As filed with the Securities and Exchange Commission on September 10, 2001
Registration No. 333-_________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
OWENS & MINOR, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 5047 54-1701843
(State or other jurisdiction of (Primary Standard Industrial Classification (I.R.S. Employer Identification No.)
incorporation) Code Number)
Owens & Minor Medical, Inc. 5047 Virginia 54-0327460
National Medical Supply Corporation 5047 Delaware 52-1539031
Owens & Minor West, Inc. 5047 California 95-2032159
Koley's Medical Supply, Inc. 5047 Nebraska 47-0274520
Stuart Medical, Inc. 5047 Pennsylvania 25-1088734
(Exact name of co-registrant as (Primary standard (State or other jurisdiction of (I.R.S. Employer Identification No.)
specified in its charter) industrial classification incorporation)
code number)
4800 Cox Road
Glen Allen, Virginia 23060
(804) 747-9794
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
DREW ST. J. CARNEAL
Senior Vice President, Secretary and General Counsel
Owens & Minor, Inc.
4800 Cox Road
Glen Allen, Virginia 23060
(804) 747-9794
(Name, address, including zip code, and telephone
number, including area code, of agent for service
of process)
It is respectfully requested that the Commission send copies of all notices,
orders and communications to:
C. PORTER VAUGHAN, III
Hunton & Williams
Riverfront Plaza, East Tower
951 East Byrd Street
Richmond, Virginia 23219
(804) 788-8200
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_] ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_] _____________
CALCULATION OF REGISTRATION FEE
===================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class Amount to be Offering Price Aggregate Registration
of Securities to be Registered Registered/(1)/ Per Unit Offering Price Fee/(2)/
-------------------------------------------------------------------------------------------------------------------
8 1/2% Senior Subordinated Notes due $200,000,000 N/A N/A $50,000
2011...........................
-------------------------------------------------------------------------------------------------------------------
Subsidiary Guarantees............... -- -- -- --
===================================================================================================================
(1) Plus accrued interest, if any, from the date of issuance.
(2) Calculated pursuant to Rule 457(f)(1) under the Securities Act of 1933, as
amended. Pursuant to Rule 457(n) under the Securities Act, no additional
registration fee is required for the registration of the Subsidiary
Guarantees.
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
--------------------------------------------------------------------------------
The information in this prospectus is not complete and may be changed. We may
not complete the exchange offer and issue these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell securities and it is not
soliciting an offer to buy these securities in any state where the offer is not
permitted.
--------------------------------------------------------------------------------
Subject to completion, dated September 10, 2001
Prospectus
[LOGO of Owens & Minor, Inc.]
OFFER TO EXCHANGE
up to $200,000,000 Principal Amount Outstanding
8 1/2 % Senior Subordinated Notes due 2011
for
a like Principal Amount of
8 1/2% Senior Subordinated Notes due 2011
That Have Been Registered under the Securities Act of 1933
The Exchange Offer
. The exchange offer expires at 5:00 p.m. New York City time, on
__________, 2001, unless extended.
. The only conditions to completing the exchange offer are that the
exchange offer not violate applicable law or applicable interpretations
of the staff of the Securities and Exchange Commission and no injunction,
order or decree has been issued that would prohibit, prevent or
materially impair our ability to proceed with the exchange offer.
. The exchange offer is not conditioned upon a minimum aggregate principal
amount of the outstanding notes being tendered.
. All outstanding notes tendered according to the procedures in this
prospectus and not withdrawn will be exchanged for an equal principal
amount of exchange notes.
The Exchange Notes
. The terms of the exchange notes to be issued in the exchange offer are
identical to the outstanding notes, except that we have registered the
exchange notes with the Securities and Exchange Commission. In addition,
the exchange notes will not be subject to the transfer restrictions
applicable to the outstanding notes. We will not apply for listing any of
the exchange notes on any securities exchange or to arrange for them to
be quoted on any quotation system.
. The exchange notes will be guaranteed on a senior subordinated basis by
most, but not all, of our current and future subsidiaries. The exchange
notes and the guarantees will be our and our guarantor subsidiaries'
general, unsecured obligations and are subordinated to our and our
subsidiaries' senior debt and will be subordinated to future senior debt
that we and our subsidiaries are permitted to incur under our senior
credit facility and the indenture governing the exchange notes.
. Interest on the exchange notes will accrue from July 2, 2001 or, if
later, from the most recent date of payment of interest on the
outstanding notes, at the rate of 8 1/2 % per year, payable on January 15
and July 15 of each year, commencing January 15, 2002. The notes will
mature on July 15, 2011.
You should carefully consider the "Risk Factors" beginning on page 13 of
this prospectus before participating in the exchange offer.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _________, 2001.
TABLE OF CONTENTS
Page
----
Summary.................................................................................................. 1
Risk Factors............................................................................................. 13
The Exchange Offer....................................................................................... 18
Use of Proceeds.......................................................................................... 27
Capitalization........................................................................................... 28
Selected Consolidated Financial Data..................................................................... 29
Description of Existing Financing Arrangements........................................................... 31
Description of the Exchange Notes........................................................................ 33
Federal Income Tax Considerations........................................................................ 65
Plan of Distribution..................................................................................... 66
Legal Matters............................................................................................ 66
Experts.................................................................................................. 66
Where You Can Find More Information...................................................................... 66
--------------------------
You should rely only upon the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer of these securities in any
jurisdiction where the offer is not permitted. You should assume the information
appearing in this prospectus is accurate only as of the date on the front cover
of this prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
i
SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS
Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our business or make other
forward-looking statements, as this term is defined in the Private Securities
Litigation Reform Act. The words "anticipates," "believes," "estimates,"
"expects," "plans," "intends" and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of identifying
them. These forward-looking statements reflect the current views of our
management; however, various risks, uncertainties and contingencies could cause
our actual results, performance or achievements to differ materially from those
expressed in, or implied by, these statements, including the following:
. general economic and business conditions;
. dependence on certain customers;
. dependence on suppliers;
. competition;
. changing trends in customer profile;
. changes in government regulation; and
. outcome of outstanding litigation.
For a discussion of important risks of an investment in our securities,
including factors that could cause actual results to differ materially from
results referred to in the forward-looking statements, see "Risk Factors" in
this prospectus. You should carefully consider the information set forth under
the caption "Risk Factors" in this prospectus. We do not have any obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
ii
SUMMARY
This summary may not contain all the information that may be important
to you. You should read this entire prospectus as well as the information
incorporated by reference in this prospectus before making an investment
decision. References in this prospectus to "we," "us," "our" or "our company"
refer to Owens & Minor, Inc. and its subsidiaries combined, unless the context
clearly indicates otherwise.
Owens & Minor, Inc.
Founded in 1882, we are the nation's leading distributor of national name
brand medical and surgical supplies. We distribute over 170,000 finished medical
and surgical products produced by approximately 1,600 suppliers to approximately
4,000 customers from 43 distribution centers nationwide. Our customers are
primarily acute care hospitals and integrated healthcare networks ("IHNs"),
which account for more than 90% of our net sales. Many of these hospital
customers are represented by national healthcare networks ("Networks") or group
purchasing organizations ("GPOs") that offer discounted pricing with suppliers
and contract distribution services with us. Our other customers include
alternate care facilities such as clinics, home healthcare organizations,
nursing homes, physician's offices, rehabilitation facilities and surgery
centers. We typically provide our distribution services under contractual
arrangements ranging from three to five years. Most of our sales consist of
consumable goods such as disposable gloves, dressings, endoscopic products,
intravenous products, needles and syringes, sterile procedure trays, surgical
products and gowns, urological products and wound closure products.
We also provide our customers with value-added services in the areas of
supply chain management, logistics and information technology. We believe these
services help our customers control healthcare costs, improve inventory
management and increase profitability. Recently, we have begun to provide
distribution and logistics services for manufacturers of medical and surgical
supplies.
The Medical/Surgical Supply Distribution Industry
The medical/surgical supply distribution industry has experienced growth in
recent years due to the aging population and emerging medical technology
resulting in new healthcare procedures and products. Healthcare industry
analysts have estimated the market for medical and surgical supplies handled by
distributors to be approximately $12.0 billion. Further, healthcare industry
analysts have estimated the market for medical and surgical supplies distributed
directly from manufacturers to range from approximately $10.0 to $12.0 billion.
Over the years, healthcare providers have continued to change and model their
health systems to meet the needs of the markets they serve. They have forged
partnerships with national medical and surgical supply distributors to meet the
challenges of managing their supply procurement and distribution needs. The
traditional role of distributors in warehousing and delivering medical and
surgical supplies to customers is evolving into the role of assisting customers
to manage the entire supply chain.
Historically, the medical/surgical supply distribution industry has been
highly fragmented. During the past decade, the overall healthcare market has
been characterized by the consolidation of healthcare providers into larger and
more sophisticated entities seeking to lower their total costs. These providers
have increasingly sought to lower total product costs through incremental value-
added services from their medical and surgical supply distributors. These trends
have driven a significant and ongoing consolidation within the medical/surgical
supply distribution industry and the formation of a smaller number of industry
participants with national capabilities.
Our Business
We purchase a high volume of essential medical and surgical products from
suppliers, inventory these items in our distribution centers and provide
delivery services to our customers. Our 43 distribution centers are located
throughout the United States and are situated close to our major customer
facilities. These distribution centers generally serve hospitals and other
customers within a 100-150 mile radius. We deliver most medical and surgical
supplies with a fleet of leased trucks. Almost all of our delivery personnel are
employees of our company, giving us effective control of customer service.
Contract carriers and parcel services are used to transport all other medical
and surgical supplies. We customize our product pallets and truck loads
according to the needs of our customers, enabling them to reduce labor on the
receiving end. Furthermore, we adjust delivery times to customers' needs,
allowing them to streamline receiving activities.
