT BONUS SCHEDULE
The bonus for each management level upon achievement of the FY96 Pre-Tax
Income and Net Revenue objectives is as follows:
<TABLE>
<CAPTION>
MANAGEMENT LEVEL QUARTERLY FUNDING
--------------------------------- ---------------------------------
<S> <C>
Chief Executive Officer.......... 110% of Base Income
Senior Vice President............ 80% of Base Income
Division President/Unit Head..... 75% of Base Income
Corporate Vice President......... 65% of Base Income
Division VP/Corp. Director....... 60% of Base Income
Division Director................ 50% of Base Income
Manager.......................... 30% of Base Income
Supervisor/Professional.......... 20% of Base Income
</TABLE>
BONUS POOL FUNDING
The funding of the bonus pool for a profit center, business unit, or
corporate services group will occur upon the achievement of the planned
quarterly YTD objectives included in the applicable Annual Business Plan and/or
Division Business Plan. The weighting of each bonus qualification parameter will
be as follows:
<TABLE>
<S> <C>
1. Americas Division
Net Revenue................. 33%
Net SS1 Units............... 33%
Operating Income*........... 33%
2. International Division
Net Revenue................. 33%
Net SS1 Units............... 33%
Operating Income*........... 33%
3. Operations Division
SS1 Unit Production......... 33%
S20 Unit Production......... 33%
Operating Income*........... 33%
</TABLE>
<PAGE> 4
Management Incentive Compensation Plan -- FY 1996
Page four
<TABLE>
<S> <C>
4. Discovery & Development
Division
Net SS1 Units............... 33%
Net New Products Revenue.... 33%
Operating Income*........... 33%
5. Corporate Services
Net Revenue................. 50%
Pre-Tax Income*............. 50%
</TABLE>
*NOTE: No bonus qualification if actual performance is less than 90% of ABP or
DBP objective.
BONUS CALCULATION
Individual participant bonuses and bonus payouts will be determined as
defined in this bonus calculation section.
1. Each profit center, business unit, and corporate services group will be
evaluated on its YTD performance achievement of the objectives for which the
bonus qualification parameters have been identified.
2. The performance in achieving each bonus qualification parameter will be
determined on a YTD basis and assigned a percentage achievement value for each
parameter in relationship to the YTD ABP or DBP objectives. A percentage
achievement above 100% will be assigned a maximum achievement value of 100%.
3. The sum of individual performance percentages of the bonus qualification
parameters will be added and averaged to determine the MICP eligible percentage
for the quarter. There will be no MICP eligible bonus qualification if the
actual operating income achievement level for Divisions or the net income
achievement level for the corporate services group is less than 90% of the
applicable ABP or DBP on a YTD basis.
4. Individual payout targets will be taken from the then current Participant
and Target Bonus Schedule.
5. The average of the bonus qualification parameters will be applied to the
individual Target Bonus to determine the quarterly MICP eligible bonus amount.
<PAGE> 5
Management Incentive Compensation Plan -- FY 1996
Page five
6. If bonus eligibility on a YTD quarterly basis has occurred, the YTD
percentage achievement of the profit center, business unit, or corporate
services group is multiplied by the percentage achievement of the individual
quarterly Management Objectives that have been approved at the beginning of each
quarter by the participant's direct supervisor and the senior executive/business
head of the profit center, business unit, or corporate services group.
Bonus calculation example:
Division Supervisor's quarterly target bonus: $30,000 base income
X 20% / 4 = $1,500
Division achievement of YTD bonus qualification parameters is 90% for
parameter 1, 95% for parameter 2, and 100% of operating income objective
(parameter 3). Average division performance is 95%.
Division Supervisor achieves 80% of Management Objectives.
Eligible Bonus:
$1,500 X 95% = $1,425
Eligible quarterly bonus for the individual:
$1,425 X 80% (individual achievement) = $1,140
BONUS PAYMENT
Seventy-five percent (75%) of the eligible individual quarterly bonus will be
paid following the end of each quarter. Twenty-five percent (25%) of the
eligible individual quarterly bonus will be held in a bonus escrow account and
will be paid following the end of the fiscal year only if the Corporation meets
or exceeds its Pre-Tax Income objective for the full fiscal year. Should the
Corporation fail to meet or exceed its Pre-Tax Income objective for the full
fiscal year, all funds in the bonus escrow account will be forfeited.
EFFECTIVE DATE
The STERIS Management Incentive Compensation Plan is effective April 1, 1995,
through March 31, 1996.
<PAGE> 1
Exhibit 10.14
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
dated as of May 13, 1996
among
STERIS CORPORATION,
as Borrower,
VARIOUS FINANCIAL INSTITUTIONS,
as Banks,
and
SOCIETY NATIONAL BANK,
as Agent
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
ARTICLE I. DEFINITIONS ........................................... 1
ARTICLE II. AMOUNT AND TERMS OF CREDIT ........................... 9
SECTION 2.1. AMOUNT AND NATURE OF CREDIT .................... 10
A. Revolving Loans ...................................... 10
B. Swing Loans .......................................... 11
SECTION 2.2. CONDITIONS TO LOANS ............................ 12
SECTION 2.3. PAYMENT ON NOTES, ETC .......................... 13
SECTION 2.4. PREPAYMENT ..................................... 14
SECTION 2.5. FEES; TERMINATION OR REDUCTION OF COMMITMENTS .. 14
SECTION 2.6. COMPUTATION OF INTEREST AND FEES ............... 15
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS ....... 15
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC .......... 15
SECTION 3.2. TAX LAW, ETC ................................... 16
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE ................................ 17
SECTION 3.4. INDEMNITY ...................................... 17
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL .. 17
SECTION 3.6. FUNDING ........................................ 17
ARTICLE IV. CONDITIONS PRECEDENT ................................. 18
SECTION 4.1. NOTES .......................................... 18
SECTION 4.2. GUARANTIES OF PAYMENT .......................... 18
SECTION 4.3. RESOLUTIONS, ORGANIZATIONAL DOCUMENTS .......... 18
SECTION 4.4. LEGAL OPINION .................................. 18
SECTION 4.5. CERTIFICATE OF INCUMBENCY ...................... 18
SECTION 4.6. GUARANTOR OF PAYMENT RESOLUTIONS, ORGANIZATIONAL
DOCUMENTS ...................................... 18
SECTION 4.7. GUARANTOR OF PAYMENT LEGAL OPINIONS ............ 18
SECTION 4.8. GUARANTOR OF PAYMENT CERTIFICATES OF INCUMBENCY 18
SECTION 4.9. GOOD STANDING CERTIFICATES ..................... 18
SECTION 4.10. AGENT FEE ...................................... 19
SECTION 4.11. LIEN SEARCHES .................................. 19
SECTION 4.14. MISCELLANEOUS .................................. 19
ARTICLE V. COVENANTS ............................................. 19
SECTION 5.1. INSURANCE ...................................... 19
SECTION 5.2. MONEY OBLIGATIONS .............................. 20
SECTION 5.3. FINANCIAL STATEMENTS ........................... 20
SECTION 5.4. FINANCIAL RECORDS .............................. 21
SECTION 5.5. FRANCHISES ..................................... 21
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 5.6. ERISA COMPLIANCE ............................... 21
SECTION 5.7. INTEREST COVERAGE .............................. 21
SECTION 5.8. CONSOLIDATED NET WORTH ......................... 22
SECTION 5.9. LEVERAGE ....................................... 22
SECTION 5.10. BORROWING ...................................... 22
SECTION 5.11. LIENS .......................................... 22
SECTION 5.12. REGULATIONS U and X ............................ 23
SECTION 5.13. INVESTMENTS .................................... 23
SECTION 5.14. MERGER AND SALE OF ASSETS ...................... 23
SECTION 5.15. ACQUISITIONS ................................... 24
SECTION 5.16. NOTICE ......................................... 24
SECTION 5.17. ENVIRONMENTAL COMPLIANCE ....................... 24
SECTION 5.18. CORPORATE NAMES ................................ 25
SECTION 5.19. SUBSIDIARY GUARANTIES .......................... 25
SECTION 5.20. AMSCO INDENTURE ................................ 25
SECTION 5.21. USE OF PROCEEDS ................................ 25
ARTICLE VI. REPRESENTATIONS AND WARRANTIES ....................... 25
SECTION 6.1. EXISTENCE ...................................... 25
SECTION 6.2. RIGHT TO ACT ................................... 26
SECTION 6.3. LITIGATION AND LIENS ........................... 26
SECTION 6.4. EMPLOYEE BENEFITS PLANS ........................ 26
SECTION 6.5. COMPLIANCE WITH LAWS ........................... 27
SECTION 6.6. SOLVENCY ....................................... 27
SECTION 6.7. FINANCIAL STATEMENTS ........................... 27
SECTION 6.8. REGULATIONS .................................... 28
SECTION 6.9. LIENS AND SECURITY INTERESTS ................... 28
SECTION 6.10. SUBSIDIARIES ................................... 28
SECTION 6.11. TAXES .......................................... 28
SECTION 6.12. FULL DISCLOSURE ................................ 28
SECTION 6.13. EFFECTIVENESS OF MERGER ........................ 29
SECTION 6.18. DEFAULTS ....................................... 30
ARTICLE VII. EVENTS OF DEFAULT ................................... 30
SECTION 7.1. PAYMENTS ......................................... 30
SECTION 7.2. SPECIAL COVENANTS ................................ 30
SECTION 7.3. OTHER COVENANTS .................................. 30
SECTION 7.4. WARRANTIES ....................................... 30
SECTION 7.5. CROSS DEFAULT .................................... 30
SECTION 7.6. ERISA DEFAULT .................................... 31
SECTION 7.7. MONEY JUDGMENT ................................... 31
SECTION 7.8. SOLVENCY ......................................... 31
ARTICLE VIII. REMEDIES UPON DEFAULT .............................. 31
SECTION 8.1. OPTIONAL DEFAULTS ................................ 31
SECTION 8.2. AUTOMATIC DEFAULTS ............................... 32
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
SECTION 8.3. OFFSETS ........................................ 32
SECTION 8.4. EQUALIZATION PROVISION ......................... 32
ARTICLE IX. THE AGENT ............................................ 33
SECTION 9.1. APPOINTMENT AND AUTHORIZATION .................. 33
SECTION 9.2. NOTE HOLDERS ................................... 33
SECTION 9.3. CONSULTATION WITH COUNSEL ...................... 33
SECTION 9.4. DOCUMENTS ...................................... 33
SECTION 9.5. AGENT AND AFFILIATES ........................... 33
SECTION 9.6. KNOWLEDGE OF DEFAULT ........................... 33
SECTION 9.7. ACTION BY AGENT ................................ 33
SECTION 9.8. NOTICES, DEFAULT, ETC .......................... 34
SECTION 9.9. INDEMNIFICATION OF AGENT ....................... 34
ARTICLE X. MISCELLANEOUS ......................................... 34
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION ............... 34
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES ................. 35
SECTION 10.3. AMENDMENTS, CONSENTS ........................... 35
SECTION 10.4 EXTENSION OF REVOLVING CREDITS ................. 35
SECTION 10.5. NOTICES ........................................ 35
SECTION 10.6. COSTS, EXPENSES AND TAXES ...................... 36
SECTION 10.7. INDEMNIFICATION ................................ 36
SECTION 10.8. CAPITAL ADEQUACY ............................... 36
SECTION 10.9. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS .. 37
SECTION 10.10. EXECUTION IN COUNTERPARTS ...................... 37
SECTION 10.11. BINDING EFFECT; BORROWER'S ASSIGNMENT .......... 37
SECTION 10.12. BANK ASSIGNMENTS/PARTICIPATIONS ................ 37
A. Assignment/Transfer of Commitments ................. 37
(i) Prior Consent ............................... 38
(ii) Agreement; Transfer Fee ..................... 38
(iii) Notes ....................................... 38
(iv) Parties ..................................... 39
(v) The Register ................................ 39
(vi) Non-U.S. Transferee ......................... 39
B. Sale of Participations ............................. 39
(i) Benefits of Participant .................... 40
(ii) Rights Reserved ............................ 40
(iii) No Delegation .............................. 40
SECTION 10.13. GOVERNING LAW; SUBMISSION TO JURISDICTION ...... 40
SECTION 10.14. SEVERABILITY OF PROVISIONS; CAPTIONS ........... 41
SECTION 10.15. INVESTMENT PURPOSE ............................. 41
SECTION 10.16. ENTIRE AGREEMENT ............................... 41
SECTION 10.17. LEGAL REPRESENTATION OF PARTIES ................ 41
SECTION 10.18. JURY TRIAL WAIVER .............................. 42
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
SCHEDULE I BANKS AND COMMITMENTS ............................ 44
EXHIBIT A REVOLVING CREDIT NOTE ............................ 45
EXHIBIT B SWING LOAN NOTE .................................. 47
EXHIBIT C NOTICE OF LOAN ................................... 49
EXHIBIT D COMPLIANCE CERTIFICATE ........................... 51
SCHEDULE 2 INDEBTEDNESS OF BORROWER AND ITS SUBSIDIARIES ....
SCHEDULE 3 LIENS ON ASSETS OF COMPANIES .....................
SCHEDULE 4 LIST OF SUBSIDIARIES OF BORROWER .................
SCHEDULE 5 LITIGATION SCHEDULE ..............................
SCHEDULE 6 DESCRIPTION OF ERISA PLANS .......................
SCHEDULE 7 COMPLIANCE .......................................
EXHIBIT E FORM OF ASSIGNMENT AGREEMENT .....................
EXHIBIT F LEGAL OPINION ....................................
ATTACHMENT I .....................................................
ATTACHMENT II ....................................................
ATTACHMENT III ...................................................
</TABLE>
iv
<PAGE> 6
Credit agreement, dated as of the 13th day of May, 1996, among STERIS
CORPORATION, an Ohio corporation, ("Borrower"), the banking institutions named
in Schedule 1 attached hereto and made a part hereof (collectively, "Banks", and
individually "Bank") and SOCIETY NATIONAL BANK, 127 Public Square, Cleveland,
Ohio 44114-1306, as Agent for the Banks under this Agreement ("Agent").
WITNESSETH:
WHEREAS, Borrower and the Banks desire to contract for the establishment
of credits in the aggregate principal amounts hereinafter set forth, to be made
available to Borrower upon the terms and subject to the conditions hereinafter
set forth;
NOW, THEREFORE, it is mutually agreed as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Adjusted LIBOR" shall mean a rate per annum equal to the quotient
obtained (rounded upwards, if necessary, to the nearest 1/100th of 1%) by
dividing (a) the applicable LIBOR rate by (b) 1.00 minus the Reserve Percentage.
"Advantage" shall mean any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or otherwise)
received by any Bank in respect of the Debt, if such payment results in that
Bank having a lesser share of the Debt, than was the case immediately before
such payment.
"AMSCO" shall mean AMSCO International, Inc., a Delaware corporation.
"AMSCO Indenture" shall mean the indenture dated as of October 15, 1992
between AMSCO and the Bank of New York, as Trustee.
"Applicable Facility Fee Rate" shall mean a rate determined as follows:
(a) for the period from the Closing Date through August 31, 1996, 10
basis points; and
(b) commencing September 1, 1996, the rate (i) shall be effective on the
first (1st) day of the month following the date upon which the Agent received,
or, if earlier, the Agent should have received, pursuant to Section 5.3 hereof,
the consolidated financial statements of the Borrower and (ii) shall be the rate
expressed in basis points set forth in the following matrix based on the result
of the computation of the ratio of Consolidated EBIT to Consolidated Interest
Expense for the most recently completed four (4) calendar quarters, provided,
however, that for
<PAGE> 7
any period prior to June 30, 1997, each such calculation shall exclude any
calendar quarters prior to the calendar quarter ending June 30, 1996:
<TABLE>
<CAPTION>
Ratio of Consolidated EBIT
to Consolidated Interest Expense Applicable Facility Fee Rate
- -------------------------------- ----------------------------
<S> <C>
Greater than or equal to 10.00 to 1.00 10 basis points
Greater than or equal to 5.00 to 1.00
but less than 10.00 to 1.00 12.5 basis points
Less than 5.00 to 1.00 15 basis points
</TABLE>
Furthermore, the above matrix does not modify or waive, in any respect, the
requirements of Section 5.7 hereof, the rights of the Banks to charge the
Default Rate described in Section 2.1 hereof, or the rights and remedies of the
Banks pursuant to Articles VII and VIII hereof.
"Applicable LIBOR margin" shall mean:
(a) for the period from the Closing Date through August 31, 1996, 25
basis points; and
(b) commencing September 1, 1996, the rate (i) shall be effective on the
first (1st) day of the month following the date upon which the Agent received,
or, if earlier, the Agent should have received, pursuant to Section 5.3 hereof,
the consolidated financial statements of the Borrower, and (ii) shall be the
rate expressed in basis points set forth in the following matrix based on the
result of the computation of the ratio of Consolidated EBIT to Consolidated
Interest Expense for the most recently completed four (4) calendar quarters,
provided, however, that for any period prior to June 30, 1997, each such
calculation shall exclude any calendar quarters prior to the calendar quarter
ending June 30, 1996:
<TABLE>
<CAPTION>
Ratio of Consolidated EBIT
to Consolidated Interest Expense Applicable Basis Points
- -------------------------------- -----------------------
<S> <C>
Greater than or equal to 10.00 to 1.00 25 basis points
Greater than or equal to 5.00 to 1.00
but less than 10.00 to 1.00 30 basis points
Less than 5.00 to 1.00 35 basis points
</TABLE>
In addition, for any day on which the outstanding aggregate principal
amount of Loans exceeds fifty percent (50%) of the Total Commitment Amount, the
Applicable LIBOR Margin otherwise in effect for each LIBOR Loan on any such day
shall be increased by 5 basis points. Furthermore, the above matrix does not
modify or waive, in any respect, the requirements of
2
<PAGE> 8
Section 5.7 hereof, the rights of the Banks to charge the Default Rate, or the
rights and remedies of the Banks pursuant to Articles VII and VIII hereof.
"Cleveland Banking Day" shall mean a day on which the main office of the
Agent is open for the transaction of business.
"Closing Date" shall mean the date set forth on the first page of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commitment" shall mean the obligation hereunder of each Bank to make
Revolving Loans (and the obligation of the Agent to make Swing Loans) up to the
aggregate amount set forth opposite such Bank's name under the column headed
"Maximum Amount" as described in Schedule 1 hereof during the Commitment Period
(or such lesser amount as shall be determined pursuant to Section 2.5 hereof).
"Commitment Percentage" shall mean, for each Bank, the percentage set
forth opposite such Bank's name under the column headed "Percentage" as
described in Schedule 1 hereof.
"Commitment Period" shall mean the period from the Effective Date to
September 30, 1998.
"Company" shall mean Borrower or a Subsidiary.
"Consolidated EBIT" shall mean, for any period on a consolidated basis
for Borrower and its Subsidiaries, the sum of the amounts for such period of:
(a) Consolidated Net Earnings, provided that: (i) all gains and
all losses realized by Borrower and its Subsidiaries upon the sale or
other disposition (including, without limitation, pursuant to sale and
leaseback transactions) of property or assets which are not sold or
otherwise disposed of in the ordinary course of business, or pursuant to
the sale of any capital stock of Borrower or any Subsidiary, shall be
excluded from such Consolidated Net Earnings, (ii) net income or net
loss of Borrower and its Subsidiaries combined on a "pooling of
interests" basis attributable to any period prior to the date of such
combination shall be excluded from such Consolidated Net Earnings, (iii)
all items of gain or loss which are properly classified as extraordinary
in accordance with GAAP shall be excluded from such Consolidated Net
Earnings, (iv) all items which are properly classified in accordance
with GAAP as cumulative effects of accounting changes shall be excluded
from such Consolidated Net Earnings, and (v) net income of any Person
which is not a Subsidiary of Borrower and its Subsidiaries and which is
consolidated with Borrower and its Subsidiaries or is accounted for by
Borrower and its Subsidiaries by the equity method of accounting shall
be included in such Consolidated Net Earnings only to the extent of the
amount of dividends 6r distributions paid to Borrower and its
Subsidiaries or a Subsidiary;
(b) Consolidated Interest Expense; and
3
<PAGE> 9
(c) charges for federal, state, local and foreign income taxes.
"Consolidated Interest Expense" shall mean, for any period, interest
expense of Borrower and its Subsidiaries for such period, determined in
accordance with GAAP.
"Consolidated Net Earnings" shall mean, for any period, the consolidated
net income (loss) of Borrower and its consolidated Subsidiaries for such period,
determined in accordance with GAAP.
"Consolidated Net Worth" shall mean at any date the consolidated
shareholders' equity of the Borrower and its consolidated Subsidiaries,
determined as of such date in accordance with GAAP.
