-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BxIG9VgTMVWMqqgVsim3Iyo8YUEE3wEtzMDM4A0K7ShA1Smq+GzHrkWLLYUaO6rT PUACNSzW5eJQmzJG22mb1Q== 0000898430-95-000512.txt : 19950414 0000898430-95-000512.hdr.sgml : 19950414 ACCESSION NUMBER: 0000898430-95-000512 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950407 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950407 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SUNRISE MEDICAL INC CENTRAL INDEX KEY: 0000720577 STANDARD INDUSTRIAL CLASSIFICATION: ORTHOPEDIC, PROSTHETIC & SURGICAL APPLIANCES & SUPPLIES [3842] IRS NUMBER: 953836867 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11228 FILM NUMBER: 95527702 BUSINESS ADDRESS: STREET 1: 2382 FARADAY AVENUE STE 200 CITY: CARLSBAD STATE: CA ZIP: 92008 BUSINESS PHONE: 3103288018 MAIL ADDRESS: STREET 1: 2355 CRENSHAW BOULEVARD STREET 2: SUITE 150 CITY: TORRANCE STATE: CA ZIP: 90501 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 7, 1995 SUNRISE MEDICAL INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 0-12744 95-3836867 (Commission File Number) (I.R.S. Employer Identification No.) 2382 Faraday Avenue, Suite 200 Carlsbad, California 92008 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code (619) 930-1500 Exhibit Index on Page 2 Page 1 of 31 Item 2. On April 7, 1995 Sunrise Medical, Inc. ("Sunrise" or the "registrant"), through a wholly owned affiliate, Homecare Holdings France S.A., purchased all of the outstanding stock of S.E.P.A.C., Corona S.A., Tecktona Bois S.A., and Tecktona Sante S.A., a group of related French corporations, (collectively, the "Corona Group"), from Mr. Christian Suzanne, Mrs. Jeane Santucci-Suzanne, Mr. Pascal Suzanne, Mr. Laurent Suzanne, Mrs. Isabelle Suzanne-Aubert, Mrs. Nathalie Suzanne-Naylor, and Lion Expansion PME, a French corporation, and all of the outstanding stock of Sci La Planche, a French real estate company, from Mr. Christian Suzanne and Mrs. Jeane Santucci-Suzanne. The total purchase price of 206 million French francs includes cash of 175 million French francs and Sunrise common stock valued at 31 million French francs. The cash portion of the purchase price will be provided from the registrant's existing credit facility. The terms of the purchase are more fully described in the Purchase Agreement, a copy of which is attached as an exhibit hereto. The Corona Group manufactures and markets hydraulic and electric beds and other furniture for home care, nursing homes and hospital markets in France. Corona sales outside France are minimal. Sunrise intends to continue to utilize the assets acquired in this transaction in the same manner as they were employed prior to the acquisition. Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. a) Financial Statements of Corona SA, its subsidiaries and related companies b) Pro Forma Financial Information c) Exhibits The following exhibits are filed with or incorporated by reference in this report: Exhibit Number Description - ------- ----------- 2 Purchase Agreement dated as of February 23, 1995 23 Accountants' consent - KPMG Audit 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SUNRISE MEDICAL INC. Date: April 7, 1995 By /s/ Ted N. Tarbet -------------------------------- Ted N. Tarbet Senior Vice President, Chief Financial Officer and Secretary (Principal Financial Officer) Date: April 7, 1995 By /s/ John M. Radak -------------------------------- John M. Radak Vice President and Controller (Principal Accounting Officer) 3 Item 7.a CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES Combined Financial Statements September 30, 1994 (With Independent Auditors' Report Thereon) 4 INDEPENDENT AUDITORS' REPORT The Board of Directors and Stockholders Corona SA: We have audited the accompanying combined balance sheet of Corona SA, its subsidiaries and related companies as of September 30, 1994, and the related combined statements of income and cash flow for the year then ended. These combined financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in France and in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of Corona SA, its subsidiaries and related companies at September 30, 1994 and the results of their operations and their cash flow for the year then ended in conformity with accounting principles generally accepted in France. Accounting principles generally accepted in France for consolidated financial statements differ in certain respects from accounting principles generally accepted in the United States. Differences between accounting principles accepted in France and the United States are summarized in Note 3 to the combined financial statements. [KPMG Audit] Neuilly sur Seine, France April 3, 1995 5 CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES COMBINED BALANCE SHEET (SEE NOTE 2) September 30, 1994 (in thousands of French Francs)
Gross Depreciation Net ASSETS Notes amount or allowances amount ------- ------ ------------- ------ FIXED ASSETS: Intangible assets: Franchises, patents and similar assets 217 203 14 Goodwill 4.1 1,670 - 1,670 Other intangible assets 30 - 30 Tangible fixed assets: 4.2 Land 669 36 633 Buildings 11.1 18,957 5,133 13,824 Industrial fixtures and equipment 11.1 15,351 8,658 6,693 Other tangible fixed assets 2,559 1,560 999 Financial assets: Loans 362 - 362 Other financial assets 43 - 43 ------- ------ ------- 39,858 15,590 24,268 ------- ------ ------- CURRENT ASSETS: Inventories: 5 Raw materials and supplies 8,883 - 8,883 Work in progress - goods 2,704 - 2,704 Finished goods 7,712 1,450 6,262 Receivables: Trade receivables 48,371 899 47,472 Sundry receivables 3,524 - 3,524 Marketable securities 132 - 132 Cash and cash equivalents 7,925 - 7,925 Prepaid expenses 1,096 - 1,096 ------- ------ ------- 80,347 2,349 77,998 ------- ------ ------- Deferred charges 37 - 37 ------- ------ ------- TOTAL ASSETS 120,242 17,939 102,303 ======== ====== =======
See accompanying notes to the combined financial statements. 6 CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES COMBINED BALANCE SHEET (SEE NOTE 2) - Continued September 30, 1994 (in thousands of French Francs)
LIABILITIES AND EQUITY Notes ----- SHAREHOLDERS' EQUITY: 7 Common stock 2,360 Additional paid - in capital 300 Retained earnings - prior years: 7 & 12.3 Legally restricted reserves 412 Tax related reserves 21 Other retained earnings 16,463 Net income for the year 18,100 Special provision for tax purposes 401 ------- 38,057 ------- OTHER FUNDS 100 ------- 100 ------- PROVISIONS 8 Provision for risks 4,011 Provision for future costs 143 ------- 4,154 ------- LIABILITIES: Financial liabilities: 6 Convertible debenture 3,203 Borrowings from credit institutions 11.1 19,079 Other borrowings and loans 1,907 Customers' advances 436 Operating liabilities Trade accounts payable and related liabilities 20,112 Taxes and social debts 13,512 Other liabilities Liabilities related to fixed assets 11 Other creditors 1,732 ------- 59,992 ------- TOTAL LIABILITIES AND EQUITY 102,303 =======
See accompanying notes to the combined financial statements. 7 CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES COMBINED STATEMENT OF INCOME (SEE NOTE 2) Year ended September 30, 1994 (in thousands of French Francs)
Notes ----- Operating income: Sales of manufactured goods 176,935 Sales of services 654 ------- Net sales (sub total) 9 177,589 ------- Changes in inventory of manufactured goods (213) Trading subsidies or grants 300 Reversal of depreciation, provisions and transfer of charges 6,744 Other income 659 ------- Total operating income 185,079 ------- Operating expenses: Purchases of raw materials and supplies 88,841 Changes in inventory of raw materials and supplies (2,391) Other purchases and expenses 23,895 Non-income taxes 2,313 Wages and salaries 24,185 Social security charges 9,560 Depreciation and provisions: Depreciation of fixed assets 4.2 2,838 Amortization of deferred charges 6 On current assets: provisions 1,546 For risks and future charges 2,393 Other expenses 474 ------- Total operating expenses 153,660 ------- Net operating income 31,419 -------
See accompanying notes to the combined financial statements. 8 CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES COMBINED STATEMENT OF INCOME (SEE NOTE 2) - Continued Year ended September 30, 1994 (in thousands of French Francs)
Notes ----- Balance brought forward 31,419 ------ Financial income: Interest and similar income 297 Foreign currency exchange gain 25 Net profit on disposal of marketable securities 294 ------ Total financial income 616 ------ Financial expenses: Interest and similar expense 2,284 Foreign currency exchange loss 29 ------ Total financial expenses 2,313 ------ Net financial expenses (1,697) ------ Net income before items below 29,722 ------ Exceptional income: Capital transactions 287 Reversal of provisions 322 ------ Total exceptional income 609 ------ Exceptional expenses: Operating charges 57 Capital transactions 285 Provisions 1,406 ------ Total exceptional expenses 1,748 ------ Net exceptional loss (1,139) Employees' profit sharing plan expense (2,563) Corporate income tax on profit (7,920) ------ Net income 18,100 ======
See accompanying notes to the combined financial statements. 9 CORONA SA, ITS SUBSIDIARIES AND RELATED COMPANIES COMBINED STATEMENT OF CASH FLOWS (SEE NOTE 2) Year ended September 30, 1994 (in thousands of French Francs)
Notes ----- Net cash provided by operating activities 10 11,969 Cash flows from investing activities: Proceeds from sale of property, plant and equipment 320 Capital expenditure (8,283) ------ Net cash used in investing activities (7,963) ------ Cash flows from financing activities: Principal payments on notes payable to banks (18) Principal payments on long-term debt (3,550) Principal payments under capital lease obligations (482) Dividends paid (2,166) ------- Net cash used in financing activities (6,216) ------- Net decrease in cash and cash equivalents (2,210) Cash and cash equivalents at beginning of year 10,135 ------- Cash and cash equivalents at end of year 7,925 =======
