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STANDBY PURCHASE AGREEMENT
dated as of November 3, 1998
between
APRIA HEALTHCARE GROUP INC.
and
RELATIONAL INVESTORS, LLC,
ON BEHALF OF THE ENTITIES NAMED HEREIN
$50,000,000
10% Convertible Subordinated Debentures due 2004
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STANDBY PURCHASE AGREEMENT
This Standby Purchase Agreement, dated as of November 3, 1998 ("the
Agreement"), is entered into by and between Relational Investors, LLC, a
Delaware limited liability company (together with its affiliates, "Relational"),
on behalf of each of the entities set forth on Annex A hereto (collectively with
Relational, the "Investors") and Apria Healthcare Group Inc., Delaware
corporation (the "Company").
WHEREAS, the Company purposes to distribute to its stockholders rights
("Rights") to purchase approximately $50,000,000 aggregate principal amount of
its 10% Convertible Subordinated Debentures due 2004, with the exact aggregate
principal amount being equal to the number of shares of common stock outstanding
on the record date for distribution of the Rights (the "Debentures"). The
Debentures will be issued pursuant to an indenture to be entered into between
the Company and the trustee thereunder (the "Trustee"). The offering of the
Debentures pursuant to the Rights is referred to herein as the "Rights
Offering;"
WHEREAS, each Right will include a Basic Subscription Privilege, pursuant
to which each holder of 1,000 Rights will have the right to purchase $1,000
principal amount of Debentures at the subscription price of $1,000 per Debenture
(the "Subscription Price") and an Oversubscription Privilege by which persons
who exercise their Basic Subscription Privilege in full may subscribe to
purchase Debentures not purchased by other holders of Rights, subject to
proration; provided that Debentures will only be issued in minimum denominations
of $1,000 in principal amount and integral multiples thereof;
WHEREAS, the Company will file with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 covering the
registration of the Debentures and the shares of Common Stock, par value $0.001
per share (the "Common Stock"), of the Company issuable upon conversion of the
Debentures under the Securities Act of 1933, as amended (the "1933 Act"),
including the related preliminary prospectus or prospectuses. Promptly after the
Registration Statement is declared effective by the Commission, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that is
omitted from such registration statement at the time it becomes effective but
that will be deemed to be part of such registration statement pursuant to
paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each
prospectus used before such registration statement becomes effective is herein
called a "preliminary prospectus." Such registration statement, including the
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exhibits and schedules thereto, if any, and the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the
time it becomes effective, and including the Rule 430A Information, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall be deemed to include the Rule 462(b) Registration Statement.
The final prospectus, including the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, in the form that it was
first furnished to stockholders of the Company in connection with the Rights
Offering is herein called the "Prospectus." For purposes of this Agreement, all
references to the Registration Statement, any preliminary prospectus, the
Prospectus or any amendment or supplement to any of the foregoing shall be
deemed to include the copy filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval system ("XXXXX"). All references in this
Agreement to financial statements and schedules and other information which is
"contained," "included" or "stated" in the Registration Statement, any
preliminary prospectus or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which is or is deemed to be incorporated by
reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act")
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be;
WHEREAS, in order to help assure the success of the Rights Offering, the
Investors are willing to commit to exercise all of their Basic Subscription
Privileges and their Oversubscription Privileges to subscribe for an aggregate
principal amount of $50,000,000 of Debentures, subject to the terms and
conditions set forth herein; and
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NOW THEREFORE, in consideration of the mutual agreements set forth herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Investors do hereby agree as
follows:
SECTION 1.
The Rights Offering; Standby Purchase Commitment.
(1) Subject to the terms and conditions set forth herein, on or before 5:00
p.m. on the expiration date of the Rights (the "Expiration Date"), each of the
Investors will take all such action as may be required to duly and effectively
exercise all of the Basic Subscription Privileges to which it may be entitled,
and to exercise such Investor's proportionate share of the Oversubscription
Privileges such that the aggregate amount of Debentures for which the
Oversubscription Privileges are exercised by the Investors is equal to
$50,000,000 principal amount of the Debentures less the Investors' aggregate
Basic Subscription Privileges.
The obligation of each Investor to purchase the Debentures pursuant to the
Rights Offering is subject to the Debentures containing such terms as are set
forth in the summary of Terms attached as Annex B hereto and the purchase price,
interest rate and conversion price not being any less favorable to the Investors
then those set forth in such summary of Terms.
(2) The Company hereby agrees to pay the Investors a fee equal to $1
million (the "Standby Commitment Fee") as compensation for agreeing to exercise
their Basic Subscription Privileges and their Oversubscription Privileges as
specified in Section 1(a). The Standby Commitment Fee shall be payable at the
Closing.
SECTION 2.
Representations and Warranties.
(a) The Company represents and warrants to each Investor and agrees with
each Investor, as follows:
(1) The Company meets the requirements for use of Form S-3 under the
1933 Act. The Registration Statement and rule 462(b) Registration Statement will
be prepared by the Company in conformity with the requirements of the 1933 Act
and the 1933 Act Regulations and will be filed with the Commission under the
1933 Act. Prior to the commencement of the Rights Offering, each of the
Registration Statement and any Rule 462(b) Registration Statement will become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement or the
qualification of the Indenture will have been issued and no proceedings for that
purpose will have been instituted or be pending or, to the knowledge of the
Company, contemplated by the Commission, and any request on the part of the
Commission for additional information will have been complied with. A copy of
each of the Registration Statement and the Rule 462(b) Registration Statement
will be delivered by the Company to each Investor. At the respective times the
Registration Statement or any Rule 462(b) Registration Statement become
effective, the Registration Statement and the Rule 462(b) Registration Statement
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and at the time any
post-effective amendments to the Registration Statement or any Rule 462(b)
Registration Statement become effective, any such post-effective amendments will
comply in all material respects with the requirements of the 1933 Act and the
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1933 Act Regulations and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. Neither the Prospectus nor any
amendments or supplements thereto, at the time the Prospectus or any such
amendment or supplement is issued, will contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Prospectus, as
amended or supplemented, at the Expiration Date will not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading. The
Indenture will be qualified under and comply in all material respects with the
Trust Indenture Act of 1939, as amended (the "1939 Act") and the rules and
regulations of the Commission under the 1939 Act (the "1939 Act Regulations").
The representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the Company in
writing by either of the Investors expressly for use in the Registration
Statement or Prospectus or to that part of the Registration Statement which
shall constitute the Statement of Eligibility and Qualification under the 1939
Act (Form T-1) of the Trustee. Each preliminary prospectus and the prospectus
filed as part of the Registration Statement as originally filed or as part of
any amendment thereto, or when filed pursuant to Rule 424 under the 1933 Act,
will comply when so filed in all material respects with the 1933 Act Regulations
and each preliminary prospectus and the final Prospectus will be identical to
the electronically transmitted copies thereof filed with the Commission pursuant
to XXXXX, except to the extent permitted by Regulation S-T.
(2) The accountants who certify the financial statements and
supporting schedules included in the Registration Statement will be independent
public accountants as required by the 1933 Act and the 1933 Act Regulations.
(3) The financial statements and the supporting schedules included in
the Registration Statement and the Prospectus will present fairly the financial
position of the Company and its consolidated subsidiaries as at the dates
indicated and the results of their operations for the periods specified; said
financial statements will have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis (except as may
otherwise be indicated therein) ("GAAP"); and the supporting schedules included
in the Registration Statement will present fairly the information required to be
stated therein.
(4) Since September 30, 1998, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Company or its subsidiaries,
other than those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one enterprise, and
(C) there has been no dividend or distribution of any kind (other than the
distribution of the Rights ) declared, paid or made by the Company on any class
of its capital stock.
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(5) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement; and the Company
is duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify would not have a material adverse effect
on the condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect").
(6) Each subsidiary of the Company (as such term is defined in Rule
405 of the 1933 Act Regulations) (each a "Subsidiary" and collectively, the
"Subsidiaries"), has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business and is duly qualified as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the failure to so
qualify would not have a Material Adverse Effect; except as otherwise disclosed
in the Registration Statement, all of the issued and outstanding capital stock
of each such Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(7) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Company's quarterly report on Form 10Q for the
period ended June 30, 1998, filed with the Commission (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Registration Statement
or pursuant to the exercise of convertible securities, options or warrants
referred to in the Registration Statement). The shares of issued and outstanding
Common Stock have been duly authorized and validly issued and are fully paid and
non-assessable; the Common Stock conforms to all statements relating thereto
contained in the Registration Statement; and the issuance of the Debentures and
the shares of Common Stock issuable upon conversion of the Debentures will not
be subject to preemptive or other similar rights.
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(8) The Debentures to be issued and sold pursuant to the Rights will
have been duly authorized, and when issued, authenticated and delivered pursuant
to the Rights, against payment of the consideration set forth therein, will have
been duly executed, authenticated, issued and delivered and will constitute
legal, valid and binding obligations of the Company, subject, as to enforcement,
to bankruptcy, insolvency, reorganization or other similar laws of general
applicability now or hereafter in effect relating to or affecting creditors'
rights and to general equity principles, and will be entitled to the benefits
provided by the Indenture, which will be substantially in the form included as
an exhibit to the Registration Statement; the Indenture will have been duly
authorized and duly qualified under the 1939 Act, and when executed and
delivered by the Company and the Trustee (assuming due authorization, execution
and delivery by the Trustee), will constitute a legal, valid and binding
instrument enforceable in accordance with its terms subject, as to enforcement,
to bankruptcy, insolvency, reorganization or other similar laws of general
applicability now or hereafter in effect relating to or affecting creditors'
rights and to general equity principles; and the Debentures and the Indenture
will conform in all material respects to the descriptions thereof in the
Registration Statement and the Prospectus.
(ix) Upon issuance and delivery of the Debentures in accordance with
this Agreement and the Indenture, the Debentures shall be convertible at the
option of the holder thereof for shares of Common Stock in accordance with the
terms of the Debentures and the Indenture; the shares of Common Stock initially
issuable upon conversion of the Debentures will have been duly authorized and
reserved for issuance, and when issued and delivered, pursuant to the terms of
the Indenture, will be validly issued, fully paid and non-assessable; such
shares are sufficient in number to meet the conversion requirements of the
Debentures; and
(x) Neither the Company nor any of its Subsidiaries is in violation of
its charter or by-laws or, except where such default would not have a Material
Adverse Effect, in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound, or to
which any of the material property or assets of the Company or any subsidiary is
subject; and the execution, delivery and performance of this Agreement, the
Indenture, the Debentures and the consummation of the transactions contemplated
herein and therein and compliance by the Company with its obligations hereunder
and thereunder have been duly authorized by all necessary corporate action and
will not conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any material
property or assets of the Company or any of its subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Company or any of its subsidiaries is a party or by which it or any
of them may be bound, or to which any of the material property or assets of the
Company or any subsidiary is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or any
applicable law, rule, regulation, judgment, order or administrative or court
decree.
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(xi) There is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any of
its subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed therein); all pending legal or governmental
proceedings to which the Company or any of its subsidiaries is a party or of
which any of their respective property or assets is the subject which are not
described in the Registration Statement, including ordinary routine litigation
incidental to the business, are, considered in the aggregate, not material to
the Company and its subsidiaries considered as one enterprise; and there are no
contracts or documents of the Company or any of its subsidiaries which are
required to be filed as exhibits to the Registration Statement by the 1933 Act
or by the 1933 Act Regulations which have not been so filed.