"Controlled Group" shall mean a Company and each Person (as therein
defined) required to be aggregated with a Company under Code Sections 414(b),
(c), (m) or (o).
"Debt" shall mean, collectively, all Indebtedness incurred by Borrower
to the Banks pursuant to this Agreement and includes the principal of and
interest on all Notes and each extension, renewal or refinancing thereof in
whole or in part, the facility fees, other fees and any prepayment premium
payable hereunder.
"Default Rate" shall mean a rate per annum which shall be two per cent
(2%) in excess of the Prime Rate from time to time in effect.
"Derived LIBOR Rate" shall mean a rate per annum which shall be the sum
of the Applicable LIBOR Margin plus Adjusted LIBOR.
"Effective Date" shall mean the date, which must be prior to June 30,
1996, upon which the Merger becomes effective .
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated pursuant thereto.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America or by any state or municipality thereof or by
any court, agency, instrumentality, regulatory authority or commission of any of
the foregoing concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
"ERISA Event" shall mean: (a) the existence of any condition or event
with respect to an ERISA Plan which presents a risk of the imposition of an
excise tax or any other liability on a Company or of the imposition of a lien on
the assets of a Company, (b) a Controlled Group member has engaged in a
non-exempt "prohibited transaction" (as defined under ERISA Section 406 or Code
Section 4975) or a breach of a fiduciary duty under ERISA which could result in
4
<PAGE> 10
liability to a Company, (c) a Controlled Group member has applied for a waiver
from the minimum funding requirements of Code Section 412 or ERISA Section 302
or a Controlled Group member is required to provide security under Code Section
401(a)(29) or ERISA Section 307, (d) a "reportable event" (as defined under
ERISA Section 4043) has occurred with respect of any Pension Plan as to which
notice is required to be provided to the PBGC, (e) a Controlled Group member has
withdrawn from a Multiemployer Plan in a "complete withdrawal" or a "partial
withdrawal" (as such terms are defined in ERISA Sections 4203 and 4205,
respectively), (f) a Multiemployer Plan is in or is likely to be in
reorganization under ERISA Section 4241, (g) an ERISA Plan (and any related
trust) which is intended to be qualified under Code Sections 401 and 501 fails
to be so qualified or any "cash or deferred arrangement" under any such ERISA
Plan fails to meet the requirements of Code Section 401(k), (h) the PBGC takes
any steps to terminate a Pension Plan or appoint a trustee to administer a
Pension Plan, or a Controlled Group member takes steps to terminate a Pension
Plan, (i) a Controlled Group member or an ERISA Plan fails to satisfy any
requirements of law applicable to an ERISA Plan, (j) a claim, action, suit,
audit or investigation is pending or threatened with respect to an ERISA Plan,
other than a routine claim for benefits, or (k) a Controlled Group member incurs
or is expected to incur any liability for post-retirement benefits under any
Welfare Plan, other than as required by ERISA Section 601, ET. SEQ. or Code
Section 4980B.
"ERISA Plan" shall mean an "employee benefit plan" (within the meaning
of ERISA Section 3(3)) that a Controlled Group member at any time sponsors,
maintains, contributes to, has liability with respect to or has an obligation to
contribute to such plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Event of Default" shall mean an event, condition or thing which
constitutes any event of default referred to in Article VII hereof
"Financial Officer" shall mean any of the following officers of
Borrower: chief executive officer, president, chief financial officer or
treasurer.
"Funded Senior Debt" shall mean the Debt and any other Indebtedness
(exclusive of (e) of the Indebtedness definition of this Agreement) of a Company
that is not Subordinated.
"GAAP" shall mean generally accepted accounting principles as then in
effect, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, applied on a basis consistent with the
past accounting practices and procedures of Borrower.
"Guarantor" shall mean one who pledges its credit or property in any
manner for the payment or other performance of the indebtedness, contract or
other obligation of another and includes (without limitation) any guarantor
(whether of payment or of collection), surety, co-maker, endorser or one who
agrees conditionally or otherwise to make any purchase, loan or investment in
order thereby to enable another to prevent or correct a default of any kind.
5
<PAGE> 11
"Guarantor of Payment" shall mean any one of AMSCO, Medical &
Environmental Designs, Inc., Ecomed, Inc., American Sterilizer Company, AMSCO
Sterile Recoveries, Inc., AMSCO International Sales Corporation, AMSCO Canada
Inc., HAS, Inc., AMSCO Europe, Inc., AMSCO Asia Pacific, Inc. and AMSCO Latin
America, Inc., which are each executing and delivering a Guaranty of Payment, or
any other party which shall deliver a Guaranty of Payment to the Agent
subsequent to the Closing Date.
"Guaranty of Payment" shall mean each of the guaranties of payment of
debt executed and delivered on or after the date hereof in connection herewith
by the Guarantors of Payment, as the same may be from time to time amended,
supplemented or otherwise modified.
"Indebtedness" shall mean, for any Company (a) all obligations to repay
borrowed money, direct or indirect, incurred, assumed, or guaranteed, (b)all
obligations for the deferred purchase price of capital assets excluding trade
payables, (c) all obligations under conditional sales or other title retention
agreements, (d) all lease obligations which have been or should be capitalized
on the books of such Company in accordance with GAAP, and (e) reimbursement and
other obligations under any letter of credit, currency swap or forward contract
or agreement, interest rate swap, cap collar or floor agreement or other
interest rate or other risk management device .
"Interest Adjustment Date" shall mean the last day of each Interest
Period.
"Interest Period" shall mean a period of one (1), two (2), three (3), or
six (6) months (as selected by Borrower) commencing on the applicable borrowing
or conversion date of each LIBOR Loan and on each Interest Adjustment Date with
respect thereto; provided, however, that if any such period would be affected by
a reduction in Commitment as provided in Section 2.5 hereof, prepayment or
conversion rights or obligations as provided in 3.5 hereof, or maturity of LIBOR
Loans as provided in Section 2.1 hereof, such period shall be shortened to end
on the date such Loan is to be prepaid or converted pursuant to such provisions.
If Borrower fails to select a new Interest Period with respect to an outstanding
LIBOR Loan at least three (3) London Banking Days prior to any Interest
Adjustment Date, Borrower shall be deemed to have converted such LIBOR Loan to a
Prime Rate Loan at the end of the then current Interest Period.
"LIBOR" shall mean the average (rounded upward to the nearest 1/16th of
1%) of the per annum rates at which deposits in immediately available funds in
United States dollars for the relevant Interest Period and in the amount of the
LIBOR Loan to be disbursed or to remain outstanding during such Interest Period,
as the case may be, are offered to the Reference Bank by prime banks in any
Eurodollar market reasonably selected by the Reference Bank, determined as of
11:00 a.m. London time (or as soon thereafter as practicable), two (2) London
Banking Days prior to the beginning of the relevant Interest Period pertaining
to a LIBOR Loan hereunder.
"LIBOR Loans" shall mean those Revolving Loans described in Section 2.lA
hereof on which Borrower has elected to pay interest at a rate based on LIBOR.
6
<PAGE> 12
"Lien" shall mean any mortgage, security interest, lien, charge,
encumbrance on, pledge or deposit of, or conditional sale or other title
retention agreement with respect to any property or asset.
"Loan" or "Loans" shall mean the advances made and/or credit extended to
Borrower by the Banks and the Agent in accordance with Article II hereof.
"Loan Documents" shall mean this Agreement, each of the Notes and the
Guaranties of Payment.
"London Banking Day" shall mean a day on which banks are open for
business in London, England, and quoting deposit rates for dollar deposits.
"Majority Banks" shall mean the holders of sixty-six and two-thirds
percent (66-2/3%) of the amount of the Total Commitment Amount, or, if there is
any borrowing hereunder (other than Swing Loans), the holders of sixty-six and
two-thirds percent (66-2/3%) of the amount outstanding under the Notes.
"Merger" shall mean the transaction contemplated by Section 1.01 of the
Merger Agreement.
"Merger Agreement" shall mean the Restated Agreement and Plan of Merger
dated as of December 16, 1995 and restated and executed as of March 28, 1996, by
and between Borrower and AMSCO.
"Multiemployer Plan" shall mean a Pension Plan that is subject to the
requirements of Subtitle E of Title IV of ERISA.
"Note" or "Notes" shall mean any Revolving Credit Note or Notes or any
Swing Loan Note, executed and delivered pursuant to Section 2.lA or B hereof, or
any other note delivered pursuant to this Agreement.
"Offering Documents" shall mean the STERIS Corporation and AMSCO
International, Inc. Joint Proxy Statement, dated April 1, 1996, and the
Registration Statement on Form S-4 filed by Borrower with the Securities and
Exchange Commission on February 23, 1996, as amended by Amendment No. 1 to Form
S-4, filed by Borrower with the Securities and Exchange Commission on April 1,
1996.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or its
successor.
"Pension Plan" shall mean an ERISA Plan that is a "pension plan" (within
the meaning of ERISA Section 3(2)).
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, corporation, limited
liability company, institution, trust, estate, government or other agency or
political subdivision thereof or any other entity.
7
<PAGE> 13
"Prime Rate" shall mean the interest rate established from time to time
by Agent as Agent's prime rate, whether or not such rate is publicly announced;
the Prime Rate may not be the lowest interest rate charged by the Agent for
commercial or other extensions of credit. Each change in the Prime Rate shall be
effective immediately from and after such change.
"Prime Rate Loans" shall mean those Revolving Loans described in Section
2.lA hereof on which Borrower shall pay interest at a rate based on the Prime
Rate.
"Possible Default" shall mean an event, condition or thing which
constitutes, or which with the lapse of any applicable grace period or the
giving of notice or both would constitute, any Event of Default and which has
not been appropriately waived by the Majority Banks in writing or fully
corrected prior to becoming an actual Event of Default.
"Reference Bank" shall mean the Cayman Islands branch office of Society
National Bank.
"Related Writing" shall mean the Loan Documents and any guaranty
agreement, subordination agreement, financial statement, audit report or other
writing furnished by Borrower, any Subsidiary or any Guarantor of Payment, or
any of their respective officers, to the Banks pursuant to or otherwise in
connection with this Agreement.
"Reserve Percentage" shall mean for any day that percentage (expressed
as a decimal) which is in effect on such day, as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for determining the
maximum reserve requirement (including, without limitation, all basic,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements) for
a member bank of the Federal Reserve System in Cleveland, Ohio, in respect of
Eurocurrency Liabilities. The Adjusted LIBOR shall be adjusted automatically on
and as of the effective date of any change in the Reserve Percentage .
"Revolving Credit Note" shall mean any Revolving Credit Note executed
and delivered pursuant to Section 2.lA hereof.
"Revolving Loan" shall mean a Loan granted to the Borrower by the Banks
in accordance with Section 2.lA hereof.
"Subordinated", as applied to Indebtedness, shall mean that the
Indebtedness has been subordinated (by written terms or written agreement being,
in either case, in form and substance satisfactory to the Banks) in favor of the
prior payment in full of the Debt.
"Subsidiary" of Borrower or any of its Subsidiaries shall mean (a) a
corporation more than fifty percent (50%) of the voting power or capital stock
of which is owned, directly or indirectly, by Borrower or by one or more other
Subsidiaries of Borrower or by Borrower and one or more Subsidiaries of
Borrower, (b) a partnership or limited liability company of which Borrower, one
or more other Subsidiaries of Borrower or Borrower and one or more Subsidiaries
of Borrower, directly or indirectly, is a general partner or managing member, as
8
<PAGE> 14
the case may be, or otherwise has the power to direct the policies, management
and affairs thereof or (c) any other Person (other than a corporation) in which
Borrower, one or more other Subsidiaries of Borrower or such Person, directly or
indirectly, has at least a majority ownership interest or the power to direct
the policies, management and affairs thereof.
"Swing Line" shall mean the credit facility established by the Agent in
accordance with Section 2.1B hereof.
"Swing Loan" shall mean a Loan granted to the Borrower by the Agent in
accordance with Section 2.1B hereof.
"Swing Loan Commitment" shall mean the commitment of the Agent to make
Swing Loans to the Borrower up to the maximum aggregate amount at any time
outstanding of Five Million Dollars ($5,000,000) on the terms and conditions set
forth in Section 2.1B hereof.
"Swing Loan Note" shall mean the Swing Loan Note executed and delivered
pursuant to Section 2.1B hereof.
"Total Commitment Amount" shall mean the obligation hereunder of the
Banks to make Loans up to the maximum aggregate principal amount of One Hundred
Twenty Five Million Dollars ($125,000,000) during the Commitment Period (or such
lesser amount as shall be determined pursuant to Section 2.5 hereof).
"Voting Stock" shall mean stock of a corporation of a class or classes
having general voting power under ordinary circumstances to elect a majority of
the board of directors, managers or trustees of such corporation (irrespective
of whether or not at the time stock of any other class or classes shall have or
might have voting power by the reason of the happening of any contingency).
"Welfare Plan" shall mean an ERISA Plan that is a "welfare plan" within
the meaning of ERISA Section 3(1).
"Wholly-Owned Subsidiary" shall mean each Subsidiary all of whose
outstanding stock, other than directors' qualifying shares, shall at the time be
owned by Borrower and/or by one or more Wholly-Owned Subsidiaries.
Any accounting term not specifically defined in this Article I shall
have the meaning ascribed thereto by GAAP.
The foregoing definitions shall be applicable to the singular and
plurals of the foregoing defined terms.
9
<PAGE> 15
ARTICLE II. AMOUNT AND TERMS OF CREDIT
SECTION 2.1. AMOUNT AND NATURE OF CREDIT. Subject to the terms and
provisions of this Agreement, each Bank will participate, to the extent
hereinafter provided, in making Loans to Borrower, in such aggregate amount as
Borrower shall request pursuant to the Commitments; provided, however, that in
no event shall the aggregate principal amount of all Loans outstanding under
this Agreement during the Commitment Period be in excess of the Total Commitment
Amount.
A. Revolving Loans
Each Bank, for itself and not one for any other, agrees to make
Revolving Loans hereunder during the Commitment Period on such basis that (a)
immediately after the completion of any borrowing by Borrower, the aggregate
principal amount then outstanding on the Revolving Credit Note issued to such
Bank shall not be in excess of the amount shown opposite the name of such Bank
under the column headed "Maximum Amount" as set forth in Schedule 1 hereto, and
(b) such aggregate principal amount outstanding on the Revolving Credit Note
issued to such Bank, shall represent that percentage of the aggregate principal
amount then outstanding on all Revolving Credit Notes (including the Revolving
Credit Note held by such Bank) which is such Bank's Commitment Percentage.
Each borrowing of a Revolving Loan from the Banks hereunder shall be
made pro rata according to their respective Commitment Percentages. The
Revolving Loans may be made as follows: Subject to the terms and conditions of
this Agreement, during the Commitment Period, each Bank shall make a Revolving
Loan or Revolving Loans to Borrower in such amount or amounts as Borrower may
from time to time request, but not exceeding in aggregate principal amount at
any one time outstanding hereunder the Commitment of such Bank. Borrower shall
have the option, subject to the terms and conditions set forth herein, to borrow
hereunder up to the Total Commitment Amount, less the aggregate amount of Swing
Loans outstanding, by means of any combination of (a) Prime Rate Loans maturing
on the last day of the Commitment Period, bearing interest at a rate per annum
which shall be the Prime Rate from time to time in effect and drawn down in
aggregate amounts of not less than Five Hundred Thousand Dollars ($500,000),
increased by increments of One Hundred Thousand Dollars ($100,000), or (b) LIBOR
Loans maturing on the last day of the Commitment Period, drawn down in aggregate
amounts of not less than Five Million Dollars ($5,000,000), increased by
increments of One Million Dollars ($1,000,000), bearing interest at a rate per
annum which shall be the Derived LIBOR Rate, fixed for each LIBOR Loan in
advance of each Interest Period for such LIBOR Loan as herein provided for each
such Interest Period. At no time shall Borrower request that more than eight (8)
LIBOR Loans be outstanding at any time.
Borrower shall pay interest on the unpaid principal amount of Prime Rate
Loans outstanding from time to time from the date thereof until paid, on the
last day of each succeeding March, June, September and December of each year and
at the maturity thereof, commencing June 30, 1996. Borrower shall pay interest
at a fixed rate for each Interest Period on the unpaid principal amount of each
LIBOR Loan outstanding from time to time from the date thereof until paid,
payable on each Interest Adjustment Date with respect to an Interest
10
<PAGE> 16
Period (provided that if an Interest Period exceed three months, the interest
must be paid every three months from the beginning of such Interest Period).
At the request of Borrower, provided no Possible Default exists
hereunder, the Banks shall convert Prime Rate Loans to LIBOR Loans at any time,
subject to the notice provisions of Section 2.2 hereof, and shall convert LIBOR
Loans to Prime Rate Loans on any Interest Adjustment Date, but each request for
Revolving Loans must either be for Prime Rate Loans or LIBOR Loans.
The obligation of Borrower to repay the Prime Rate Loans and the LIBOR
Loans made by each Bank and to pay interest thereon shall be evidenced by a
Revolving Credit Note of Borrower substantially in the form of Exhibit A hereto,
with appropriate insertions, dated the date of this Agreement and payable to the
order of such Bank on the last day of the Commitment Period in the principal
amount of its Commitment, or, if less, the aggregate unpaid principal amount of
Revolving Loans made hereunder by such Bank. If an Event of Default shall occur
hereunder, the principal of the Revolving Credit Note and the unpaid interest
thereon shall bear interest, until paid, at the Default Rate . Subject to the
provisions of this Agreement, Borrower shall be entitled to borrow funds, repay
the same in whole or in part and reborrow hereunder at any time and from time to
time during the Commitment Period.
B. Swing Loans.
Subject to the terms and conditions of this Agreement, during the
Commitment Period, the Agent may make a Swing Loan or Swing Loans to Borrower in
such amount or amounts as Borrower may from time to time request, but not
exceeding in aggregate principal amount at any one time outstanding the Swing
Loan Commitment. Each Swing Loan shall be due and payable on the earlier of (a)
demand made by the Agent at any time upon one (1) Cleveland Banking Day's prior
notice to the Borrower, (b)the twentieth (20th) day after the date that such
Swing Loan is made, or (c) the last day of the Commitment Period; provided that
if no Possible Default shall have occurred and be continuing at the time of such
demand, then the Borrower shall, immediately after the Borrower learns of such
demand, if and to the extent that the Borrower is permitted to borrow Revolving
Loans under the terms of this Agreement at the time of such demand, be deemed to
have submitted a request for a Revolving Loan in an amount necessary to repay
the amount demanded, and the provisions of Section 2.lA hereof concerning
minimum principal amounts and integral multiples thereof required for requesting
Revolving Loans shall not apply to Revolving Loans made pursuant to this
paragraph.
Each Swing Loan shall bear interest at a fixed rate per annum which
shall be an interest rate agreed upon by the Agent and the Borrower which has
requested the Swing Loan. Each Swing Loan shall be drawn down in aggregate
amounts of not less than One Hundred Thousand Dollars ($100,000), increased by
increments of Fifty Thousand Dollars ($50,000). Borrower shall pay interest to
the Agent, for the sole benefit of the Agent, on the unpaid principal amount of
each Swing Loan outstanding from time to time from the date thereof until paid,
on the last day of each succeeding March, June, September and December of each
year and at the maturity thereof. Each Swing Loan shall bear interest for a
minimum of one (1) day.
11
<PAGE> 17
The obligation of Borrower to repay the Swing Loans and to pay interest
thereon shall be evidenced by a Swing Loan Note of Borrower substantially in the
form of Exhibit B hereto, with appropriate insertions, dated the date of this
Agreement and payable to the order of the Agent on the last day of the
Commitment Period in the principal amount of the Swing Loan Commitment, or, if
less, the aggregate unpaid principal amount of Swing Loans made hereunder by the
Agent. If an Event of Default shall occur hereunder, the principal of the Swing
Loan Note and the unpaid interest thereon shall bear interest, until paid, at
the Default Rate. Subject to the provisions of this Agreement, Borrower shall be
entitled to borrow funds, repay the same in whole or in part and reborrow
hereunder at any time and from time to time during the Commitment Period.
The Agent shall not make any Swing Loan under the Swing Line if, after
giving effect thereto, (a) the sum of the then aggregate outstanding principal
amount of all Loans would exceed the Total Commitment Amount, or (b) the
aggregate outstanding principal amount of all Swing Loans would exceed the Swing
Loan Commitment. The Agent shall at no time be obligated to make any Swing Loan.
The Agent shall not, without the approval of the Majority Banks, make a Swing
Loan if the Agent shall have actual knowledge that a Possible Default has
occurred and is continuing.