See accompanying notes to the combined financial statements. 10 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 1 NATURE OF BUSINESS Corona SA and its related companies (Corona Group) is the second largest manufacturer in France of beds and bedroom furniture for hospitals, nursing homes and distributors of home medical equipment. During recent years the Corona Group has gained a substantial share of the French market in hospital beds, its principal product being the electrical height adjustable bed. The Corona Group is privately owned and is comprised of the following entities: Corona SA, Tecktona Bois SA, Tecktona Sante SA, S.E.P.A.C., and SCI La Planche. Corona SA is the main manufacturing and distributing company in the Group and owns 95% of the common shares of both Tecktona Bois SA and Tecktona Sante SA. Tecktona Bois SA manufactures wood based products which it supplies solely to Corona SA. Tecktona Sante SA is a distribution company which sells products to retailers which it purchases from Corona SA. S.E.P.A.C. is the holding company of Corona SA with 56.7% of the share capital of that company. The remaining shares in Corona SA are held by private shareholders and an external investor. S.E.P.A.C. was created in order to facilitate the transfer of shares in Corona SA to relatives of the private shareholders. SCI La Planche is owned by the same private shareholders. The purpose of SCI La Planche is the ownership, management, administration and sale of assets which are leased to Corona SA and its subsidiaries. 11 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1 PRINCIPLES OF PRESENTATION AND COMBINATION The combined financial statements include the financial statements of Corona SA, Tecktona Bois SA, Tecktona Sante SA and those of S.E.P.A.C. and SCI La Planche. As S.E.P.A.C. is a French partnership, which has no commercial activity, it cannot be the consolidating company for Corona SA and its subsidiaries under French accounting rules. In order to present the substance of the Group's activities and financial position the net assets of SCI La Planche, and the net assets of S.E.P.A.C. have been included in the combined financial statements of the Corona Group. All significant intercompany balances and transactions have been eliminated in combination. The closing date is September 30, 1994, the financial year end of Corona SA, Tecktona Bois SA and Tecktona Sante SA. The financial statements which have been combined for S.E.P.A.C. and SCI La Planche are those for the year ended December 31, 1994, being the financial year end of these companies. As the impact of the last three months of this period is insignificant, these financial statements have not been adjusted in the financial statements of the Corona Group at September 30, 1994. Minority interests have not been identified under a separate caption within the combined financial statements of the Corona Group. They are included within other retained earnings but do not represent a significant proportion of the net assets. 2.2 GENERAL ACCOUNTING POLICIES The principal accounting policies adopted by the Corona Group are in accordance with accounting policies generally accepted in France (see note 3). The financial statements have been prepared on the basis of the following general accounting concepts: . assumption of going concern, . consistency in accounting principles, . use of historical costs, . matching concept. 12 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 2.3 SPECIFIC ACCOUNTING POLICIES INTANGIBLE ASSETS Computer software licences are capitalized and amortized on a straight line basis over one year. Research and development costs are charged to expenses as incurred. TANGIBLE FIXED ASSETS Tangible fixed assets are valued at cost and are depreciated on a straight line or accelerated basis over the following estimated useful lives:
Straight Accelerated line (years) (years) ------------ ------------ Buildings 20 - Furnitures and fittings 5 to 10 5 and 7 Plant and machinery 2 to 10 5 and 10 Moulds 3 to 5 - Water purification station 7 to 15 - Hardware 3 to 10 5 Vehicles 2 to 4 - Furnitures 10 -
When assets are disposed of, the cost and related accumulated depreciation are removed from the financial statements, and any resulting gain or loss is recognized in exceptional income for the period. The costs of maintenance and repairs are charged to the income statement as incurred; significant improvement costs are capitalized. FINANCIAL ASSETS Financial assets are recorded at their purchase price. Acquisition costs of financial assets are not capitalized. INVENTORIES Raw materials are valued according to the latest invoice price which management does not consider to be significantly different from historical cost. Unit costs are updated each time a supplier's invoice is registered in the accounting system. 13 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) Work in progress and finished goods are valued according to the bill of materials included in the products at every step of the production process. The bills of materials include the costs of raw material, labor and sub- contractor costs as follows: In valuing work in process and finished goods, raw materials are valued at the latest invoice price; labor cost is calculated according to a standard time and a standard hourly cost for each step of the process. The standard hourly cost corresponds to the annual operating expenses divided by the workers' productive hours during the year. The operating expenses include all such expenses except for salesmen's commissions, freight and subcontractors' expenses. This basis of valuation has the effect of including in inventory a portion of selling expenses. Whilst it is an unusual practice from a French point of view, this policy has been adopted because the significant majority of the Corona Group production is manufactured to order. Subcontractors' costs are valued at the invoice price. The only inventory depreciated is the demonstration inventory which is provided for on a straight-line basis over one year from the date of its being made available to clients. RECEIVABLES Accounts receivables are recorded at historical cost. Provisions against bad and doubtful receivables are made on a case by case basis. The provisioning policy is a 100% provision for doubtful receivables when management consider that there is nearly no chance of recovering the debt. PREPAID EXPENSES Prepaid expenses is largely comprised of the inventory of advertising catalogues whose costs are capitalized and amortized over the expected useful lives. REVENUE RECOGNITION Revenue is recognized in the financial statements upon delivery of goods to customers. The Corona Group production is essentially based on orders received. These orders provide for a delivery date which can, at the customer's request, be deferred. Accordingly, revenue is recognised in the financial statements at the delivery date or, in the event of a valid business reason for deferral at the customer's request, at the date on which goods are ready for delivery. 14 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) RETIREMENT INDEMNITIES No accrual provision is made by the Corona Group for future liabilities for the lump sum retirement indemnities payable under French labor law. These future payments are charged to expenses as they are incurred. WARRANTY ACCRUAL Warranty costs are accrued for after sales service of any nature provided by the company over a period of one year from the date of sale. The calculation method is based on the determination of an estimate of the annual cost of the after sales service. This estimated cost takes into account the purchase cost of repair parts, the operating charges of the department, the labor cost and overheads related to aftersales service. GRANTS No large grants or subsidies have been received by the Corona Group during the period. FOREIGN CURRENCY TRANSLATION The accounting records of the Company are maintained in French francs. During the period foreign currency transactions are recorded at prevailing rates of exchange and the effect of rate changes are included in the determination of net income for the period. Year end balances are translated at the rates prevailing at the balance sheet date. LEASES The Corona Group has acquired assets under finance leases. The major contracts relate to the premises leased by Tecktona Bois SA, and to a robot leased by Corona SA. The leasing operations detailed above have been treated as capital leases according to French accounting standards in the combined financial statements. DEFERRED TAX Deferred tax has been recorded on all material timing differences between book and taxable income in accordance with French accounting standards in the combined financial statements. 15 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 2.4 CONSISTENCY IN APPLICATION OF ACCOUNTING POLICIES The principal accounting policies detailed above have been consistently applied in the financial statements from year to year. 3 DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN FRANCE AND THE US The principal differences between the French accounting principles ('French GAAP') which have been applied in the preparation of the Corona Group financial statements and accounting principles generally accepted in the US ('US GAAP') are as follows: 3.1 PROVISION FOR POST-RETIREMENT BENEFITS No provision has been made in the financial statements of the Corona Group for these payments. The total of this commitment is not considered material given the low average age of the employees of the group. 3.2 DIVIDENDS According to French accounting principles, dividends declared at the end of one financial period are not distributed until they have been approved by the shareholders in a General Meeting. Dividends paid are, therefore, accounted for after the period end. This causes a timing difference between French GAAP and US GAAP in which dividends are accounted for when they are declared. See note 12 for subsequent events. 3.3 INVENTORY VALUATION As described in note 2.3 above, the carrying value of inventory includes an element of selling expenses which should be expensed as a period cost under accounting principles accepted in the US. The impact of this policy on net income for 1994 is not considered significant. The pre-tax impact of this policy on the shareholders' equity as of September 30, 1994 is estimated at FF. 1,350. 16 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 3.4 AMORTIZATION OF GOODWILL As explained in note 4.1, the goodwill arising from the acquisition by S.E.P.A.C. of shares in Corona SA has not been amortized. Accounting principles generally accepted in the United States would require such goodwill to be amortized over a period not exceeding 40 years. 3.5 INCOME STATEMENT PRESENTATION The reclassifications which would be necessary for a presentation in accordance with US GAAP have not been undertaken. The major characteristics of the French accounts format which differ from the U.S. format are as follows: . French GAAP financial statements do not comprise a "cost of sales" caption and, as a result, it is not possible to derive a "gross profit" for the year from the combined financial statements as presented. . The increases and decreases in provisions are shown gross rather than net. . Systematic classification of certain items as "exceptional" which are not "exceptional" for U.S. purposes. These include accelerated fixed asset depreciation for tax purposes, gain or loss on the disposal of fixed assets and "prior year" items. 17 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 4 FIXED ASSETS 4.1 GOODWILL IN S.E.P.A.C UPON THE PURCHASE OF SHARES IN CORONA SA S.E.P.A.C. purchased shares in Corona SA as follows: 9,810 on April 14, 1990 and 3,751 on October 1, 1991. The differences between the acquisition prices and the share of the net assets in Corona SA acquired at the time of these purchases have been treated as goodwill. This amounts to FF. 1,670 and is included in intangible assets on the accompanying combined balance sheet. Goodwill has not been amortized. 4.2 TANGIBLE FIXED ASSETS 4.2.1 MOVEMENTS IN COSTS AND RELATED DEPRECIATIONS The table below shows the analysis of tangible fixed assets by category.