1
We enable our customers to order products using just-in-time and
stockless services. We believe that we make the supply chain more efficient
through the utilization of advanced warehousing, delivery and purchasing
techniques. A key component of this strategy is our significant investment in
advanced information technology, which includes automated warehousing
technology, as well as electronic data interchange and Internet-based technology
for communicating with both customers and suppliers. We provide technology to
enable customers to analyze their own purchasing data to help them maintain
contract compliance, create workflow efficiencies, raise employee productivity
and cut costs.
Competitive Advantages
We believe that our strong competitive position is attributable to a
number of factors, including the following:
Market-Leading Position with Nationwide Capabilities and Operating Scale
Our market leading position is demonstrated by:
. our estimated 28% market share of the acute care hospital market;
. our 43 distribution centers serving large hospital-based and
alternate care systems and the country's largest Networks and
GPOs in all 50 states; and
. our ability to generate economies of scale in the purchase,
management and distribution of medical and surgical supplies.
Established Relationships with Customers
. We maintain strong and long-standing customer relationships, many
that have spanned a decade or more.
. We have long-term contracts with leading Networks and GPOs,
including Novation, the supply company of VHA, Inc. and
University HealthSystem Consortium, and Broadlane, Inc., the GPO
for Tenet Healthcare Corporation, and other healthcare providers.
. In addition to our strong relationship with Networks and GPOs, we
have strong relationships with the individual member hospitals
and with customers who do not have Network or GPO affiliations.
Value-Added Services Designed to Increase Supply Chain Efficiencies
. Our information systems and activity-based management programs
are designed to manage contract compliance, track inventory,
manage expenses and increase the overall efficiency of the supply
chain by supporting efficient business decisions.
. Our CostTrack, WISDOM, PANDAC(R) Wound Closure Management Program
and Focus on Consolidation, Utilization & Standardization
programs distinguish us from our competitors.
Long-Standing Relationships with Suppliers
We have well-established relationships with almost all major suppliers
of medical and surgical supplies. We believe our well-established relationships
are attributable to:
. our status as the only major national distributor that does not
manufacture or sell products under its own private label;
. the purchase of a high volume of products from almost all major
suppliers, enabling us to obtain attractive terms, including
discounts for prompt payment and volume incentives; and
. the development of cross-functional teams to work with our
suppliers to improve efficiencies and lower supply chain costs.
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Manufacturer Distribution and Logistics Services
We have begun to provide distribution and logistics solutions services
to manufacturers of medical and surgical supplies. These services are
characterized by:
. customized services developed in partnership with manufacturers;
and
. our ability to leverage existing infrastructure, such as
distribution centers, technology and logistics expertise in
providing these services.
Proven Management Team with Significant Industry Experience
We have a proven management team with significant experience in the
healthcare industry. This experience is demonstrated by the following:
. our top three executive officers' combined total of nearly 100
years of experience in the healthcare industry;
. a reputation for integrity and quality of service in the
marketplace;
. an ability to create innovative services for our customers; and
. a net sales compound annual growth rate of 14%, from $1.4 billion
in 1993 to approximately $3.5 billion in 2000.
Business Strategy
We are committed to expanding our strong market position and to
increasing net sales and cash flow by capitalizing on our position as a leading
provider of supply chain solutions to our customers and suppliers. To achieve
these goals, our business strategy focuses on three key initiatives:
Enhance Operational Excellence
We constantly strive to enhance operational excellence by:
. maintaining high quality distribution services, thus lowering
costs for ourselves and improving efficiency and satisfaction for
our customers;
. making significant investments in technology allowing us to
manage operations effectively, including ensuring high fill rates
and accurate orders and invoices; and
. using our technology investments to increase efficiency
throughout the supply chain.
We believe this focus on efficiency and accuracy gives us an advantage
in the marketplace.
Convert Information into Knowledge into Profit
We utilize information to create supply chain efficiencies that
differentiate us from our competition and strengthen relationships with our
customers through the following initiatives:
. the creation of a data warehouse of information generated from
our transactions with our customers and suppliers;
. the conversion of this data into information about purchasing and
product usage, ordering patterns and supplier agreements to help
customers improve efficiency and lower costs; and
. the development of a proprietary tool to connect customer
subscribers to this data warehouse, providing them with knowledge
to support decisions, allowing them to mine their own purchasing
and product usage information and to monitor contract compliance.
Increase Market Presence by Expanding Distribution-Related Services
We believe we have the opportunity to occupy a greater position in the
supply chain as healthcare provider customers and medical and surgical
manufacturers look to outsource supply chain functions. We plan to achieve this
objective by:
3
. leveraging our network of distribution facilities, our logistics
expertise and our long-standing relationships that make us a
trusted partner in healthcare; and
. expanding our role with hospital customers in supply chain
management and offering third-party logistics services to
manufacturers who currently sell directly to healthcare
providers.
Our third-party logistics business has been developed internally.
Future growth in this business may be achieved through internal development,
strategic acquisitions or other strategies.
Recent Developments
Tender Offer
On June 5, 2001, we commenced a tender offer to purchase any and all
$150 million aggregate principal amount of our 10 7/8 % Senior Subordinated
Notes due 2006. As of 5:00 p.m., New York City time, on Monday, July 2, 2001,
the expiration date, we had accepted tender of 2006 notes from holders of
$119,740,000 (or 79.8%) of the $150,000,000 outstanding principal amount of the
2006 notes. The remaining $30,260,000 of 2006 notes were redeemed on August 2,
2001 at a redemption price of 105.4375% of the principal amount thereof, plus
accrued and unpaid interest to August 2, 2001.
Recent Financings
On July 2, 2001, we sold $200 million principal aggregate amount of
our 8 1/2% Senior Subordinated Notes due 2011 in an offering not registered
under the Securities Act of 1933 in reliance on exemptions from registration
under the Securities Act. We used approximately $160.1 million of the proceeds
from the note offering to fund the tender offer and the related call for
redemption. We intend to use the remaining net proceeds from the note offering
for general corporate purposes, which may include the repurchase or redemption
of a portion of the outstanding $2.6875 Term Convertible Securities, Series A of
Owens & Minor Trust I, and the related 5.375% Junior Subordinated Debentures due
2013, and/or the implementation of our third-party logistics business
development strategy. Pending their ultimate use, we have applied the remaining
net proceeds from the note offering to reduce the level of receivables
transferred under our receivables financing facility. For a description of the
trust preferred securities, revolving credit facility and receivables financing
facility, see "Description of Existing Financing Arrangements."
_______________________
Our executive and administrative offices are located at 4800 Cox Road,
Glen Allen, Virginia 23060. Our telephone number is (804) 747-9794.
4
The Exchange Offer
Background of the Outstanding
Notes................................... On July 2, 2001, we issued $200,000,000 aggregate principal amount of our 8 1/2%
Senior Subordinated Notes due 2011 (the "outstanding notes") to Lehman Brothers,
Inc., Banc of America Securities LLC, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, First Union Securities, Inc., Goldman, Sachs & Co. and J.P. Morgan
Securities Inc. (the "initial purchasers") in transactions not registered under
the Securities Act of 1933 in reliance on exemptions from registration under the
Securities Act. The initial purchasers then sold the outstanding notes to
qualified institutional buyers in reliance on Rule 144A under the Securities Act
and outside the U.S. to persons in reliance on Regulation S under the Securities
Act. Because they have been sold in reliance on exemptions from registration, the
outstanding notes are subject to transfer restrictions.
In connection with the issuance of the outstanding notes, we entered into an
exchange and registration rights agreement with the initial purchasers in which we
agreed to deliver to you this prospectus and to use our commercially reasonable
efforts to complete the exchange offer or to file and cause to become effective a
registration statement covering the resale of the outstanding notes.
The Exchange Offer...................... We are offering to exchange up to $200,000,000 principal amount of exchange notes
for an identical principal amount of outstanding notes. Outstanding notes may be
exchanged only in $1,000 increments. The terms of the exchange notes are identical
in all material respects to the outstanding notes except that the exchange notes
have been registered under the Securities Act. Because we have registered the
exchange notes, the exchange notes will not be subject to transfer restrictions
and holders of exchange notes will have no registration rights.
We will issue the exchange notes promptly after the expiration of the exchange
offer.
Resale of Exchange Notes................ We believe you may offer, sell or otherwise transfer the exchange notes you
receive in the exchange offer without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that:
. you acquire the exchange notes you receive in the exchange offer in the
ordinary course of your business;
. you are not engaging in and do not intend to engage in a distribution of
the exchange notes;
. you have no arrangement or understanding with any person to participate
in the distribution of the exchange notes issued to you in the exchange
offer; and
. you are not an "affiliate" of ours, as that term is defined in Rule 405
under the Securities Act.
Our belief is based upon interpretations by the staff of the Securities and
Exchange Commission, as set forth in no-action letters to third parties unrelated
to us. The staff has not considered the exchange offer in the context of a no-
action letter and we
5
cannot assure you that the staff would make a similar determination with respect
to this exchange offer.
If you do not meet the conditions described above, you may incur liability under
the Securities Act if you transfer any exchange note without delivering a
prospectus meeting the requirements of the Securities Act. We do not assume or
indemnify you against that liability.
Each broker-dealer issued exchange notes in the exchange offer for its own account
in exchange for outstanding notes acquired by the broker-dealer as a result of
market-making or other trading activities must acknowledge that it will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of the exchange notes issued in the exchange offer. A broker-dealer may use
this prospectus for an offer to resell, resale or other retransfer of the exchange
notes issued to it in the exchange offer.