Each Bank shall be deemed to have unconditionally and irrevocably
purchased a pro rata risk participation from the Agent in the Swing Loans,
without recourse or warranty (except that the outstanding Swing Loans in fact
were made by the Agent, have not been repaid, and have not been sold or assigned
by the Agent) in an amount equal to such Bank's Commitment Percentage times the
amount outstanding on the Swing Loan Note. In addition, from and after the date
that any Bank funds such participation, such Bank shall, to the extent of its
Commitment Percentage, be entitled to receive a ratable portion of any payment
of principal and interest received by the Agent on account of such Swing Loans,
payable promptly to such Bank upon receipt; provided, however, that at such time
as the Banks provide funds for purchase of such risk participation, the interest
payable thereon shall be at a rate of interest in accordance with Section 2.1A
hereof.
The Agent may at any time, without notice to or the consent of the
Borrower, terminate the Swing Line and cause Revolving Loans to be made by the
Banks in an aggregate amount equal to the amount of principal and interest
outstanding under the Swing Line, and the conditions precedent set forth in
Section 2.2 hereof shall not apply to such Revolving Loans. The proceeds of such
Revolving Loans shall be paid to the Agent for payment of the Swing Loan Note.
The Revolving Loans resulting therefrom shall bear interest in accordance with
Section 2.1A hereof.
SECTION 2.2. CONDITIONS TO LOANS. The obligation of each Bank to make
Loans hereunder is conditioned, in the case of each borrowing hereunder, upon:
(a) All conditions precedent to the consummation of the Merger shall
have been satisfied in accordance with the terms of the Merger Agreement, the
Merger shall have become effective under applicable law, and the Banks shall
have received a certificate from the secretary
12
<PAGE> 18
or assistant secretary of Borrower to such effect, attaching a true and complete
copy of the duly executed certificate of merger. No material conditions
precedent to Borrower's obligations to consummate such transactions shall have
been waived without the prior written consent of the Agent and the Banks;
(b) receipt by the Agent of a Notice of Loan, in the form of Exhibit C
hereto, from Borrower by 11:00 AM on the proposed date of borrowing, such notice
to provide the aggregate amount of the Prime Rate Loans, and, if LIBOR Loans are
requested, three (3) London Banking Days' notice of the proposed date, such
notice to provide the aggregate amount and initial Interest Period of such LIBOR
Loans. The Agent shall notify each Bank of the date, amount and initial Interest
Period (if applicable) promptly upon the receipt of such notice, and, in any
event, by 1:00 P.M. on the date such notice is received. On the date such Loan
is to be made, each Bank shall provide the Agent not later than 3:00 P.M.
Cleveland time, with the amount in federal or other immediately available funds,
required of it;
(c) the fact that no Possible Default shall then exist or immediately
after the Loan would exist; and
(d) the fact that the representations and warranties contained in
Article VI hereof shall be true and correct in all material respects with the
same force and effect as if made on and as of the date of such Loan except to
the extent that any thereof expressly relate to an earlier date .
The obligation of the Agent to make Swing Loans hereunder is conditioned, in
each case, upon (i) its consent to do so, (ii) receipt by the Agent of notice
from Borrower by 11:00 AM on the proposed date which states the aggregate amount
and maturity of the borrowing, and (iii) (c) and (d) above. Each request for a
Loan by Borrower hereunder shall be deemed to be a .representation and warranty
by Borrower as of the date of such request as to the facts specified in (c) and
(d) above.
SECTION 2.3. PAYMENT ON NOTES, ETC. All payments of principal, interest
and facility and other fees shall be made to the Agent in immediately available
funds for the account of the Banks (except that Swing Loan payments shall be
solely for the account of the Agent unless the Banks have advanced funds on a
Swing Loan), and the Agent (on such day if such payment is received by the Agent
prior to 1:00 P.M. and on the next Cleveland Banking Day if received after 1:00
P.M.) shall distribute to each Bank its ratable share of the amount of
principal, interest, and facility and other fees received by it for the account
of such Bank. Each Bank shall record (a) any principal, interest or other
payment, and (b) the principal amount of the Prime Rate Loans and the LIBOR
Loans and all prepayments thereof and the applicable dates with respect thereto,
and the Agent shall record Swing Loans and payments thereof, by such method as
such Bank may generally employ; provided, however, that failure to make any such
entry shall in no way detract from Borrower's obligations under each such Note.
The aggregate unpaid amount of Loans set forth on the records of each Bank shall
be rebuttably presumptive evidence of the principal and interest owing and
unpaid on each Note. Whenever any payment to be made here under, including
without limitation any payment to be made on any Note, shall be stated to be due
on a day which is not a Cleveland Banking Day, such payment shall be made
13
<PAGE> 19
on the next succeeding Cleveland Banking Day and such extension of time shall in
each case be included in the computation of the interest payable on such Note;
provided, however, that with respect to any LIBOR Loan, if the next succeeding
Cleveland Banking Day falls in the succeeding calendar month, such payment shall
be made on the preceding Cleveland Banking Day and the relevant Interest Period
shall be adjusted accordingly.
SECTION 2.4. PREPAYMENT. Borrower shall have the right at any time or
from time to time to prepay on a pro rata basis, all or any part of the
principal amount of the Notes then outstanding as designated by Borrower, plus
interest accrued on the amount so prepaid to the date of such prepayment.
Borrower shall give the Agent notice of prepayment of any Prime Rate Loans or
Swing Loans by not later than 11:00 A.M. Cleveland time on the Cleveland Banking
Day such prepayment is to be made and written notice of the prepayment of any
LIBOR Loan not later than 1:00 P.M. Cleveland time three London Banking Days
before the Cleveland Banking Day on which such prepayment is to be made.
Prepayments of Prime Rate Loans and Swing Loans shall be without any premium or
penalty . In any case of prepayment of any LIBOR Loans, Borrower agrees that if
Adjusted LIBOR as determined as of 11:00 P.M. London time, three (3) London
Banking Days prior to the date of prepayment of any LIBOR Loans (hereinafter,
"Prepayment LIBOR") shall be lower than the last Adjusted LIBOR previously
determined for those LIBOR Loans with respect to which prepayment is intended to
be made (hereinafter, "Last LIBOR"), then Borrower shall, upon written notice by
the Agent, promptly pay to the Agent, for the account of each of the Banks, in
immediately available funds, a prepayment penalty equal to the product of (a) a
rate (the "Prepayment Penalty Rate") which shall be equal to the difference
between the Last LIBOR and the Prepayment LIBOR, times (b) all or such part of
the principal amounts of the Notes as relate to the LIBOR Loans to be prepaid,
times (c) the quotient obtained by dividing (i) the number of days in the period
commencing with the date on which such prepayment is to be made to that date
which coincides with the last day of the Interest Period previously established
when the LIBOR Loans, which are to be prepaid, were made by (ii) three hundred
sixty (360). In addition, Borrower shall immediately pay directly to the Agent,
for the account of the Banks, the amount of any additional costs or expenses
(including, without limitation, cost of telex, wires, or cables) incurred by the
Agent or the Banks in connection with the prepayment, upon Borrower's receipt of
a written statement from the Agent. Each prepayment of a LIBOR Loan shall be in
the aggregate principal sum of not less than One Million Dollars ($1,000,000).
In the event Borrower cancels a proposed LIBOR Loan subsequent to the delivery
to the Agent of the notice of the proposed date, aggregate amount and initial
Interest Period of such Loan, but prior to the draw down of funds thereunder,
such cancellation shall be treated as a prepayment subject to the aforementioned
prepayment penalty.
SECTION 2.5. FEES; TERMINATION OR REDUCTION OF COMMITMENTS . Borrower
agrees to pay to Agent, for the ratable account of each Bank, as a consideration
for its Commitment hereunder, a quarterly facility fee equal to (a) the
Applicable Facility Fee Rate, times (b) the Commitment, times (c) the quotient
obtained by dividing (i) the number of days in the calendar quarter, by (ii)
three hundred sixty (360). The facility fee shall be payable in arrears on June
30, 1996 and on the last day of each calendar quarter thereafter. Borrower may
at any time or from time to time terminate in whole or ratably in part the
Commitments of the
14
<PAGE> 20
Banks hereunder to an amount not less than the aggregate principal amount of the
Loans then outstanding, by giving the Agent not fewer than five (5) Cleveland
Banking Days' notice, provided that any such partial termination shall be in an
aggregate amount for all of the Banks of Five Million Dollars ($5,000,000)
increased by increments of One Million Dollars ($1,000,000). The Agent shall
promptly notify each Bank of its proportionate amount and the date of each such
termination. After each such termination, the facility fees payable hereunder
shall be calculated upon the Commitments of the Banks as so reduced. If Borrower
terminates in whole the Commitments of the Banks, on the effective date of such
termination (Borrower having prepaid in full the unpaid principal balance, if
any, of the Notes outstanding, together with all interest (if any) and facility
and other fees accrued and unpaid), all of the Notes outstanding shall be
delivered to the Agent marked "Canceled" and redelivered to Borrower. Any
partial reduction in the Commitments of the Banks shall be effective during the
remainder of the Commitment Period.
SECTION 2.6. COMPUTATION OF INTEREST AND FEES. Interest on Loans,
expenses and facility and other fees and charges hereunder shall be computed on
the basis of a year having three hundred sixty (360) days and calculated for the
actual number of days elapsed. In no event shall the rate of interest hereunder
exceed the rate allowable by law.
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO LIBOR LOANS
SECTION 3.1. RESERVES OR DEPOSIT REQUIREMENTS, ETC. If at any time any
law, treaty or regulation (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System) or the interpretation thereof
by any governmental authority charged with the administration thereof or any
central bank or other fiscal, monetary or other authority shall impose (whether
or not having the force of law), modify or deem applicable any reserve and/or
special deposit requirement (other than reserves included in the Reserve
Percentage, the effect of which is reflected in the interest rate(s) of the
LIBOR Loan(s) in question) against assets held by, or deposits in or for the
amount of any Loans by, any Bank, and the result of the foregoing is to increase
the cost (whether by incurring a cost or adding to a cost) to such Bank of
making or maintaining hereunder LIBOR Loans or to reduce the amount of principal
or interest received by such Bank with respect to such LIBOR Loans, then, upon
demand by such Bank, Borrower shall pay to such Bank from time to time on
Interest Adjustment Dates with respect to such LIBOR Loans, as additional
consideration hereunder, additional amounts sufficient to fully compensate and
indemnify such Bank for such increased cost or reduced amount, assuming (which
assumption such Bank need not corroborate) such additional cost or reduced
amount was allocable to such LIBOR Loans. A certificate as to the increased cost
or reduced amount as a result of any event mentioned in this Section 3.1,
setting forth the calculations therefor, shall be promptly submitted by such
Bank to Borrower and shall, in the absence of manifest error, be conclusive and
binding as to the amount thereof. Notwithstanding any other provision of this
Agreement, after any such demand for compensation by any Bank, Borrower, upon at
least three (3) Cleveland Banking Days' prior written notice to such Bank
through the Agent, may prepay the affected LIBOR Loans in full or convert all
LIBOR Loans to Prime Rate Loans regardless of the Interest Period of any
thereof. Any such
15
<PAGE> 21
prepayment or conversion shall be subject to the prepayment penalties set forth
in Section 2.4 hereof. Each Bank shall notify Borrower as promptly as
practicable (with a copy thereof delivered to the Agent) of the existence 6f any
event which will likely require the payment by Borrower of any such additional
amount under this Section.
SECTION 3.2. TAX LAW, ETC. In the event that by reason of any law,
regulation or requirement or in the interpretation thereof by an official
authority, or the imposition of any requirement of any central bank whether or
not having the force of law, any Bank shall, with respect to this Agreement or
any transaction under this Agreement, be subjected to any tax, levy, impost,
charge, fee, duty, deduction or withholding of any kind whatsoever (other than
any tax imposed upon the total net income of such Bank) and if any such measures
or any other similar measure shall result in an increase in the cost to such
Bank of making or maintaining any LIBOR Loan or in a reduction in the amount of
principal, interest or facility fee receivable by such Bank in respect thereof,
then such Bank shall promptly notify Borrower stating the reasons therefor.
Borrower shall thereafter pay to such Bank upon demand from time to time on
Interest Adjustment Dates with respect to such LIBOR Loans, as additional
consideration hereunder, such additional amounts as shall fully compensate such
Bank for such increased cost or reduced amount. A certificate as to any such
increased cost or reduced amount, setting forth the calculations therefor, shall
be submitted by such Bank to Borrower and shall, in the absence of manifest
error, be conclusive and binding as to the amount thereof.
If any Bank receives such additional consideration from Borrower
pursuant to this Section 3.2, such Bank shall use its best efforts to obtain the
benefits of any refund, deduction or credit for any taxes or other amounts on
account of which such additional consideration has been paid and shall reimburse
Borrower to the extent, but only to the extent, that such Bank shall receive a
refund of such taxes or other amounts together with any interest thereon or an
effective net reduction in taxes or other governmental charges (including any
taxes imposed on or measured by the total net income of such Bank) of the United
States or any state or subdivision thereof by virtue of any such deduction or
credit, after first giving effect to all other deductions and credits otherwise
available to such Bank. If, at the time any audit of such Bank's income tax
return is completed, such Bank determines, based on such audit, that it was not
entitled to the full amount of any refund reimbursed to Borrower as aforesaid or
that its net income taxes are not reduced by a credit or deduction for the full
amount of taxes reimbursed to Borrower as aforesaid, Borrower, upon demand of
such Bank, shall promptly pay to such Bank the amount so refunded to which such
Bank was not so entitled, or the amount by which the net income taxes of such
Bank were not so reduced, as the case may be .
Notwithstanding any other provision of this Agreement, after any such
demand for compensation by any Bank, Borrower, upon at least three (3) Cleveland
Banking Days' prior written notice to such Bank through the Agent, may prepay
the affected LIBOR Loans in full or convert all LIBOR Loans to Prime Rate Loans
regardless of the Interest Period of any thereof. Any such prepayment or
conversion shall be subject to the prepayment penalties set forth in Section 2.4
hereof.
16
<PAGE> 22
SECTION 3.3. EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. In respect of any LIBOR Loans, in the event that the Agent
shall have determined that dollar deposits of the relevant amount for the
relevant Interest Period for such LIBOR Loans are not available to the Reference
Bank in the applicable Eurodollar market or that, by reason of circumstances
affecting such market, adequate and reasonable means do not exist for
ascertaining the LIBOR rate applicable to such Interest Period, as the case may
be, the Agent shall promptly give notice of such determination to Borrower and
(a) any notice of new LIBOR Loans (or conversion of existing Loans to LIBOR
Loans) previously given by Borrower and not yet borrowed (or converted, as the
case may be) shall be deemed a notice to make Prime Rate Loans, and (b) Borrower
shall be obligated either to prepay, or to convert to Prime Rate Loans, any
outstanding LIBOR Loans on the last day of the then current Interest Period or
Periods with respect thereto .
SECTION 3.4. INDEMNITY. Without prejudice to any other provisions of
this Article III, Borrower hereby agrees to indemnify each Bank against any loss
or expense which such Bank may sustain or incur as a consequence of any default
by Borrower in payment when due of any amount hereunder in respect of any LIBOR
Loan, including, but not limited to, any loss of profit, premium or penalty
incurred by such Bank in respect of funds borrowed by it for the purpose of
making or maintaining such LIBOR Loan, as determined by such Bank in the
exercise of its sole but reasonable discretion. A certificate as to any such
loss or expense shall be promptly submitted by such Bank to Borrower and shall,
in the absence of manifest error, be conclusive and binding as to the amount
thereof.
SECTION 3.5. CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at any
time any new law, treaty or regulation, or any change in any existing law,
treaty or regulation, or any interpretation thereof by any governmental or other
regulatory authority charged with the administration thereof, shall make it
unlawful for any Bank to fund any LIBOR Loans which it is committed to make
hereunder with moneys obtained in the Eurodollar market, the Commitment of such
Bank to fund LIBOR Loans shall, upon the happening of such event forthwith be
suspended for the duration of such illegality, and such Bank shall by written
notice to Borrower and the Agent declare that its Commitment with respect to
such Loans has been so suspended and, if and when such illegality ceases to
exist, such suspension shall cease and such Bank shall similarly notify Borrower
and the Agent. If any such change shall make it unlawful for any Bank to
continue in effect the funding in the applicable Eurodollar market of any LIBOR
Loan previously made by it hereunder, such Bank shall, upon the happening of
such event, notify Borrower, the Agent and the other Banks thereof in writing
stating the reasons therefor, and Borrower shall, on the earlier of (a) the last
day of the then current Interest Period or (b) if required by such law,
regulation or interpretation, on such date as shall be specified in such notice,
either convert all LIBOR Loans to Prime Rate Loans or prepay all LIBOR Loans to
the Banks in full. Any such prepayment or conversion shall be subject to the
prepayment penalties described in Section 2.4 hereof.
SECTION 3.6. FUNDING. Each Bank may, but shall not be required to, make
LIBOR Loans hereunder with funds obtained outside the United States.
17
<PAGE> 23
ARTICLE IV. CONDITIONS PRECEDENT
The obligation of each Bank to make its first Loan hereunder is subject
to Borrower furnishing to each Bank the following:
SECTION 4.1. NOTES. Borrower shall have executed and delivered to the
Agent, each Bank's Revolving Credit Note and Swing Line Note.
SECTION 4.2. GUARANTIES OF PAYMENT. Each of AMSCO International, Inc.,
Medical & Environmental Designs, Inc., Ecomed, Inc., American Sterilizer
Company, AMSCO Sterile Recoveries, Inc., AMSCO International Sales Corporation,
AMSCO Canada Inc., HAS, Inc., AMSCO Europe, Inc., AMSCO Asia Pacific, Inc. and
AMSCO Latin America, Inc. shall have executed and delivered its Guaranty of
Payment to the Agent.
SECTION 4.3. RESOLUTIONS, ORGANIZATIONAL DOCUMENTS . Certified copies of
(a) the resolutions of the board of directors of Borrower evidencing approval of
the execution of the Loan Documents and the execution of other Related Writings
to which Borrower is a party, and (b) Borrower's Articles (or Certificate) of
Incorporation, bylaws and all amendments thereto (as in effect as of the
Effective Date).
SECTION 4.4. LEGAL OPINION. A favorable opinion of counsel for Borrower
in the form of Exhibit F hereto.
SECTION 4.5. CERTIFICATE OF INCUMBENCY. A certificate of the secretary
or assistant secretary of Borrower certifying the names of the officers of
Borrower authorized to sign the Loan Documents, together with the true
signatures of such officers.
SECTION 4.6. GUARANTOR OF PAYMENT RESOLUTIONS, ORGANIZATIONAL DOCUMENTS.
Certified copies of (a) the resolutions of the boards of directors, or executive
committees thereof, of each Guarantor of Payment identified in Section 4.2
hereof, evidencing approval of the execution of its Guaranty of Payment and any
other Related Writings to which such Guarantor of Payment is a party, and
(b)each such Guarantor of Payment's Articles (or Certificate) of Incorporation,
bylaws and all amendments thereto.
SECTION 4.7. GUARANTOR OF PAYMENT LEGAL OPINIONS. A favorable opinion of
counsel for each Guarantor of Payment in the form of Exhibit F hereto.
SECTION 4.8. GUARANTOR OF PAYMENT CERTIFICATES OF INCUMBENCY. A
certificate of the secretary or assistant secretary of each Guarantor of Payment
certifying the names of the officers of such Guarantor of Payment authorized to
sign its Guaranty of Payment and any other Related Writings to which such
Guarantor of Payment is a party.
SECTION 4.9. GOOD STANDING CERTIFICATES. A good standing certificate for
Borrower and each Guarantor of Payment identified in Section 4.2 above, issued
on or about
18
<PAGE> 24
the date hereof by the Secretary of State in the state(s) where Borrower or
Guarantor of Payment is incorporated or qualified as a foreign corporation.
SECTION 4.10. AGENT FEE. Borrower shall pay to the Agent, for its sole
benefit, fees as set forth in the Agent Fee Letter between Borrower and the
Agent, and dated as of the Closing Date.
SECTION 4.11. LIEN SEARCHES. With respect to the property owned by
Borrower and its Subsidiaries: (a) the results of U.C.C. lien searches,
satisfactory to the Agent and the Banks; and (b) the results of federal and
state tax lien and judicial lien searches regarding Borrower and its
Subsidiaries, satisfactory to the Agent and the Banks.
SECTION 4.12. MERGER APPROVALS.
(a) Certified copy of resolutions of the board of directors and
shareholders of Borrower evidencing approval of the Merger Agreement and
the transactions contemplated thereby .
(b) Certified copy of resolutions of the board of directors and
shareholders of AMSCO evidencing approval of the Merger Agreement and
the transactions contemplated thereby .
SECTION 4.13. RECEIPT OF DOCUMENTS. Copies of the Merger Agreement, the
Offering Documents and such other documents relating to the Merger, this
Agreement or the transactions contemplated thereby or hereby as requested by
Banks, certified as true and complete copies thereof by the secretary or
assistant secretary of Borrower or AMSCO, as appropriate .