Land & Industrial Land fixtures & Improve- equipment Work in ment Buildings & Other process Total COST: At October 1, 1993 669 15,157 12,995 49 28,870 Additions - 3,751 5,483 - 9,234 Disposals - - (568) - (568) Transfers - 49 - (49) - At September 30, 1994 669 18,957 17,910 - 37,536 DEPRECIATION: Accumulated depreciation at October 1, 1993 30 4,147 8,678 - 12,855 Charge for the year 6 986 1,823 - 2,815 Disposals - - (283) - (283) At September 30, 1994 36 5,133 10,218 - 15,387 Net book value at September 30, 1994 633 13,824 7,692 - 22,149
18 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 4.2.2 EXPLANATIONS OF SIGNIFICANT MOVEMENTS Additions to buildings are largely composed of extensions to the production premises of Corona SA in order to rationalize the production process. More specifically, surfaces for an automatic painting chain were installed. Additions to plant and equipment were largely comprised of a painting chain (FF. 2,987) and of a robot (FF. 1,000). 5 CURRENT ASSETS 5.1 INVENTORIES The table below shows the analysis of inventories at September 30, 1994: Raw materials 8,883 Work in process 2,704 Finished goods 4,888 Demonstration stocks 2,824 ------ Gross inventories 19,299 Provision (1,450) ------ Net value 17,849 ======
Demonstration inventories were completely provided for as of September 30, 1993. Those demonstration inventories held at September 30, 1994 have been provided for over one year according to the date at which they were made available to clients. 5.2 MATURITIES OF CURRENT ASSETS Current assets are recoverable within 1 year except for an amount of FF. 1,660 which represents VAT recoverable. This receivable is due from the French government and is interest bearing at a rate of approximately 4%. 19 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 6 FINANCIAL LIABILITIES 6.1 MATURITIES OF DEBTS
Less than Between After 1 year 1 and 5 years 5 years Total ---------- ------------- ------- ----- Convertible debenture 3,203 -- -- 3,203 Bank loans 2,731 6,977 1,685 11,393 Finance lease: building 423 2,199 4,164 6,786 Finance lease: equipment 150 750 -- 900 Other borrowings and loans 1,907 -- -- 1,907 ----- ------ ------ ------ 8,414 9,926 5,849 24,189 ===== ====== ====== ======
Other borrowings and loans relate to the current accounts with the private shareholders. 6.2 CHARACTERISTICS OF THE CONVERTIBLE DEBT During the year ended September 30, 1993 Corona SA obtained a loan of FF. 3,000 which was made up of 1,770 debentures with a nominal value of FF. 1.695 each and which are convertible into shares. Interest is payable on these debentures on an annual basis. Under the terms of the contract, this borrowing is repayable in equal parts over the years 1996, 1997 and 1998. However, as described in note 12, the characteristics of this liability have been modified since the year end and, as a result, the debt is shown as current in note 6.1. 20 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 7 SHAREHOLDERS' EQUITY 7.1 CHANGES IN SHAREHOLDERS' EQUITY
Special Additional Legally Tax provision Common paid-in restricted Related Retained Net income for tax stock capital reserves reserves earnings for the year purposes TOTALS ------ ---------- ---------- -------- -------- ------------ --------- ------ Balance as of October 1, 1993 2,360 300 316 21 8,896 10,161 473 22,527 Attribution of 1993 net income (of which FF.2,166 is dividend) 96 7,899 (10,161) (2,166) 1994 SCI result distributed to owners (332) (332) Write back of provision to income statement (72) (72) Net income for the year 18,100 18,100 Balance as of September 30, 1994 2,360 300 412 21 16,463 18,100 401 38,057
7.2 COMPOSITION OF THE SHARE CAPITAL The share capital is that of Corona SA. The investments in the subsidiaries Tecktona Bois SA and Tecktona Sante SA have been eliminated in the consolidation of these two companies. The minority interests of these companies, are not considered to be significant and have been included in retained earnings. 21 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 8 PROVISIONS FOR RISKS AND CHARGES These provisions are comprised of the following elements: Warranty accrual 2,250 Provision for corporation taxes (following an inspection by the tax authorities for the years ended September 30, 1991, 1992 and 1993) 1,406 Other 498 ------ 4,154 ======
The tax provision has been substantially paid over to the tax authorities subsequent to the year end. 9 DETAILS OF THE INCOME STATEMENT 9.1 ANALYSIS OF SALES Sales Corona France production 129,267 Sales to French overseas territories and departments 3,639 Sales of goods and spare parts 29,441 Other income 654 ------- TOTAL France 163,001 ------- Corona export sales 14,572 Other export 16 ------- TOTAL export 14,588 ------- TOTAL SALES 177,589 =======
22 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 9.2 AVERAGE NUMBERS OF PERSONNEL
Salaried Non-salaried personnel personnel --------- ------------ Executives 6 -- Technicians and other professionals 20 -- Employees 15 -- Laborers 107 6 ----- ----- Sub-total 148 6 Sales people 6 -- ----- ----- TOTAL 154 6 ===== =====
10 RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES The reconciliation of net income to net cash provided by operating activities for the year ended September 30, 1994 follows (in thousand of French francs): Net income 18,100 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of fixed assets 2,838 Gain on sale of equipment (11) Increase in trade accounts receivable (8,258) Increase in inventories (2,775) Decrease in prepaid expenses 214 Decrease in other receivables 979 Increase in trade accounts payable 2,466 Increase in accrued expenses 264 Decrease in income taxes payable (710) Decrease in other liabilities (1,138) ------ Net cash provided by operating activities 11,969 ======
23 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 11 OTHER COMMITMENTS 11.1 FINANCE LEASE COMMITMENTS The capitalization of the finance leases has the following effects on the combined financial statements as of and for the year ended September 30, 1994:
Plant and Buildings equipment --------- --------- BALANCE SHEET Capital value of items 8,411 1,000 Accumulated depreciation (2,229) (100) Capital payments remaining (6,786) (900) ------ ----- Impact on net assets (604) -- ====== ===== INCOME STATEMENT Finance lease charge (1,050) (180) Depreciation expense 420 100 Financial expense 668 80 ------ ----- Impact on pre-tax net income 38 -- ====== =====
24 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 11.2 DEFERRED TAXATION The following deferred tax assets have been accounted for in the accompanying combined balance sheet: Deferred tax on the capitalization of the finance lease contracts 201 Deferred tax on employee profit sharing and other timing differences or the 1994 financial year (deductible in the 1995 financial year) 780 ---- 981 ==== These deferred taxes are applied as follows: . to the combined reserves at the beginning of the financial year 633 . to the net income for the financial year 348 ---- 981 ====
11.3 SECURITIES GRANTED Shares in Corona SA held by S.E.P.A.C. have been pledged to guarantee the financing made available by Credit Lyonnais. In addition, certain fixed assets are mortgaged to provide security for the leasing companies or financial institutions who have financed such assets. 25 Corona SA, its Subsidiaries and Related Companies Notes to the Combined Financial Statements September 30, 1994 (all amounts are in thousands of French francs) 12 EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE 12.1 TRANSACTIONS IN PROCESS Negotiations have been entered into, subsequent to the balance sheet date for the combined financial statements, for the sale of all the shares of the companies in the Corona Group to an American company, Sunrise Medical (via an intermediate company incorporated in France, Homecare Holdings France SA). 12.2 CONVERSION OF THE DEBENTURES The conversion of the convertible debentures into shares will be made prior to the acquisition by Sunrise Medical and will result in an increase of FF.3,000 in the net assets of the Corona Group. 12.3 DISTRIBUTION OF DIVIDENDS As described in note 3.2, the annual French financial statements are prepared before recording the dividends which the shareholders have agreed to distribute. The distributions which have been made subsequent to September 30, 1994 amount to: . FF. 5,003 taken from the net income for the year ended September 30, 1994 of which FF. 2,838 is effectively returned to the Group (since it is paid to the holding company S.E.P.A.C), . FF. 4,600 taken from prior year retained earnings of which FF. 2,608 is returned to the Group (since it is paid to the holding company S.E.P.A.C.). 26 Item 7.b SUNRISE MEDICAL INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The unaudited pro forma condensed consolidated balance sheet as of December 30, 1994 assumes that the acquisition of all shares of Corona S.A. and its related companies ("Corona") had occurred on December 30, 1994 and accordingly is reflected in the financial position of Sunrise Medical Inc. ("Sunrise") as of December 30, 1994. The unaudited pro forma condensed consolidated statements of operations for the year ended July 1, 1994 and the six months ended December 30, 1994 present the results of operations of Sunrise assuming the Corona acquisition had been consummated as of the beginning of the periods indicated, except that operating results for Corona's fiscal year ending September 30, 1994 were used to prepare the unaudited pro forma condensed consolidated statement of operations for the year ended July 1, 1994, Sunrise's fiscal year end. The unaudited pro forma condensed financial statements have been prepared by Sunrise and all calculations have been made based upon assumptions deemed appropriate. The unaudited pro forma condensed financial statements were prepared utilizing the accounting policies of both Sunrise and Corona (except, in the case of Corona, where those policies deviated from U.S. generally accepted accounting principles). The preliminary allocations of the purchase price, which will be subject to further adjustments as Sunrise finalizes the allocation of the purchase price in accordance with generally accepted accounting principles, are included in the unaudited pro forma condensed financial statements. The unaudited pro forma financial information does not purport to be indicative of the results of operations or the financial position which would have actually been obtained if the acquisitions had been consummated on the dates indicated. In addition, the unaudited pro forma financial information does not purport to be indicative of results of operation or financial positions which may be achieved in the future. The unaudited pro forma financial information should be read in conjunction with Sunrise's historical consolidated financial statements and notes thereto contained in the 1994 Annual Report on Form 10-K and the Quarterly Report on Form 10-Q for the quarter ended December 30, 1994. 27 SUNRISE MEDICAL INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 30, 1994 (in thousands)
Sunrise Medical December 30, 1994 Corona Unaudited Per Form 10-Q December 31, 1994 Acquisition Pro Forma (Unaudited) (1) (Unaudited) Adjustments Amount ----------------- ----------------- ----------- --------- Assets Current assets: Cash and cash equivalents $6,132 $1,979 $8,111 Receivables, net 133,975 13,261 147,236 Inventories 77,549 3,460 81,009 Other current assets 10,882 482 11,364 --------------------------------------------------------------------- Total current assets 228,538 19,182 247,720 Property, plant and equip., net 82,874 4,084 1,055 (2) 88,013 Goodwill & other intangibles, net 229,071 320 31,871 (3) 261,262 Other assets, net 744 744 ---------------- ----------------- ----------- --------- Total assets $541,227 $23,586 $32,926 $597,739 ================ ================= =========== ========= Liabilities and Stockholders' Equity Current liabilities: Current maturities -- long-term obligations $1,710 $ 1,435 $ 3,145 Trade accounts payable 32,823 7,629 40,452 Accrued compensation and other expenses 53,259 2,935 2,271 (4) 58,465 Income taxes 9,455 1,321 10,776 ---------------- ----------------- ----------- --------- Total current liabilities 97,247 13,320 2,271 112,838 Long-term debt, less current installments 157,077 2,942 32,735 (5) 192,754 Deferred income taxes 2,865 2,865 Stockholders' equity 284,038 7,324 (2,080)(6) 289,282 -------------------------------------------------------------------- Total liabilities and stockholders' equity $541,227 $23,586 $32,926 $597,739 ====================================================================