Expiration Date......................... 5:00 p.m., New York City time, on _________, 2001, unless we extend the exchange
offer. It is possible that we will extend the exchange offer until all outstanding
notes are tendered. You may withdraw outstanding notes you tendered at any time
before 5:00 p.m., New York City time, on the expiration date. See "The Exchange
Offer--Expiration Date; Extensions; Amendments."
Withdrawal Rights....................... You may withdraw outstanding notes you tendered by furnishing a notice of
withdrawal to the exchange agent or by complying with the applicable procedures of
The Depository Trust Company's Automated Tender Offer Program (ATOP) system at any
time before 5:00 p.m. New York City time on the expiration date. See "The Exchange
Offer--Withdrawal of Tenders."
Accrued Interest on the Exchange Notes and the
Outstanding Notes....................... The exchange notes will bear interest from July 2, 2001 or, if later, from the
most recent date of payment of interest on the outstanding notes.
Conditions to the Exchange Offer........ The exchange offer is subject only to the following conditions:
. the compliance of the exchange offer with securities laws;
. the proper tender of the outstanding notes;
. the representation by the holders of the outstanding notes that they are
not our affiliate, that the exchange notes they will receive are being
acquired by them in the ordinary course of their business and that at
the time the exchange offer is completed the holder had no plan to
participate in the distribution of the exchange notes; and
. no judicial or administrative proceeding shall have been threatened that
would limit us from proceeding with the exchange offer.
Representations and Warranties.......... By participating in the exchange offer, you represent to us that, among other
things:
. you will acquire the exchange notes you receive in the exchange offer in
the ordinary course of your business;
6
. you are not engaging in and do not intend to engage in a distribution of
the exchange notes;
. you have no arrangement or understanding with any person to participate
in the distribution of the exchange notes issued to you in the exchange
offer; and
. you are not an affiliate of ours or, if you are an affiliate, you will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable.
Procedures for Tendering Outstanding Notes Held
in the Form of Book-Entry Interests............
The outstanding notes were issued as global securities in fully registered form
without coupons. Beneficial interests in the outstanding notes that are held by
direct or indirect participants in DTC are shown on, and transfers of the notes
can be made only through, records maintained in book-entry form by DTC with
respect to its participants.
If you are a holder of an outstanding note held in the form of a book-entry
interest and you wish to tender your outstanding note for exchange pursuant to the
exchange offer, you must send the exchange agent either:
. a properly completed and validly executed letter of transmittal; or
. a computer-generated message transmitted by means of DTC's ATOP system
that, when received by the exchange agent will form a part of a
confirmation of book-entry transfer in which you acknowledge and agree
to be bound by the terms of the letter of transmittal.
The exchange agent must also receive prior to the expiration of the exchange offer
either:
. a timely confirmation of book-entry transfer of your outstanding notes
into the exchange agent's account at DTC; or
. the documents necessary for compliance with the guaranteed delivery
procedures described below.
For more information, see "The Exchange Offer--Procedures for Tendering."
Procedures for Tendering Certificated
Outstanding Notes.............................. If you are a holder of book-entry interests in the outstanding notes, you are
entitled to receive, in limited circumstances, in exchange for your book-entry
interests, certificated notes that are in equal principal amounts to your book-
entry interests. See "Description of the Exchange Notes--Book-Entry, Delivery and
Form." No certificated notes are issued and outstanding as of the date of this
prospectus. If you acquire certificated outstanding notes before the expiration of
the exchange offer, you must tender your certificated outstanding notes in
accordance with the procedures described in this prospectus under the heading "The
Exchange Offer--
7
Procedures for Tendering--Outstanding Notes Held in Certificated Form."
Tenders by Beneficial Owners............ If you are a beneficial owner whose outstanding notes are registered in the name
of the broker, dealer, commercial bank, trust company or other nominee and wish to
tender those outstanding notes in the exchange offer, please contact the
registered holder as soon as possible and instruct them to tender on your behalf
and comply with the instructions in this prospectus.
Guaranteed Delivery Procedures.......... If you are unable to comply with the procedures for tendering, you may tender your
outstanding notes according to the guaranteed delivery procedures described in
this prospectus under the heading "The Exchange Offer--Procedures for Tendering--
Guaranteed Delivery Procedures."
Acceptance of Outstanding Notes and
Delivery of Exchange Notes.............. If the conditions described under "The Exchange Offer--Conditions" are satisfied,
we will accept for exchange any and all outstanding notes that are properly
tendered before the expiration date. If we close the exchange offer, the exchange
notes will be delivered promptly following the expiration date. Otherwise, we will
promptly return any outstanding notes tendered.
Federal Income Tax Considerations....... See "Federal Income Tax Considerations" for a discussion of U.S. federal income
tax considerations you should consider before tendering outstanding notes in the
exchange offer.
Consequences of Failure to
Exchange........................... If you do not participate in the exchange offer, upon completion of the exchange
offer, the liquidity of the market for your outstanding notes could be adversely
affected. See "The Exchange Offer--Participation in the Exchange Offer, Untendered
Notes."
Exchange Agent.......................... SunTrust Bank is serving as exchange agent for the exchange offer. The address for
the exchange agent is listed under "The Exchange Offer--Exchange Agent."
8
The Exchange Notes
The form and terms of the exchange notes to be issued in the exchange
offer are the same as the form and terms of the outstanding notes except that
the exchange notes will be registered under the Securities Act and, accordingly,
will not bear legends restricting their transfer. The exchange notes issued in
the exchange offer will evidence the same debt as the outstanding notes, and
both the outstanding notes and the exchange notes are governed by the same
indenture.
Issuer............................. Owens & Minor, Inc.
Notes Offered...................... $200,000,000 in aggregate principal
amount of 8 1/2% Senior Subordinated
Notes due 2011.
Guarantees......................... All payments with respect to the notes,
including principal and interest, will be
fully and unconditionally guaranteed on
an unsecured senior subordinated basis,
jointly and severally, by most but not
all of our current and future
subsidiaries. Each of our guarantors also
guarantees our revolving credit facility
on a senior basis.
Maturity Date...................... July 15, 2011.
Interest Payment Dates............. January 15/th/ and July 15th, commencing
January 15, 2002.
Rankings........................... The notes and the guarantees will be
unsecured and:
. subordinate in right of
payment to all of our and our
guarantors' existing and
future senior indebtedness
(including our and our
guarantors' obligations under
our revolving credit
facility);
. equal in right of payment to
our and our guarantors' future
senior subordinated
indebtedness; and
. senior in right of payment to
our and our guarantors'
subordinated indebtedness.
Assuming we had completed the note
offering and applied the proceeds as
described in "Use of Proceeds," as of
June 30, 2001:
. our outstanding senior
indebtedness would have been
$0.7 million; and
. our outstanding junior
subordinated indebtedness
would have been $132.0
million.
Optional Redemption................ On or after July 15, 2006, we may redeem
all or part of the notes, at the
redemption prices (expressed as
percentages of principal amount) listed
below, plus accrued and unpaid interest,
if any, to the date of redemption, if
redeemed during the 12-month period
commencing on July 15 of the years set
forth below:
Redemption
Year Price
---- -----
2006 104.250%
2007 102.833%
2008 101.417%
2009 and thereafter 100.000%
Before July 15, 2004, we may redeem up to
35% of the original aggregate principal
amount of the notes with the net cash
proceeds of certain public
9
offerings of equity, provided at least
65% of the original aggregate principal
amount of the notes remains outstanding
after the redemption.
Change of Control................... Upon specified change of control events,
unless we have exercised our option to
redeem all of the notes as described
above, each holder of a note will have
the right to require us to repurchase all
or a portion of its notes at a purchase
price in cash equal to 101% of the
principal amount, plus accrued and unpaid
interest, if any, to the date of
repurchase.
Covenants........................... The indenture governing the notes will
limit our ability and that of our
restricted subsidiaries to, among other
things:
. incur additional indebtedness;
. create liens;
. pay dividends on or redeem
capital stock;
. make certain investments;
. make restricted payments;
. make certain dispositions of
assets;
. engage in transactions with
affiliates;
. engage in certain business
activities; and
. engage in mergers,
consolidations and certain
sales of assets.
The indenture governing the notes will
also limit our ability to permit
restrictions on the ability of certain of
our subsidiaries to pay dividends or make
certain other distributions.
These covenants are subject to important
exceptions and qualifications, as
described under "Description of the
Exchange Notes."
Exchange and Registration Rights
Agreement...........................
We agreed to offer to exchange the
outstanding notes for a new issue of
identical debt securities registered
under the Securities Act as evidence of
the same underlying obligation of
indebtedness. This exchange offer is in
satisfaction of that agreement. We have
also agreed to provide a shelf
registration statement to cover resales
of the outstanding notes under certain
circumstances. If we fail to satisfy
these obligations, we have agreed to pay
liquidated damages to holders of the
outstanding notes under specified
circumstances until we satisfy our
obligations.
Use of Proceeds..................... We will not receive any proceeds upon the
completion of the exchange offer. See
"Use of Proceeds."
10
SUMMARY HISTORICAL FINANCIAL DATA
The following table summarizes certain consolidated historical
financial data, which you should read in conjunction with our consolidated
financial statements and related notes and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included in our Annual Report
on Form 10-K for the year ended December 31, 2000 and Quarterly Report on Form
10-Q for the period ended June 30, 2001. The summary consolidated financial data
as of and for each of the years in the three-year period ended December 31, 2000
have been derived from our audited consolidated financial statements. The
summary consolidated financial data as of and for the six months ended June 30,
2000 and 2001 have been derived from our unaudited consolidated quarterly
financial statements. The consolidated balance sheets as of December 31, 1999
and 2000 and the consolidated statements of operations for each of the years in
the three-year period ended December 31, 2000, and the independent auditors'
report thereon, are incorporated by reference in this prospectus from our Annual
Report on Form 10-K for the year ended December 31, 2000. The unaudited
consolidated balance sheet as of June 30, 2001 and the unaudited consolidated
statements of operations for the six months ended June 30, 2000 and 2001 are
incorporated by reference in this prospectus from our Quarterly Report on Form
10-Q for the period ended June 30, 2001.