SECTION 4.14. MISCELLANEOUS. Such other items as may be reasonably
required by the Agent or the Banks.
ARTICLE V. COVENANTS
Borrower agrees that so long as the Commitments remain in effect and
thereafter until the principal of and interest on all Notes and all other
payments and fees due hereunder shall have been paid in full, Borrower shall
perform and observe, and shall cause each Subsidiary to perform and observe,
each of the following provisions, namely:
SECTION 5.1. INSURANCE. Each Company shall (a) maintain insurance to
such extent and against such hazards and liabilities as is commonly maintained
by companies similarly situated; and (b) within ten (10) days of any Bank's
written request, furnish to such Bank such information about any Company's
insurance as that Bank may from time to time reasonably request, which
information shall be prepared in form and detail satisfactory to such Bank and
certified by an officer of such Company.
19
<PAGE> 25
SECTION 5.2. MONEY OBLIGATIONS. Each Company shall pay in full (a) prior
in each case to the date when penalties would attach, all taxes, assessments and
governmental charges and levies (except only those so long as and to the extent
that the same shall be contested in good faith by appropriate and timely
proceedings) for which it may be or become liable or to which any or all of its
properties may be or become subject; (b) all of its wage obligations to its
employees in compliance with the Fair Labor Standards Act (29 U.S.C. 206-207) or
any comparable provisions; and (c) all of its other obligations calling for the
payment of money (except only those so long as and to the extent that the same
shall be contested in good faith) before such payment becomes overdue.
SECTION 5.3. FINANCIAL STATEMENTS . The Borrower shall furnish to each
Bank:
(a) within forty-five (45) days after the end of each of the first three
quarter-annual periods of each fiscal year, balance sheets of Borrower and its
Subsidiaries as of the end of such period and statements of income (loss),
shareholders' equity and cash flow for the quarter and fiscal year to date
periods, all prepared on a consolidated basis, in accordance with GAAP, and in
form and detail satisfactory to the Banks and certified by Financial Officers of
the Borrower;
(b) within ninety (90) days after the end of each fiscal year, an annual
audit report of the Borrower and its Subsidiaries for that year prepared on a
consolidated, in accordance with GAAP, and in form and detail satisfactory to
the Banks and certified by an independent public accountant satisfactory to the
Banks, which report shall include balance sheets and statements of income
(loss), shareholders' equity and cash-flow for that period, together with a
certificate by the accountant setting forth the Possible Defaults coming to its
attention during the course of its audit or, if none, a statement to that
effect;
(c) concurrently with the delivery of the financial statements set forth
in (a) and (b) above, a Compliance Certificate in the form of Exhibit D hereto;
(d) within ninety (90) days after the end of each fiscal year of
Borrower, annual pro-forma projections of Borrower and its Subsidiaries for the
then current fiscal year and the next two succeeding fiscal years, to be in form
acceptable to the Agent;
(e) as soon as available, copies of all notices, reports, definitive
proxy or other statements and other documents sent by Borrower to its
shareholders, to the holders of any of its debentures or bonds or the trustee of
any indenture securing the same or pursuant to which they are issued, or sent by
Borrower (in final form) to any securities exchange or over the counter
authority or system, or to the Securities and Exchange Commission or any similar
federal agency having regulatory jurisdiction over the issuance of Borrower's
securities; and
(f) within ten (10) days of any Bank's written request, such other
information about the financial condition, properties and operations of any
Company as such Bank may from time to time reasonably request, which information
shall be submitted in form and detail satisfactory to such Bank and certified by
a Financial Officer of the Company or Companies in question.
20
<PAGE> 26
SECTION 5.4. FINANCIAL RECORDS. Each Company shall at all times maintain
true and complete records and books of account including, without limiting the
generality of the foregoing, appropriate reserves for possible losses and
liabilities, all in accordance with GAAP, and at all reasonable times (during
normal business hours and upon notice to the Company in question) permit the
Banks to examine that Company's books and records and to make excerpts therefrom
and transcripts thereof.
SECTION 5.5. FRANCHISES. Each Company shall preserve and maintain at all
times its existence, rights and franchises, except as provided in Section 5.14.
SECTION 5.6. ERISA COMPLIANCE. No Company shall incur any material
accumulated funding deficiency within the meaning of ERISA, or any material
liability to the PBGC, established thereunder in connection with any ERISA Plan.
Borrower shall furnish to the Banks (a) as soon as possible and in any event
within thirty (30) days after any Company knows or has reason to know that any
Reportable Event, as defined under ERISA Section 4043, with respect to any ERISA
Plan has occurred, a statement of the Financial Officer of such Company, setting
forth details as to such Reportable Event and the action which such Company
proposes to take with respect thereto, together with a copy of the notice of
such Reportable Event given to the PBGC if a copy of such notice is available to
such Company, and (b) promptly after receipt thereof a copy of any notice such
Company, or any member of the Controlled Group may receive from the PBGC or the
Internal Revenue Service with respect to any ERISA Plan administered by such
Company; provided, that this latter clause shall not apply to notices of general
application promulgated by the PBGC or the Internal Revenue Service, or to
notices relating to ministerial errors or other minor compliance errors.
Borrower shall promptly notify the flanks of any material taxes assessed,
proposed to he assessed or which Borrower has reason to believe may be assessed
against a Company by the Internal Revenue Service with respect to any ERISA
Plan. As used in this Section "material" means the measure of a matter of
significance which shall be determined as being an amount equal to five per cent
(5%) of the Consolidated Net Worth of Borrower and its Subsidiaries. As soon as
practicable, and in any event within twenty (20) days, after any Company becomes
aware that an ERISA Event has occurred, such Company shall provide Bank with
notice of such ERISA Event with a certificate by the chief financial officer or
other authorized officer of such Company setting forth the details of the event
and the action such Company or another Controlled Group member proposes to take
with respect thereto. Borrower shall, at the request of the Agent or any Bank,
deliver or caused to be delivered to the Agent or such Bank, as the case may be,
true and correct copies of any documents relating to the ERISA Plan of any
Company.
SECTION 5.7. INTEREST COVERAGE. Borrower shall not suffer or permit at
any time, for Borrower and its Subsidiaries, the ratio of Consolidated EBIT to
Consolidated Interest Expense to be less than 3.00 to 1.00, based upon
Borrower's financial statements for the most recent calendar quarter and the
three (3) previous calendar quarters (on a rolling four (4) quarter basis);
provided that, anything herein to the contrary notwithstanding, for any period
prior to June 30, 1997, each such calculation pursuant to this Section shall
exclude any calendar quarters prior to the calendar quarter ending June 30,
1996.
21
<PAGE> 27
SECTION 5.8. CONSOLIDATED NET WORTH. Borrower shall not suffer or permit
its Consolidated Net Worth at any time, based upon Borrower's financial
statements for the most recent calendar quarter, to fall below the current
minimum amount required, which current minimum amount required shall be (a) One
Hundred Seventy Five Million Dollars ($175,000,000) on the Effective Date
through September 29, 1996, (b) increasing on September 30, 1996, by fifty
percent (50%) of Borrower's Consolidated Net Earnings for the calendar quarter
ending September 30, 1996, and (c) further increasing on the last day of each
subsequent calendar quarter by an additional fifty percent (50%) of Borrower's
Consolidated Net Earnings for such calendar quarter then ended; provided,
however, that (i) if Borrower engages in an equity offering, the Consolidated
Net Worth required hereunder shall be immediately increased, on the date of such
offering, by one hundred percent (100%) of the net proceeds of such offering,
and (ii) the Consolidated Net Worth required hereunder shall never be decreased
due to losses of Borrower and its Subsidiaries.
SECTION 5.9. LEVERAGE. Borrower shall not suffer or permit at any time,
for Borrower and its Subsidiaries, on a consolidated basis, the ratio of (a) (i)
Funded Senior Debt, plus (ii) Subordinated Indebtedness, to (b) (i) Funded
Senior Debt, plus (ii) Subordinated Indebtedness, plus (iii) Consolidated Net
Worth, to be greater than .40 to 1.00, based upon the financial statements of
Borrower and its Subsidiaries for the most recent calendar quarter.
SECTION 5.10. BORROWING. No Company shall create, incur or have
outstanding any obligation for borrowed money or any Indebtedness of any kind;
provided, that this Section shall not apply to (a) the Loans; (b) any loans
granted to Borrower evidenced by promissory notes, installment contracts, or
financing leases executed pursuant to any other agreement now or hereafter in
effect so long as the aggregate principal amount of all such loans does not
exceed Twenty Five Million Dollars ($25,000,000) at any one time outstanding;
(c) the Indebtedness set forth in Schedule 2 attached hereto and made a part
hereof, including refinancings and renewals so long as the original principal
amount of such Indebtedness is not increased; (d) loans to a Company from a
Company so long as each such Company is a Guarantor of Payment; or (e)
reimbursement and other obligations under any letter of credit, currency swap or
forward contract or agreement, interest rate swap, cap collar or floor agreement
or other interest rate or other risk management device..
SECTION 5.11. LIENS. No Company shall create, assume or suffer to exist
any Lien upon any of its property or assets whether now owned or hereafter
acquired; provided that this Section shall not apply to the following:
(a) Liens for taxes not yet due or which are being actively contested in
good faith by appropriate proceedings;
(b) other statutory Liens incidental to the conduct of its business or
the ownership of its property and assets which (i) were not incurred in
connection with the borrowing of money or the obtaining of advances or credit,
and (ii) which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use thereof in the operation of its
business;
22
<PAGE> 28
(c) Liens on property or assets of a Subsidiary to secure obligations of
such Subsidiary to Borrower or a Guarantor of Payment;
(d) purchase money Liens on real estate and fixed assets securing the
loans pursuant to Section 5.10 (b) hereof; and
(e) Liens on assets of the Companies, as listed on Schedule 3 hereto.
Borrower shall not, nor shall Borrower permit any Subsidiary to enter into any
contract or agreement which would prohibit the Agent or the Banks from acquiring
a security interest, mortgage or other Lien on, or a collateral assignment of,
any of the property or assets of Borrower and/or any of its Subsidiaries.
SECTION 5.12. REGULATIONS U and X. No Company shall take any action that
would result in any non-compliance of the Loans with Regulations U and X of the
Board of Governors of the Federal Reserve System.
SECTION 5.13. INVESTMENTS. No Company shall (a) create, acquire or hold
any Subsidiary, (b) make or hold any investment in any stocks, bonds or
securities of any kind, (c) be or become a party to any joint venture or other
partnership without the prior written consent of the Majority Banks and the
Agent, (d) make or keep outstanding any advance or loan, or (e) be or become a
Guarantor of any kind, except guarantees securing only indebtedness of the
Companies incurred or permitted pursuant to this Agreement; provided, that this
Section shall not apply to (i) any endorsement of a check or other medium of
payment for deposit or collection through normal banking channels or similar
transaction in the normal course of business, (ii) any investment in direct
obligations of the United States of America or in certificates of deposit issued
by a member bank of the Federal Reserve System with a long term bank deposit
rating of "A" or better by Standard & Poor's Corporation, (iii) any investment
in commercial paper or securities which at the time of such investment is
assigned the highest quality rating in accordance with the rating systems
employed by either Moody's Investor Service, Inc. or Standard and Poor's
Corporation; (iv) the holding of Subsidiaries listed on Schedule 4 attached
hereto and made a part hereof; (v) loans or advances to employees in the
ordinary course of business; (vi) loans from Borrower to a Guarantor of Payment;
or (vii) loans from Borrower to a Subsidiary, so long as (A) all loans to any
Subsidiary, which is not a Guarantor of Payment, are not in excess of the
aggregate amount of Seven Million Five Hundred Thousand Dollars ($7,500,000),
and (B) all loans to all Subsidiaries, which are not Guarantors of Payment, are
not in excess of the aggregate amount of Twenty Five Million Dollars
($25,000,000). In addition, any loan by Borrower to a Guarantor of Payment, as
provided in subpart (vi) of this Section, in excess of Twenty Five Million
Dollars ($25,000,000) shall be evidenced by a promissory note pledged to the
Banks as security for the Debt, with such security agreement to be in form and
substance satisfactory to the Agent.
SECTION 5.14. MERGER AND SALE OF ASSETS. No Company shall merge or
consolidate with any other corporation or sell, lease or transfer or otherwise
dispose of all or
23
<PAGE> 29
a substantial part of its assets to any Person or entity, except that if no
Possible Default shall then exist or immediately thereafter shall begin to
exist,
(a) any Subsidiary may merge with (i) Borrower (provided that Borrower
shall be the continuing or surviving corporation) or (ii) any one or more
Guarantors of Payment, provided that either (x) the continuing or surviving
corporation shall be a Wholly-Owned Subsidiary which is a Guarantor of Payment,
or (y) after giving effect to any merger pursuant to this sub-clause (ii),
Borrower and/or one or more Wholly-Owned Subsidiaries which are Guarantors of
Payment shall own not less than the same percentage of the outstanding Voting
Stock of the continuing or surviving corporation as Borrower and/or one or more
Wholly-Owned Subsidiaries (which are Guarantors of Payment) owned of the merged
Subsidiary immediately prior to such merger, or
(b) any Subsidiary may sell, lease, transfer or otherwise dispose of any
of its assets to (i) Borrower, (ii) any Wholly-Owned Subsidiary which is a
Guarantor of Payment, or (iii) any Guarantor of Payment, of which Borrower
and/or one or more Wholly-Owned Subsidiaries, which are Guarantors of Payment,
shall own not less than the same percentage of Voting Stock as Borrower and/or
one or more Wholly-Owned Subsidiaries (which are Guarantors of Payment) then own
of the Subsidiary making such sale, lease, transfer or other disposition.
(c) in addition to (a) and (b) above, the Companies may, during any
twelve (12) month period, sell, transfer or otherwise dispose of assets not in
excess of the aggregate fair market value, for all Companies and all such
assets, of Twenty Five Million Dollars ($25,000,000).
SECTION 5.15. ACQUISITIONS. No Company shall acquire or permit any
Subsidiary to acquire the assets or stock of any other corporation; provided,
however, that Borrower or any Guarantor of Payment may acquire the stock or
assets of another corporation so long as (a) Borrower or such Guarantor of
Payment, as the case may be, is the surviving entity, and (b) the Companies are
in full compliance with the Loan Documents both prior to and subsequent to the
transaction. In addition, for any acquisition by Borrower in which the aggregate
consideration paid by the Companies exceeds the aggregate amount of Twenty Five
Million Dollars ($25,000,000), Borrower shall provide to the Agent and the
Banks, at least ten (10) days prior to such acquisition, a pro forma financial
statement of Borrower showing compliance with Sections 5.7, 5.8 and 5.9 hereof,
both before and after the acquisition.
SECTION 5.16. NOTICE. Borrower shall cause its Financial Officer to
promptly notify the Banks whenever any Possible Default may occur hereunder or
any other representation or warranty made in Article VI hereof or elsewhere in
this Agreement or in any Related Writing may for any reason cease in any
material respect to be true and complete.
SECTION 5.17. ENVIRONMENTAL COMPLIANCE. Each Company shall comply in all
material respects with any and all Environmental Laws including, without
limitation, all Environmental Laws in jurisdictions in which any Company owns or
operates a facility or site, arranges for disposal or treatment of hazardous
substances, solid waste or other
24
<PAGE> 30
wastes, accepts for transport any hazardous substances, solid waste or other
wastes or holds any interest in real property or otherwise. Borrower shall
furnish to the Banks promptly after receipt thereof a copy of any notice any
Company may receive from any governmental authority, private person or entity or
otherwise that any material litigation or proceeding pertaining to any
environmental, health or safety matter has been filed or is threatened against
such Company, any real property in which such Company holds any interest or any
past or present operation of such Company. No Company shall allow the release or
disposal of hazardous waste, solid waste or other wastes on, under or to any
real property in which any Company holds any interest or performs any of its
operations, in violation of any Environmental Law. As used in this Section,
"litigation or proceeding" means any demand, claim, notice, suit, suit in equity
action, administrative action, investigation or inquiry whether brought by any
governmental authority, private person or entity or otherwise. Borrower shall
defend, indemnify and hold the Agent and Banks harmless against all costs,
expenses, claims, damages, penalties and liabilities of every kind or nature
whatsoever (including attorneys fees) arising out of or resulting from the
noncompliance of any Company with any Environmental Law.
SECTION 5.18. CORPORATE NAMES. No Company shall change its corporate
name, unless, in each case, Borrower shall provide each Bank with thirty (30)
days prior written notice thereof.
SECTION 5.19. SUBSIDIARY GUARANTIES. Upon the request of the Agent or
the Majority Banks, each Subsidiary or other affiliate of a Company, created,
acquired or held subsequent to the Closing Date, shall execute and deliver to
the Agent a Guaranty of Payment of all of the Debt, such agreement to be in form
and substance acceptable to the Agent.
SECTION 5.20. AMSCO INDENTURE. Borrower shall comply fully with all
obligations imposed upon it pursuant to the AMSCO Indenture by virtue of the
Merger, including but not limited to obligations arising under Sections 3.07,
5.01 and 11.16 of the AMSCO Indenture.
SECTION 5.21. USE OF PROCEEDS. Borrower's use of the proceeds of the
Notes shall be solely for working capital and other general corporate purposes
of Borrower and its Subsidiaries which are Guarantors of Payment and for
acquisition purposes consistent with the restrictions set forth in Section 5.15
hereof.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES
Subject only to such exceptions, if any, as may be fully disclosed in an
officer's certificate or written opinion of counsel furnished by Borrower to
each Bank prior to the execution and delivery hereof, Borrower represents and
warrants as follows:
SECTION 6.1. EXISTENCE. Borrower is a duly organized and validly
existing Ohio corporation and is in good standing in the office of Ohio's
Secretary of State and is qualified to conduct business as a foreign corporation
in each state where the failure to do so
25
<PAGE> 31
would have a material adverse effect on Borrower, and is not required to be
qualified to transact business in any other jurisdiction where the failure to do
so would have a material adverse effect on Borrower.
SECTION 6.2. RIGHT TO ACT. The execution, delivery and performance by
Borrower of the Loan Documents has been duly authorized by all requisite
corporate action. No registration with or approval of any governmental agency of
any kind is required for the due execution and delivery or for the
enforceability of the Loan Documents. Borrower has legal power and right to
execute and deliver the Loan Documents and to perform and observe the provisions
of the Loan Documents. By executing and delivering the Loan Documents and by
performing and observing the provisions of the Loan Documents, Borrower will not
violate any existing provision of its articles of incorporation, code of
regulations or by-laws or any applicable law or violate or otherwise become in
default under any existing contract or other obligation binding upon Borrower.
The officers executing and delivering the Loan Documents on behalf of Borrower
have been duly authorized to do so, and the Loan Documents, when executed, are
legally binding upon Borrower in every respect.
SECTION 6.3. LITIGATION AND LIENS. Except for the matters described or
referred to in Schedule S hereto, no litigation, investigation or proceeding is
pending or threatened against any Company before any court or any administrative
agency, including but not limited to the United States Food and Drug
Administration, which is reasonably expected to have a material adverse effect
on such Company.
SECTION 6.4. EMPLOYEE BENEFITS PLANS. Schedule 6 identifies each ERISA
Plan. No ERISA Event has occurred or is expected to occur with respect to an
ERISA Plan. Full payment has been made of all amounts which a Controlled Group
member is required, under applicable law or under the governing documents, to
have been paid as a contribution to or a benefit under each ERISA Plan. The
liability of each Controlled Group member with respect to each ERISA Plan has
been fully funded based upon reasonable and proper actuarial assumptions, has
been fully insured, or has been fully reserved for on its financial statements.
No changes have occurred or are expected to occur that would cause a material
increase in the cost of providing benefits under the ERISA Plan. With respect to
each ERISA Plan that is intended to be qualified under Code Section 401(a): (i)
the ERISA Plan and any associated trust operationally comply with the applicable
requirements of Code Section 401(a), (ii) the ERISA Plan and any associated
trust have been amended to comply with all such requirements as c currently in
effect, other than those requirements for which a retroactive amendment can be
made within the "remedial amendment period" available under Code Section 401(b)
(as extended under Treasury Regulations and other Treasury pronouncements upon
which taxpayers may rely), (iii) the ERISA Plan and any associated trust have
received a favorable determination letter from the Internal Revenue Service
stating that the ERISA Plan qualifies under Code Section 401(a), that the
associated trust qualifies under Code Section 501(a) and, if applicable, that
any cash or deferred arrangement under the ERISA Plan qualifies under Code
Section 401(k), unless the ERISA Plan was first adopted at a time for which the
above-described "remedial amendment period" has not yet expired, (iv) the ERISA
Plan currently satisfies the requirements of Code Section 410(b), without regard
to any retroactive amendment that may be made within the above-described
"remedial amendment period", and (v) no contribution made
26
<PAGE> 32
to the ERISA Plan is subject to an excise tax under Code Section 4972; and. With
respect to any Pension Plan, the "accumulated benefit obligation" of Controlled
Group members with respect to the Pension Plan (as determined in accordance with
Statement of Accounting Standards No. 87, "Employers' Accounting for Pensions")
does not exceed the fair market value of Pension Plan assets. Neither Borrower,
nor any Subsidiary has a Multiemployer Plan.