(See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements) 28 SUNRISE MEDICAL INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS SIX MONTHS ENDED DECEMBER 30, 1994 (in thousands, except per share amounts)
Sunrise Medical December 30, 1994 Corona Unaudited Per Form 10 - Q December 31, 1994 Acquisition Pro Forma (Unaudited) (8) (Unaudited) Adjustments Amount ----------------- ----------------- ----------- --------- Net sales $287,462 $18,725 $306,187 Cost of sales 186,393 12,489 198,882 ----------------- ---------------- ----------- --------- Gross profit 101,069 6,236 107,305 Marketing, selling and administrative expenses 60,844 3,242 6 (9) 64,092 Research and development expenses 6,088 205 6,293 Corporate expenses 3,404 3,404 Amortization of goodwill and other intangibles 3,188 398 (10) 3,586 ----------------- ---------------- ----------- --------- Corporate operating income 27,545 2,789 (404) 29,930 Other (expense) income: Interest expense (4,462) (233) (1,244) (11) (5,939) Other income & exp., net (409) 50 (359) ----------------- ---------------- ----------- --------- Income before taxes 22,674 2,606 (1,648) 23,632 Income taxes 9,319 923 (480) (12) 9,762 ----------------- ---------------- ----------- --------- Net income $13,355 $1,683 ($1,168) $13,870 ================= ================ =========== ========= Earnings per share $0.72 $0.74 ================= ========= Weighted average number of shares outstanding 18,577 264 (13) 18,841 ================= =========== =========
(See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements) 29 SUNRISE MEDICAL INC. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED JULY 1, 1994 (in thousands, except per share amounts)
Sunrise Medical Corona Unaudited July 1, 1994 September 30, 1994 Acquisition Pro Forma Per Form 10 - K (7)(8) (Unaudited) Adjustments Amount ----------------- ----------------- ----------- --------- Net sales $467,906 $31,321 $499,227 Cost of sales 297,081 20,890 317,971 ----------------- ---------------- ----------- --------- Gross profit 170,825 10,431 181,256 Marketing, selling and administrative expenses 100,238 5,158 11 (9) 105,407 Research and development expenses 11,029 384 11,413 Corporate expenses 5,444 5,444 Amortization of goodwill and other intangibles 5,435 797 (10) 6,232 ----------------- ---------------- ----------- --------- Corporate operating income 48,679 4,889 (808) 52,760 Other (expense) income: Interest expense (6,078) (408) (2,488) (11) (8,974) Other income & exp., net (17) 109 92 ----------------- ---------------- ----------- --------- Income before taxes 42,584 4,590 (3,296) 43,878 Income taxes 16,727 1,397 (960) (12) 17,164 ----------------- ---------------- ----------- --------- Net income $25,857 $3,193 ($2,336) $26,714 ================= ================ =========== ========= Earnings per share $1.41 $1.44 ================= ========= Weighted average number of shares outstanding 18,317 232 (13) 18,549 ================= =========== =========
(See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements) 30 SUNRISE MEDICAL INC. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (1) Condensed from the unaudited balance sheet of Corona S. A. and related companies ("Corona") as of December 31, 1994 and translated from French francs to U.S. dollars at the month end exchange rate. (2) To record the estimated increase to fair market value of real estate owned by Corona. (3) Represents estimated goodwill from acquisition. (4) Represents estimated acquisition-related fees and expenses, including corporate and real estate transfer taxes, incurred by Sunrise Medical Inc. ("Sunrise"). (5) Reflects the debt incurred to finance the acquisition. The purchase price of $38,533 (FFR 206,000) consisted of $32,735 (FFR 175,000) in cash drawn from Sunrise's multi-currency credit facility and $5,798 (FFR 31,000) in Sunrise common stock to be issued at date of acquisition. (6) Reflects elimination of equity of Corona and issuance of Sunrise common stock valued at $5,798. (7) The results of operations for Corona's fiscal year ending September 30, 1994 have been used to prepare the unaudited pro forma condensed consolidated statement of operations for the year ended July 1, 1994. (8) Condensed from the unaudited statements of operations of Corona S.A. and related companies for the fiscal year ending September 30, 1994 and the six months ending December 31, 1994 and translated from French francs to U.S. dollars using the applicable weighted average exchange rates. (9) Additional depreciation expense on the depreciable portion of the revalued real estate. (10) Represents the amortization of goodwill generated by the acquisition on a straight line basis over forty years. (11) Reflects additional interest expense attributable to the bank debt used to finance the acquisition. (12) Recognizes pro forma income taxes calculated using statutory tax rates for the applicable period and providing no tax benefit from the amortization of goodwill. (13) Reflects the additional number of shares outstanding assuming the acquisition had occurred at the beginning of the period. 31 EX-2 2 PURCHASE AGREEMENT EXHIBIT 2 AGREEMENT FOR ------------- THE PURCHASE ------------ OF SHARES OF ------------ S.E.P.A.C, CORONA S.A., TECKTONA BOIS S.A., ------------------------------------------- TECKTONA SANTE S.A., and SCI LA PLANCHE --------------------------------------- BY -- HOMECARE HOLDINGS FRANCE S.A. ----------------------------- INDEX ----- RECITALS.................................................................... 2 ARTICLE 1 DEFINITIONS...................................................... 3 ----------- ARTICLE 2 SALE............................................................. 6 ---- 2.1 Shares........................................................... 6 ------ 2.2 Minority Shares.................................................. 6 --------------- 2.3 SCI Shares....................................................... 6 ---------- 2.4 Assignment....................................................... 6 ---------- 2.5 Effective Date of Sale and Transfer.............................. 6 ----------------------------------- 2.6 Undistributed Profits............................................ 6 --------------------- ARTICLE 3 PURCHASE PRICE................................................... 7 -------------- 3.1 Purchase Price - Payment......................................... 7 ------------------------ 3.1.1 Shares.............................................. 7 ------ 3.1.2 SCI Shares.......................................... 8 ---------- ARTICLE 4 NET WORTH........................................................ 8 --------- 4.1 Guaranteed Net Worth............................................. 8 -------------------- 4.2 Net Worth Determination.......................................... 9 ----------------------- 4.2.1 Preparation of Financial Statements................. 9 ----------------------------------- 4.2.2 Financial Statements Audit.......................... 9 -------------------------- 4.3 Price Adjustments................................................ 10 ----------------- 4.4 Conversion of Convertible Bonds.................................. 10 ------------------------------- 4.5 Reimbursment of Cash Advances.................................... 10 ----------------------------- ARTICLE 5 INFORMATION, REPRESENTATIONS AND WARRANTIES...................... 10 ------------------------------------------- 5.1 Disclosure to Buyer.............................................. 10 ------------------- 5.2 Representation and Warranties regarding the CORONA GROUP......... 11 -------------------------------------------------------- 1 5.2.1 Representations and Warranties at Signing........... 11 ----------------------------------------- 5.2.2 Representations, Warranties and Indemnification ----------------------------------------------- at Closing.......................................... 11 ---------- 5.3 Representations and Warranties regarding SCI..................... 11 -------------------------------------------- 5.3.1 Representations and Warranties at Signing........... 11 ----------------------------------------- 5.3.2 Representations, Warranties and Indemnification ----------------------------------------------- at Closing.......................................... 12 ---------- 5.4 Access to Information............................................ 12 --------------------- 5.5 Knowledge of Sellers............................................. 12 -------------------- ARTICLE 6 CONSUMMATION, CLOSING............................................ 12 --------------------- 6.1 Condition Precedent to Closing................................... 12 ------------------------------ 6.2 Closing.......................................................... 13 ------- 6.2.1 Documents to be delivered by the Sellers ---------------------------------------- and LION EXPANSION.................................. 13 ------------------ 6.2.2 Documents to be delivered by Mr. Christian Suzanne -------------------------------------------------- and Mrs Jeanne Santucci-Suzanne..................... 14 ------------------------------- 6.2.3 Documents to be delivered by Buyer.................. 15 ---------------------------------- 6.3 Closing Undertakings of Buyer.................................... 15 ----------------------------- ARTICLE 7 OPERATION OF BUSINESS............................................ 16 --------------------- ARTICLE 8 MISCELLANEOUS PROVISIONS......................................... 16 ------------------------ 8.1 Cooperation...................................................... 16 ----------- 8.2 Announcements.................................................... 17 ------------- 8.3 Obligations Joint and Several.................................... 17 ----------------------------- 8.4 Notices.......................................................... 17 ------- 8.5 Costs and Fees................................................... 18 -------------- 8.6 Entire Agreement................................................. 18 ---------------- 8.7 Attachments...................................................... 18 ----------- 8.8 Commissions...................................................... 19 ----------- 2 8.9 Severability..................................................... 19 ------------ 8.10 Governing Law.................................................... 19 ------------- 8.11 Disputes / Arbitration........................................... 19 ---------------------- 8.12 Language......................................................... 19 -------- --------------------- 3 ATTACHMENTS ----------- TO -- PURCHASE AGREEMENT ------------------ ATTACHMENT 1 - Ownership of the Shares of CORONA GROUP and SCI ATTACHMENT 2 - Allocation of Purchase Price and Schedule of Payments including Ownership Percentages ATTACHMENT 3 - Terms of Sunrise Medical Inc. Shares ATTACHMENT 4 - Escrow Agreement ATTACHMENT 5 - Cancelled ATTACHMENT 6 - Representations and Warranties at Signing ATTACHMENT 7 - Representations, Warranties and Indemnification at Closing ATTACHMENT 8 - SCI Representations and Warranties at Signing ATTACHMENT 9 - SCI Representations, Warranties and Indemnification at Closing ATTACHMENT 10 - Non-Competition Undertaking ATTACHMENT 11 - SCI La Planche Shares Purchase Agreement ATTACHMENT 11bis- SEPAC Shares Purchase Agreement ATTACHMENT 12 - Cancelled ATTACHMENT 13 - Arbitration Procedure ATTACHMENT 14 - English Version of the Agreement The Company hereby agrees to furnish supplementally a copy of the omitted exhibits to the Commission upon request. 