Six Months
Year Ended December 31, Ended June 30,
------------------------------------ -----------------------
1998 1999/(1)/ 2000 2000 2001
---------- ---------- ---------- ---------- ----------
(in thousands) (unaudited)
Statement of Income Data/(2)/:
Net sales.............................................. $3,090,048 $3,194,134 $3,503,583 $1,731,972 $1,878,039
Cost of goods sold..................................... 2,755,158 2,851,556 3,127,911 1,547,208 1,678,435
---------- ---------- ---------- ---------- ----------
Gross margin........................................... 334,890 342,578 375,672 184,764 199,604
---------- ---------- ---------- ---------- ----------
Selling, general and administrative expenses........... 247,472 249,960 268,205 134,350 145,995
Depreciation and amortization.......................... 18,270 19,365 21,515 10,431 11,228
Interest expense, net.................................. 14,066 11,860 12,566 6,358 6,808
Discount on accounts receivable securitization......... 4,655 5,240 6,881 3,818 2,905
Distributions on mandatorily redeemable preferred
securities........................................... 4,494 7,095 7,095 3,548 3,548
Restructuring expense (credit)/(3)/...................... 11,200 (1,000) (750) (750) (1,476)
---------- ---------- ---------- ---------- ----------
Total expenses......................................... 300,157 292,520 315,512 157,755 169,008
---------- ---------- ---------- ---------- ----------
Income before income taxes............................. 34,733 50,058 60,160 27,009 30,596
Income tax provision................................... 14,588 22,079 27,072 12,154 13,462
---------- ---------- ---------- ---------- ----------
Net income............................................. 20,145 27,979 33,088 14,855 17,134
Dividends on preferred stock........................... 1,898 -- -- -- --
---------- ---------- ---------- ---------- ----------
Net income attributable to common stock................ $ 18,247 $ 27,979 $ 33,088 $ 14,855 $ 17,134
========== ========== ========== ========== ==========
Balance Sheet Data (end of period):
Working capital........................................ $ 235,247 $ 219,448 $ 233,637 $ 211,184 $ 260,356
Inventory.............................................. 275,094 342,478 315,570 362,485 376,277
Total assets........................................... 717,768 865,000 867,548 868,742 911,177
Long-term debt......................................... 150,000 174,553 152,872 151,972 156,100
Mandatorily redeemable preferred securities............ 132,000 132,000 132,000 132,000 132,000
Shareholders' equity................................... 161,126 182,381 212,772 194,929 233,617
Supplemental Non-GAAP Data:
Outstanding financing/(4)/............................. $ 225,000 $ 280,790 $ 233,533 $ 260,929 $ 261,772
Adjusted cash flow from operations/(5)/................ 67,485 61,677 68,767 46,180 (16,818)
Capital expenditures................................... 12,609 22,105 19,627 9,551 9,205
Historical Ratios/(2)/:
Gross margin as a percent of net sales................. 10.8% 10.7% 10.7% 10.7% 10.6%
SG&A as a percent of net sales......................... 8.0% 7.8% 7.7% 7.8% 7.8%
Average receivable days sales outstanding/(6)/......... 33.5 34.9 33.3 33.4 32.9
Average inventory turnover............................. 9.8x 9.2x 9.5x 8.8x 9.8x
Earnings to fixed charges/(7)/......................... 1.9x 2.5x 2.7x 2.5x 2.7x
----------------------------
11
/(1)/ On July 30, 1999, we acquired certain net assets of Medix, Inc. This
acquisition was accounted for as a purchase.
/(2)/ Net sales, gross margin, selling, general and administrative expenses
and all related ratios have been restated for all periods in accordance
with Emerging Issues Task Force Issue 00-10, Accounting for Shipping and
Handling Fees and Costs. See note 1 to our consolidated financial
statements, which are incorporated by reference in this prospectus from
our Annual Report on Form 10-K for the year ended December 31, 2000.
/(3)/ In 1998, we incurred $11.2 million, or $6.6 million after taxes, of
restructuring expenses. For the years ended December 31, 1999 and 2000,
and for the six months ended June 30, 2001, we reduced the restructuring
accrual by $1.0 million, $0.8 million and $1.5 million, respectively, or
$0.6 million, $0.4 million and $0.8 million, respectively, after taxes.
See note 3 to our consolidated financial statements, which are incor-
porated by reference in this prospectus from our Annual Report on Form
10-K for the year ended December 31, 2000 and note 6 to our consolidated
financial statements, which are incorporated by reference in this
prospectus from our Quarterly Report on Form 10-Q for the period ended
June 30, 2001.
/(4)/ Outstanding financing includes debt and sales of accounts receivable
under our off balance sheet receivables financing facility. For a
description of the receivables financing facility, see "Description of
Existing Financing Arrangements."
/(5)/ Cash flow from operations has been adjusted to exclude proceeds from
sales and collections of accounts receivable under our off balance sheet
receivables financing facility. See "Description of Existing Financing
Arrangements."
/(6)/ Excludes the impact of our off balance sheet receivables financing
facility. See "Description of Existing Financing Arrangements."
/(7)/ For purposes of computing this ratio, earnings consist of income before
income taxes and fixed charges. Fixed charges consist of interest
expense, discount on accounts receivable securitization, amortization of
debt issuance costs, distributions on mandatorily redeemable preferred
securities, preferred dividend requirements and one-third of rental
expense (the portion considered representative of the interest factor).
12
RISK FACTORS
Your investment in the exchange notes will involve risk. You should
consider carefully each of the following risks and all other information
contained and incorporated by reference in this prospectus before deciding to
participate in the exchange offer. The factors discussed below, however, are
generally applicable to the outstanding notes as well as the exchange notes.
Risks Relating to Our Business
Dependence on Sales to Certain Customers--The loss of certain customers could
have a material adverse effect on our results of operations.
In 2000, net sales to member hospitals under contract with Novation
represented approximately 51.0% of our net sales. Net sales to member hospitals
under contract with Broadlane accounted for approximately 9.6% of our net sales
for the same period. Although the termination of our relationship with Novation
or Broadlane would not necessarily result in the loss of all of their respective
member hospitals as customers, termination or the loss of Tenet Healthcare,
Broadlane's largest member, as a customer could have a material adverse effect
on our results of operations. Our contracts establish the price at which
products will be distributed, but generally do not require minimum purchase
volumes by customers and are terminable by the customer upon short notice.
Dependence on Suppliers--Our inability to maintain good relations with our
suppliers could affect the profitability of our business.
We distribute approximately 170,000 products from approximately 1,600
suppliers and are dependent on these suppliers for the supply of products. For
the year ended December 31, 2000, our ten largest suppliers accounted for
approximately 66% of our net sales. Currently, we rely on suppliers to provide
agreeable purchasing and delivery terms and sales performance incentives. Our
ability to sustain our gross margins has been, and will continue to be,
dependent, in part, on our ability to continue to obtain favorable terms and
incentives from our suppliers. These terms and incentives may be subject to
changes in suppliers' strategies, from time to time, which could adversely
affect our gross margins over time. The profitability of our business depends
upon our ability to maintain good relations with these suppliers. Approximately
16% of our net sales in 2000 were sales of Johnson & Johnson Hospital Services,
Inc. products. Approximately 15% of our net sales in 2000 were sales of products
of the subsidiaries of Tyco International.
Competition--Increased competition in the medical/surgical supply distribution
industry could adversely affect our results of operations.
The medical/surgical supply distribution industry in the United States
is highly competitive and consists of (1) three major, nationwide distributors,
including us, (2) a few smaller, nationwide distributors and (3) a number of
regional and local distributors. Certain of our competitors have, and our
competitors in the future may have, greater financial and other resources than
we do. Competitive factors within the medical/surgical supply distribution
industry include total delivered product cost, product availability, the ability
to fill and invoice orders accurately, delivery time, services provided,
inventory management, information technology, electronic commerce capabilities
and the ability to meet special requirements of customers. Vertically integrated
distributors of medical and surgical supplies may have an advantage with respect
to total delivered product cost. Further consolidation of medical and surgical
supply distributors is expected to continue through the purchase of smaller
distributors by larger companies as a result of competitive pressures in the
marketplace. In response to competitive pressures, we have in the past, from
time to time, reduced the prices that we charge our customers. These competitive
pressures may adversely impact the gross margins we realize, or otherwise
adversely affect our results of operations. In recent years, many of our
customers have experienced increased financial constraints due to, among other
things, the Balanced Budget Act of 1997, which has reduced government
reimbursements to healthcare providers. This has led to increased scrutiny of
supply chain costs and increased pricing pressures. Increased competition
resulting from these and other factors could adversely affect the prices we
charge customers and the gross margins we realize in the future. A significant
reduction in pricing or gross margins could adversely affect our overall results
of operations.
13
Technological Advancement--Our ability to compete successfully is dependent on
technological advances in our product and service offerings, and our failure to
timely or adequately respond to technological advances in our industry may
adversely affect our results of operations.
Our ability to succeed with our long-term growth strategy is dependent
on the technological competitiveness of our information systems, which include
automated warehousing technology as well as EDI and Internet-based technology
for communicating with both customers and suppliers. If we are unable to
innovate and implement our technological solutions, other competitors may be
able to compete more effectively with us and our business and results of
operations may be adversely affected.
Healthcare Reform--Changes in the laws and regulations affecting the healthcare
industry could have a material adverse effect on our results of operations.