SECTION 6.5. COMPLIANCE WITH LAWS.
Except for the matters described or referred to in Schedule 7 hereto:
(a) Each Company is in compliance with the requirements of all
applicable laws, statutes, regulations, rules or ordinances of any governmental
entity, or of any agency thereof.
(b) Without limiting the foregoing, each Company is in compliance with
any and all Environmental Laws including, without limitation, all Environmental
Laws in all jurisdictions in which any Company owns or operates, or has owned or
operated, a facility or site, 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 waste or other wastes or holds or
has held any interest in real property or otherwise. No material litigation or
proceeding arising under, relating to or in connection with any Environmental
Law is pending or, to the best of their knowledge, threatened against any
Company, any real property in which any Company holds or has held an interest or
any past or present operation of any Company. No release, threatened release or
disposal of hazardous waste, solid waste or other wastes is occurring, or has
occurred (other than those that are currently being cleaned up in accordance
with Environmental Laws), on, under or to any real property in which any Company
holds any interest or performs any of its operations, in violation of any
Environmental Law. As used in this Section, "litigation or proceeding" means any
demand, claim, notice, suit, suit in equity, action, administrative action,
investigation or inquiry whether brought by any governmental authority, private
person or entity or otherwise.
SECTION 6.6. SOLVENCY. Borrower has received consideration which is the
reasonable equivalent value of the obligations and liabilities that Borrower has
incurred to the Banks. Borrower is not insolvent as defined in any applicable
state or federal statute, nor will Borrower be rendered insolvent by the
execution and delivery of the Loan Documents. Borrower is not engaged nor is it
about to engage in any business or transaction for which the assets retained by
it will be an unreasonably small capital, taking into consideration the
obligations to the Banks incurred hereunder. Borrower does not intend to, nor
does Borrower believe that it will, incur debts beyond its ability to pay them
as they mature.
SECTION 6.7. FINANCIAL STATEMENTS. The December 31, 1995 consolidated
financial statements of Borrower, furnished to each Bank, are true and complete,
have been prepared in accordance with GAAP, and fairly present Borrower's and
each Subsidiary's financial condition as of the date of such financial
statements and the results of each Company's operations for the interim period
then ending. Since that date, there has been no material adverse change in any
Company's financial condition, properties or business nor any change in their
accounting procedures.
27
<PAGE> 33
SECTION 6.8. REGULATIONS. Borrower is not engaged principally or as one
of its important activities, in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System of the United States of
America). Neither the granting of the Loans hereunder (or any conversion
thereof) nor the use of the proceeds of the Loans will violate, or be
inconsistent with, the provisions of Regulation U or X of said Board of
Governors.
SECTION 6.9. LIENS AND SECURITY INTERESTS. On the Closing Date and on
the Effective Date, except for Liens permitted pursuant to Section 5.11 hereof
and except as set forth in Schedule 3 hereto, (a) Borrower has good and
marketable title to all of its properties and assets, (b) there is no financing
statement outstanding covering any personal property of Borrower or of any
Subsidiary; (c) there is no mortgage outstanding covering any real property of
Borrower or of any Subsidiary; and (d) no real or personal property of Borrower
or of any Subsidiary is subject to any security interest or Lien of any kind. On
the Closing Date and on the Effective Date, neither Borrower nor any Subsidiary
has entered into any contract or agreement which would prohibit the Agent or the
Banks from acquiring a security interest, mortgage or other Lien on, or a
collateral assignment of, any of the property or assets of Borrower or any of
its Subsidiaries.
SECTION 6.10. SUBSIDIARIES. Each Subsidiary of Borrower is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate power and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. Borrower has no Subsidiaries or affiliates
other than those listed on Schedule 4 hereto.
SECTION 6.11. TAXES. Except for such matters that would not be
reasonably likely to have, individually or in the aggregate, a material adverse
effect on Borrower, (a) each Company has timely filed all returns and reports
required to be filed by it with any taxing authority with respect to taxes for
all periods heretofore ended, taking into account any extension of time to file
granted to or obtained on behalf of such Company, (b) all taxes required to be
paid with respect to the periods covered by such returns or reports and that are
due prior to the date hereof have been paid, (c) as of the date hereof, no
deficiency for any amount of tax has been asserted or assessed by a taxing
authority against any Company, except for amounts which have been paid or for
which the affected Borrower has made an adequate reserve as reflected in
Borrower's financial statements, (d) all lability for taxes of any Company that
are or will become due or payable with respect to periods covered by the
financial statements referred to in Section 6.7 have been paid or adequately
reserved for on such financial statements to the extent required by GAAP, and
(e) no Company is liable for any taxes arising out of its inclusion in any
consolidated, affiliated, combined or unitary group.
SECTION 6.12. FULL DISCLOSURE. None of the Loan Documents or any
schedule or exhibit thereto or document, certificate, report, statement or other
information furnished to the Agent or the Banks in connection herewith or
therewith or with the consummation of the transactions contemplated hereby or
thereby contains any material misstatement of fact nor omits to state a material
fact necessary to make the statements contained
28
<PAGE> 34
herein or therein not misleading. There is no fact materially adversely
affecting the assets, business, financial position, results of operations or
prospects of any Company which has not been set forth in a footnote included in
the financial statements referred to in Section 6.7 or in an exhibit or schedule
thereto.
SECTION 6.13. EFFECTIVENESS OF MERGER. On or prior to the Effective
Date, the Merger will have become effective in accordance with the terms of the
Merger Agreement.
SECTION 6.14. OFFERING DOCUMENTS. The Offering Documents have been filed
with the Securities and Exchange Commission (as to the Joint Proxy Statement) or
declared effective by the Securities and Exchange Commission (as to the
Registration Statement on Form S-4), and the Merger Agreement is in full force
and effect. The representations and warranties contained in the Merger Agreement
that are not made as of a specific date are true at and as of the Effective Date
as if made at and as of the Effective Date, and the representations and
warranties contained in the Merger Agreement that are made as of a specific date
shall be true as of such date, except that the failure of all such
representations and warranties to be true would not, in the aggregate, have a
material adverse effect.
SECTION 6.15. CERTIFICATE OF MERGER. The Certificate of Merger, as
required by applicable law, with the Secretary of State of Delaware, prior to
the making of the first Loan hereunder in each case comply as to form and
substance with the laws of the State of Delaware and the State of Ohio, as
applicable.
SECTION 6.16. JOINT PROXY STATEMENT AND PROXY SOLICITATION.
(a) The Joint Proxy Statement (as referenced in the definition of
Offering Documents), as of the date it was distributed to shareholders of
Borrower and AMSCO, and at the time of each shareholder meeting to consider and
vote on the Merger, did not and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(b) The Joint Proxy Statement (as referenced in the definition of
Offering Documents), as of the date it was distributed to shareholders of
Borrower and AMSCO, and at the time of each shareholder meeting to consider and
vote on the Merger, complied in all material respects as to form with, and all
filing of and solicitations under the Joint Proxy Statement have been made in
accordance with, the applicable provisions of the Securities Exchange Act of
1934, as amended, and the proxy solicitation rules and other applicable rules
and regulations thereunder.
SECTION 6.17. SHAREHOLDER APPROVAL. The holders of the requisite
percentage (under applicable law and the Certificate or Articles of
Incorporation of Borrower and AMSCO) of outstanding stock of Borrower and AMSCO,
respectively, have voted to
29
<PAGE> 35
approve the Merger Agreement at a meeting of shareholders of Borrower and AMSCO,
respectively, duly called and held on or prior to the Effective Date.
SECTION 6.18. DEFAULTS. No Possible Default exists hereunder, nor will
any begin to exist immediately after the execution and delivery hereof. No
Company is in default under, nor will the execution, delivery or performance by
such Company of its obligations under this Credit Agreement or the Merger
Agreement give rise to a default under, any material agreement, indenture or
other instrument relating to the borrowing of money by such Company or the
guarantee by such Company of any such obligation (other than trade payables and
instruments relating to transactions entered into in the ordinary course of
business), which default is reasonably likely to have, either individually or in
the aggregate, a material adverse effect on such 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 default.
ARTICLE VII. EVENTS OF DEFAULT
Each of the following shall constitute an Event of Default hereunder:
SECTION 7.1. PAYMENTS. If the principal of or interest on any Note or
any facility or other fee shall not be paid in full punctually when due and
payable.
SECTION 7.2. SPECIAL COVENANTS. If any Company or any Guarantor of
Payment shall fail or omit to perform and observe Sections 5.7, 5.8, 5.9, or
5.19 hereof.
SECTION 7.3. OTHER COVENANTS. If any Company or any Guarantor of Payment
shall fail or omit to perform and observe any agreement or other provision
(other than those referred to in Sections 7.1 or 7.2 hereof) contained or
referred to in this Agreement or any Related Writing that is on such Company's
or Guarantor of Payment's part, as the case may be, to be complied with, and
that Possible Default shall not have been fully corrected within thirty (30)
days after the giving of written notice thereof to Borrower by Agent or any Bank
that the specified Possible Default is to be remedied.
SECTION 7.4. WARRANTIES. If any representation, warranty or statement
made in or pursuant to this Agreement or any Related Writing or any other
material information furnished by any Company or any Guarantor of Payment to the
Banks or any thereof or any other holder of any Note, shall be false or
erroneous in any material respect.
SECTION 7.5. CROSS DEFAULT. If any Company or any Guarantor of Payment
shall default in the payment of principal or interest due and owing upon any
other obligation for borrowed money in excess of Five Hundred Thousand Dollars
($500,000) beyond any period of grace provided with respect thereto or in the
performance or observance of any other agreement, term or condition contained in
any agreement under which such obligation is created, if the effect of such
default is to accelerate the maturity of such indebtedness or to permit the
holder thereof to cause such indebtedness to become due prior to its stated
maturity.
30
<PAGE> 36
SECTION 7.6. ERISA DEFAULT. The occurrence of one or more ERISA Events
which the Banks determine could have a material adverse effect on the financial
condition of the Borrower and its Subsidiaries when taken as a whole.
SECTION 7.7. MONEY JUDGMENT. A final judgment or order for the payment
of money shall be rendered against any Company or any Guarantor of Payment by a
court of competent jurisdiction, which remains unpaid or unstayed and
undischarged for a period (during which execution shall not be effectively
stayed) of thirty (30) days after the date on which the right to appeal has
expired, provided that the aggregate of all such judgments shall exceed One
Million Dollars ($1,000,000).
SECTION 7.8. SOLVENCY. If any Company or any Guarantor of Payment shall
(a) discontinue business, or (b) generally not pay its debts as such debts
become due, or (c) make a general assignment for the benefit of creditors, or
(d) apply for or consent to the appointment of a receiver, a custodian, a
trustee, an interim trustee or liquidator of all or a substantial part of its
assets. or (e) be adjudicated a debtor or have entered against it an order for
relief under Title 11 of the United States Code, as the same may be amended from
time to time, or (f) file a voluntary petition in bankruptcy or file a petition
or an answer seeking reorganization or an arrangement with creditors or seeking
to take advantage of any other law (whether federal or state) relating to relief
of debtors, or admit (by answer, by default or otherwise) the material
allegations of a petition filed against it in any bankruptcy, reorganization,
insolvency or other proceeding (whether federal or state) relating to relief of
debtors, or (g) suffer or permit to continue unstayed and in effect for thirty
(30) consecutive days any judgment, decree or order entered by a court of
competent jurisdiction, which approves a petition seeking its reorganization or
appoints a receiver, custodian, trustee, interim trustee or liquidator of all or
a substantial part of its assets, or (h) take, or omit to take, any action in
order thereby to effect any of the foregoing.
ARTICLE VIII. REMEDIES UPON DEFAULT
Notwithstanding any contrary provision or inference herein or elsewhere,
SECTION 8.1. OPTIONAL DEFAULTS. If any Event of Default referred to in
Section 7.1, 7.2., 7.3, 7.4, 7.5, 7.6, or 7.7 hereof shall occur, the Majority
Banks shall have the right in their discretion, by directing the Agent, on
behalf of the Banks, to give written notice to Borrower, to:
(a) terminate the Commitments and the credits hereby established, if not
theretofore terminated, and, immediately upon such election, the obligations of
Banks, and each thereof, to make any further Loan or Loans hereunder,
immediately shall be terminated, and/or
(b) accelerate the maturity of all of Borrower's Debt to the Banks (if
it be not already due and payable), whereupon all of Borrower's Debt to the
Banks shall become and thereafter
31
<PAGE> 37
be immediately due and payable in full without any presentment or demand and
without any further or other notice of any kind, all of which are hereby waived
by Borrower.
SECTION 8.2. AUTOMATIC DEFAULTS. If any Event of Default referred to in
Section 7.8 hereof shall occur,
(a) all of the Commitments and the credits hereby established shall
automatically and immediately terminate, if not theretofore terminated, and no
Bank thereafter shall be under any obligation to grant any further Loan or Loans
hereunder, and
(b) the principal of and interest on any Notes then outstanding, and all
of Borrower's Debt to the Banks, shall thereupon become and thereafter be
immediately due and payable in full (if it be not already due and payable), all
without any presentment, demand or notice of any kind, which are hereby waived
by Borrower.
SECTION 8.3. OFFSETS. If there shall occur or exist any Possible Default
referred to in Section 7.8 hereof or if the maturity of the Notes is accelerated
pursuant to Section 8.1 or 8.2 hereof, each Bank shall have the right at any
time to set off against, and to appropriate and apply toward the payment of, any
and all Debt then owing by Borrower to that Bank (including. without limitation,
any participation purchased or to be purchased pursuant to Section 8.4 hereof),
whether or not the same shall then have matured, any and all deposit balances
and all other indebtedness then held or owing by that Bank to or for the credit
or account of Borrower. all without notice to or demand upon Borrower or any
other person, all such notices and demands being hereby expressly waived by
Borrower.
SECTION 8.4. EQUALIZATION PROVISION. Each Bank agrees with the other
Banks that if it, at any time, shall obtain any Advantage over the other Banks
or any thereof in respect of Borrower's Debt to the Banks (except as to Swing
Loans as set forth in Section 2.lB hereof and except under Article III hereof),
ii shall purchase from the other Banks, for cash and at par, such additional
participation in Borrower's Debt to the Banks as shall be necessary to nullify
the Advantage. If any such Advantage resulting in the purchase of an additional
participation as aforesaid shall be recovered in whole or in part from the Bank
receiving the Advantage, each such purchase shall be rescinded, and the purchase
price restored (but without interest unless the Bank receiving the Advantage is
required to pay interest on the Advantage to the person recovering the Advantage
from such Bank) ratably to the extent of the recovery. Each Bank further agrees
with the other Banks that if it at any time shall receive any payment for or on
behalf of Borrower on any indebtedness owing by Borrower to that Bank by reason
of offset of any deposit or other indebtedness, it will apply such payment first
to any and all indebtedness owing by Borrower to that Bank pursuant to this
Agreement (including, without limitation, any participation purchased or to be
purchased pursuant to this Section or any other Section of this Agreement).
Borrower agrees that any Bank so purchasing a participation from the other Banks
or any thereof pursuant to this Section may exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Bank was a direct creditor of Borrower in the amount of such
participation.
32
<PAGE> 38
ARTICLE IX. THE AGENT
The Banks authorize Society National Bank and Society National Bank
hereby agrees to act as Agent for the Banks in respect of this Agreement upon
the terms and conditions set forth elsewhere in this Agreement, and upon the
following terms and conditions:
SECTION 9.1. 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 hereunder as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. Neither
the Agent nor any of its directors, officers, attorneys or employees shall be
liable for any action taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct.
SECTION 9.2. NOTE HOLDERS. The Agent may treat the payee of any Note as
the holder thereof until written notice of transfer shall have been filed with
it signed by such payee and in form satisfactory to the Agent.
SECTION 9.3. CONSULTATION WITH COUNSEL. The Agent may consult with legal
counsel selected by it and shall not be liable for any action taken or suffered
in good faith by it in accordance with the opinion of such counsel.
SECTION 9.4. DOCUMENTS. The Agent shall not be under any duty to examine
into or pass upon the validity, effectiveness, genuineness or value of any Loan
Documents or any other Related Writing furnished pursuant hereto or in
connection herewith or the value of any collateral obtained hereunder, and the
Agent shall be entitled to assume that the same are valid, effective and genuine
and what they purport to be.
SECTION 9.5. AGENT AND AFFILIATES. With respect to the Loans made
hereunder, the Agent shall have the same rights and powers hereunder as any
other Bank and may exercise the same as though it were not the Agent, and the
Agent and its affiliates may accept deposits from, lend money to and generally
engage in any kind of business with Borrower or any Subsidiary or affiliate of
Borrower.
SECTION 9.6. KNOWLEDGE OF DEFAULT. It is expressly understood and agreed
that the Agent shall be entitled to assume that no Possible Default has occurred
and is continuing, unless the Agent has been notified by a Bank in writing that
such Bank considers that a Possible Default has occurred and is continuing and
specifying the nature thereof.
SECTION 9.7. ACTION BY AGENT. So long as the Agent shall be entitled,
pursuant to Section 9.6 hereof, to assume that no Possible Default shall have
occurred and be continuing, the Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may be
vested in it by, or with respect to taking or refraining from taking any action
or actions which it may be able to take under or in respect of, this Agreement.
The Agent shall incur no liability under or in respect of this Agreement by
acting
33
<PAGE> 39
upon any notice, certificate, warranty or other paper or instrument believed by
it to be genuine or authentic or to be signed by the proper party or parties, or
with respect to anything which it may do or refrain from doing in the reasonable
exercise of its judgment, or which may seem to it to be necessary or desirable
in the premises.
SECTION 9.8. NOTICES, DEFAULT, ETC. In the event that the Agent shall
have acquired actual knowledge of any Possible Default, the Agent shall promptly
notify the Banks and shall take such action and assert such rights under this
Agreement as the Majority Banks shall direct and the Agent shall inform the
other Banks in writing of the action taken. The Agent may take such action and
assert such rights as it deems to be advisable, in its discretion, for the
protection of the interests of the holders of the Notes.
SECTION 9.9. INDEMNIFICATION OF AGENT. The Banks agree to indemnify the
Agent (to the extent not reimbursed by Borrower), ratably according to the
respective principal amounts of their Commitments from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in its capacity as agent
in any way relating to or arising out of this Agreement or any action taken or
omitted by the Agent with respect to this Agreement, provided that no Bank shall
be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including attorney fees)
or disbursements resulting from the Agent's gross negligence, willful misconduct
or from any action taken or omitted by the Agent in any capacity other than as
agent under this Agreement.
SECTION 9.10. SUCCESSOR AGENT. The Agent may resign as agent hereunder
by giving not fewer than thirty (30) days' prior written notice to Borrower and
the Banks. If the Agent shall resign under this Agreement, then either (a) the
Majority Banks shall appoint from among the Banks a successor agent for the
Banks, with the consent of Borrower, which shall not be unreasonably withheld,
or (b) if a successor agent shall not be so appointed and approved within the
thirty (30) day period following the Agent's notice to the Banks of its
resignation, then the Agent shall appoint a successor agent who shall serve as
agent until such time as the Majority Banks appoint a successor agent. Upon its
appointment, such successor agent shall succeed to the rights. powers and duties
as agent, and the term "Agent" shall mean such successor effective upon its
appointment, and the former agent's rights, powers and duties as agent shall be
terminated without any other or further act or deed on the part of such former
agent or any of the parties to this Agreement.
ARTICLE X. MISCELLANEOUS
SECTION 10.1. BANKS' INDEPENDENT INVESTIGATION. Each Bank, by its
signature to this Agreement, acknowledges and agrees that the Agent has made no
representation or warranty, express or implied, with respect to the
creditworthiness, financial condition, or any other condition of any Company or
with respect to the statements contained in any information
34
<PAGE> 40
memorandum furnished in connection herewith or in any other oral or written
communication between the Agent and such Bank. Each Bank represents that it has
made and shall continue to make its own independent investigation of the
creditworthiness, financial condition and affairs of the Companies in connection
with the extension of credit hereunder, and agrees that the Agent has no duty or
responsibility, either initially or on a continuing basis, to provide any Bank
with any credit or other information with respect thereto (other than such
notices as may be expressly required to be given by Agent to the Banks
hereunder), whether coming into its possession before the granting of the first
Loans hereunder or at any time or times thereafter.