4 PURCHASE AGREEMENT ------------------ entered into this 23rd day of February, 1995, BETWEEN THE UNDERSIGNED: - ----------------------- 1. Mr. Christian Suzanne, a French citizen born on December 12, 1926 and residing at 36 rue des Hautes Gatinieres, 37210 Rochecorbon, 2. Mrs. Jeanne Santucci-Suzanne, a French citizen born on March 24, 1936 and residing at 37210 Rochecorbon, 3. Mr. Pascal Suzanne, a French citizen born on November 14, 1960 and residing at Domaine de la Touche 37210 Vernou, represented for the purpose hereof by Jeanne Santucci-Suzanne pursuant to a power of attorney dated February 22, 1995, 4. Mr. Laurent Suzanne, a French citizen born on April 17, 1963 and residing at 59 rue Origet, 37000 Tours, represented for the purpose hereof by Christian Suzanne pursuant to a power of attorney dated February 23, 1995, 5. Mrs. Isabelle Suzanne-Aubert a French citizen born on January 10, 1959 and residing at 6 rue des Bons-Enfants 37000 Tours, represented for the purpose hereof by Christian Suzanne pursuant to a power of attorney dated February 23, 1995, 6. Mrs. Nathalie Suzanne-Naylor a French citizen born on February 2, 1967 and residing at 101 West 15th Street, New York, NY 1000-11, represented for the purpose hereof by Jeanne Santucci-Suzanne pursuant to a power of attorney dated February 7, 1995, Hereafter collectively referred to as the "Sellers", acting jointly and severally for the purposes hereof, 7. LION Expansion PME, a French Corporation having its registered office at 19, Boulevard des Italiens, 75008 PARIS, registered with the clerk of the commercial Registry of Paris under No 326 356 250, represented by Mr. Claude Venot, General Secretary, Hereafter referred to as "LION EXPANSION", and, 8. Homecare Holdings France S.A., with a registered capital of FF 3,509,700, having its registered office Village d'activite du Petit Chatelier, 357 Route de Sainte Luce, C.P. 2402, 44301 Nantes, Cedex 03, France, registered with the Clerk of the Commercial Registry of Nantes under No B 379 425 665, represented by Mr. Sam Sinasohn, having all the necessary powers for the purpose hereof. Hereafter referred to as "Buyer", RECITALS A. All capitalized terms herein have the respective meaning ascribed thereto in Article 1 hereof. B. The Sellers are the sole shareholders of SEPAC. The detailed ownership of the shares of SEPAC among the Sellers is as set out in Attachment 1 hereto; ------------ C. The Sellers, SEPAC and LION EXPANSION are, except for the minority shares held by Mr. Henri Sorin and by Mr Jean Marie Santucci, the sole shareholders of CORONA S.A ("CORONA"). The detailed ownership of the shares of CORONA among the Sellers, SEPAC, LION EXPANSION and MM. Sorin and JM Santucci is as set out in Attachment 1 hereto; ------------ D. LION EXPANSION also holds 1770 Convertible Bonds ("obligations ----------- convertibles"), with a par value of FF 1,695 each, issued pursuant to the ------------ Convertible Loan. It is contemplated that 100% of these Convertible Bonds will be converted into CORONA shares before Closing Date, as set out in Attachment 1 hereto. ------------ E. The Sellers, SEPAC and CORONA are in turn, the sole shareholders of: (i) Tecktona Sante S.A. ("TS"); and, (ii) Tecktona Bois S.A. ("TB"); The detailed ownership of the shares of TS and TB among the Sellers, SEPAC and CORONA is as set out in Attachment 1 hereto; ------------ F. Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne are also the sole shareholders of SCI LA PLANCHE ("SCI"). The detailed ownership of the SCI Shares among Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne is as set out in Attachment 1 hereto; ------------ G. The Sellers and LION EXPANSION desire to sell and transfer the Shares to Buyer, and Buyer desires to purchase and acquire all such Shares, and Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne desire to sell and transfer the SCI Shares to Buyer, and Buyer desires to purchase and acquire all such SCI Shares. The Buyer also desires to acquire the Minority Shares. 2 NOW, THEREFORE, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS ----------- 1.1 "Agreement" means this agreement for the purchase of shares of SEPAC, CORONA, TB, TS, and SCI, and all Attachments hereto. 1.2 "Buyer" means the French corporation Homecare Holdings France S.A., with a registered capital of FF 3,509,700, having its registered office Village d'activite du Petit Chatelier, 357 Route de Sainte Luce, C.P. 2402, 44301 Nantes, Cedex 03, France, registered with the Clerk of the Commercial Registry of Nantes under No B 379 425 665. 1.3 "Cash Advances" mean the sums in the amount of FF 883.622 and FF 760.000 respectively owed by SCI and SEPAC to some of the Sellers. 1.4 "Claim" means any claim by a third party against Buyer or any company of the CORONA GROUP or SCI, giving rise to an Additional Liability (as defined in the Representations, Warranties and Indemnification at Closing). 1.5 "Closing" means the completion of all transactions contemplated under this Agreement, which shall take place on the Closing Date at the offices of Baker & McKenzie, Paris, listed in Section 8.4, and/or such other location as the parties may mutually agree. 1.6 "Closing Date Financial Statements" means the consolidated unaudited financial statements of CORONA, TS and TB for the accounting period beginning on October 1, 1994 and ending on the Closing Date prepared in accordance with the consolidation principles defined by French accounting rules and comprising a balance sheet, income statements and the relevant schedules supporting the financial statements, and the financial statements of SCI and of SEPAC for the accounting period beginning on January 1, 1995 and ending on the Closing Date comprising for each company a balance sheet and income statements, all of which financial statements are to be prepared in accordance with the procedure and other accounting principles defined in Section 4.2 below. 1.7 "Closing Date" means April 23, 1995, 0 a.m., at the latest, or such other date and/or time as the parties may mutually agree. 1.8 - See Rider 1.8 - 1.9 "Closing Net Worth Determination Date" means the day on which the final determination of the Closing Net Worth will be made in accordance with the provisions of Section 4 of this Agreement. 3 RIDER 1.8 --------- 1.8 "Closing Net Worth" means the sum of the following as of the Closing Date: (i) the total consolidated net worth of CORONA, TS and TB prepared in accordance with French GAAP; (ii) plus the net worth of SEPAC (non-consolidated), which includes ---- dividends received from CORONA; (iii) less the net book value in SEPAC's financial statements of its ---- investments in CORONA and TS, accounted for at historical cost; (iv) plus goodwill on acquisition ("Ecart d'acquisition") by SEPAC of ---- its investments in CORONA and TS, calculated in accordance with French GAAP; (v) plus the net worth of SCI; ---- (vi) For purposes of determining the Closing Net Worth, any transaction of a capital nature which occurs or becomes known that would affect the capital structure of SEPAC would be accounted for in accordance with French GAAP. As an example only, the following calculation demonstrates the method of the sum described above which will be applied as of the Closing Date, this example is based on latest available financial statements as at the date hereof.
(in million FF) Total consolidated net worth of CORONA, TS and TB (30/09/94) 40.0 Net worth of SEPAC (31/12/94) 5.5 SEPAC's investments in CORONA and TS (9.5) SEPAC's "ecart d'acquisition" on acquisition of CORONA and TS 1.5 Capital structure change in SEPAC 0 Net Worth of SCI (31/12/94) 0.4 Closing Net Worth 37.9 - ----------------- ----
1.10 "Convertible Bonds" means the 1,770 convertible bonds issued by CORONA and held as at the date hereof by LION EXPANSION pursuant to the Convertible Loan. 1.11 "Convertible Loan" means the convertible bonds issuance agreement dated November 9, 1992 between CORONA and LION EXPANSION. 1.12 "CORONA" means the French corporation CORONA S.A. with a registered capital of FF2,360,000, having its registered office at ZI La Planche, 37210 Rochecorbon, France, registered with the Clerk of the Commercial Registry of Tours under the number B 664 800 166. 1.13 "CORONA GROUP" means SEPAC, CORONA, TS and TB collectively. 1.14 "Escrow Agent" means Bank of America, Paris branch, or any other bank or financial establishment of notorious repute, established in Paris. 1.15 "Escrow Amount" means FF 15,000,000. 1.16 "GAAP" means the prevailing generally accepted accounting principles applicable in France. 1.17 "Guaranteed Net Worth" means FF 43,500,000. 1.18 "KPMG" means KPMG Peat Marwick, Paris Office, France. 1.19 "LION EXPANSION" means LION Expansion PME, a French Corporation having its registered office at 19 Boulevard des Italiens, 75002 Paris, registered with the clerk of the commercial Registry of Paris under No 326 356 250. 1.20 "Nominal Exchange Rate" means the average French Franc/US dollar spot exchange rate quoted in the key currency cross rate table of the Wall Street Journal Western Edition for the period of seven (7) consecutive New York business days ending on the seventh (7th) business day preceding the Closing Date. 1.21 "Nominal Share Price" means the average daily closing share price of Sunrise Shares as printed in the Wall Street Journal (Western Edition) for the period of seven (7) consecutive New York business days ending on the seventh (7th) business day preceding the Closing Date. 1.22 "Operating Year" means fiscal year. 1.23 "Parties" means all of the parties to this Agreement, including the Sellers, LION EXPANSION, and the Buyer. 1.24 "SCI" means the French real estate company SCI LA PLANCHE with a registered capital of FF68,000, having its registered office at ZI La Planche, 37210 Rochecorbon, France, not registered with the Clerk of the Commercial Registry. 4 1.25 "SCI Shares" means the shares composing the registered capital of SCI held by Mr. Christian Suzanne and Mrs. Jeanne Santucci-Suzanne. 1.26 "Securities Act" means the Securities and Exchange Act of 1933 of the United States of America. 1.27 "Sellers" collectively means Mr. Christian Suzanne, Mrs. Jeanne Santucci- Suzanne, Mr. Pascal Suzanne, Mr. Laurent Suzanne, Mrs. Isabelle Suzanne- Aubert and Mrs. Nathalie Suzanne-Naylor. 1.28 "SEPAC" means the French civil company S.E.P.A.C. with a registered capital of FF 20,000, having its registered office at 36 Rue des Hautes Gatinieres, 37210 Rochecorbon, France, registered with the Clerk of the Commercial Registry of Tours under the number D 377 682 232. 1.29 "Shares" collectively means the shares held as at the date hereof by the Sellers and LION EXPANSION in the companies composing the CORONA GROUP and the shares which may be issued by CORONA to LION EXPANSION and to the Sellers between the signing of this Agreement and the Closing Date as a result of the conversion by LION EXPANSION and the Sellers of all or part of the Convertible Bonds. In addition, the Minority Shares will become Shares as from the date on which they are acquired by Mr. Christian Suzanne. 1.30 "Minority Shares" means the 25 shares held by Mr. Henri Sorin (5 shares) and by Mr. Jean Marie Santucci (20 shares) in CORONA, and which will be acquired by Mr. Christian Suzanne in accordance with Section 2.2 below. 1.31 "Sunrise Medical Group" means any and all legal entities, directly or indirectly controlled by Sunrise Medical Inc. 1.32 "Sunrise Shares" means shares of the common stock of Sunrise Medical Inc., a corporation traded on the New York Stock Exchange (symbol SMD). 