Our company, our customers and our suppliers are subject to extensive
federal and state regulations relating to healthcare. In recent years there have
been a number of government initiatives to reduce healthcare costs. Congress and
various state legislatures have proposed changes in laws and regulations that
could result in major restructuring of the healthcare industry. We cannot
predict the extent to which changes in governmental support of healthcare
services, the methods by which such services are delivered, the prices for such
services or other legislation or regulation governing such services or mandated
benefits may have a material adverse effect on our results of operations.
Risks Associated with Acquisitions--We may not be able to successfully identify,
manage or integrate possible future acquisitions.
An element of our growth to date and our strategy for the future is
expansion through the acquisition of companies that complement or expand our
existing business, including our third-party logistics business. As a result, we
continually evaluate potential acquisition opportunities, some of which may be
material in size or scope. Acquisitions involve a number of special risks,
including the time associated with identifying and evaluating future
acquisitions, the diversion of management's attention to the integration of the
operations, personnel and information technology of the acquired companies, the
incorporation of the products and services of the acquired companies into the
products and services we offer, possible adverse short-term effects on our
operating results, the realization of acquired intangible assets and the loss of
key employees of the acquired companies. We do not currently have any
commitments or agreements with respect to any acquisitions. We may not be able
to locate suitable acquisition candidates at prices acceptable to us, may not
have adequate resources to consummate an otherwise desirable acquisition, may
not consummate successfully any acquisitions and may not be able to operate
profitably or integrate successfully any particular acquired business into our
operations. See "Use of Proceeds."
Litigation--An adverse outcome in the legal actions to which we are a party
could have a material adverse effect on our results of operations.
We are a party to various legal actions described in our Annual Report
on Form 10-K for the year ended December 31, 2000. There can be no assurance
that an adverse outcome of such legal actions would not have a material adverse
effect on our results of operations.
Risks Relating to the Notes
Substantial Leverage--Our substantial indebtedness could adversely affect our
financial health and prevent us from fulfilling our obligations under the notes.
We are, and will continue after the exchange offer to be, highly
leveraged. As of June 30, 2001, on a pro forma basis after giving effect to the
note offering, we would have had total indebtedness of approximately $332.7
million, of which $200.0 million would have consisted of the outstanding notes,
$132.0 million would have consisted of the trust preferred securities and the
related junior subordinated debentures, and the balance would have consisted of
approximately $0.7 million of other debt. Our company and our subsidiaries will
be permitted to incur additional indebtedness in the future. See
"Capitalization," "Selected Consolidated Financial Data," "Description of
Existing Financing Arrangements" and "Description of the Exchange Notes."
14
Our ability to make scheduled payments of principal of, or to pay the
interest or liquidated damages, if any, on, or to refinance, our indebtedness
(including the notes), or to fund planned capital expenditures, acquisitions and
other strategic initiatives will depend on our future performance, which, to a
certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. Our
management believes that cash flow from operations and available cash, together
with available borrowings under the revolving credit facility and future funding
under the receivables financing facility, will be adequate to meet our future
liquidity needs. We cannot assure you that our business will generate sufficient
cash flow from operations or that future borrowings will be available under the
revolving credit facility or future funding will be available under the
receivables financing facility in an amount sufficient to enable us to service
our indebtedness, including the notes, or to fund our other liquidity needs. See
"Capitalization," "Selected Consolidated Financial Data," "Description of
Existing Financing Arrangements" and "Description of the Exchange Notes."
The degree to which we are leveraged could have important consequences
to holders of the notes, including, but not limited to:
. making it more difficult for us to satisfy our obligations with
respect to the notes;
. increasing our vulnerability to general adverse economic and
industry conditions;
. limiting our ability to obtain additional financing to fund
future working capital needs, capital expenditures, acquisitions
and other strategic initiatives and other general corporate
purposes;
. requiring the dedication of a substantial portion of our cash
flow from operations to the payment of principal of, and interest
on, our indebtedness, thereby reducing the availability of such
cash flow to fund working capital needs, capital expenditures,
acquisitions and other strategic initiatives or other general
corporate purposes;
. limiting our flexibility in planning for, or reacting to, changes
in our business and the industry; and
. placing us at a competitive disadvantage as compared to less
leveraged competitors.
In addition, the indenture and the revolving credit facility will
contain financial and other restrictive covenants that will limit our ability
to, among other things, borrow additional funds. Our failure to comply with such
covenants could result in an event of default which, if not cured or waived,
could have a material adverse effect on us. See "Description of the Exchange
Notes," and "Description of Existing Financing Arrangements."
Subordination of Notes--Your right to receive payments on the notes is junior to
our existing senior indebtedness and possibly all of our future borrowings.
Further, the guarantees of the notes are junior to all our guarantors' existing
indebtedness and possibly to all of their future borrowings.
The notes will be subordinated in right of payment to all of our
current and future senior debt and the current and future senior debt of our
guarantors. Upon any distribution to our creditors in a liquidation or
dissolution of our company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to us or our property, the holders
of senior debt will be entitled to be paid in full before any payment may be
made with respect to the notes. In addition, the subordination provisions of the
indenture will provide that payments with respect to the notes will be blocked
in the event of a payment default on senior debt and may be blocked for up to
179 days each year in the event of certain non-payment defaults on senior debt.
In the event of our bankruptcy, liquidation or reorganization, holders of the
notes will participate ratably with all holders of our subordinated indebtedness
that is deemed to be of the same class as the notes, and potentially with all of
our other general creditors, based upon the respective amounts owed to each
holder or creditor, in our remaining assets. In any of the foregoing events,
there can be no assurance that there would be sufficient assets to pay amounts
due on the notes. As a result, holders of notes may receive less, ratably, than
the holders of senior debt. In addition, under the subordination provisions of
the indenture, payments that would otherwise be made to holders of the notes
will instead be paid to holders of senior debt under certain circumstances. As a
result of these provisions, other of our creditors (including trade creditors)
that are not holders of senior debt may recover more, ratably, than the holders
of the notes.
As of June 30, 2001, on a pro forma basis after giving effect to the
note offering and the application of the proceeds as described in "Use of
Proceeds," the aggregate amount of our senior debt and that of our subsidiaries
(including borrowings under the revolving credit facility) would have been
approximately $0.7 million, and we would have had $225.0 million of unused
credit under the revolving credit facility. The indenture will permit the
15
incurrence of substantial additional indebtedness, including senior debt, by us
and our subsidiaries in the future. See "Description of Existing Financing
Arrangements" and "Description of the Exchange Notes."
Not All Subsidiaries Are Guarantors--Your right to receive payments on
these notes could be adversely affected if any of our non-guarantor subsidiaries
declare bankruptcy, liquidate or reorganize.
Some but not all of our subsidiaries will guarantee the notes. In the
event of a bankruptcy, liquidation or reorganization of any of the non-guarantor
subsidiaries, holders of their indebtedness and their trade creditors will
generally be entitled to payment of their claims from the assets of those
subsidiaries before any assets are made available for distribution to us. O&M
Funding Corp. and Owens & Minor Trust I will not guarantee the notes.
Possible Inability to Fund a Change of Control Offer--We may not have the
ability to raise the funds necessary to finance the change of control offer
required by the indenture.
Upon a change of control, we will be required under the indenture to
offer to repurchase all outstanding notes at 101% of the principal amount
thereof plus accrued and unpaid interest and liquidated damages, if any, to the
date of repurchase. However, there can be no assurance that sufficient funds
will be available at the time of any change of control to make any required
repurchases of notes tendered or that restrictions in the revolving credit
facility will allow us to make such required repurchases. Notwithstanding these
provisions, we could enter into certain transactions, including certain
recapitalizations, that would not constitute a change of control but would
increase the amount of debt outstanding at such time. See "Description of the
Exchange Notes--Covenants--Change of Control."
Fraudulent Conveyance--Federal and state statutes allow courts, under specific
circumstances, to void guarantees and require noteholders to return payments
received from guarantors.
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, the notes and the subsidiary
guarantees could be voided, or claims in respect of the notes or the subsidiary
guarantees could be subordinated to all of our other debts or the debts of that
guarantor, if, among other things, our company or any guarantor, at the time it
incurred the indebtedness evidenced by the notes or its subsidiary guarantee:
. received or receives less than reasonably equivalent value or
fair consideration for the incurrence of such indebtedness; and
. was or is insolvent or rendered insolvent by reason of such
occurrence; or
. was or is engaged in a business or transaction for which the
assets remaining with our company or such guarantor constituted
unreasonably small capital; or
. intended or intends to incur, or believed or believes that it
would incur, debts beyond its ability to pay such debts as they
mature.
In addition, the payment of interest and principal by us pursuant to
the notes or the payment of amounts by a guarantor pursuant to a subsidiary
guarantee could be voided and required to be returned to the person making such
payment, or to a fund for the benefit of our creditors or such guarantor, as the
case may be.
The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, our company or a guarantor would be considered
insolvent if:
. the sum of its debts, including contingent liabilities, were
greater than the saleable value of all of its assets at a fair
valuation;
. if the present fair saleable value of its assets were less than
the amount that would be required to pay its probable liability
on its existing debts, including contingent liabilities, as they
become absolute and mature; or
. it could not pay its debts as they become due.
16
To the extent a subsidiary guarantee is voided as a fraudulent
conveyance or held unenforceable for any other reason, the holders of the notes
would not have any claim against that subsidiary and would be creditors solely
of us and any other subsidiary guarantors whose guarantees are not held
unenforceable.
Failure to Exchange Outstanding Notes--If you fail to exchange your outstanding
notes, they will continue to be restricted securities and may become less
liquid.