(xii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the offering,
issuance or sale of the Debentures hereunder or the issuance of shares of Common
Stock upon conversion thereof, except such as may be required under the 1933 Act
or the 1933 Act Regulations, the 1939 Act or the 1939 Act Regulations or state
securities laws and the qualification of the Indenture under the 1939 Act.
(xiii) This Agreement has been duly authorized, executed and delivered
by the Company. This Agreement constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms except as enforcement may be
limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' right generally. The Board of Directors of the
Company, by action of the Special Finance Committee, has authorized and approved
this Agreement and the transactions relating thereto.
(xiv) The Company and its subsidiaries have good title to all real and
personal properties owned by them, in each case free and clear of all liens,
encumbrances and debts except (A) for property pledged and/or mortgaged pursuant
to the Credit Agreement among the Company, Bank of America, NationsBank and the
other lenders thereunder, as amended (the "Credit Agreement"), (B) as do not
materially interfere with the use made and proposed to be made of such
properties, (C) as set forth in the Registration Statement or (D) as could not
reasonably be expected to have a Material Adverse Effect.
(xv) Except as set forth in the Registration Statement or this
Agreement, there are no persons with registration or other similar rights to
have any securities (debt or equity) of the Company registered pursuant to the
Registration Statement or otherwise registered by the Company under the 0000
Xxx.
(xvi) The documents to be incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or are filed with the
Commission, complied and will comply as to form in all material respects with
the requirements of the 1934 Act and the rules and regulations of the Commission
under the 1934 Act (the "1934 Act Regulations"), and, when read together with
the other information in the Prospectus, at the time the Registration Statement
and any amendments thereto becomes effective and at the Closing, will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
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(xvii) Except as disclosed in the Registration Statement, and except
as to matters which, individually or in the aggregate, would not have a Material
Adverse Effect, neither the Company nor any of its subsidiaries has any material
liabilities or obligations (absolute, accrued, contingent or otherwise, known or
unknown), other than liabilities incurred in the ordinary course of business
subsequent to December 31, 1997.
(xviii) Except for such matters as would not, individually or in the
aggregate, have a Material Adverse Effect; (i) the Company and its subsidiaries
hold all permits, licenses, variances, exemptions, orders and approval (the
"Permits") of all governmental entities necessary for the operation of the
businesses of the Company and its subsidiaries, (ii) the Company and its
Subsidiaries are in compliance with the terms of the Permits and (iii) except as
disclosed in the Registration Statement, the businesses of the Company and its
Subsidiaries are not being conducted in violation of any law, ordinance, or
regulation of any governmental entity.
(xix) Each of the Company and its Subsidiaries has filed all tax
returns required to be filed by any of them and has paid (or the Company has
paid on its behalf) or has set up an adequate reserve for the payment of, all
taxes required to be paid in respect of the periods covered by such returns. The
information contained in such tax returns is true, complete and accurate in all
material respects. Neither the Company nor any of its Subsidiaries is delinquent
in the payment of any tax, assessment or governmental charge except to the
extent of reserves established therefor. No deficiencies for any taxes have been
proposed, asserted or assessed against the Company or any of its subsidiaries
that have not been finally settled or paid in full except to the extent of
reserves established therefor. No requests for waivers of the time to assess any
such tax are pending and there are no outstanding audit examinations, deficiency
litigations or refund litigations with respect to the Company or any of its
subsidiaries. The federal income tax returns of the Company and each of its
Subsidiaries consolidated in such returns have been examined by and settled with
the Internal Revenue Service for all years through December 31, 1995.
(xx) The Company and its Subsidiaries have not knowingly engaged in
activities which are prohibited under federal Medicare and Medicaid statutes,
including without limitation 42 U.S.C. 1320a-7b, or related state or local
statutes or regulations or which otherwise constitutes fraud.
(xxi) Except as set forth in the Registration Statement, and except
for such matters as will not, individually or in the aggregate, have a Material
Adverse Effect, the Company and each of its Subsidiaries (i) have obtained all
applicable permits, licenses and other authorizations which are required to be
obtained under all applicable Environmental Laws, (ii) are in compliance with
all terms and conditions of such required permits, licenses and authorizations
and also are in compliance with all other applicable requirements of
Environmental Laws and (iii) and are not aware of nor have received notice of
any past activity, practice, incident or action which will give rise to any
common law or statutory liability or otherwise form the basis of any claim,
action, suit or proceeding, against the Company or any of its Subsidiaries based
on or resulting from the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling or the emission, discharge or release
into the environment, or any pollutant, contaminant or hazardous or toxic
material or waste.
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(xxii) The Company and each of its Subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is adequate for the
conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.
(b) Any certificate identified as a certificate under this Agreement and
signed by any officer of the Company and delivered to the Investors or to
counsel for the Investors shall be deemed a representation and warranty by the
Company to each Investor as to the matters covered thereby.
(c) Each Investor severally represents and warrants to the Company as of
the date hereof, and agrees with the Company, as follows:
(i) This Agreement has been duly authorized, executed and delivered by
such Investor.
(ii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein and compliance by such
Investor with its obligations hereunder have been duly authorized by all
necessary action and will not conflict with or constitute a breach of, or
default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any material property or assets of such Investor or any of its
subsidiaries pursuant to, any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which such Investor is a party or
by which it may be bound, or to which any of the material property or assets of
such Investor is subject, nor will such action result in any violation of the
provisions of the charter or by-laws, or comparable governing documents of such
Investor or any applicable law, rule, regulation, judgment, order or
administrative or court decree.
(iii) Such Investor has, or has available to it, sufficient funds for
the performance of its obligations pursuant to this Agreement.