SECTION 10.2. NO WAIVER; CUMULATIVE REMEDIES. No omission or course of
dealing on the part of Agent, any Bank or the holder of any Note in exercising
any right, power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. The remedies herein provided are cumulative and in addition
to any other rights, powers or privileges held by operation of law, by contract
or otherwise.
SECTION 10.3. AMENDMENTS, CONSENTS. No amendment, modification,
termination, or waiver of any provision of any Loan Document nor consent to any
variance therefrom, shall be effective unless the same shall be in writing and
signed by the Majority Banks and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
Anything herein to the contrary notwithstanding, unanimous consent of the Banks
shall be required with respect to (a) any increase in the Commitments hereunder.
(b) the extension of maturity of the Notes, the payment date of interest
thereunder, or the payment of facility or other fees or amounts payable
hereunder, (c) any reduction in the rate of interest on the Notes, or in any
amount of principal or interest due on any Note, or the payment of facility or
other fees hereunder or any change in the manner of pro rata application of any
payments made by Borrower to the Banks hereunder, (d) any change in any
percentage voting requirement, voting rights, or the Majority Banks definition
in this Agreement, (e) the release of any Guarantor of Payment, or (f) any
amendment to this Section 10.3 or Section 8.4 hereof. Notice of amendments or
consents ratified by the Banks hereunder shall immediately be forwarded by
Borrower to all Banks. Each Bank or other holder of a Note shall be bound by any
amendment, waiver or consent obtained as authorized by this Section, regardless
of its failure to agree thereto.
SECTION 10.4 EXTENSION OF REVOLVING CREDITS. Upon the written request of
Borrower to the Agent and the Banks and submission of the financial statements
required pursuant to Section 5.3 (b) hereof, the Banks shall have the option
each year of extending the Commitments for an additional year. Each such
extension shall require the unanimous written consent of all of the Banks.
SECTION 10.5. NOTICES. All notices, requests, demands and other
communications provided for hereunder shall be in writing and, if to Borrower,
mailed or delivered to it, addressed to it at the address specified on the
signature pages of this Agreement, if to a Bank. mailed or delivered to it,
addressed to the address of such Bank specified on the
35
<PAGE> 41
signature pages of this Agreement, or, as to each party, at such other address
as shall be designated by such party in a written notice to each of the other
parties. All notices, statements, requests, demands and other communications
provided for hereunder shall be deemed to be given or made when received by the
Agent, the Banks or the Borrower, as the case may be.
SECTION 10.6. COSTS, EXPENSES AND TAXES. Borrower agrees to pay on
demand all costs and other expenses of the Banks and Agent, including, but not
limited to, (a) administration and out-of-pocket expenses of Agent in connection
with the administration of the Loan Documents, the collection and disbursement
of all funds hereunder and the other instruments and documents to be delivered
hereunder, (b) extraordinary expenses of Agent or the Banks in connection with
the administration of the Loan Documents and the other instruments and documents
to be delivered hereunder, (c) the reasonable fees and out-of-pocket expenses of
special counsel for the Banks, with respect thereto and of local counsel, if
any, who may be retained by said special counsel with respect thereto, and (d)
all costs and expenses, including reasonable attorneys' fees, in connection with
the restructuring or enforcement of the Loan Documents or any Related Writing.
Borrower also agree to pay any expenses of the Banks and the Agent incurred in
connection with the preparation of the Loan Documents and any Related Writings.
In addition, Borrower shall pay any and all stamp and other taxes and fees
payable or determined to be payable in connection with the execution and
delivery of the Loan Documents, and the other instruments and documents to be
delivered hereunder, and agrees to save Agent and each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes or fees.
SECTION 10.7. INDEMNIFICATION. Borrower agrees to defend, indemnify and
hold harmless the Agent and the Banks from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses (including attorney fees), or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent or
any Bank in connection with any investigative, administrative or judicial
proceeding (whether or not such Bank or the Agent shall be designated a party
thereto) or any other claim by any person or entity relating to or arising out
of this Agreement or any actual or proposed use of proceeds of the Loans
hereunder or any activities of any Company or any Guarantor of Payment or any of
their affiliates; provided that no Bank nor the Agent shall have the right to be
indemnified under this Section for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction. All obligations
provided for in this Section 10.7 shall survive any termination of this
Agreement.
SECTION 10.8. CAPITAL ADEQUACY. To the extent not covered by Article III
hereof, if any Bank shall have determined, after the date hereof, that the
adoption of any applicable law, rule, regulation or guideline regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its lending office) with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Bank's capital (or the capital of its holding company) as
a consequence of its obligations hereunder to
36
<PAGE> 42
a level below that which such Bank (or its holding company) could have achieved
but for such adoption, change or compliance (taking into consideration such
Bank's policies or the policies of its holding company with respect to capital
adequacy) by an amount deemed by such Bank to be material, then from time to
time, within 15 days after demand by such Bank (with a copy to the Agent),
Borrower shall pay to such Bank such additional amount or amounts as shall
compensate such Bank (or its holding company) for such reduction. Each Bank
shall designate a different lending office if such designation will avoid the
need for, or reduce the amount of, such compensation and will not, in the
judgment of such Bank, be otherwise disadvantageous to such Bank. A certificate
of any Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, such Bank may use any
reasonable averaging and attribution methods. Failure on the part of any Bank to
demand compensation for any reduction in return on capital with respect to any
period shall not constitute a waiver of such Bank's rights to demand
compensation for any reduction in return on capital in such period or in any
other period. The protection of this Section shall be available to each Bank
regardless of any possible contention of the invalidity or inapplicability of
the law, regulation or other condition which shall have been imposed.
SECTION 10.9. OBLIGATIONS SEVERAL; NO FIDUCIARY OBLIGATIONS. The
obligations of the Banks hereunder are several and not joint. Nothing contained
in this Agreement and no action taken by Agent or the Banks pursuant hereto
shall be deemed to constitute the Banks a partnership, association, joint
venture or other entity. No default by any Bank hereunder shall excuse the other
Banks from any obligation under this Agreement; but no Bank shall have or
acquire any additional obligation of any kind by reason of such default. The
relationship among Borrower and the Banks with respect to the Loan Documents and
the Related Writings is and shall be solely that of debtors and creditors,
respectively, and no Bank has any fiduciary obligation toward Borrower with
respect to any such documents or the transactions contemplated thereby.
SECTION 10.10. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
SECTION 10.11. BINDING EFFECT; BORROWER'S ASSIGNMENT. This Agreement
shall be binding upon and inure to the benefit of Borrower, Agent and each of
the Banks and their respective successors and assigns, after it shall have been
executed by Borrower, Agent and each Bank, except that Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
prior written consent of all of the Banks.
37
<PAGE> 43
SECTION 10.12. BANK ASSIGNMENTS/PARTICIPATIONS.
A. Assignment/Transfer of Commitments.
Each Bank shall have the right at any time or times to assign or
transfer to another financial institution, without recourse, all or any part of
(a) that Bank's Commitment, (b) any Loan made by that Bank, (c) any Note, and
(d) that Bank's participations, if any, purchased pursuant to Section 8.4;
provided, however, in each such case, that the transferor and the transferee
shall have complied with the following requirements:
(i) Prior Consent. No transfer may be consummated pursuant to this
Section 10.12 without the prior written consent of the Borrower and the Agent
(other than a transfer by any Bank to any affiliate of such Bank), which consent
of the Borrower and the Agent shall not be unreasonably withheld; provided,
however, that, neither Borrower nor the Agent shall be deemed to be unreasonable
in withholding its respective consent if, (1) after giving effect to such
transfer, any Bank's (including any assignee becoming a Bank pursuant to this
Section 10.12) Commitment Percentage of the Total Commitment Amount would be
less than Ten Million Dollars ($10,000,000), (2) the proposed transferee is a
financial institution not organized under the laws of a state or of the United
States (unless such institution is an affiliate of the transferring Bank) or (3)
if the proposed transferee's long-term certificates of deposit shall be rated A
or below by any rating agency or the equivalent rating by Thompson's Bank Watch;
provided, further, that, if at the time of the proposed transfer, (A) any
Possible Default shall have occurred, the Borrower's consent shall not be
required, or (B) Borrower is the subject of a proceeding referenced in Section
7.8, the Borrower's consent shall not be required and any Bank may consummate a
transfer contemplated by this Section 10.12 notwithstanding the requirements of
clauses (1), (2) or (3) of this Section 10. 12A (i). Anything herein to the
contrary notwithstanding, any Bank may at any time assign all or any portion of
its rights under the Loan Documents to a Federal Reserve Bank, and no such
assignment shall release such assigning Bank from its obligations hereunder.
(ii) Agreement; Transfer Fee. Unless the transfer shall be to an
affiliate of the transferor or the transfer shall be due to merger of the
transferor or for regulatory purposes, the transferor (1) shall remit to the
Agent, for its own account, an administrative fee of Two Thousand Five Hundred
Dollars ($2,500) and (2) shall cause the transferee to execute and deliver to
the Borrower, the Agent and each Bank (A) an Assignment Agreement, in the form
of Exhibit E hereto (an "Assignment Agreement") together with the consents and
releases and the Administrative Questionnaire referenced therein and (B) such
additional amendments, assurances and other writings as the Agent may reasonably
require.
(iii) Notes. Borrower shall execute and deliver (1) to the Agent, the
transferor and the transferee, any consent or release (of all or a portion of
the obligations of the transferor) to be delivered in connection with the
Assignment Agreement, (2) if a Bank's entire interest in its Commitment, its
Commitment Percentage and in all of its Loans has been transferred to the
transferee, an appropriate Note shall be issued to the transferee, and the
transferor's Note shall be returned to the Borrower marked "replaced", and (3)
if only a portion of a Bank's interest in its Commitment, its Commitment
Percentage and its Loans has been transferred, a new Note to each of the
transferor and the transferee, and the transferor's previous Note shall be
returned to the Borrower marked "replaced".
38
<PAGE> 44
(iv) Parties. Upon satisfaction of the requirements of this Section 10.1
2A, including the payment of the fee and the delivery of the documents set forth
in Section 10.12A (ii), (1) the transferee shall become and thereafter be deemed
to be a "Bank" for the purposes of this Agreement, and (2) the transferor (A)
shall continue to be a "Bank" for the purposes of this Agreement only if and to
the extent that the transfer shall not have been a transfer of its entire
interest in its Commitment, its Commitment Percentage and its Loans, (B) in the
case of any transfer of its entire interest in its Commitment, its Commitment
Percentage and its Loans, shall cease to be and thereafter shall no longer be
deemed to be a "Bank" and (C) the signature pages hereto and Schedule 1 hereto
shall be automatically amended, without further action, to reflect the result of
any such transfer.
(v) The Register. The Agent shall maintain at its address referred to in
Section 10.5 a copy of each Assignment and Acceptance delivered to it and a
register (the "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 entries in the Register shall be conclusive, in the
absence of manifest error, and Borrower, the Agent and the Banks may treat each
financial institution whose \name is recorded in the Register as the owner of
the Loan recorded therein for all purposes of this Agreement. The Register shall
be available for inspection by Borrower or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(vi) Non-U.S. Transferee. If, pursuant to this section, any interest in
this Agreement or any Note is transferred to any transferee which is organized
under the laws of any jurisdiction other than the United States or any state
thereof, the transferor Bank shall cause such transferee, concurrently with the
effectiveness of such transfer, (i) to represent to the transferor Bank (for the
benefit of the transferor Bank, the Agent and Borrower) that under applicable
law and treaties no taxes will be required to be withheld by the Agent, Borrower
or the transferor Bank with respect to any payments to be made to such
transferee in respect of the Loans hereunder, (ii) to furnish to the transferor
Bank (and, in the case of any transferee registered in the Register, the Agent
and Borrower) either (A) U.S. Internal Revenue Service Form 4224 or U.S.
Internal Revenue Service Form 1001 or (B) United States Internal Revenue Service
Form W-8 or W-9, as applicable (wherein such transferee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest payments
hereunder), and (iii) to agree (for the benefit of the transferor Bank, the
Agent and Borrower) to provide the transferor Bank (and, in the case of any
transferee registered in the Register, the Agent and Borrower) a new Form 4224
or Form 1001 or Form W-8 or W-9, as applicable, upon the expiration or
obsolescence of any previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and amendments duly
executed and completed by such transferee, and to comply from time to time with
all applicable U.S. laws and regulations with regard to such withholding tax
exemption.
B. Sale of Participations.
Each Bank shall have the right at any time or times, without the consent
of the Agent or the Borrower, to sell one or more participations or
subparticipations to a financial institution, as
39
<PAGE> 45
the case may be, in all or any part of (a) that Bank's Commitment, (b) that
Bank's Commitment Percentage, (c) any Loan made by that Bank, (d) any Note
delivered to that Bank pursuant to this Agreement, and (e) that Bank's
participations, if any, purchased pursuant to Section 8.4 or this Section
10.12B.
(i) Benefits of Participant. The provisions of Article III and Section
10.8 shall inure to the benefit of each purchaser of a participation or
subparticipation and the Agent shall continue to distribute payments pursuant to
this Agreement as if no participation has been sold.
(ii) Rights Reserved. In the event any Bank shall sell any participation
or subparticipation, that Bank shall, as between itself and the purchaser,
retain all of its rights (including, without limitation, rights to enforce
against the Borrower the Loan Documents and the Related Writings) and duties
pursuant to the Loan Documents and the Related Writings, including. without
limitation, that Bank's right to approve any waiver, consent or amendment
pursuant to Section 10.3, except if and to the extent that any such waiver,
consent or amendment would:
(A) reduce any fee or commission allocated to the
participation or subparticipation, as the case may be,
(B) reduce the amount of any principal payment on any Loan
allocated to the participation or subparticipation, as
the case may be, or reduce the principal amount of any
Loan so allocated or the rate of interest payable
thereon, or
(C) extend the time for payment of any amount allocated to
the participation or subparticipation, as the case may
be.
(iii) No Delegation. No participation or subparticipation shall operate
as a delegation of any duty of the seller thereof. Under no circumstance shall
any participation or subparticipation be deemed a novation in respect of all or
any part of the seller's obligations pursuant to this Agreement.
SECTION 10.13. GOVERNING LAW; SUBMISSION TO JURISDICTION. This
Agreement, each of the Notes and any Related Writing shall be governed by and
construed in accordance with the laws of the State of Ohio and the respective
rights and obligations of Borrower and the Banks shall be governed by Ohio law,
without regard to principles of conflict of laws. Borrower hereby irrevocably
submits to the non-exclusive jurisdiction of any Ohio state or federal court
sitting in Cleveland, Ohio, over any action or proceeding arising out of or
relating to this Agreement, any Loan Document or any Related Writing, and
Borrower hereby irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such Ohio state or federal court.
Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably waives,
to the fullest extent permitted by law, any objection it may now or hereafter
have to the laying of venue in any action or proceeding in any such court as
well as any right it may now or hereafter have to remove such action or
proceeding, once commenced, to
40
<PAGE> 46
another court on the grounds of FORUM NON CONVENIENS or otherwise. Borrower
agrees that a final, nonappealable judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
SECTION 10.14. SEVERABILITY OF PROVISIONS; CAPTIONS. Any provision of
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction. The several captions to Sections and subsections herein are
inserted for convenience only and shall be ignored in interpreting the
provisions of this Agreement.
SECTION 10.15. INVESTMENT PURPOSE. Each of the Banks represents and
warrants to Borrower that it is entering into this Agreement with the present
intention of acquiring any Note issued pursuant hereto for investment purposes
only and not for the purpose of distribution or resale, it being understood,
however, that each Bank shall at all times retain full control over the
disposition of its assets.
SECTION 10.16. ENTIRE AGREEMENT. This Agreement, any Note and any other
agreement, document or instrument attached hereto or referred to herein or
executed on or as of the date hereof integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral representations and
negotiations and prior writings with respect to the subject matter hereof.
SECTION 10.17. LEGAL REPRESENTATION OF PARTIES. The Loan Documents were
negotiated by the parties with the benefit of legal representation.
41
<PAGE> 47
SECTION 10.18. JURY TRIAL WAIVER. BORROWER, THE AGENT AND EACH OF THE
BANKS WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, THE AGENT AND
THE BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO. THIS
WAIVER SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY ANY BANK'S OR
THE AGENT'S ABILITY TO PURSUE REMEDIES PURSUANT TO ANY CONFESSION OF JUDGMENT OR
COGNOVIT PROVISION CONTAINED IN ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT AMONG BORROWER, THE AGENT AND THE BANKS, OR ANY THEREOF.
<TABLE>
<S> <C>
Address: 5960 Heisley Road STERIS CORPORATION
Mentor, OH 44060
By: /s/ Bill R. Sanford
-------------------------------------
Bill R. Sanford, Chairman, President, and
Chief Executive Officer
and /s/ Michael A. Keresman, III
-------------------------------------
Michael A. Keresman, III, Senior Vice
President, Chief Financial Officer,
and Secretary
Address: Society Center SOCIETY NATIONAL BANK, individually
127 Public Square and as Agent
Mailcode: OH-O1-27-0611
Cleveland, OH 44114-0611 By: /s/ Richard A. Pohle
-------------------------------------
Richard A. Pohle, Vice President
and Manager
Address: 600 Superior Avenue BANK ONE, COLUMBUS, NA
Cleveland, OH 44114-2650
Attention: N.Ohio Large Corp. By: /s/ Babette C. Coerdt
Markets Group, #0149 -------------------------------------
Babette C. Coerdt, Vice President and
Group Manager
Address: 611 Woodward Avenue NBD BANK
Detroit, MI 48226
Attention: Mid-corporate By: /s/ Paul R. DeMelo
Banking Division -------------------------------------
Paul R. DeMelo, Vice President
</TABLE>
42
<PAGE> 48
<TABLE>
<S> <C>
Address: One Cleveland Center PNC BANK, NATIONAL ASSOCIATION
1375 E. 9th St., Ste. 1250
Cleveland, OH 44114 By: /s/ Bryon A. Pike
Attention: Corporate Banking -------------------------------------
Byron A. Pike, Vice President
Address: Pittsburgh Branch ABN AMRO BANK N.V., PITTSBURGH
One PPG Place, Ste. 2950 BRANCH
Pittsburgh, PA 15222-5400
By: /s/ Roy D. Hasbrook
-------------------------------------
Roy D. Hasbrook, Group Vice President
and Director
and: /s/ Kathryn C. Toth
------------------------------------
Kathryn C. Toth, Vice President
</TABLE>
<PAGE> 49
SCHEDULE 1
<TABLE>
<CAPTION>
MAXIMUM
BANKING INSTITUTIONS PERCENTAGE AMOUNT
- -------------------- ---------- ------
<S> <C> <C>
Society National Bank 24.0 % $ 30,000,000
Bank One, Columbus, NA 20.8 % $ 26,000,000
NBD Bank 18.4 % $ 23,000,000
PNC Bank, National Association 18.4 % $ 23,000,000
ABN AMRO Bank N.V.,
Pittsburgh Branch 18.4 % $ 23,000,000
===== ============
Total Commitment Amount 100.0% $125,000,000
</TABLE>
44
<PAGE> 50
EXHIBIT A
REVOLVING CREDIT NOTE
$____________ _________, Ohio
May 13, 1996
FOR VALUE RECEIVED, the undersigned STERIS CORPORATION, an Ohio
corporation, ("Borrower"), promises to pay on September 30, 1998, to the order
of _________ (the "Bank") at the Main Office of Society National Bank, Agent,
127 Public Square, Cleveland, Ohio 44114-1306 the principal sum of
________________________________________________________________________DOLLARS
or the aggregate unpaid principal amount of all Loans made by Bank to Borrower
pursuant to Section 2.1 of the credit agreement, as hereinafter defined,
whichever is less, in lawful money of the United Slates of America. As used
herein, "Credit Agreement" means the credit agreement dated as of May 13, 1 996,
among Borrower, the banks named therein and Society National Bank, as Agent. as
it may from time to time be amended, modified or supplemented. Capitalized terms
used herein shall have the meanings ascribed to them in the Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount of
each Loan from time to t i me outstanding, from the date of such Loan until the
payment in full thereof, at the rates per annum which shall be determined in
accordance with the provisions of Section 2.lA of the Credit Agreement. Such
interest shall be payable on each date provided for in such Section 2.1A;
provided, however, that interest on any principal portion which is not paid when
due shall be payable on demand.
The portions of the principal sum hereof from time to time representing
Prime Rate Loans and LIBOR Loans, and payments of principal of any thereof,
shall be shown on the records of Bank by such method as Bank may generally
employ; provided, however, that failure to make any such entry shall in no way
detract from Borrower's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity occurs
by reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, until paid, at the Default Rate. All
payments of principal of and interest on this Note shall be made in immediately
available funds.