Outstanding notes that you do not tender or we do not accept will,
following the exchange offer, continue to be restricted securities. You may not
offer or sell untendered outstanding notes except in reliance on an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. We will issue new notes in exchange for the outstanding
notes pursuant to the exchange offer only following the satisfaction of
procedures and conditions described elsewhere in this prospectus. These
procedures and conditions include timely receipt by the exchange agent of the
outstanding notes and of a properly completed and validly executed letter of
transmittal.
Because we anticipate that most holders of outstanding notes will
elect to exchange their outstanding notes, we expect that the liquidity of the
market for any outstanding notes remaining after the completion of the exchange
offer may be substantially limited. Any outstanding note tendered and exchanged
in the exchange offer will reduce the aggregate principal amount of the
outstanding notes outstanding. Following the exchange offer, if you did not
tender your outstanding notes you generally will not have any further
registration rights and your outstanding notes will continue to be subject to
transfer restrictions. Accordingly, the liquidity of the market for any
outstanding notes could be adversely affected.
No Liquidity; Absence of Public Market--The liquidity of any market for the
outstanding notes could be adversely affected after completion of the exchange
offer. In addition, there may be no active trading market for the exchange notes
to be issued in the exchange offer.
There has been no public market for the outstanding notes. If most
holders of the outstanding notes tender their notes in the exchange offer, the
liquidity for the outstanding notes not tendered in the exchange offer could be
adversely affected upon completion of the exchange offer. In addition, we cannot
assure you with respect to:
. the liquidity of any market for the exchange notes that may
develop;
. your ability to sell exchange notes; or
. the price at which you will be able to sell the exchange notes.
If a public market were to exist, the exchange notes could trade at
prices that may be higher or lower than their principal amount or purchase
price, depending on many factors, including prevailing interest rates, the
market for similar notes and our financial performance. We do not intend to list
the exchange notes to be issued to you in the exchange offer on any securities
exchange or to seek approval for quotations through any automated quotation
system. No active market for the exchange notes is currently anticipated. The
initial purchasers of the outstanding notes have advised us that they currently
anticipate making a secondary market for the exchange notes, but they are not
obligated to do so. We cannot assure you that an active or liquid public trading
market will develop for the exchange notes.
17
THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
On July 2, 2001, we issued the outstanding notes to the initial
purchasers in transactions not registered under the Securities Act of 1933 in
reliance on exemptions from registration under that act. The initial purchasers
then sold the outstanding notes to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and outside the U.S. to non-U.S. persons in
reliance on Regulation S under the Securities Act. Because they have been sold
pursuant to exemptions from registration, the outstanding notes are subject to
transfer restrictions.
In connection with the issuance of the outstanding notes, we entered
into the exchange and registration rights agreement with the initial purchasers
in which we agreed with the initial purchasers that, we would:
. use our commercially reasonable efforts to file with the
Securities and Exchange Commission a registration statement
related to the exchange notes on or before 90 days following the
issuance of the exchange notes;
. use our commercially reasonable efforts to cause the registration
statement to become effective under the Securities Act on or
before 150 days following the issuance of the exchange notes; and
. offer to the holders of the outstanding notes the opportunity to
exchange their outstanding notes for a like principal amount of
exchange notes upon the effectiveness of the registration
statement.
Our failure to comply with these agreements would result in additional
interest being due on the outstanding notes. A copy of the exchange and
registration rights agreement has been filed as an exhibit to the registration
statement of which this prospectus is a part.
Based on existing interpretations of the Securities Act by the staff
of the Securities and Exchange Commission described in several no-action letters
to third parties unrelated to us, and subject to the following sentence, we
believe that the exchange notes issued in the exchange offer may be offered for
resale, resold and otherwise transferred by their holders, other than broker-
dealers or our "affiliates," as that term is defined in Rule 405 under the
Securities Act, without further compliance with the registration and prospectus
delivery provisions of the Securities Act. However, any holder of outstanding
notes who is an affiliate of ours, who is not acquiring the exchange notes in
the ordinary course of such holder's business or who intends to participate in
the exchange offer for the purpose of distributing the exchange notes:
. will not be able to rely on the interpretations by the staff of
the Securities and Exchange Commission described in the above-
mentioned no-action letters;
. will not be able to tender outstanding notes in the exchange
offer; and
. must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any sale or
transfer of the outstanding notes unless the sale or transfer is
made under an exemption from these requirements.
We do not intend to seek our own no-action letter, and there is no
assurance that the staff of the Securities and Exchange Commission would make a
similar determination regarding the exchange notes as it has in these no-action
letters to third parties.
As a result of the filing and effectiveness of the registration
statement of which this prospectus is a part, we will not be required to pay an
increased interest rate on the outstanding notes. Following the closing of the
exchange offer, holders of outstanding notes not tendered will not have any
further registration rights except in limited circumstances requiring the filing
of a shelf registration statement, and the outstanding notes will continue to be
subject to restrictions on transfer. Accordingly, the liquidity of the market
for the outstanding notes will be adversely affected.
Terms of the Exchange Offer
Upon the terms and subject to the conditions stated in this prospectus
and in the letter of transmittal, we will accept all outstanding notes properly
tendered and not withdrawn before 5:00 p.m., New York City time, on the
18
expiration date. After authentication of the exchange notes by the trustee or an
authenticating agent, we will issue $1,000 principal amount of exchange notes in
exchange for each $1,000 principal amount of outstanding notes accepted in the
exchange offer.
By tendering your outstanding notes for exchange notes in the exchange
offer and signing or agreeing to be bound by the letter of transmittal, you will
represent to us that:
. you will acquire the exchange notes you receive in the exchange
offer in the ordinary course of your business;
. you have no arrangement or understanding with any person to
participate in the distribution of the exchange notes issued to
you in the exchange offer;
. you are not an affiliate of ours or, if you are an affiliate, you
will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable;
. you are not engaged in and do not intend to engage in the
distribution of the exchange notes; and
. if you are a broker-dealer that will receive exchange notes for
your own-account in exchange for outstanding notes that were
acquired as a result of market-making or other trading
activities, that you will deliver a prospectus, as required by
law, in connection with any resale of those exchange notes.
Broker-dealers that are receiving exchange notes for their own account
must have acquired the outstanding notes as a result of market-making or other
trading activities in order to participate in the exchange offer. Each
broker-dealer that receives exchange notes for its own account under the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of the exchange notes. The letter of transmittal states that by
so acknowledging and by delivering a prospectus, a broker-dealer will not be
admitting that it is an "underwriter" within the meaning of the Securities Act.
We will be required to allow broker-dealers to use this prospectus following the
exchange offer in connection with the resale of exchange notes received in
exchange for outstanding notes acquired by broker-dealers for their own account
as a result of market-making or other trading activities. If required by
applicable securities laws, we will, upon request, make this prospectus
available to any broker-dealer for use in connection with a resale of exchange
notes for a period of 180 days after the consummation of the exchange offer. See
"Plan of Distribution."
The exchange notes will evidence the same debt as the outstanding
notes and will be issued under and entitled to the benefits of the same
indenture. The form and terms of the exchange notes are identical in all
material respects to the form and terms of the outstanding notes except that:
. the exchange notes will be issued in a transaction registered
under the Securities Act; and
. the exchange notes will not be subject to transfer restrictions.
As of the date of this prospectus, $200,000,000 aggregate principal
amount of the outstanding notes was outstanding. In connection with the issuance
of the outstanding notes, we arranged for the outstanding notes to be issued and
transferable in book-entry form through the facilities of DTC, acting as
depositary. The exchange notes will also be issuable and transferable in
book-entry form through DTC.
This prospectus, together with the accompanying letter of transmittal,
is initially being sent to all registered holders as of the close of business
__________ , 2001. We intend to conduct the exchange offer as required by the
Securities Exchange Act of 1934, and the rules and regulations of the Securities
and Exchange Commission under the Exchange Act, including Rule 14e-1, to the
extent applicable.
Rule 14e-1 describes unlawful tender practices under the Exchange Act.
This section requires us, among other things:
. to hold our exchange offer open for 20 business days;
. to give 10 days notice of any change in the terms of this offer;
and
. to issue a press release in the event of an extension of the
exchange offer.
19
The exchange offer is not conditioned upon any minimum aggregate
principal amount of outstanding notes being tendered, and holders of the
outstanding notes do not have any appraisal or dissenters' rights under the
Virginia Stock Corporation Act or under the indenture in connection with the
exchange offer. We shall be considered to have accepted outstanding notes
tendered according to the procedures in this prospectus when, as and if we have
given oral or written notice of acceptance to the exchange agent. See
"--Exchange Agent." The exchange agent will act as agent for the tendering
holders for the purpose of receiving exchange notes from us and delivering
exchange notes to those holders.
If any tendered outstanding notes are not accepted for exchange
because of an invalid tender or the occurrence of other events described in this
prospectus, certificates for these unaccepted outstanding notes will be
returned, at our cost, to the tendering holder of the outstanding notes or, in
the case of outstanding notes tendered by book-entry transfer, into the holder's
account at DTC according to the procedures described below, as promptly as
practicable after the expiration date.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes related to the exchange of outstanding
notes in the exchange offer. We will pay all charges and expenses, other than
applicable taxes, in connection with the exchange offer. See "--Solicitation of
Tenders; Fees and Expenses."
Neither we nor our board of directors makes any recommendation to
holders of outstanding notes as to whether to tender or refrain from tendering
all or any portion of their outstanding notes in the exchange offer. Moreover,
we have not authorized anyone to make any such recommendation. Holders of
outstanding notes must make their own decision whether to tender in the exchange
offer and, if so, the amount of outstanding notes to tender after reading this
prospectus and the letter of transmittal and consulting with their advisors, if
any, based on their own financial position and requirements.