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SECTION 3.
Closing.
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(a) On or prior to 10:00 a.m. on the Expiration Date, a closing (the
"Closing") shall be had at the executive offices of the Company at 0000 Xxxxxx
Xxxxxx, Xxxxx Xxxx, Xxxxxxxxxx or at such other place as the parties may agree.
At the Closing, (i) the Company shall deliver, or cause to be delivered, to the
Investors (A) each of the documents and agreements necessary to evidence
satisfaction of the conditions to the Investors' obligations as set forth herein
and (B) the Standby Commitment Fee, by wire transfer of funds to the accounts
specified by the Investors; and (ii) each Investor shall (A) deliver to the
Company all documents necessary for the exercise of its Basic Subscription
Privileges and Oversubscription Privileges in accordance with Section 1 hereto
and (B) make payment in full of the exercise price for its Basic Subscription
Privileges, by wire transfer of funds to the subscription agent for the Rights
Offering.
(b) As promptly as practicable, but in no event later than five business
days following the Expiration Date, the Company shall notify each Investor of
the principal amount of Debentures required to be purchased by it pursuant to
its Oversubscription Privileges. Not later than three business days following
receipt of such notice, each Investor shall make payment in full of the full
purchase price for the foregoing Debentures by wire transfer of funds to the
subscription agent for the Rights Offering.
(c) Delivery of the Debentures to the Investors shall by made by the
subscription agent for the Rights Offering in accordance with the terms and
provisions of the Rights Offering.
SECTION 4.
Covenants of the Company.
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The Company covenants with each Investor as follows:
(a) The Company shall make all necessary filings with respect to the
transactions contemplated by this Agreement, under the 1933 Act and the 1934 Act
and the rules and regulations thereunder, under applicable blue sky or similar
securities laws and shall use all reasonable efforts to obtain required
approvals and clearances with respect thereto. The Company will comply with the
requirements of Rule 430A and will notify the Investors immediately, and confirm
the notice in writing, (i) when any post-effective amendment to the Registration
Statement shall become effective, or any supplement to the Prospectus or any
amended Prospectus shall have been filed, (ii) of the receipt of any comments
from the Commission on the Registration Statement, (iii) of any request by the
Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose,
and (v) of the suspension of the qualification of the Debentures or the shares
of Common Stock issuable upon the conversion of the Debentures, for offering or
sale in any jurisdiction, or the initiation or threatening of any proceedings
for any such purpose. The Company will promptly effect the filings necessary
pursuant to Rule 424(b) and will take such steps as it deems necessary to
ascertain promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.
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(b) The Company will prepare and file the Registration Statement or any
amendments thereto (including any filing under Rule 462(b)) or any amendment or
supplement to either the prospectus included in the Registration Statement at
the time it becomes effective or to the Prospectus, whether pursuant to the 1933
Act, the 1934 Act or otherwise, will furnish the Investors with copies of the
Registration Statement and any such amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such amendment or supplement or use any such prospectus to which any
Investor or counsel for the Investors shall reasonably object, provided that
such objection shall not prevent the filing of any such amendment or supplement
which, in the opinion of counsel for the Company, is required to be filed by the
requirements of the 1933 Act or the 1933 Act Regulations.
(c) If any event shall occur as a result of which it is necessary, in the
opinion of counsel for the Investors, to amend or supplement the Prospectus in
order to make the Prospectus not misleading in the light of the circumstances
existing at the time it is delivered to a purchaser, or if for any other reason
it shall be necessary to amend or supplement the Prospectus in order to comply
with the 1933 Act, the 1933 Act Regulations, the 1934 Act or the 1934 Act
Regulations, the Company will forthwith amend or supplement the Prospectus (in
form and substance satisfactory to counsel for the Investors and in compliance
with the 1933 Act and the 1933 Act Regulations) so that, as so amended or
supplemented, the Prospectus will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statement therein,
in the light of the circumstances existing at the time it is delivered to a
purchaser, not misleading and will comply with the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, and the Company will
furnish to the Investors a reasonable number of copies of such amendment or
supplement.
(d) The Company will use the net proceeds received by it from the sale of
the Debentures for the repayment of indebtedness under the Credit Agreement.
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(e) If, at the time that the Registration Statement becomes effective, any
information shall have been omitted therefrom in reliance upon Rule 430A of the
1933 Act Regulations, then immediately following the execution of this
Agreement, the Company will prepare, and file or transmit for filing with the
Commission in accordance with such Rule 430A and Rule 424(b) of the 1933 Act
Regulations, copies of an amended Prospectus, or, if required by such Rule 430A,
a post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.
(f) The Company will reserve and keep available at all times, free of
preemptive rights, shares of Common Stock for the purpose of enabling the
Company to satisfy any obligations to issue Common Stock upon conversion of the
Debentures.
(g) The Company and its Subsidiaries shall afford to the Investors and
their accountants, counsel and other representatives reasonable access during
normal business hours (and at such other times as the parties may mutually
agree) throughout the period prior to the Closing to all of its properties,
books, contracts, commitments, records and personnel and, during such period,
the Company shall furnish promptly to the Investors (i) a copy of each report,
schedule and other document filed or received by it pursuant to the requirements
of federal or state securities laws and (ii) all other information concerning
its business, properties and personnel as such Investor may reasonably request.
(h) The Company shall enter into an amendment to its Credit Agreement with
the other parties thereto on substantially the terms set forth on Annex C. The
Company also shall seek to amend the Credit Agreement as it deems necessary or
appropriate so that none of the transactions contemplated hereby, including,
without limitation, the conversion of the Debentures into Common Stock by any
Investor, will constitute or result in a Default ( as defined in the Credit
Agreement) or an Event of Default ( as defined in the Credit Agreement) under
the Credit Agreement as so amended and otherwise as the Company or the Investors
may deem appropriate.