This Note is one of the Revolving Credit Notes referred to in the Credit
Agreement. Reference is made to the Credit Agreement for a description of the
right of the undersigned to anticipate payments hereof, the right of the holder
hereof to declare this Note due prior to its stated maturity, and other terms
and conditions upon which this Note is issued.
45
<PAGE> 51
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the State of
Ohio to waive the issuance and service of process, to admit the maturity of this
Note and the nonpayment thereof when due, to confess judgment against the
undersigned in favor of the holder of this Note for the amount then appearing
due, together with interest and costs of suit, and thereupon to release all
errors and to waive all rights of appeal and stay of execution. The foregoing
warrant of attorney shall survive any judgment, and if any judgment be vacated
for any reason, the holder hereof nevertheless may thereafter use the foregoing
warrant of attorney to obtain an additional judgment or judgments against the
undersigned. The undersigned agrees that the Agent or the Banks' attorney may
confess judgment pursuant to the foregoing warrant of attorney. The undersigned
further agrees that the attorney confessing judgment pursuant to the foregoing
warrant of attorney may receive a legal fee or other compensation from the Agent
or the Banks.
STERIS CORPORATION
By:___________________________________
Bill R. Sanford, Chairman, President,
and Chief Executive Officer
and_______________________________________________
Michael A. Keresman, III, Senior Vice President,
Chief Financial Officer, and Secretary
================================================================================
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
================================================================================
46
<PAGE> 52
EXHIBIT B
SWING LINE NOTE
$5,000,000 _________, Ohio
- ---------- May 13, 1996
FOR VALUE RECEIVED, the undersigned STERIS CORPORATION, an Ohio
corporation, ("Borrower"), promises to pay on the earlier of demand or September
30, 1998, to the order of SOCIETY NATIONAL BANK (the "Bank") at the Main Office
of Society National Bank, Agent, 127 Public Square, Cleveland, Ohio 44114-1306
the principal sum of
FIVE MILLION AND 00/100 ............................................... DOLLARS
- -----------------------------------------------------------------------
or the aggregate unpaid principal amount of all Swing Loans made by Bank to
Borrower pursuant to Section 2.1 B of the credit agreement, as hereinafter
defined, whichever is less, in lawful money of the United States of America. As
used herein, "Credit Agreement" means the credit agreement dated as of May 13,
1996, among Borrower, the banks named therein and Society National Bank, as
Agent, as it may from time to time be amended, modified or supplemented.
Capitalized terms used herein shall have the meanings ascribed to them in the
Credit Agreement.
Borrower also promises to pay interest on the unpaid principal amount of
each Swing Loan from time to time outstanding, from the date of such Swing Loan
until the payment in full thereof, at the rates per annum which shall be
determined in accordance with the provisions of Section 2.1 B of the Credit
Agreement. Such interest shall be payable on each date provided for in such
Section 2.1 B; provided, however, that interest on any principal portion which
is not paid when due shall be payable on demand.
The principal sum hereof from time to time and payments of principal
hereof, shall be shown on the records of Bank by such method as Bank may
generally employ; provided, however, that failure to make any such entry shall
in no way detract from Borrower's obligations under this Note.
If this Note shall not be paid at maturity, whether such maturity occurs
by reason of lapse of time or by operation of any provision for acceleration of
maturity contained in the Credit Agreement, the principal hereof and the unpaid
interest thereon shall bear interest, until paid, at the Default Rate. All
payments of principal of and interest on this Note shall be made in immediately
available funds.
This Note is the Swing Line Note referred to in the Credit Agreement.
Reference is made to the Credit Agreement for a description of the right of the
undersigned to anticipate payments hereof, the right of the holder hereof to
declare this Note due prior to its stated maturity, and other terms and
conditions upon which this Note is issued.
47
<PAGE> 53
The undersigned authorizes any attorney at law at any time or times
after the maturity hereof (whether maturity occurs by lapse of time or by
acceleration) to appear in any state or federal court of record in the State of
Ohio to waive the issuance and service of process, to admit the maturity of this
Note and the nonpayment thereof when due, to confess judgment against the
undersigned in favor of the holder of this Note for the amount then appearing
due, together with interest and costs of suit, and thereupon to release all
errors and to waive all rights of appeal and stay of execution. The foregoing
warrant of attorney shall survive any judgment, and if any judgment be vacated
for any reason, the holder hereof nevertheless may thereafter use the foregoing
warrant of attorney to obtain an additional judgment or judgments against the
undersigned. The undersigned agrees that the Agent or the Banks' attorney may
confess judgment pursuant to the foregoing warrant of attorney. The undersigned
further agrees that the attorney confessing judgment pursuant to the foregoing
warrant of attorney may receive a legal fee or other compensation from the Agent
or the Banks.
STERIS CORPORATION
By:___________________________________
Bill R. Sanford, Chairman, President,
and Chief Executive Officer
and_____________________________________________
Michael A. Keresman, III, Senior Vice President,
Chief Financial Officer, and Secretary
================================================================================
"WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE."
================================================================================
48
<PAGE> 54
EXHIBIT C
NOTICE OF LOAN
[Date]_____________, 19__
Society National Bank
127 Public Square
Cleveland, Ohio 44114-0616
Attention: ___________________
Ladies and Gentlemen:
The undersigned, STERIS CORPORATION, refers to the Credit Agreement,
dated as of May 13, 1996 ("Credit Agreement", the terms defined therein being
used herein as therein defined), among the undersigned, the Banks, as defined in
the Credit Agreement, and Society National Bank, as Agent, and hereby gives you
notice, pursuant to Section 2.2 of the Credit Agreement that the undersigned
hereby requests a Loan under the Credit Agreement, and in the connection sets
forth below the information relating to the Loan (the "Proposed Loan") as
required by Section 2.2 of the Credit Agreement:
(a) The Cleveland Banking Day of the Proposed Loan is ___________,
19__.
(b) The amount of the Proposed Loan is $_______________
(c) The Proposed Loan is to be a Prime Rate Loan ____ /LIBOR Loan .
(Check one.)
(d) If the Proposed Loan is a LIBOR Loan, the Interest Period
requested is one month ___, two months ___, three months ___,
six months ____
(Check one.)
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the Proposed Loan:
(i) the representations and warranties contained in each Loan
Document are correct, before and after giving effect to the Proposed
Loan and the application of the proceeds therefrom, as though made on
and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Proposed Loan, or the application of proceeds therefrom, which
constitutes a Possible Default or an Event of Default; and
49
<PAGE> 55
(iii) the conditions set forth in Section 2.2 and Article IV of the
Credit Agreement have been satisfied.
Very truly yours,
STERIS CORPORATION
By:______________________________
Name:
Title:
50
<PAGE> 56
EXHIBIT D
COMPLIANCE CERTIFICATE
For Fiscal Quarter ended _____________________
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected President and Chief Financial Officer of
STERIS CORPORATION, an Ohio corporation ("Borrower);
(2) We are familiar with the terms of that certain Credit Agreement,
dated as of May 13, 1996, among the undersigned, the Banks, as defined in the
Credit Agreement, and Society National Bank, as Agent (as the same may be
amended, supplemented or otherwise modified, the "Credit Agreement", the terms
defined therein and not otherwise defined in this Certificate being used herein
as therein defined), and the terms of the other Loan Documents, and we have
made, or have caused to be made under our supervision, a review in reasonable
detail of the transactions and condition of the Borrower and its Subsidiaries
during the accounting period covered by the attached financial statements;
(3) The review described in paragraph (2) above did not disclose, and we
have no knowledge of, the existence of any condition or event which constitutes
or constituted a Possible Default or Event of Default, at the end of the
accounting period covered by the attached financial statements or as of the date
of this Certificate;
(4) The representations and warranties made by the Borrower contained in
each Loan Document are true and correct as though made on and as of the date
hereof, and,
(5) Set forth on Attachment I hereto are calculations of the financial
covenants set forth in Sections ____ and ____ of the Credit Agreement, which
calculations show compliance with the terms thereof.
IN WITNESS WHEREOF, we have signed this certificate the ___ day of
________, 19__.
STERIS CORPORATION
By: ______________________________
Title: ___________________________________
and_______________________________________
Title: __________________________________
51
<PAGE> 57
Attachment I
STERIS Corporation
Covenant Compliance Certificate
as of the Fiscal Quarter Ending ________________
As Of
__/__/__
<TABLE>
<S> <C> <C> <C>
1. INTEREST COVERAGE RATIO
Consolidated Net Earnings
plus: Consolidated Income Tax Expense
plus: Other
plus: Consolidated Interest Expense _________________
Consolidated EBIT (A)
Consolidated Interest Expense (B)
Interest Coverage Ratio (A/B)
Covenant Minimum 3.00
2. CONSOLIDATED NET WORTH
Consolidated Net Worth as of __/__/__
plus: 50% of Consolidated Net Earnings* _________________
Required Consolidated Net Worth
Actual Consolidated Net Worth
* For the most recent Fiscal Quarter
3. LEVERAGE
Funded Senior Debt
Subordinated Debt
Total Funded Indebtedness (X)
plus: Consolidated Net Worth _________________
Consolidated Capitalization (Y) 0
Consolidated Leverage (X/Y) 0.0%
Maximum Required Leverage 40.0%
</TABLE>
52
<PAGE> 58
SCHEDULE 2
INDEBTEDNESS OF BORROWER AND ITS SUBSIDIARIES
EXISTING ON THE CLOSING DATE
[TO BE PROVIDED BY BORROWER]
(Referred to in Section 5.10)
53
<PAGE> 59
SCHEDULE 3
LIENS ON ASSETS OF THE COMPANIES
[TO BE PROVIDED BY BORROWER]
(Referred to in Section 5.11)
54
<PAGE> 60
SCHEDULE 4
LIST OF SUBSIDIARIES OF BORROWER ON THE CLOSING DATE
<TABLE>
<CAPTION>
============================================================================================
Percentage Percentage
of voting of Voting
Securities Securities
Owned by Owned by
State of Principle Place STERIS AMSCO
Subsidiary Organization of Business
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
============================================================================================
</TABLE>
(Referred to in Section 5.13)
[TO BE PROVIDED BY BORROWER]
55
<PAGE> 61
SCHEDULE 5
LITIGATION SCHEDULE
[TO BE PROVIDED BY BORROWER]
(Referred to in Section 6.3)
56
<PAGE> 62
SCHEDULE 6
DESCRIPTION OF ERISA PLANS
[TO BE PROVIDED BY BORROWER]
(Referred to in Section 6.4)
57
<PAGE> 63
EXHIBIT E
FORM OF
ASSIGNMENT AGREEMENT
This Assignment Agreement (this "Assignment Agreement") between
__________________________________________________________ (the "Assignor") and
____________________________________________________________ (the "Assignee") is
dated as of ______________________ 199_. The parties hereto agree as follows:
1. PRELIMINARY STATEMENT. The Assignor is a party to a Credit Agreement,
dated as of May 13, 1996 (which, as it may be amended, modified, renewed or
extended from time to time, is herein called the "Credit Agreement"), among
STERIS CORPORATION ("Borrower"), certain banks listed on the signature pages
thereof (collectively, "Banks" and, individually, "Bank"), and SOCIETY NATIONAL
BANK, as agent for the Banks ("Agent"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings attributed to them in the
Credit Agreement. The Assignor desires to assign to the Assignee, and the
Assignee desires to assume from the Assignor, an undivided interest (the
"Purchased Percentage") in the Commitment of the Assignor such that after giving
effect to the assignment and assumption hereinafter provided, the Commitment of
the Assignee shall equal _____________________________ Dollars ($______________)
[not less than $10,000,000] and its percentage of the Total Commitment Amount
shall equal ______________________________ percent (______ %).
2. ASSIGNMENT. For and in consideration of the assumption of obligations by
the Assignee set forth in Section 3 hereof and other consideration set forth
herein, and effective as of the Assignment Effective Date (as hereinafter
defined), the Assignor does hereby sell, assign, transfer and convey all of its
right, title and interest in and to the Purchased Percentage of (a) the
Commitment of the Assignor (as in effect on the Assignment Effective Date), (b)
any Revolving Loan made by the Assignor which is outstanding on the Assignment
Effective Date, (c) any Note delivered to the Assignor pursuant to the Credit
Agreement, and (d) the Credit Agreement and the other Related Writings. Pursuant
to Section 10.12A of the Credit Agreement, on and after the Assignment Effective
Date the Assignee shall have the same rights, benefits and obligations as the
Assignor had under the Credit Agreement and the Related Writings with respect to
the Purchased Percentage of the Related Writings, all determined as if the
Assignee were a "Bank" under the Credit Agreement with
_____________________________________________________________________ Dollars
($_____________) [not less than $10,000,000] equaling ____________ percent
(________%) of the Total Commitment Amount. The Assignment Effective Date (the
"Assignment Effective Date") shall be two (2) Cleveland Banking Days (or such
shorter period agreed to by the Agent) after a Notice of Assignment
substantially in the form of Attachment I hereto and any consents substantially
in the form of Attachment II hereto required to be delivered to the Agent,
together with a fee of $2,500, in accordance with Section 10.1 2A of the Credit
Agreement, have been delivered to the Agent; provided, however, that, in the
event that the Borrower shall appropriately deliver a Notice of Borrowing prior
to the time at which all of
Page 1 of 11 Pages
<PAGE> 64
conditions to the effectiveness of this Assignment shall have been met, the
Assignment Effective Date shall be the Cleveland Banking Day immediately
following the day upon which the Loans by the Banks are to be made under such
Notice of Borrowing. In no event will the Assignment Effective Date occur if the
payments required to be made by the Assignee to the Assignor on the Assignment
Effective Date under Section 4 are not made on or prior to the proposed
Assignment Effective Date. The Assignor will notify the Assignee of the proposed
Assignment Effective Date on the Cleveland Banking Day prior to the proposed
Assignment Effective Date and will notify the Assignee of any pending Notice of
Borrowing which would delay such proposed Assignment Effective Date.
3. ASSUMPTION. For and in consideration of the assignment of rights by the
Assignor set forth in Section 2 hereof and the other consideration set forth
herein, and effective as of the Assignment Effective Date, the Assignee does
hereby accept that assignment, and assume and covenant and agree fully,
completely and timely to perform, comply with and discharge, each and all of the
obligations, duties and liabilities of the Assignor under the Credit Agreement
and the Related Writings which are assigned to the Assignee hereunder, which
assumption includes, without limitation, the obligation to fund the unfunded
portion of the Total Commitment Amount in accordance with the provisions set
forth in the Credit Agreement as if the Assignee were a "Bank" under the Credit
Agreement with __________________________________________________ Dollars
($_________) equaling _______________________ percent (______%) of the Total
Commitment Amount. The Assignee agrees to be bound by all provisions relating to
"Banks" under and as defined in the Credit Agreement and the Related Writings,
including, without limitation, provisions relating to the payment of
indemnification. The Assignee agrees further to deliver to the Agent,
concurrently herewith. a completed Administrative Questionnaire, substantially
in the form attached hereto as Attachment III.
4. PAYMENT OBLIGATIONS. On and after the Assignment Effective Date, the
Assignee shall be entitled to receive from the Agent all payments of principal,
interest and fees with respect to the Purchased Percentage of the Assignor's
Commitment and Loans. The Assignee shall advance funds directly to the Agent
with respect to all Loans and reimbursement payments made on or after the
Assignment Effective Date. In consideration for the sale and assignment of Loans
hereunder, (a) with respect to all Prime Rate Loans made by the Assignor
outstanding on the Assignment Effective Date, the Assignee shall pay the
Assignor, on the Assignment Effective Date, an amount in U.S. Dollars equal to
the Purchased Percentage of all such Prime Rate Loans, and (b) with respect to
each LIBOR Loan made by the Assignor outstanding on the Assignment Effective
Date, (i) on the last day of the Interest Period therefor or (ii) on such
earlier date agreed to by the Assignor and the Assignee or (iii) on the date on
which any such LIBOR Loan either becomes due (by acceleration or otherwise) or
is prepaid (the date as described in the foregoing clauses (i), (ii) or (iii)
being hereinafter referred to as the "Payment Date"), the Assignee shall pay the
Assignor an amount in U.S. Dollars equal to the Purchased Percentage of such
LIBOR Loan denominated in U.S. Dollars. On and after the Assignment Effective
Date, the Assignee will also remit to the Assignor any amounts of interest on
Loans and fees received from the Agent which relate to the Purchased Percentage
of Loans made by the Assignor accrued for periods prior to the Assignment
Effective Date, in the case of
Page 2 of 11 Pages
<PAGE> 65
Prime Rate Loans, or the Payment Date, in the case of LIBOR Loans, and not
heretofore paid by the Assignee to the Assignor. In the event interest for the
period from the Assignment Effective Date to but not including the Payment Date
is not paid by the Borrower with respect to any LIBOR Loan sold by the Assignor
to the Assignee hereunder, the Assignee shall pay to the Assignor interest for
such period on such LIBOR Loan at the applicable rate provided by the Credit
Agreement. In the event that either party hereto receives any payment to which
the other party hereto is entitled under this Assignment Agreement, then the
party receiving such amount shall promptly remit it to the other party hereto.
5. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY. The Assignee
represents and warrants to the Assignor, the Borrower, the Agent and the other
Banks (a) that it is capable of making and has made and shall continue to make
its own credit determinations and analysis based upon such information as the
Assignee deemed sufficient to enter into the transaction contemplated hereby and
not based on any statements or representations by the Assignor, (b) the Assignee
confirms that it meets the requirements to be an assignee as set forth in
Section 10.12 of the Credit Agreement; (c) the Assignee confirms that it is able
to fund the Loans as required by the Credit Agreement; and (d) the Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and the Related Writings
are required to be performed by it as a Bank thereunder. It is understood and
agreed that the assignment and assumption hereunder are made without recourse to
the Assignor and that the Assignor makes no representation or warranty of any
kind to the Assignee and shall not be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency or collectability
of the Credit Agreement or any Related Writings. (ii) any representation,
warranty or statement made in or in connection with the Credit Agreement or any
of the Related Writings, (iii) the financial condition or creditworthiness of
the Borrower or any guarantor, (iv) the performance of or compliance with any of
the terms or provisions of the Credit Agreement or any of the Related Writings,
(v) inspecting any of the property, books or records of the Borrower or (vi) the
validity, enforceability, perfection, priority, condition, value or sufficiency
of any collateral securing or purporting to secure the Loans. Neither the
Assignor nor any of its officers, directors, employees, agents or attorneys
shall be liable for any mistake, error of judgment, or action taken or omitted
to be taken in connection with the Loans, the Credit Agreement or the Related
Writings, except for its or their own bad faith or willful misconduct. The
Assignee appoints the Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement as are delegated to the Agent by
the terms thereof.
6. INDEMNITY. The Assignee agrees to indemnify and hold the Assignor
harmless against any and all losses, cost and expenses (including, without
limitation, attorneys' fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee's performance or
non-performance of obligations assumed under this Assignment Agreement.
7. SUBSEQUENT ASSIGNMENTS. After the Assignment Effective Date, the
Assignee shall have the right pursuant to Section 10.12 of the Credit Agreement
to assign the rights which are assigned to the Assignee hereunder to any entity
or person, provided that (a) any
Page 3 of 11 Pages
<PAGE> 66
such subsequent assignment does not violate any of the terms and conditions of
the Credit Agreement, any of the Related Writings, or any law, rule, regulation,
order, writ, judgment, injunction or decree and that any consent required under
the terms of the Credit Agreement or any of the Related Writings has been
obtained, (b) the assignee under such assignment from the Assignee shall agree
to assume all of the Assignee's obligations hereunder in a manner satisfactory
to the Assignor and (c) the Assignee is not thereby released from any of its
obligations to the Assignor hereunder.
8. REDUCTIONS OF AGGREGATE AMOUNT OF COMMITMENTS. If any reduction in the
Total Commitment Amount occurs between the date of this Assignment Agreement and
the Assignment Effective Date, the percentage of the Total Commitment Amount
assigned to the Assignee shall remain the percentage specified in Section 1
hereof and the dollar amount of the Commitment of the Assignee shall be
recalculated based on the reduced Total Commitment Amount.
9. ENTIRE AGREEMENT. This Assignment Agreement and the attached consent
embody the entire agreement and understanding between the parties hereto and
supersede all prior agreements and understandings between the parties hereto
relating to the subject matter hereof.
10. GOVERNING LAW. This Assignment Agreement shall be governed by the
internal law, and not the law of conflicts, of the State of Ohio.
11. NOTICES. Notices shall be given under this Assignment Agreement in the
manner set forth in the Credit Agreement. For the purpose hereof, the addresses
of the parties hereto (until notice of a change is delivered) shall be the
address set forth under each party's name on the signature pages hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment
Agreement by their duly authorized officers as of the date first above written.