Expiration Date; Extensions; Amendments
The term "expiration date" shall mean 5:00 p.m., New York City time,
on __________ , 2001, unless we, in our sole discretion, extend the exchange
offer, in which case the term "expiration date" shall mean the latest date to
which the exchange offer is extended.
We expressly reserve the right, in our sole discretion:
. to delay acceptance of any outstanding notes or to terminate the
exchange offer and to refuse to accept outstanding notes not
previously accepted, if any of the conditions described under "--
Conditions" shall have occurred and shall not have been waived by
us;
. to extend the expiration date of the exchange offer;
. to amend the terms of the exchange offer in any manner;
. to purchase or make offers for any outstanding notes that remain
outstanding after the expiration date;
. to the extent permitted by applicable law, to purchase
outstanding notes in the open market, in privately negotiated
transactions or otherwise.
The terms of the purchases or offers described in the fourth and fifth
clauses above may differ from the terms of the exchange offer.
Any delay in acceptance, termination, extension or amendment will be
followed as promptly as practicable by oral or written notice to the exchange
agent and by making a public announcement. If the exchange offer is amended in a
manner determined by us to constitute a material change, we will promptly
disclose the amendment in a manner reasonably calculated to inform the holders
of the amendment.
You are advised that we may extend the exchange offer because some of
the holders of the outstanding notes do not tender on a timely basis. In order
to give these noteholders the ability to participate in the exchange and to
avoid the significant reduction in liquidity associated with holding an
unexchanged outstanding note, we may elect to extend the exchange offer.
20
Interest on the Exchange Notes
The exchange notes will bear interest from July 2, 2001 or the most
recent date on which interest was paid or provided for on the outstanding notes
surrendered for the exchange notes. Accordingly, holders of outstanding notes
that are accepted for exchange will not receive interest that is accrued but
unpaid on the outstanding notes at the time of tender. Interest on the exchange
notes will be payable semi-annually on each January 15 and July 15, commencing
on January 15, 2002.
Procedures for Tendering
Only a holder may tender its outstanding notes in the exchange offer.
Any beneficial owner whose outstanding notes are registered in the name of his
broker, dealer, commercial bank, trust company or other nominee or are held in
book-entry form and who wishes to tender should contact the registered holder
promptly and instruct the registered holder to tender on his behalf. If the
beneficial owner wishes to tender on his own behalf, the beneficial owner must,
before completing and executing the letter of transmittal and delivering his
outstanding notes, either make appropriate arrangements to register ownership of
the outstanding notes in the owner's name or obtain a properly completed bond
power from the registered holder. The transfer of record ownership may take
considerable time.
The tender by a holder will constitute an agreement between the
holder, us and the exchange agent according to the terms and subject to the
conditions described in this prospectus and in the letter of transmittal.
A holder who desires to tender outstanding notes and who cannot comply
with the procedures described in the prospectus for tender on a timely basis or
whose outstanding notes are not immediately available must comply with the
procedures for guaranteed delivery described below.
The method of delivery of outstanding notes and the letter of
transmittal and all other required documents to the exchange agent is at the
election and risk of the holders. Delivery of such documents will be deemed made
only when actually received by the exchange agent or deemed received under the
ATOP procedures described below. In all cases, sufficient time should be allowed
to assure delivery to the exchange agent before the expiration date. No letter
of transmittal or outstanding notes should be sent to us. Holders may also
request that their respective brokers, dealers, commercial banks, trust
companies or nominees effect the tender for holders in each case as described in
this prospectus and in the letter of transmittal.
Outstanding Notes Held in Certificated Form
For a holder to validly tender outstanding notes held in physical
form, the exchange agent must receive, before 5:00 p.m. New York city time on
the expiration date, at its address set forth in this prospectus:
. a properly completed and validly executed letter of transmittal,
or a manually signed facsimile thereof, together with any
signature guarantees and any other documents required by the
instructions to the letter of transmittal, and
. certificates for tendered outstanding notes.
Outstanding Notes Held in Book-Entry Form
We understand that the exchange agent will make a request promptly
after the date of the prospectus to establish accounts for the outstanding notes
at DTC for the purpose of facilitating the exchange offer, and subject to their
establishment, any financial institution that is a participant in DTC may make
book-entry delivery of outstanding notes by causing DTC to transfer the
outstanding notes into the exchange agent's account for the outstanding notes
using DTC's procedures for transfer.
If you desire to transfer outstanding notes held in book-entry form
with DTC, the exchange agent must receive, before 5:00 p.m., New York City time,
on the expiration date, at its address listed in this prospectus, a confirmation
of book-entry transfer of the outstanding notes into the exchange agent's
account at DTC, which is referred to in this prospectus as a "book-entry
confirmation," and:
21
. a properly completed and validly executed letter of transmittal,
or manually signed facsimile thereof, together with any signature
guarantees and other documents required by the instructions in
the letter of transmittal; or
. an agent's message transmitted pursuant to DTC's Automated Tender
Offer Program.
Tender of Outstanding Notes Using DTC's Automated Tender Offer Program (ATOP)
The exchange agent and DTC have confirmed that the exchange offer is
eligible for DTC's Automated Tender Offer Program. Accordingly, DTC participants
may electronically transmit their acceptance of the exchange offer by causing
DTC to transfer outstanding notes held in book-entry form to the exchange agent
in accordance with DTC's ATOP procedures for transfer. DTC will then send a
book-entry confirmation, including an agent's message to the exchange agent.
The term "agent's message" means a message transmitted by DTC,
received by the exchange agent and forming part of the book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering outstanding notes that are the subject of that
book-entry confirmation that the participant has received and agrees to be bound
by the terms of the letter of transmittal, and that we may enforce such
agreement against such participant. If you use ATOP procedures to tender
outstanding notes you will not be required to deliver a letter of transmittal to
the exchange agent, but you will be bound by its terms just as if you had signed
it.
Signatures
Signatures on a letter of transmittal or a notice of withdrawal, as
the case may be, must be guaranteed by a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act, unless the outstanding notes tendered with the
letter of transmittal are tendered:
. by a registered holder who has not completed the box entitled
"Special Registration Instructions" or "Special Delivery
Instructions" in the letter of transmittal; or
. for the account of an institution eligible to guarantee
signatures.
If the letter of transmittal is signed by a person other than the
registered holder or DTC participant who is listed as the owner, the outstanding
notes must be endorsed or accompanied by appropriate bond powers that authorize
the person to tender the outstanding notes on behalf of the registered holder or
DTC participant who is listed as the owner, in either case signed as the name of
the registered holder(s) who appears on the outstanding notes or the DTC
participant who is listed as the owner ,with the signature on the outstanding
note or bond power guaranteed by an eligible guarantor institution. If the
letter of transmittal or any outstanding notes or bond powers are signed or
endorsed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, those persons should so indicate when signing, and unless waived by
us, evidence satisfactory to us of their authority to so act must be submitted
with the letter of transmittal.
If you tender your outstanding notes through ATOP, signatures and
signature guarantees are not required.
Determination of Validity
All questions as to the validity, form, eligibility, including time of
receipt, acceptance and withdrawal of the tendered outstanding notes will be
determined by us in our sole discretion. This determination will be final and
binding. We reserve the absolute right to reject any and all outstanding notes
not properly tendered or any outstanding notes our acceptance of which would, in
the opinion of our counsel, be unlawful. We also reserve the absolute right to
waive any irregularities or conditions of tender as to particular outstanding
notes. Our interpretation of the terms and conditions of the exchange offer,
including the instructions in the letter of transmittal, will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of outstanding notes must be cured within the time we
shall determine. Although we intend to notify holders of defects or
irregularities related to tenders of outstanding notes, neither we, the exchange
agent nor any other person shall be under any duty to give notification of
defects or irregularities related to tenders of outstanding notes nor shall any
of them incur liability for failure to give notification. Tenders of outstanding
notes will not be
22
considered to have been made until the irregularities have been cured or waived.
Any outstanding notes received by the exchange agent that we determine are not
properly tendered or the tender of which is otherwise rejected by us and as to
which the defects or irregularities have not been cured or waived by us will be
returned by the exchange agent to the tendering holder unless otherwise provided
in the letter of transmittal, as soon as practicable following the expiration
date.
Guaranteed Delivery Procedures
Holders who wish to tender their outstanding notes and:
. whose outstanding notes are not immediately available;
. who cannot complete the procedure for book-entry transfer on a
timely basis;
. who cannot deliver their outstanding notes, the letter of
transmittal or any other required documents to the exchange agent
before the expiration date; or
. who cannot complete a tender of outstanding notes held in book-
entry form using DTC's ATOP procedures on a timely basis
may effect a tender if they tender through an eligible institution described
under "--Procedures for Tendering --Signatures," or, if they tender using ATOP's
guaranteed delivery procedures.
A tender of outstanding notes made by or through an eligible
institution will be accepted if:
. before 5:00 p.m., New York City time, on the expiration date, the
exchange agent receives from an eligible institution a properly
completed and duly executed notice of guaranteed delivery, by
facsimile transmittal, mail or hand delivery, that: (1) sets
forth the name and address of the holder, the registration or
certificate number or numbers of the holder's outstanding notes
and the principal amount of the outstanding notes tendered, (2)
states that the tender is being made and (3) guarantees that,
within five business days after the expiration date, a properly
completed and validly executed letter of transmittal or
facsimile, together with a certificate(s) representing the
outstanding notes to be tendered in proper form for transfer, or
a confirmation of book-entry transfer into the exchange agent's
account at DTC of outstanding notes delivered electronically, and
any other documents required by the letter of transmittal will be
deposited by the eligible institution with the exchange agent;
and
. the properly completed and executed letter of transmittal or a
facsimile, together with the certificate(s) representing all
tendered outstanding notes in proper form for transfer, or a
book-entry confirmation, and all other documents required by the
letter of transmittal are received by the exchange agent within
five business days after the expiration date.