(i) The Company shall take all action (including, if required, redeeming
all of the outstanding rights or amending or terminating the Rights Agreement,
dated as of June 30, 1997 (the "Rights Agreement"), by and among the Company,
Norwest Bank Minnesota, N.A. (the "Rights Agent") and U.S. Stock Transfer
Corporation, as amended, so that the entering into of this Agreement and the
consummation of the transactions contemplated hereby will not result in the
grant of any rights to any person under the Rights Agreement to purchase or
receive additional shares of capital stock of the Company or enable or require
the rights to be exercised, distributed or triggered in any way. The Company
shall take such required action to provide that no right to exercise with
respect to any awards granted under the Abbey Amended and Restated 1992 Stock
Incentive Plan shall or may be accelerated as a result of the transactions
contemplated by this Agreement.
14
(j) The Company will reimburse the Investors for all out-of-pocket expenses
reasonably incurred by them in connection with this Agreement and the
consummation of the transactions contemplated hereby, whether or not the
transactions contemplated in this Agreement are consummated, including without
limitation reasonable fees and disbursements of counsel.
SECTION 5.
Conditions of Investors' Obligations.
The obligations of the Investors hereunder are subject to the satisfaction
or waiver, on or prior to the date of the Closing (the "Closing Date"), of the
following conditions:
(a) The Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at the Closing Date no stop order suspending
the effectiveness of the Registration Statement shall have been issued under the
1933 Act or proceedings therefor initiated or threatened by the Commission. A
prospectus containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) of the 1933 Act Regulations within the
prescribed time period and prior to the Closing Date the Company shall have
provided evidence satisfactory to the Investors of such timely filing, or a
post-effective amendment providing such information shall have been promptly
filed and declared effective in accordance with the requirements of Rule 430A of
the 1933 Act Regulations.
(b) The representations and warranties made by the Company shall be true
and correct in all material respects and the Company shall have performed in all
material respects all obligations required to be performed by it prior to the
Closing.
(c) On the Closing Date the Investors shall have received:
(i) The favorable opinion, dated as of the Closing Date, of Xxxxxx X.
Xxxxxxxx, Esq., substantially in the form of Annex D hereto.
(ii) Payment by wire transfer of the Standby Commitment Fee to the
accounts specified by the Investors.
(iii) A letter from Xxxxxx, Xxxx & Xxxxxxxx stating that nothing has
come to their attention that would lead them to believe that the Registration
Statement or any amendment thereto, including the Rule 430A Information (except
for the financial statements and schedules and other financial data included or
incorporated by reference therein or omitted therefrom and the Form T-1, as to
which counsel need make no statement), at the time such Registration Statement
or any such amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto (except for the financial
statements and schedules and other financial data included or incorporated by
reference therein or omitted therefrom, as to which counsel need make no
statement), at the time the Prospectus was issued, at the time any such amended
or supplemented prospectus was issued or at the Closing Date, included or
includes an untrue statement of a material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(iv) A certificate of the Chairman, the President or a Vice President
of the Company and of the chief financial or chief accounting officer of the
Company, dated as of the Closing Date, to the effect that (i) there has been no
Material Adverse Effect since the execution of this Agreement, (ii) the
representations and warranties in Section 2 hereof are true and correct in all
material respects with the same force and effect as though expressly made at and
as of Closing Date, (iii) the Company has complied in all material respects with
all agreements and satisfied all conditions required on its part to be performed
or satisfied at or prior to Closing Date pursuant to this Agreement.
15
(v) From Deloitte & Touche, a letter dated such date, in form and
substance satisfactory to the Investors, to the effect that (i) they are
independent certified public accountants with respect to the Company and its
subsidiaries within the meaning of the 1933 Act and the 1933 Act Regulations;
(ii) it is their opinion that the consolidated financial statements and
supporting schedules included in the Registration Statement and covered by their
opinions therein comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act Regulations; (iii)
based upon limited procedures set forth in detail in such letter, nothing has
come to their attention which causes them to believe that (A) the interim
unaudited financial statements of the Company and its subsidiaries included in
the Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the 1933 Act
Regulations or are not presented in conformity with GAAP applied on a basis
substantially consistent with that of the audited consolidated financial
statements included in the Registration Statement (except as may otherwise be
indicated therein), (B) the unaudited amounts of revenue, earnings and earnings
per common and equivalent share set forth under "Selected Consolidated Financial
Data" in the Prospectus were not determined on a basis substantially consistent
with that of the audited consolidated financial statements included in the
Registration Statement, or (C) at a specified date not more than three days
prior to the Closing Date, there has been any change in the capital stock of the
Company or any increase in the consolidated long-term debt of the Company and
its subsidiary or any decrease in consolidated net current assets or net assets
as compared with the amounts shown in the balance sheet incorporated by
reference in the Registration Statement or, during the period from October 1,
1998 to a specified date not more than three days prior to the Closing Date,
there were any decreases, as compared with the corresponding period in the
preceding year, in consolidated revenues, net income or net income per share of
the Company and its subsidiaries, except in all instances for changes, increases
or decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur and except as otherwise set forth in such letter; and (iv)
in addition to the examination referred to in their opinions and the limited
procedures referred to in clause (iii) above, they have carried out certain
specified procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information which are included in the
Registration Statement and Prospectus and which are specified by the Investors,
and have found such amounts, percentages and financial information to be in
agreement with the relevant accounting, financial and other records of the
Company and its Subsidiaries identified in such letter.
(d) At the Closing Date:
(i) No preliminary or permanent injunction or other order by any court
or other judicial or administrative body of competent jurisdiction which
prohibits or prevents the consummation of the transactions contemplated by this
Agreement shall have been issued and remain in effect.