1.33 "TB" means the French corporation TECKTONA BOIS S.A. with a registered capital of FF 1,100,000, having its registered office at ZI Route de Meslay, La Logerie, 37210 Parcay Meslay, France, registered with the Clerk of the Commercial Registry of Tours under the number B 343 786 992, (hereinafter called "TB") 1.34 "Territory" means France, Belgium, Switzerland, Tunisia, Algeria, Morocco and Egypt. 1.35 "TS" means the French corporation TECKTONA SANTE S.A. with a registered capital of FF 2,100,000, having its registered office at ZI Route de Meslay, 37210 Parcay Meslay, France, registered with the Clerk of the Commercial Registry of Tours under the number B 383 473 758, (hereinafter called "TS") 5 ARTICLE 2 SALE ---- 2.1 Shares ------ The Sellers and LION EXPANSION hereby agree to sell and transfer to Buyer all of the Shares on the terms and subject to the conditions of this Agreement, and Buyer hereby agrees to purchase such Shares and to accept the transfer, with effect as of the Closing Date. 2.2 Minority Shares --------------- Mr. Christian Suzanne hereby agree to acquire from Mr. Sorin and from Mr. JM Santucci the Minority Shares prior to the Closing Date, so that the said Minority Shares become Shares and can be sold and tranferred to Buyer pursuant to Section 2.1 above. 2.3 SCI Shares ---------- Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne hereby agree to sell and transfer to Buyer all of the SCI Shares on the terms and subject to the conditions of this Agreement, and Buyer hereby agrees to purchase such SCI Shares and to accept the transfer, with effect as of the Closing Date. 2.4 Assignment ---------- It is expressly agreed that until the Closing Date, Buyer may assign by any means all or part of its rights and obligations pursuant to this Agreement, to any legal entity in the Sunrise Medical Group, provided it remains jointly liable hereunder. 2.5 Effective Date of Sale and Transfer ----------------------------------- The sales provided in Sec. 2.1, 2.2 and 2.3 shall become effective on the Closing Date. 2.6 Undistributed Profits --------------------- The sales and transfers shall include all rights to profits of CORONA, TS and TB for the period commencing on October 1, 1993, and ending on the Closing Date ("Latest CORONA/TS/TB Profit Period"). The sales and transfers shall also include all rights to profits of SEPAC and of SCI for period commencing on January 1, 1994 and ending on the Closing Date ("Latest SEPAC/SCI Profit Period"). The Sellers agree, as from the date hereof, not to vote nor accept any profit distribution from CORONA/TS/TB relating to the Latest CORONA/TS/TB Profit Period, or from SEPAC/SCI relating to the Latest SEPAC/SCI Profit Period. The Sellers also agree not to vote nor accept any profit distribution relating to earlier Operating Years. As a specific exception to the foregoing principle, it is, however, agreed that the Sellers and LION EXPANSION shall be authorized to vote their shares in such a manner as to cause CORONA to distribute a dividend in the aggregate amount of FF 4,620,000 before the Closing Date and to pay the same before the said date. It is understood, however, that 6 in such a case, the said dividend shall be voted and paid before the date of the conversion of the Convertible Bonds, so as to be allocated to SEPAC up to 56.7% and to the Sellers and LION EXPANSION for the balance, i.e., a total amount of FF 2,000,460. Finally, it is declared by the Sellers and LION EXPANSION that before the date hereof, CORONA has distributed and paid a total dividend of FF 5.000.000 from the earnings of the fiscal year which ended on September 30, 1994, out of which 56,7% was allocated to SEPAC which has not distributed any dividends itself. ARTICLE 3 PURCHASE PRICE -------------- In consideration of the sale of the Shares, Minority Shares and SCI Shares as contemplated herein, provided all the Convertible Bonds have been converted on Closing date, Sellers and LION EXPANSION shall receive a total purchase price of FF 206,000,000, which shall be allocated among themselves in accordance with Attachment 2 hereof. ------------ Said total purchase price shall be subject to adjustment based on any shortfall of the Closing Net Worth compared to the Guaranteed Net Worth, all in accordance with the provisions of Section 4 hereof. 3.1 Purchase Price - Payment ------------------------ 3.1.1 Shares ------ The total purchase price for the sale and transfer of the Shares amounts to FF 188,600,160 and shall be payable in accordance with the following: (i) On the Closing Date, Buyer shall in accordance with Attachment 2 (Allocation of the Purchase Price) pay to the ------------ Sellers and LION EXPANSION a total amount of FF 142,600,160 by SWIFT transfer; (ii) On or before the Closing Date, Buyer shall cause Sunrise Medical Inc. to issue to the Sellers and LION EXPANSION in accordance with the breakdown indicated in Attachment 2 ------------ hereof, Sunrise Shares for an amount equivalent to FF 31,000,000. The number of Sunrise Shares to be issued pursuant to this Section shall be obtained by converting FF 31,000,000 into U.S. dollars rounded to the nearest U.S. dollar using the designated Nominal Exchange Rate and then dividing this dollar figure by the Nominal Share Price. Fractional shares will be paid in cash to the nearest French Franc. For example, at a Nominal Share Price of $25.00 and a Nominal Exchange Rate of FF 5.40 per US dollar, the FF 31,000,000 would be delivered as 229,629 Sunrise Shares plus FF 86.00 for the fractional share as explained herein below: 7 FF 31,000,000/(FF 5,40 per US $) = US $5,740,741; US $5,740,741/(US $25,00 per Sunrise Share) = 229,629.6400 Sunrise Shares; 0,6400 Sunrise Shares x (FF 5.40 per US $) = FF 86.40. The Sunrise Shares shall be delivered to the Sellers and LION EXPANSION on the Closing Date. The issuance and delivery of the Sunrise Shares shall be made subject to the rules and undertaking set out in Attachment 3 ------------ (Terms of Sunrise Medical Inc. Shares). Buyer reserves the option to substitute cash for some portion or all of the Sunrise Shares contemplated in this Section 2.1.1. (iii) On the Closing Date, Buyer shall pay the Escrow Amount in escrow to the Escrow Agent, in accordance with the terms of the Escrow Agreement to be executed on the Closing Date in the form of the document attached hereto as Attachment 4. ------------ Such Escrow Amount less any shortfall between the Guaranteed Net Worth and the Closing Net Worth (as defined in Sect. 4 hereof), if any, shall be distributed to the Sellers and LION EXPANSION in accordance with Attachment 2 within 10 days of ------------ the Closing Net Worth Determination Date. The shortfall, if any, between the Guaranteed Net Worth and the Closing Net Worth shall be returned to Buyer within 10 days of the Closing Net Worth Determination Date. The Escrow Amount shall be deposited in unit trust funds invested in French Francs ("SICAV de Tresorerie en Francs Francais") whose earnings shall be for the benefit of the Sellers and LION EXPANSION, provided, however, that the earnings relating to the portion of the Escrow amount corresponding to a shortfall between the Guaranteed Net Worth and the Closing Net Worth, if any, shall be for the benefit of Buyer. 3.1.2 SCI Shares ---------- The total purchase price for the sale and transfer of the SCI Shares amounts to FF 17,399,840 and shall be payable to Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne in accordance with Attachment 2 on the Closing Date by SWIFT transfer. ------------ ARTICLE 4 NET WORTH --------- 4.1 Guaranteed Net Worth -------------------- The Sellers and LION EXPANSION guarantee that the Closing Net Worth shall be at least equal to the Guaranteed Net Worth. 8 4.2 Net Worth Determination ----------------------- The Closing Net Worth will be determined in the manner set forth below in accordance with GAAP. Property, machinery and equipment shall be valued at historical cost and net of depreciation and depreciated on a consistent basis and in accordance with GAAP. Inventory will be valued in accordance with GAAP net of all reserves including but not limited to reserves for intercompany profits, slow-moving, excess and obsolete inventories as required by GAAP. Accounts receivable shall be valued in accordance with GAAP, net of all reserves as required. The Closing Date Financial Statements shall include accruals for actual, contingent and estimated liabilities incurred as of the Closing Date in accordance with GAAP, including, but not limited to, (i) vacation earned and not taken by employees (but not the retirement premiums for which no provisions are recorded) and (ii) taxes expected to be paid currently or some time in the future on revenues and income earned prior to the Closing Date. Amounts receivable or payable, including accruals, in foreign currencies will be valued at the exchange rate in effect on the Closing Date. The Closing Net Worth shall be exclusive of any write-ups of asset values, if any, since September 30, 1993, with respect to CORONA, TS and TB and since December 31, 1993, with respect to SEPAC and SCI. It takes into account the increase in net assets resulting from the conversion of the Convertible Bonds. 4.2.1 Preparation of Financial Statements ----------------------------------- Buyer will cause the usual chartered accountant of the CORONA GROUP and SCI to prepare and remit respectively to the Sellers and Buyer the Closing Date Financial Statements and a statement detailing the calculation of the Closing Net Worth, no later than forty five (45) days from the Closing Date. 4.2.2 Financial Statements Audit -------------------------- The Closing Date Financial Statements and the Closing Net Worth will be audited by KPMG. KPMG will submit to the Buyer, the Sellers and LION EXPANSION its final written audit report within forty five (45) days after the date on which the Closing Date Financial Statements were submitted to the Buyer and to the Sellers. The Sellers may raise objections to the Net Worth computation within twenty (20) days from the date KPMG submitted its audit report, by providing Buyer with a written statement specifying all appropriate details supporting their objections. KPMG will allow the Sellers to inspect and review its conclusions and workpapers. If objections are raised by the Sellers as to KPMG's audit report, the Sellers, LION EXPANSION and Buyer shall attempt to amicably resolve the dispute. If no agreement is reached within thirty (30) days after Buyer has received the Sellers written statement of objections, the Closing Date Financial Statement shall be submitted for review to the firm Coopers & Lybrand, Paris Office, which firm shall act as an arbitrator which shall finally determine the Closing Net Worth considering the principles set forth in this Agreement. Coopers & Lybrand shall 9 have access to all relevant documents and information, and its conclusions shall be final and binding upon the parties. The arbitration costs, which shall include at a minimum Coopers & Lybrand's fees in their capacity as arbitrator, shall be advanced equally by the Buyer on the one hand and the Sellers and LION EXPANSION on the other hand, and shall be finally borne in the manner which the arbitrator deems appropriate in its final decision. 4.3 Price Adjustments ----------------- Any shortfall of the Closing Net Worth, as determined in accordance with this Agreement, from the Guaranteed Net Worth shall be deducted franc for franc from the Escrow Amount, including allocable earnings thereon, and returned to Buyer upon final determination of the Closing Net Worth in accordance with this Section 4. To the extent the Closing Net Worth shortfall is greater than the Escrow Amount, the Sellers and LION EXPANSION shall each, on a prorata basis according to the allocation of the purchase price for the Shares among themselves, immediately pay such amount to the Buyer in cash. Any excess of the Closing Net Worth, if any, shall be for the Buyer only and will not result in any price adjustment. 