[ADDRESS] [NAME OF ASSIGNEE]
By: ____________________________
Title: _________________________
[ADDRESS] [NAME OF ASSIGNOR]
By: ____________________________
Title: _________________________
Page 4 of 11 Pages
<PAGE> 67
ATTACHMENT I
TO
FORM OF ASSIGNMENT AGREEMENT
NOTICE OF ASSIGNMENT
--------------------
To: STERIS CORPORATION
5960 Heisley Road
Mentor, OH 44060
Attention: __________________________
SOCIETY NATIONAL BANK, as Agent
127 Public Square
Cleveland, Ohio 44114
Attention: __________________________
From: [NAME OF ASSIGNOR]
[NAME OF ASSIGNEE]
_____________________ 19__
1. We refer to that Credit Agreement, dated as of May 13, 1996 (which, as
it may be amended, modified, renewed or extended from time to time, is herein
called the "Credit Agreement"), among STERIS CORPORATION ("Borrower"), certain
banks listed on the signature pages thereof (collectively, "Banks" and,
individually , "Bank"), including ________________________________ (the
"Assignor") and SOCIETY NATIONAL BANK, as agent for the Banks (as such, the
"Agent"). Capitalized terms used herein and in any consent delivered in
connection herewith and not otherwise defined herein or in such consent shall
have the meanings attributed to them in the Credit Agreement.
2. The Assignor and ____________________________________ (the "Assignee")
have entered into an Assignment Agreement, dated as of ____________________,
19__, pursuant to which, among other things, the Assignor has sold, assigned,
delegated and transferred to the Assignee. and the Assignee has purchased,
accepted and assumed from the Assignor, an undivided interest in and to all of
the Assignor's rights and obligations under the Credit Agreement such that
Assignee's percentage of the Total Commitment Amount shall equal
__________________________________________ Dollars ($_________) [not less than
$10,000,000] _______________ percent (_____%), effective as of the "Assignment
Effective Date" (as hereinafter defined).
Page 5 of 11 Pages
<PAGE> 68
The "Assignment Effective Date" shall be the later of
_______________________, 19__ or two Cleveland Banking Days (or such shorter
period as agreed to by the Agent) after this Notice of Assignment and any
consents and payments required by Sections 10.1 2A of the Credit Agreement have
been delivered to the Agent, provided that the Assignment Effective Date shall
not occur if any condition precedent agreed to by the Assignor and the Assignee
has not been satisfied; provided, however, that, in the event that the Borrower
shall appropriately deliver a Notice of Borrowing prior to the time at which all
of the conditions to the effectiveness of this Assignment shall have been met,
the Assignment Effective Date shall be the Cleveland Banking Day immediately
following the day upon which the Loans by the Banks are to be made under such
Notice of Borrowing.
3. As of this date, the Commitment Percentage of the Assignor in the Total
Commitment Amount and Loans is ________% (Dollars ($_______)). As of the
Assignment Effective Date, the Commitment Percentage of the Assignor in the
Total Commitment Amount and Loans will be ________% (________________________
________________ Dollars ($_______)) (as such percentage may be reduced or
increased by assignments which become effective prior to the assignment to the
Assignee becoming effective) and the Commitment Percentage of the Assignee in
the Total Commitment Amount and Loans will be _____% (________________________
Dollars ($________)).
4. The Assignor and the Assignee hereby give to the Borrower and the Agent
notice of the assignment and delegation referred to herein. The Assignor will
confer with the Agent before __________________________, 19__ to determine if
the Assignment Agreement will become effective on such date pursuant to Section
3 hereof, and will confer with the Agent to determine the Assignment Effective
Date pursuant to Section 3 hereof if it occurs thereafter. The Assignor shall
notify the Agent if the Assignment Agreement does not become effective on any
proposed Assignment Effective Date as a result of the failure to satisfy the
conditions precedent agreed to by the Assignor and the Assignee. At the request
of the Agent, the Assignor will give the Agent written confirmation of the
occurrence of the Assignment Effective Date.
5. The Assignee hereby accepts and assumes the assignment and delegation
referred to herein and agrees as of the Assignment Effective Date (a) to perform
fully all of the obligations under the Credit Agreement which it has hereby
assumed and (b) to be bound by the terms and conditions of the Credit Agreement
as if it were a "Bank".
6. The Assignor and the Assignee request and agree that any payments to be
made by the Agent to the Assignor on and after the Assignment Effective Date
shall, to the extent of the assignment referred to herein, be made entirely to
the Assignee, it being understood that the Assignor and the Assignee shall make
between themselves any desired allocations.
7. The Assignor and the Assignee request and direct that the Agent prepare
and cause the Borrower to execute and deliver the Note or Notes to the Assignor
and the Assignee in accordance with Section 10.12 of the Credit Agreement. The
Assignor and the Assignee agree
Page 6 of 11 Pages
<PAGE> 69
to deliver to the Agent, for delivery to the Borrower, the original Note
received from it by the Borrower upon their receipt of a new Note in the amount
set forth above.
8. The Assignee advises the Agent that the address listed below is its
address for notices under the Credit Agreement:
______________________________
______________________________
______________________________
The Assignee advises the Agent that the address listed below is the address
of its Lending Office and the wire transfer instructions for delivery of funds
by the Agent thereto:
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
______________________________
ASSIGNOR ASSIGNEE
______________________________ _____________________________
By:___________________________ By:__________________________
Title: _______________________ Title:_______________________
Page 7 of 11 Pages
<PAGE> 70
ATTACHMENT II
TO
FORM OF ASSIGNMENT AGREEMENT
CONSENT AND RELEASE
TO: [NAME OF ASSIGNOR]
__________________
__________________
[NAME OF ASSIGNEE]
__________________
__________________
_______________________ 19__
1. We acknowledge receipt from ___________________________________________
(the "Assignor") and ________________________________________________ (the
"Assignee") of the Notice of Assignment, dated as of ____________________, 19__
(the "Notice"). Capitalized terms used herein and not otherwise defined herein
shall have the meanings attributed to them in the Notice.
****[2. In consideration of the assumption by the Assignee of the
obligations of the Assignor as referred to in the Notice, the Borrower hereby
(a) irrevocably consents, pursuant to Section 10.12 of the Credit Agreement, to
the assignment and delegation referred to in the Notice, (b) as of the
Assignment Effective Date, irrevocably reduces the percentage of the Assignor in
the Total Commitment Amount and the Loans by the percentage of the Total
Commitment Amount and the Loans assigned to the Assignee and releases the
Assignor from all of its obligations to the Borrower under the Credit Agreement
and any of the Related Writings to the extent that such obligations have been
assumed by the Assignee and (c) agrees that, as of the Assignment Effective
Date, Borrower shall consider the Assignee as a "Bank" for all purposes under
the Credit Agreement and any of the Related Writings to the extent of the
assignment and delegation referred to in the Notice.]******
* * * * [3. The Borrower directs the Agent to prepare for issuance by the
Borrower of replacement Notes requested by the Assignor and the Assignee in the
Notice.]****
4. In consideration of the assumption by the Assignee of the obligations of
the Assignor as referred to in the Notice, the Agent and Borrower executing
below hereby (a) irrevocably consents, pursuant to Section 10.1 2A of the Credit
Agreement, to the assignment and delegation referred to in the Notice, (b) as of
the Assignment Effective Date, irrevocably releases the Assignor from its
obligations to the Agent under the Credit Agreement or any of the Related
Writings to the extent that such obligations have been assumed by the Assignee,
and
Page 8 of 11 Pages
<PAGE> 71
(c) agrees that, as of the Assignment Effective Date, the Agent shall consider
the Assignee as a "Bank" for all purposes under the Credit Agreement and any of
the Related Writings to the extent of the assignment and delegation referred to
in the Notice.
STERIS CORPORATION SOCIETY NATIONAL BANK, as Agent
_______________________________ __________________________________
By:____________________________ By:_______________________________
Title:_________________________ Title:____________________________
Paragraph 2 is to be included only if the consent of the Borrower is required
pursuant to Section 10.1 2A of the Credit Agreement.
Page 9 of 11 Pages
<PAGE> 72
ATTACHMENT III
TO
FORM OF ASSIGNMENT AGREEMENT
FORM OF
ADMINISTRATIVE QUESTIONNAIRE
Please accurately complete the following information and return via FAX to
Society National Bank, Attention of __________________________, as soon as
possible.
FAX Number:_________________________
LEGAL NAME TO APPEAR IN DOCUMENTATION:
- --------------------------------------
_______________________________________________________________________________
GENERAL INFORMATION - DOMESTIC LENDING OFFICE:
- ----------------------------------------------
Institution Name:____________________________________________________________
Street Address:______________________________________________________________
City, State, Zip Code:_______________________________________________________
GENERAL INFORMATION - LIBOR LENDING OFFICE:
- -------------------------------------------
Institution Name:____________________________________________________________
Street Address:______________________________________________________________
City, State, Zip Code:_______________________________________________________
CONTACTS/NOTIFICATION METHODS:
- ------------------------------
CREDIT CONTACTS:
Primary Contact:_____________________________________________________________
Street Address:______________________________________________________________
City, State, Zip Code:_______________________________________________________
Phone Number:________________________________________________________________
FAX Number:__________________________________________________________________
Backup Contact:______________________________________________________________
Street Address:______________________________________________________________
City, State, Zip Code:_______________________________________________________
Phone Number:________________________________________________________________
FAX Number:__________________________________________________________________
Page 10 of 1 I Pages
<PAGE> 73
TAX WITHHOLDING:
- ----------------
Non Resident Alien ______Y* ______N
*Form 4224 Enclosed
Tax ID Number ____________________
CONTACTS/NOTIFICATION METHODS:
- ------------------------------
ADMINISTRATIVE CONTACTS - BORROWINGS, PAYDOWNS, INTEREST, FEES, ETC.
Contact:___________________________________________________________________
Street Address:____________________________________________________________
City, State, Code:_________________________________________________________
Phone Number:______________________________________________________________
FAX Number:________________________________________________________________
PAYMENT INSTRUCTIONS:
- ---------------------
Name of Bank where funds are to be transferred:
___________________________________________________________________________
Routing Transit/ABA number of Bank where funds are to be transferred:
___________________________________________________________________________
Name of Account, if applicable:
___________________________________________________________________________
Account Number:____________________________________________________________
Additional Information:____________________________________________________
MAILINGS:
- ---------
Please specify who should receive financial information:
Name:______________________________________________________________________
Street Address:____________________________________________________________
City, State, Zip Code:_____________________________________________________
It is very important that all of the above information is accurately filled in
and returned promptly. If there is someone other than yourself who should
receive this questionnaire, please notify us of their name and FAX number and we
will FAX them a copy of the questionnaire. If you have any questions, please
call _____________________________________ of Society National Bank at
(216)_________________.
Page 11 of 11 Pages
<PAGE> 74
SCHEDULE 7
COMPLIANCE
<PAGE> 1
EXHIBIT 11.1
STERIS CORPORATION AND SUBSIDIARIES
NET INCOME PER COMMON SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED MARCH 31
-------------------------------
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
PRIMARY INCOME PER SHARE:
Net income before cumulative effect of accounting change
to Common Shareholders................................. $12,794 $ 8,736 $ 5,146
======= ======= =======
Weighted average Common Shares outstanding................ 17,804 17,442 17,184
Common Share equivalents of stock options................. 1,700 1,566 1,510
------- ------- -------
Weighted average Common Shares and Common Share
equivalents outstanding during the period.............. 19,504 19,008 18,694
======= ======= =======
Net income per share before cumulative effect of
accounting change...................................... $ 0.66 $ 0.46 $ 0.28
Cumulative effect of accounting change.................... 0.00 0.00 0.06
------- ------- -------
Net income per share...................................... $ 0.66 $ 0.46 $ 0.34
======= ======= =======
FULLY DILUTED INCOME PER SHARE:
Net income per share before cumulative effect of
accounting change to Common Shareholders............... $12,794 $ 8,736 $ 5,146
======= ======= =======
Weighted average Common Shares outstanding................ 17,804 17,442 17,184
Common Share equivalents of stock options................. 1,764 1,794 1,546
------- ------- -------
Weighted average Common Shares and Common Share
equivalents outstanding during the period.............. 19,568 19,236 18,730
======= ======= =======
Fully diluted net income per share before cumulative
effect of accounting change............................ $ 0.65 $ 0.46 $ 0.28
Cumulative effect of accounting change.................... 0.00 0.00 0.06
------- ------- -------
Fully diluted net income per share........................ $ 0.65 $ 0.46 $ 0.34
======= ======= =======
</TABLE>
2
<PAGE> 1
EXHIBIT 21.1
STERIS CORPORATION
STERIS CORPORATION SUBSIDIARY LIST
<TABLE>
<CAPTION>
PERCENTAGE
SUBSIDIARY OWNED INCORPORATED LOCATION
- ---------------------------------------------- ---------- --------------- ---------------------
<S> <C> <C> <C>
Ecomed, Inc. ................................. 100% Indiana Indianapolis, Indiana
Medical & Environmental Designs, Inc. ........ 100% Missouri Mentor, Ohio
STERIS S.A.................................... 100% Belgium Brussels, Belgium
STERIS Canada, Limited/Limite................. 100% Canada Mississauga,
Ontario, Canada
STERIS GmbH................................... 100% Germany Orsingen-Nenzingen,
Germany
STERIS Limited................................ 100% United Kingdom Oxfordshire, England
STERIS S.r.l.................................. 100% Italy Asti, Italy
STERIS Foreign Sales Corporation.............. 100% U.S. Virgin St. Thomas, U.S.
Islands Virgin Islands
STERIS USA Distribution Corporation........... 100% Ohio Mentor, Ohio
</TABLE>
3
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
and related Prospectuses of our report dated April 22, 1996, with respect to the
consolidated financial statements and schedule of STERIS Corporation and
Subsidiaries included in this Form 10-K for the year ended March 31, 1996:
<TABLE>
<CAPTION>
REGISTRATION
NUMBER DESCRIPTION FILING DATE
- ------------ --------------------------------------------------------------- ------------------
<C> <S> <C>
33-31610 Post-effective Amendment to Form S-4 on Form S-8 May 13, 1996
33-31610 Form S-4 -- Joint Proxy Statement -- STERIS Corporation merger February 23, 1996
with AMSCO International, Inc.
33-91444 Form S-8 Registration Statement -- STERIS Corporation 1994 April 21, 1995
Equity Compensation Plan
33-91442 Form S-8 Registration Statement -- STERIS Corporation 1994 April 21, 1995
Nonemployee Directors Equity Compensation Plan
33-55976 Form S-8 Registration Statement -- STERIS Corporation 401(k) March 4, 1994
Plan
33-55258 Form S-8 Registration Statement -- STERIS Corporation Non- December 3, 1992
Qualified Stock Option Plan
</TABLE>
ERNST & YOUNG LLP
Cleveland, Ohio
June 19, 1996
4
<PAGE> 1
Exhibit 24
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and director,
of STERIS Corporation, an Ohio Corporation, which proposes to file with the
Securities and Exchange Commission, Washington, D. C. under the provisions of
the Securities and Exchange Act of 1934, as amended, its Annual Report on Form
10-K for the fiscal year ended March 31, 1996 (the "Annual Report"), hereby
constitutes Bill R. Sanford, Michael A. Keresman, III, and Roy L. Turnell, and
each of them, as attorney for the undersigned, with full power of substitution
and resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report, and exhibits thereto, and any and all
amendments thereto, with full power and authority to do and perform any and all
acts whatsoever requisite and necessary to be done in the premises, hereby
ratifying and approving the acts of such attorney or any such substitute.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of June
18, 1996.
/s/ Michael A. Keresman, III
--------------------------------------
Michael A. Keresman, III,
Senior Vice President,
Chief Financial Officer, and Secretary
(Principal Financial Officer and
Principal Accounting Officer)
<PAGE> 2
Exhibit 24
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and director,
of STERIS Corporation, an Ohio Corporation, which proposes to file with the
Securities and Exchange Commission, Washington, D. C. under the provisions of
the Securities and Exchange Act of 1934, as amended, its Annual Report on Form
10-K for the fiscal year ended March 31, 1996 (the "Annual Report"), hereby
constitutes Bill R. Sanford, Michael A. Keresman, III, and Roy L. Turnell, and
and resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report, and exhibits thereto, and any and all
amendments thereto, with full power and authority to do and perform any and all
acts whatsoever requisite and necessary to be done in the premises, hereby
ratifying and approving the acts of such attorney or any such substitute.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of June
18, 1996.
/s/ Bill R. Sanford
--------------------------------------
Bill R. Sanford, Chairman of the Board
President, Chief Executive Officer
(Principal Executive Officer)
<PAGE> 3
Exhibit 24
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and director,
of STERIS Corporation, an Ohio Corporation, which proposes to file with the
Securities and Exchange Commission, Washington, D. C. under the provisions of
the Securities and Exchange Act of 1934, as amended, its Annual Report on Form
10-K for the fiscal year ended March 31, 1996 (the "Annual Report"), hereby
constitutes Bill R. Sanford, Michael A. Keresman, III, and Roy L. Turnell, and
and resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report, and exhibits thereto, and any and all
amendments thereto, with full power and authority to do and perform any and all
acts whatsoever requisite and necessary to be done in the premises, hereby
ratifying and approving the acts of such attorney or any such substitute.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of June
18, 1996.
/s/ Jerry E. Robertson, Ph.D.
--------------------------------------
Jerry E. Robertson, Ph.D.
Director
<PAGE> 4
Exhibit 24
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and director,
of STERIS Corporation, an Ohio Corporation, which proposes to file with the
Securities and Exchange Commission, Washington, D. C. under the provisions of
the Securities and Exchange Act of 1934, as amended, its Annual Report on Form
10-K for the fiscal year ended March 31, 1996 (the "Annual Report"), hereby
constitutes Bill R. Sanford, Michael A. Keresman, III, and Roy L. Turnell, and
and resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report, and exhibits thereto, and any and all
amendments thereto, with full power and authority to do and perform any and all
acts whatsoever requisite and necessary to be done in the premises, hereby
ratifying and approving the acts of such attorney or any such substitute.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of June
18, 1996.
/s/ Thomas J. Magulski
--------------------------------------
Thomas J. Magulski
Director
<PAGE> 5
Exhibit 24
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and director,
of STERIS Corporation, an Ohio Corporation, which proposes to file with the
Securities and Exchange Commission, Washington, D. C. under the provisions of
the Securities and Exchange Act of 1934, as amended, its Annual Report on Form
10-K for the fiscal year ended March 31, 1996 (the "Annual Report"), hereby
constitutes Bill R. Sanford, Michael A. Keresman, III, and Roy L. Turnell, and
and resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report, and exhibits thereto, and any and all
amendments thereto, with full power and authority to do and perform any and all
acts whatsoever requisite and necessary to be done in the premises, hereby
ratifying and approving the acts of such attorney or any such substitute.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of June
18, 1996.
/s/ Russell L. Carson
--------------------------------------
Russell L. Carson
Director
<PAGE> 6
Exhibit 24
POWER OF ATTORNEY
The undersigned, an officer or director, or both an officer and director,
of STERIS Corporation, an Ohio Corporation, which proposes to file with the
Securities and Exchange Commission, Washington, D. C. under the provisions of
the Securities and Exchange Act of 1934, as amended, its Annual Report on Form
10-K for the fiscal year ended March 31, 1996 (the "Annual Report"), hereby
constitutes Bill R. Sanford, Michael A. Keresman, III, and Roy L. Turnell, and
and resubstitution, for and in the name, place, and stead of the undersigned, to
sign and file the Annual Report, and exhibits thereto, and any and all
amendments thereto, with full power and authority to do and perform any and all
acts whatsoever requisite and necessary to be done in the premises, hereby
ratifying and approving the acts of such attorney or any such substitute.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of June
18, 1996.
/s/ Frank E. Samuel, Jr.
--------------------------------------
Frank E. Samuel, Jr.
Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 158
<SECURITIES> 9,193
<RECEIVABLES> 26,551
<ALLOWANCES> 350
<INVENTORY> 10,660
<CURRENT-ASSETS> 52,455
<PP&E> 23,222
<DEPRECIATION> 3,985
<TOTAL-ASSETS> 85,367
<CURRENT-LIABILITIES> 19,367
<BONDS> 0
<COMMON> 38,436
0
0
<OTHER-SE> 23,958
<TOTAL-LIABILITY-AND-EQUITY> 62,394
<SALES> 91,192
<TOTAL-REVENUES> 91,192
<CGS> 33,872
<TOTAL-COSTS> 33,872
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 21,035
<INCOME-TAX> 8,241
<INCOME-CONTINUING> 12,794
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,794
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.65
</TABLE>