(ii) An amendment to the Credit Agreement shall have been executed and
delivered by all parties thereto and the Investors and the Company shall be
reasonably satisfied that none of the transactions contemplated hereby,
including, without limitation, the conversion of the Debentures into Common
Stock by any Investor, will constitute a Default or an Event of Default under
the Credit Agreement as so amended.
(iii) The Company shall have obtained all consents and approvals from
and shall have made all filings and registrations with, any person, including
but not limited to any governmental entity, necessary to be obtained or made in
order to consummate the transactions contemplated by this Agreement.
16
(iv) The Company shall have issued certificates evidencing the
Debentures and executed and delivered to each Investor a receipt of payment for
the amount subscribed for by such Investor.
(v) The Company shall have executed and delivered or caused to be
delivered the Registration Rights Agreement substantially in the form of Annex E
hereto.
(e) At the Closing Date, the Debentures and the Common Stock issuable upon
conversion thereof shall have been approved for listing on the New York Stock
Exchange, subject only to official notice of insurance.
SECTION 6.
Indemnification.
----------------
(a) The Company agrees to indemnify and hold harmless each Investor and
each person, if any, who controls any Investor within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage or expense
whatsoever, promptly after submission for payment, arising out of or resulting
from the transactions contemplated hereunder, including, but not limited to, (A)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the Rule 430A
Information, if applicable, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or alleged
omission therefrom of a material fact necessary in order to make the statement
therein, in the light of the circumstances under which they were made, not
misleading, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, which were not made in
reliance upon and in conformity with written information furnished to the
Company by the Investors expressly for use in the Registration Statement (or any
amendment thereto); (B) any breach or default by the Company of any of the
representations or warranties under this Agreement or any other document
contemplated hereby, (C) any breach by the Company of any of the covenants or
agreements (other than breaches of covenants to be performed by the Company
after the Closing) of the Company under this Agreement or any other document
contemplated hereby or (D) any litigation or proceedings brought by any
shareholder of the Company (whether such action is brought in such shareholder's
name or derivatively on behalf of the Company) in respect of the transactions
contemplated by this Agreement or the Registration Statement or any other
document contemplated hereby (collectively, the "Indemnifiable Investor
Claims").
17
(ii) against any and all loss, liability, claim, damage or expense
whatsoever, promptly after submission for payment, to the extent of the
aggregate amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or of
any claim whatsoever based upon any Indemnifiable Investor Claim; provided that
(subject to Section 6(d) below) any such settlement is effected with the written
consent of the Company (which shall not be unreasonably withheld); and
(iii) against any and all expense whatsoever, promptly after
submission for payment (including, subject to Section 6(c) hereof, the
reasonable fees and disbursements of counsel for the indemnified party),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any
Indemnifiable Investor Claim, to the extent that any such expense is not paid
under (i) or (ii) above; provided, however, that this indemnity agreement shall
not apply to any loss, liability, claim, damage or expense to the extent arising
out of any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with written information furnished to
the Company by any Investor expressly for use in the Registration Statement (or
any amendment thereto), including the Rule 430A Information, or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(b) Each Investor severally agrees to indemnify and hold harmless the
Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all
loss, liability, claim, damage or expense described in the indemnity contained
in subsection (a)(i)(A) of this Section, promptly after submission for payment,
but only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Investor
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
18
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
except to the extent the indemnifying party is materially prejudiced thereby,
and the indemnifying party may participate at its own expense in the defense of
any such action. If the indemnifying party so elects within a reasonable time
after receipt of such notice, it may assume the defense of such action, with
counsel chosen by it and approved by the indemnified parties in such action,
unless such indemnified parties reasonably object to such assumption on the
ground that there may be legal defenses available to them which are different
from, conflicting with or in addition to those available to such indemnifying
party. Absent any difference or conflict referred to in the preceding sentence,
if an indemnifying party assumes the defense of such action, the indemnifying
parties shall not be liable for any fees and expenses of counsel for the
indemnified parties incurred thereafter in connection with such action. In no
event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel retained for local procedural
and practice matters) separate from their own counsel for any indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification could be sought under this
Section 6 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party, (iii) does not impugn the reputation of any
indemnified party and (iv) does not restrict any indemnified party from engaging
in any activity.
(d) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for reasonable fees and
expenses of counsel, such indemnifying party agrees that it shall be liable for
any settlement of the nature contemplated by Section 6(a)(ii) effected without
its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
19
(e) Expenses incurred by an indemnified party in defense or settlement of
any claim that shall be subject to a right of indemnification hereunder shall be
advanced by the Company promptly upon submission for payment, provided that the
Company shall have received an undertaking by or on behalf of such indemnified
party to repay such amount to the extent that it shall be determined ultimately
that the indemnified party is not entitled to be indemnified hereunder.
SECTION 7.
Representations, Warranties and Agreements to Survive Delivery.
---------------------------------------------------------------
All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto and identified as such, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of any Investor
or controlling person, or by or on behalf of the Company, and shall survive
delivery of the Debentures to the Investors.
SECTION 8.
Termination of Agreement.
-------------------------
(a) This Agreement may be terminated at any time prior to the Closing Date:
(i) by written agreement of the Company and the
Investors;
(ii) by either the Company or any Investor, by giving written notice
of such termination to other parties, if Closing shall not have occurred on or
prior to February 28, 1999 (unless the failure to consummate the Closing by such
date shall be due to the failure of the party seeking to terminate this
Agreement to have fulfilled any of its obligations under this Agreement);
(iii) by any Investor, by giving written notice to the Company, if
since the date of this Agreement or since the respective dates as of which
information is given in the Prospectus, any event has occurred or failed to
occur which would have a Material Adverse Effect, whether or not arising in the
ordinary course of business, or if there has been a breach by the Company of any
representation, warranty, covenant or agreement that would give rise to the
failure of the conditions to the obligations of the Investors set forth in
Section 5(b), which breach cannot be cured after the giving of written notice to
the Company of such breach and prior to the Closing Date;
(iv) by either the Company or any Investor in the event that any
governmental authority shall have issued a final, non-appealable order, decree
or ruling or taken any other final, non-appealable action restraining, enjoining
or otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
nonappealable;
7
20
(v) by the Company, if the Company's Board of Directors determines in
good faith that such action is in the best interests of the Company and its
stockholders.