4.4 Conversion of Convertible Bonds ------------------------------- It is agreed that before the Closing Date, all of the Convertible Bonds will be converted by LION EXPANSION and/or the Sellers into shares of CORONA. 4.5 Reimbursement of Cash Advances ----------------------------- The Cash Advances shall be reimbursed by SEPAC and SCI to the Sellers on the Closing Date in accordance with Section 6.3.3 hereof up to the maximum amount set forth in Section 1.3 hereof. ARTICLE 5 INFORMATION, REPRESENTATIONS AND WARRANTIES ------------------------------------------- 5.1 Disclosure to Buyer ------------------- The Sellers and LION EXPANSION have provided Buyer with true, correct and complete information concerning all facts and circumstances known or recognizable to them at the date of signing of this Agreement which might adversely in a material manner affect the financial position or the business of the CORONA GROUP or its current or future earnings. Should any of the facts or circumstances which might adversely in a material manner affect the financial position, business or current or future earnings of the CORONA GROUP become known to the Sellers or LION EXPANSION on or before the Closing Date, the Sellers and/or LION EXPANSION shall immediately notify Buyer in writing and shall provide Buyer with any information related to such facts or circumstances which Buyer may in its reasonable discretion request. 10 5.2 Representation and Warranties regarding the CORONA GROUP -------------------------------------------------------- 5.2.1 Representations and Warranties at Signing ----------------------------------------- As a material inducement for Buyer to enter into this Agreement without which Buyer would not have agreed to purchase the Shares, the Sellers and LION EXPANSION warrant and represent respectively the accuracy and completeness as of the date hereof of (i) the information relating to the CORONA GROUP set out in this Agreement and in particular in the above Recitals, and of (ii) the representations and warranties respectively made by them in the document entitled "Representations and Warranties at Signing" attached hereto as Attachment 6 (which includes in particular the ------------ audited and certified without reserves balance sheets, income statements and exhibits of CORONA, TS and TB as at September 30, 1994 and the balance sheet and income statement of SEPAC as at December 31, 1994) and that any facts or circumstances affecting the accuracy or completeness of such information which come to their knowledge prior to the Closing Date will immediately be communicated to Buyer. 5.2.2 Representations, Warranties and Indemnification at Closing ---------------------------------------------------------- The Sellers and LION EXPANSION agree to reiterate to Buyer on the Closing Date all of the representations and warranties which they have respectively made, and to provide Buyer with an indemnification against any breach thereof, and a bank guarantee guaranteeing such indemnification, (i) by signing and delivering to Buyer on the Closing Date the document entitled "Representations, Warranties and Indemnification at Closing" attached hereto as Attachment 7 and (ii) by respectively delivering to Buyer on the ------------- Closing Date, the bank guarantees in the form of the documents attached as Exhibit 7.5 to said Attachment 7, being stated that the ------------ bank guarantee to be provided by the Sellers shall also cover the undertakings of Mr. Christian Suzanne and Mrs. Jeanne Santucci Suzanne set forth in Section 5.3.2 below. 5.3 Representations and Warranties regarding SCI -------------------------------------------- 5.3.1 Representations and Warranties at Signing ----------------------------------------- As a material inducement for Buyer to enter into this Agreement without which Buyer would not have agreed to purchase the SCI Shares, Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne individually and jointly warrant and represent the accuracy and completeness as of the date hereof of the information relating to SCI set out in this Agreement, and in particular, in the Recitals and in the document entitled "SCI Representations and Warranties at Signing" attached hereto as Attachment 8 , which includes in ------------ particular the balance sheet and income statement of SCI as at December 31, 1994, and that any facts or circumstances affecting the accuracy or completeness of such information which come to their knowledge prior to the Closing Date will immediately be communicated to Buyer. 11 5.3.2 Representations, Warranties and Indemnification at Closing ---------------------------------------------------------- Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne agree to reiterate to Buyer on the Closing Date all of such representations and warranties, and to provide Buyer with an indemnification against any breach thereof, by signing and delivering to Buyer on the Closing Date the document entitled "SCI Representations, Warranties and Indemnification at Closing" attached hereto as Attachment 9. ------------ 5.4 Access to Information --------------------- The representatives, attorneys and accountants of Buyer shall prior to the Closing Date have reasonable access to the records and files, audits, business premises and buildings of the CORONA GROUP and of SCI, as well as to all information relating to taxes, commitments, agreements, titles and the financial condition of, or otherwise pertaining to, its business. The fact that the Sellers have allowed Buyer and its representatives access to the above information and documents, or to any other information and documents, prior to the date hereof or prior to the Closing Date shall not affect any of the representations and warranties made by the Sellers and LION EXPANSION under this Agreement. 5.5 Knowledge of Sellers -------------------- In case of representations and warranties depending on the knowledge of the Sellers of certain facts or circumstances, the Sellers shall be imputed with the actual knowledge of any proxyholders, managers, sales persons, sales representatives, accountants, attorneys and all other employees of the CORONA GROUP not previously indentified in this Section. ARTICLE 6 CONSUMMATION, CLOSING --------------------- 6.1 Condition Precedent to Closing ------------------------------ The Closing shall occur subject to the sole condition precedent that Buyer shall have obtained, within sixty (60) days as from the date hereof, the appropriate authorization from the French Ministry of Economy and Finance -Treasury Department, to proceed with the investment described herein. Buyer undertakes as of the date hereof to perform with the utmost diligence all of the steps and formalities to obtain the required clearance from the Treasury Department. Buyer shall inform the Sellers by remitting copies of the letters addressed to the Treasury Department. The Sellers undertake, for their part, to fully cooperate with Buyer in these efforts. 12 Should the condition precedent not be fulfilled within the required period of time, this Agreement will automatically become null and void at the request of either party, without judiciary formalities and without indemnification to either party. 6.2 Closing ------- Subject to the fulfilment of the conditions precedent specified in Sect. 6.1, the consummation of the purchase and sale of the Shares, Minority Shares and SCI Shares shall occur on the Closing Date (or where the context so admits on Closing). At the Closing, the parties shall exchange the following documents: 6.2.1 Documents to be delivered by the Sellers and LION EXPANSION ----------------------------------------------------------- The Sellers and LION EXPANSION shall deliver the following documents to Buyer: (i) the share transfer forms, duly signed and completed by the Sellers and LION EXPANSION, respectively, transferring the Shares (except SEPAC Shares) and Minority Shares to Buyer; (ii) ten (10) original and duly signed counterparts of the share transfer agreement in the form of the document attached hereto as Attachment 11bis (SEPAC Shares Purchase ---------------- Agreement), transferring the SEPAC Shares to Buyer, dated as of the Closing Date; (iii) the share transfer registers and individual shareholders' accounts of CORONA, TS and TB, up to date as at the Closing Date, such that the registration of the transfers effected may be immediately entered on said registers and accounts; (iv) a certified copy of the minutes containing the approval of Buyer as new shareholder by the Board of Directors of CORONA, TS and TB, and the approval of Buyer as a new shareholder by the shareholders of SEPAC; (v) a certified copy of the minutes of the Board of Directors of CORONA acknowledging the conversion into CORONA shares of all the Convertible Bonds, together with a certified copy of the updated Articles of Incorporation of CORONA as of the Closing Date; (vi) the letters of resignation from their respective corporate functions of all the Officers and Directors in office in the CORONA GROUP on the Closing Date, such resignations being effective without exception, on or before the Closing Date; (vii) the letters of resignation of the statutory auditors of the companies of the CORONA GROUP, such resignations being effective on the Closing Date; 13 (viii) non-competition undertakings in the form of the document contained in Attachment 10 dated as of the Closing Date and ------------- signed by each of the Sellers; (ix) a warranty and indemnification in the form of the document entitled "Representations, Warranties and Indemnification at Closing" contained in Attachment 7, applicable on the ------------ Closing Date and duly signed by each of the Sellers and LION EXPANSION on the Closing Date; (x) a bank guarantee in the form of the model attached as Exhibit 7.5 to Attachment 7 "Representations, Warranties and Indemnification at Closing", issued by a reputable French bank on behalf of the Sellers; (xi) a bank guarantee in the form of the model attached as Exhibit 7.5 to Attachment 7 "Representations, Warranties and Indemnification at Closing", issued by a reputable French bank on behalf of LION EXPANSION; (xii) the Escrow Agreement in the form of the document attached hereto as Attachment 4 dated as of the Closing Date and duly ------------ signed by each of the Sellers and LION EXPANSION; (xiii) a copy of Attachment 3 hereto, duly signed and reiterated by ------------ the Sellers and LION EXPANSION on the Closing Date. 6.2.2 Documents to be delivered by Mr. Christian Suzanne and Mrs Jeanne ----------------------------------------------------------------- Santucci-Suzanne ---------------- Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne shall deliver the following documents to Buyer: (i) six (6) original and duly signed counterparts of the share transfer agreement in the form of the document attached hereto as Attachment 11 (SCI La Planche Shares Purchase ------------- Agreement), transferring the SCI Shares to Buyer, dated as of the Closing Date; (ii) a certified copy of the minutes containing the approval of Buyer as new shareholder by the Shareholders of SCI; (iii) letters of resignation from their respective corporate functions as manager of SCI of all the managers in office in SCI on the Closing Date, such resignations being effective without exception, on or before the Closing Date; 14 (iv) a warranty and indemnification in the form of the document entitled "SCI Representations, Warranties and Indemnification at Closing" contained in Attachment 9, ------------ applicable on the Closing Date and duly signed by each of Mr. Christian Suzanne and Mrs. Jeanne Santucci-Suzanne on the Closing Date; 6.2.3 Documents to be delivered by Buyer ---------------------------------- (i) Buyer shall deliver to the Sellers and LION EXPANSION the Escrow Agreement in the form of the document attached hereto as Attachment 4 dated as of the Closing Date and duly signed ------------ by an authorized representative of Buyer; (ii) Buyer shall deliver to the Sellers and LION EXPANSION shares certificates issued in compliance with applicable regulations, for the Sunrise Shares issued in accordance with Section 3.1.1 (ii) above; (iii) Buyer shall deliver to the Sellers and LION EXPANSION a copy of Attachment 3 hereto, duly signed and reiterated by the ------------ Buyer on the Closing Date. (iv) Buyer shall deliver to Mr. Christian Suzanne and Mrs Jeanne Santucci-Suzanne two (2) sets of the share transfer agreements respectively referred to in Sections 6.2.1(ii) and 6.2.2(i) above, duly signed. 6.3 Closing Undertakings of Buyer ----------------------------- On the Closing Date, Buyer shall procure that : 6.3.1 Mrs Jeanne Santucci-Suzanne be appointed as Chairman ("President du Conseil d'Administration") in CORONA, TS and TB, for a minimum period of one (1) month to maximum period of twelve (12) months as from the Closing Date, with a global gross compensation of FF 60,000 per month for a full time employment to the benefit of the group. However, Buyer will be entitled to appoint a bilingual Chairman in replacement of Mrs Santucci Suzanne, in which case, Mrs Santucci Suzanne will be appointed as General Manager ("mandataire social") for the remainder of the twelve (12) month period. In such a case, Mrs Santucci Suzanne will only work half time and her compensation shall correlatively be reduced by 50%. 6.3.2 The companies of the CORONA GROUP and SCI obtain the release of all personal guarantees granted by the Sellers for the benefit of any of the companies of the CORONA GROUP or SCI as a collateral to the existing bank facilities. 6.3.3 SEPAC and/or SCI repay to the Sellers the Cash Advances made by the Sellers, within the limits set forth in Section 1.3 above. 15 6.3.4 CORONA enter with MM Laurent and Pascal Suzanne into an employment agreement whose terms and conditions will be negotiated before the Closing Date. ARTICLE 7 OPERATION OF BUSINESS --------------------- Until the Closing Date, the Sellers shall continue to operate and maintain the businesses of the companies of the CORONA GROUP and SCI in the ordinary course in order to promote sales and profitability, and shall not permit any of these companies to increase the rate of compensation or commission of any employee or sales representative, and, except as specifically authorized in Section 2.6 hereof, shall not pay nor accrue dividend payments, other than those expressly authorized pursuant to Section 2.6 above, or bonus payments to the Sellers, LION EXPANSION, other shareholders and/or other employees of the CORONA GROUP or of SCI. Sellers shall not pay nor accrue any extraordinary pension contribution. In addition, except with the prior authorization of Buyer's appointed representative for the purpose of this Section, Mr. Roger Lewis, who undertakes to diligently handle the request, none of the companies in the CORONA GROUP nor SCI shall commit to any expenditure or capital investment which exceeds FF 300,000, nor enter into any material contracts as defined in Section 1.12 of Attachment 6 with a term extending beyond the Closing ------------ Date, without Buyer's prior approval, nor dispose of any fixed assets, either tangible or intangible, other than in the ordinary course of business. It is noted in this respect that the Buyer is duly informed and approves Mr. Christian Suzanne's desire to purchase from CORONA at book value before the Closing Date, the SAAB car which he usually drives. ARTICLE 8 MISCELLANEOUS PROVISIONS ------------------------ 8.1 Cooperation ----------- At the Closing or as soon thereafter as practicable, but in no event later than (thirty) 30 calendar days after the Closing Date, the Sellers shall deliver or cause to be delivered to Buyer, or at Buyer's direction to the CORONA GROUP or to SCI, all original agreements, documents, books, records and files in their possession, relating to the CORONA GROUP or to SCI, to the extent not then located on the premises occupied by the CORONA GROUP or SCI. The Sellers shall assist Buyer and, at their direction, the companies of the CORONA GROUP and SCI in connection with anything that might be necessary or beneficial for the continued operation of the CORONA GROUP's businesses after the Closing, and will cooperate to the best of their capabilities with respect to any business, financial, tax and export -related matters as well as any filings with authorities, courts, associations and the like. LION EXPANSION on its part agrees to cooperate fully with Buyer after the Closing Date for all matters relating to the ownership and or sale of its shares in CORONA. 16 8.2 Announcements ------------- Upon the signing of this Agreement, the parties shall arrange at the request of Buyer for announcements of the purchase as contemplated by this Agreement to the employees of the CORONA GROUP, the press, customers and other business contacts of the CORONA GROUP. No public announcements shall be made by the Sellers, LION EXPANSION or Buyer without prior clearance by the respective other party, unless required under any applicable laws. 8.3 Obligations Joint and Several ----------------------------- The Sellers and LION EXPANSION shall be severally liable for any of their obligations under this Agreement. With respect to the non-competition obligation of the Sellers, the rules of which are set out in Attachment 10, the Sellers shall, as an exception to the principle stated ------------- on the first page hereof, not be jointly and severally liable for the obligations set forth therein. 8.4 Notices ------- Any notice that is to be given shall be in French with English translation and shall be duly and validly made by ordinary registered letter with return receipt requested or express courier, and, in case of emergency, by telex or by hand delivered letter, or in case of an interruption in postal services, by any effective means, all time limits running from either the delivery of said letter or of its first presentation, the Postal Service's information being proof thereof, or from the date of the delivery of notice given by another means. All notices shall be given to the following respective address of the following persons, except in case of change duly notified in advance: For the Sellers: Mr. Christian Suzanne 36 rue des Hautes Gratinieres 37210 Rochecorbon For LION EXPANSION Mr. Claude Venot 36 rue des Hautes Gratinieres 37210 Rochecorbon For Buyer: Roland Feneaux Homecare Holdings France S.A., Village d'activite du Petit Chatelier, 357 Route de Sainte Luce, C.P. 2402, 44301 Nantes, Cedex 03, France 17 and Mr. Richard H. Chandler, Chairman Sunrise Medical Inc. 2382 Faraday Ave Suite 200 Carlsbad, CA 92008 Copy to: Mr. Remy Bricard Baker & McKenzie 32, Avenue Kleber, 75016 Paris, France Mr. Christian Suzanne shall be the Sellers' representative on all matters relating to the transaction among the parties. In the event Mr. Christian Suzanne is not able to fulfill as the Sellers' representative, Mr. Laurent Suzanne will serve as the Sellers' representative. Mr. Claude Venot shall be LION EXPANSION's representative on all matters relating to the transaction among the parties. Mr. Richard H. Chandler shall be the Buyer's representative on all matters relating to the transaction among the parties. In the event Mr. Richard H. Chandler is not able to fulfill as the Buyers's representative, Mr. Ted M. Tarbeit will serve as the Buyer's representative. 8.5 Costs and Fees -------------- Buyer shall bear all costs for transfer taxes, if any, accruing in connection with the documents to be executed at the Closing. All other costs and expenses of this Agreement, including tax, legal, financial, advisory and similar services rendered to the parties shall be borne by the respective parties which have incurred the same. 8.6 Entire Agreement ---------------- This Agreement, including its Attachments constitutes the entire agreement of the parties with respect to the transactions contemplated herein, and shall supersede all prior agreements, written or oral, made with respect thereto. All amendments and supplements to this Agreement (including this paragraph) shall be invalid unless made in writing and executed by the Sellers and Buyer. 8.7 Attachments ----------- All Attachments attached to or referred to in this Agreement shall constitute an integral part of this Agreement. The defined terms of this Agreement shall have the same meaning in its Attachments, and vice versa, unless otherwise specified in the respective definition. 18 8.8 Commissions ----------- The parties acknowledge that, except for Credit Lyonnais/Clinvest on behalf of Sellers, no person, firm or corporation has been employed or retained or claims to be employed or retained to bring about, arrange for or to represent either party in the transactions contemplated by this Agreement. The fees associated with the services provided by Credit Lyonnais/Clinvest shall be borne exclusively by the Sellers and not charged to the CORONA GROUP or SCI. 8.9 Severability ------------ In the event that one or more provisions of this Agreement shall be invalid or unenforceable, or if this Agreement is incomplete, the validity of and the enforceability of the other provisions of this Agreement shall not be affected thereby. In such a case, the parties hereby agree on such valid and enforceable provision or on provisions completing this Agreement which is or which are commensurate with the commercial intent of this Agreement. 8.10 Governing Law ------------- This Agreement shall be governed by the laws of France. 8.11 Disputes / Arbitration ---------------------- The parties shall do their best efforts to resolve amicably any controversy or claim arising out of or relating to this Agreement, the breach hereof or the rights or liabilities of either party hereunder. All such claims and disputes which cannot be so resolved shall be referred to and finally settled by arbitration. The arbitral proceedings shall be held in Paris, France, in accordance with the Arbitration Procedure attached hereto as Attachment 13 (Arbitration Procedure). ------------- 8.12 Language -------- This Agreement and its Attachments was signed in French. A translation into English, accepted by the Parties and acknowledged to be a true translation of this Agreement, is contained in Attachment 14 (English ------------- Version of the Agreement) hereto. The French version shall be the binding version. Signed in Paris, France on 2/23/95 in 3 original counterparts, Sellers: Homecare Holdings France S.A. by: /s/ Sam Sinasohn ----------------- name: Sam Sinasohn /s/ Christian Suzanne title: Power of Attorney - --------------------- Mr Christian Suzanne 19 /s/ Jeane Santucci-Suzanne - -------------------------- Mrs Jeanne Santucci-Suzanne /s/ Jeane Santucci-Suzanne - -------------------------- Mr Pascal Suzanne /s/ Christian Suzanne - --------------------- Mr Laurent Suzanne /s/ Christian Suzanne - --------------------- Mrs Isabelle Suzanne-Aubert /s/ Jeane Santucci-Suzanne - -------------------------- Mrs Nathalie Suzanne-Naylor /s/ Claude Venot - -------------------------- Lion Expansion by: Claude Venot name: title:Secretaire General 20 EX-23 3 ACCOUNTANT'S CONSENT EXHIBIT 23 SUNRISE MEDICAL INC. ACCOUNTANTS' CONSENT The Board of Directors We consent to incorporation by reference in the Registration Statement No. 33-44082 on Form S-4, Statement No. 33-49500 on Form S-3, Statement No. 33-55880 on Form S-3, Statement No. 33-39887 on Form S-8, Statement No. 33-35797 on Form S-8, Statement No. 33-13460 on Form S-8, and Statement No. 33-88216 on Form S-8 of Sunrise Medical Inc. of our report dated April 3, 1995, with respect to the combined balance sheet of Corona SA, its subsidiaries and related companies as of September 30, 1994 and the related combined statements of income and cash flows for the year then ended, which report appears in the Form 8-K of Sunrise Medical Inc. dated April 7, 1995. [KPMG Audit] Neuilly sur Seine, France April 5, 1995 -----END PRIVACY-ENHANCED MESSAGE-----