(b) If this Agreement is terminated pursuant to this Section 8 such
termination shall be without liability of any party to any other party except as
provided in Section 4(j) and Section 8(c) hereof, except that nothing herein
will relieve any party from liability for breach of this Agreement prior to such
termination.
(c) If this Agreement is terminated:
(i) by either party prior to the effective date of the Registration
Statement, then, provided that the Investors shall not be in breach of their
obligations as set forth herein, the Investors shall be entitled to
reimbursement of their expenses as set forth in Section 4(j);
(ii) by the Company on or after the effective date of the Registration
Statement pursuant to Section 8(a)(v), other than as a result of an alternative
debt or equity financing proposal, then the Company shall promptly pay to the
Investors an amount equal to one-half of the Standby Commitment Fee in addition
to reimbursement of Investors' expenses as set forth in Section 4(j).
(iii) by the Company on or after the effective date of the
Registration Statement pursuant to Section 8(a)(v) as a result of an alternative
debt or equity financing proposal, then the Company shall promptly pay to the
Investors an amount equal to the Standby Commitment Fee in addition to
reimbursement of Investors' expenses as set forth in Section 4(j).
If this Agreement has been terminated and the Company, within six
months of the date of such termination, enters into an agreement or letter of
intent providing for, or consummates, any debt or equity financing not
contemplated herein, then the Company shall promptly pay to the Investors a fee
equal to the Standby Commitment Fee less any amount paid pursuant to subclause
(ii) or (iii) of the preceding sentence; provided, however, that no such amount
shall be payable in the event this Agreement is terminated by the Investors as a
result of Section 8(a)(iii).
21
SECTION 9.
Notices.
--------
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given when delivered personally to the
recipient, one day after being sent to the recipient by reputable overnight
express courier service (charges prepaid), five days after being mailed to the
recipient (postage prepaid) or upon confirmation if transmitted by any standard
form of telecommunication. Notices shall be directed as follows:
To Relational Investors, LLC:
Relational Investors, LLC
0000 Xx Xxxxx Xxxxxxx Xxxxx,
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxx Xxxxxxxx
with a copy to:
Xxxxxxxx & Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx Xxxxxxx
To the Company:
Apria Healthcare Group Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
with a copy to:
Xxxxxx Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
22
SECTION 10.
Parties.
--------
This Agreement shall each inure to the benefit of and be binding upon
the Investors and the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Investors and the Company and their
respective successors and the controlling persons and officers and directors and
their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained.
This Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the Investors and the Company and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Debentures from any Investor shall
be deemed to be a successor by reason merely of such purchase.
SECTION 11.
Governing Law.
--------------
This Agreement shall be governed by and construed in accordance with
the laws of the State of California applicable to agreements made and to be
performed in said state.
SECTION 12.
Miscellaneous.
--------------
(a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company and each of the Investors, or in the case of a waiver,
by the party against whom the waiver is to be effective. No failure or delay by
any party in exercising any right, power or privilege hereunder shall operate as
a waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
(b) No party to this Agreement may assign any of its rights or obligations
under this Agreement without the prior written consent of the other parties
hereto except that the Investors may without such consent assign their rights
hereunder to one or more of their respective affiliates.
(c) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, and all of which shall constitute one and the
same agreement.
(d) The heading references herein are for convenience purposes only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
23
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
APRIA HEALTHCARE GROUP INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Title: Chief Executive Officer
RELATIONAL INVESTORS, LLC
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Authorized Signatory
24
Annex A
RELATIONAL ENTITIES
Debentures to
Entity be Purchased
------ ------------
Relational Investors, L.P. $50,000,000, less the
amounts allocated by
Relational to the
entities listed below*
Relational Fund Partners, L.P. *
Relational Coast Partners, L.P. *
Relational Partners, L.P. *
Xxxxx X. Xxxxxxxxxx Trust *
*Less amounts allocated to another Investor.
25
Annex B
SUMMARY TERM SHEET
Issuer: Apria Healthcare Group, Inc., a
Delaware corporation.
Issue: Approximately $50 million
principal amount of 10% Convertible
Subordinated Debentures due 2004, the ("Debentures").
Par Value/Price: $1,000 per Note.
Use of Proceeds: Repayment of bank debt.
Offering: Via registered tradable rights
offering.
Ranking: The Debentures are general, unsecured
obligations of the Company,
subordinate in right of payment to
all existing and future Senior
indebtedness of the Company and pari
passu with existing Senior
Subordinated Notes.
Interest: 10% per annum, payable semi-annually;
cumulative and, if not paid on any
interest payment date, additional
interest will accumulate on such
unpaid amount. Interest payable
prior to the anniversary of the date
of issuance of the Debentures in the
year 2002 may, at the election of the
Company, be accrued and paid in cash
on such anniversary. Interest shall
be payable on any such accrued
interest at a rate of 10% per annum.
Redemption Rights:
At option of
the Issuer: The Debentures are redeemable,
in whole or in part, at the Company's
option, at any time on or after the
third anniversary of issuance, upon
not less than 30 nor more than 60
days' notice, at the redemption
prices (expressed as percentages of
the principal amount) of 104%, 102%
and 100% in years 2002, 2003 and
2004, respectively, plus, in each
case, accrued and unpaid interest
including interest on such accrued
and unpaid interest, to the date of
redemption.
26
At option of
the Holder: Upon the occurrence of a
Change of Control the Company will be
required to offer to purchase the
Debentures at a purchase price equal
to 101% of the aggregate principal
amount thereof, plus accrued and
unpaid interest to the date of
purchase.
Mandatory: On the fifth anniversary of the
initial date of Issuance the Issuer
will redeem all of the Debentures
then outstanding at a redemption
price equal to par value plus accrued
and unpaid interest to the date of
redemption.
Conversion Rights: The Debentures are convertible at the
option of the holder at any time
after June 1, 1999 and prior to the
close of business on the maturity
date, unless previously redeemed or
repurchased, into shares of common
stock at the conversion price equal
to 10% above the average trading
price of the Common Stock of the
Company for the ten trading days
ending three days prior to the
effective date of the Registration
Statement (the "Conversion Price");
provided, however, if such average
trading price (a) is equal to or less
than $3.6363, the Conversion Price
shall be deemed to equal $4.00 and
(b) is equal to or greater than
$4.5454, the Conversion Price shall
be deemed to equal $5.00.
27
Annex C
[Credit Agreement Amendment Term Sheet]
[To be supplied by Apria]
28
Annex D
1. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
2. The Company has corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the Registration
Statement and to enter into and perform its obligations under this Agreement and
the Stockholders' Agreement.
3. To the best of such counsel's knowledge and information, the Company is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which a failure to so qualify would have a
material adverse effect on the business of the Company and its subsidiaries
considered as one enterprise.
4. The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus in the column "Actual" under the caption
"Capitalization" (except for subsequent issuances, if any, pursuant to this
Agreement or pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus or pursuant to the exercise of convertible
securities, options or warrants referred to in the Prospectus) and the shares of
issued and outstanding Common Stock have been duly authorized and validly issued
and are fully paid and non-assessable. The shares of Common Stock issuable upon
conversion of the Debentures have been duly authorized and validly reserved by
the Company for issuance upon such conversion in the manner provided in the
Indenture, will be validly issued, fully paid and nonassessable.
5. Each Subsidiary has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the [State of Delaware], has
corporate power and authority under such laws to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and, to the best of such counsel's knowledge and information, is duly
qualified as a foreign corporation to transact business and is in good standing
in each jurisdiction in which a failure to so qualify would have a material
adverse effect on the business of the Company and its subsidiaries considered as
one enterprise; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and, to the best
of such counsel's knowledge and information, is owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity.
29
6. The issuance of the Debentures and the Common Stock issuable upon
conversion of the Debentures is not subject to preemptive or other similar
rights arising by operation of law, under the charter or by-laws of the Company
or, to the best of such counsel's knowledge and information, otherwise.
7. The Debentures to be issued and sold by the Company pursuant to this
Agreement and the Rights have been duly authorized by requisite corporate action
on the part of the Company, and when executed and authenticated and paid for by
the Investors, will be valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable against the Company in accordance
with their terms, except to the extent that enforcement thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally, and by general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity); and the Debentures, the Rights and Indenture
conform as to legal matters in all material respects to the descriptions thereof
in the Prospectus.
8. The Indenture has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement, enforceable against the Company in
accordance with its terms, except to the extent that enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and by
general principles of equity (regardless of whether enforceability is considered
in a proceeding at law or in equity); the Indenture has been duly qualified
under the 1939 Act.
9. The Standby Purchase Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
10. The Stockholders' Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement, enforceable
against the Company in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, and by general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
30
11. The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and, to the best of such counsel's
knowledge and information, no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been issued
under the 1933 Act or proceedings therefor initiated or threatened by the
Commission.
12. At the time the Registration Statement became effective and at the
Closing Date, the Registration Statement (other than the financial statements
and supporting schedules included herein, as to which no opinion need be
rendered) complied as to form in all material respects with the requirements of
the 1933 Act, the 1933 Act Regulations, the 1939 Act and the 1939 Act
Regulations.
13. The Debentures, the Common Stock issuable upon the conversion of the
Debentures and the Indenture conform in all material respects as to legal
matters to the description thereof contained in the Prospectus, and the form of
certificate used to evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements.
14. There are no legal or governmental proceedings pending or, to the best
of their knowledge and information after due inquiry, threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein, and all pending legal or governmental proceedings to which
the Company or any subsidiary is a party or to which any of their property is
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are, considered in the
aggregate, not material.
15. To the best of such counsel's knowledge and information after due
inquiry, (a) there are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits thereto other than those
described or referred to therein or filed or incorporated by reference as
exhibits thereto, the descriptions thereof or references thereto are correct and
(b) no default exists in the due performance or observance of any material
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, notes, lease or other instrument so
described, referred to, filed or incorporated by reference.
16. The execution, delivery and performance of this Agreement, the
Stockholders' Agreement and the Indenture and the consummation of the
transactions contemplated herein and therein and compliance by the Company with
its obligations hereunder and thereunder will not conflict with or constitute a
breach of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, any contract, indenture, mortgage, loan agreement,
note, lease or other instrument to which the Company or any of its subsidiaries
is a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any of its subsidiaries is subject, nor
will such action result in any violation of the provisions of the charter or
by-laws of the Company, or any applicable law, administrative regulations or
administrative or court decree.
17. Each document filed pursuant to the 1934 Act (other than the financial
statements and supporting schedules included therein, as to which no opinion
need be rendered) and incorporated or deemed to be incorporated by reference in
the Prospectus complied when so filed as to form in all material respects with
the 1934 Act and the 1934 Act Regulations.
In rendering such opinion, such counsel may rely, as to matters of
fact (but not as to legal conclusions), to the extent he deems proper, on
certificates of responsible officers of the Company and public officials.
Very truly yours,