A tender made through DTC's ATOP system will be accepted if:
. before 5:00 p.m., New York City time, on the expiration date, the
exchange agent receives an agent's message from DTC stating that
DTC has received an express acknowledgment from the participant
in DTC tendering the outstanding notes that they have received
and agree to be bound by the notice of guaranteed delivery; and
. the exchange agent receives, within five business days after the
expiration date, either: (1) a book-entry confirmation, including
an agent's message, transmitted via DTC's ATOP procedures; or (2)
a properly completed and executed letter of transmittal or a
facsimile, together with the certificate(s) representing all
tendered outstanding notes in proper form for transfer, or a
book-entry confirmation, and all other documents required by the
letter of transmittal.
Upon request to the exchange agent, a notice of guaranteed delivery
will be sent to holders who wish to tender their outstanding notes according to
the guaranteed delivery procedures described above.
Withdrawal of Tenders
23
Except as otherwise provided in this prospectus, tenders of
outstanding notes may be withdrawn at any time before 5:00 p.m., New York City
time, on the expiration date. To withdraw a tender of outstanding notes in the
exchange offer:
. a written or facsimile transmission of a notice of withdrawal
must be received by the exchange agent at its address listed
below before 5:00 p.m., New York City time, on the expiration
date; or
. you must comply with the appropriate procedures of DTC's ATOP
system.
Any notice of withdrawal must:
. specify the name of the person having deposited the outstanding
notes to be withdrawn;
. identify the outstanding notes to be withdrawn, including the
registration or certificate number or numbers and principal
amount of the outstanding notes or, in the case of outstanding
notes transferred by book-entry transfer, the name and number of
the account at the book-entry facility to be credited;
. be signed by the same person and in the same manner as the
original signature on the letter of transmittal by which the
outstanding notes were tendered, including any required signature
guarantee, or be accompanied by documents of transfer sufficient
to permit the trustee for the outstanding notes to register the
transfer of the outstanding notes into the name of the person
withdrawing the tender; and
. specify the name in which any of these outstanding notes are to
be registered, if different from that of the person who deposited
the outstanding notes to be withdrawn.
All questions as to the validity, form and eligibility, including time
of receipt, of the withdrawal notices will be determined by us, whose
determination shall be final and binding on all parties. Any outstanding notes
so withdrawn will be judged not to have been tendered according to the
procedures in this prospectus for purposes of the exchange offer, and no
exchange notes will be issued in exchange for those outstanding notes unless the
outstanding notes so withdrawn are validly retendered. Any outstanding notes
that have been tendered but are not accepted for exchange will be returned to
the holder of the outstanding notes without cost to the holder or, in the case
of outstanding notes tendered by book-entry transfer into the holder's account
at DTC according to the procedures described above. This return or crediting
will take place as soon as practicable after withdrawal, rejection of tender or
termination of the exchange offer. Properly withdrawn outstanding notes may be
retendered by following one of the procedures described above under "--
Procedures for Tendering" at any time before the Expiration Date.
Conditions
The exchange offer is subject only to the following conditions:
. the compliance of the exchange offer with securities laws;
. the proper tender of the outstanding notes;
. the representation by the holders of the outstanding notes that
they are not our affiliate, that the exchange notes they will
receive are being acquired by them in the ordinary course of
their business and that at the time the exchange offer is
completed the holder had no plan to participate in the
distribution of the exchange notes; and
. no judicial or administrative proceeding is pending or shall have
been threatened that would limit us from proceeding with the
exchange offer.
24
Exchange Agent
SunTrust Bank, the trustee under the indenture, has been appointed as
exchange agent for the exchange offer. In this capacity, the exchange agent has
no fiduciary duties and will be acting solely on the basis of our directions.
Requests for assistance and requests for additional copies of this prospectus or
of the letter of transmittal should be directed to the exchange agent. You
should send certificates for outstanding notes, letters of transmittal and any
other required documents to the exchange agent addressed as follows:
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
SunTrust Bank (804) 782-7855 SunTrust Bank
Attention: Jim McManus Confirm Facsimile Transmission by Attention: Jim McManus
Corporate Trust Department Telephone: Corporate Trust Department
10/th/ Floor, HDQ 5310 (804) 782-5726 10/th/ Floor, HDQ 5310
919 E. Main Street 919 E. Main Street
Richmond, Virginia 23219 Richmond, Virginia 23219
Delivery of the letter of transmittal to an address other than as
listed above or transmission of instructions via facsimile other than as
described above does not constitute a valid delivery of the letter of
transmittal.
Solicitation of Tenders, Fees and Expenses
We will bear the expenses of requesting that holders of outstanding
notes tender those notes for exchange notes. The principal solicitation under
the exchange offer is being made by mail. Additional solicitations may be made
by our officers and regular employees and our affiliates in person, by
telegraph, telephone or telecopier.
We have not retained any dealer-manager in connection with the
exchange offer and will not make any payments to brokers, dealers or other
persons soliciting acceptances of the exchange offer. We, however, will pay the
exchange agent reasonable and customary fees for its services and will reimburse
the exchange agent for its reasonable out-of-pocket costs and expenses in
connection with the exchange offer and will indemnify the exchange agent for all
losses and claims incurred by it as a result of the exchange offer. We may also
pay brokerage houses and other custodians, nominees and fiduciaries the
reasonable out-of-pocket expenses incurred by them in forwarding copies of this
prospectus, letters of transmittal and related documents to the beneficial
owners of the outstanding notes and in handling or forwarding tenders for
exchange.
We will pay the expenses to be incurred in connection with the
exchange offer, including fees and expenses of the exchange agent and trustee
and accounting and legal fees and printing costs.
You will not be obligated to pay any transfer tax in connection with
the exchange, except if you instruct us to register exchange notes in the name
of, or request that outstanding notes not tendered or not accepted in the
exchange offer be returned to, a person other than you, in which event you will
be responsible for the payment of any applicable transfer tax.
Accounting Treatment
The exchange notes will be recorded at the same carrying value as the
outstanding notes, as reflected in our accounting records on the date of the
exchange. Accordingly, we will recognize no gain or loss for accounting purposes
upon the closing of the exchange offer. We will amortize the expenses of the
exchange offer over the term of the exchange notes under generally accepted
accounting principles.
Participation in the Exchange Offer, Untendered Notes
Participation in the exchange offer is voluntary. Holders of the
outstanding notes are urged to consult their financial and tax advisors in
making their own decisions on what action to take.
As a result of the making of, and upon acceptance for exchange of all
outstanding notes tendered under the terms of, this exchange offer, we will have
fulfilled a covenant contained in the terms of the exchange and
25
registration rights agreement. Holders of the outstanding notes who do not
tender in the exchange offer will continue to hold their outstanding notes and
will be entitled to all the rights, and subject to the limitations, applicable
to the outstanding notes under the indenture. Holders of outstanding notes will
no longer be entitled to any rights under the exchange and registration rights
agreement that by their terms terminate or cease to have further effect as a
result of the making of this exchange offer. All untendered outstanding notes
will continue to be subject to the restrictions on transfer described in the
indenture. To the extent that outstanding notes are tendered and accepted in the
exchange offer, the trading market for untendered outstanding notes could be
adversely affected. This is because there will probably be many fewer remaining
outstanding notes outstanding following the exchange offer, significantly
reducing the liquidity of the untendered notes.
We may in the future seek to acquire untendered outstanding notes in
the open market or through privately negotiated transactions, through subsequent
exchange offers or otherwise. We intend to make any acquisitions of outstanding
notes following the applicable requirements of the Exchange Act, and the rules
and regulations of the Securities and Exchange Commission under the Exchange
Act, including Rule 14e-1, to the extent applicable. We have no present plan to
acquire any outstanding notes that are not tendered in the exchange offer or to
file a registration statement to permit resales of any outstanding notes that
are not tendered in the exchange offer.
26
USE OF PROCEEDS
We will not receive any cash proceeds from the exchange offer. We used
approximately $160.1 million of the proceeds from the note offering to fund the
tender offer and the related call for redemption for the 2006 notes. We intend
to use the remaining net proceeds from the note offering for general corporate
purposes, which may include the repurchase or redemption of a portion of the
outstanding $2.6875 Term Convertible Securities, Series A of our special purpose
trust, Owens & Minor Trust I, and the related 5.375% Junior Subordinated
Debentures due 2013, and/or the implementation of our third-party logistics
business development strategy. Pending their ultimate use, we have applied the
remaining net proceeds from the offering to reduce the level of receivables
transferred under our receivables financing facility. See "Description of
Existing Financing Arrangements."
27
CAPITALIZATION
The following table shows our capitalization as of June 30, 2001 on an
actual basis and as adjusted to give effect to the offering of the outstanding
notes on July 2, 2001 and the application of the net proceeds as described in
"Use of Proceeds." You should read this table in conjunction with our
consolidated financial statements and the related notes to our consolidated
financial statements, which are incorporated by reference in this prospectus.
See "Use of Proceeds," "Selected Consolidated Financial Data," and "Description
of Existing Financing Arrangements."
June 30, 2001
--------------------------
As
Actual Adjusted
----------- --------------
(in thousands) (unaudited)
Cash and cash equivalents............................................. $ 1,423 $ 1,423
============ ===========
Debt (including current maturities):
Revolving credit facility ....................................... $ 6,100 $ --
10.875% senior subordinated notes due 2006....................... 150,000 --
8 1/2% senior subordinated notes ................................ -- 200,000
Other ........................................................... 672 672
------------ -----------
Total debt................................................. 156,772 200,672
Mandatorily redeemable preferred securities........................... 132,000 132,000
Shareholders' equity:
Common stock..................................................... 67,516 67,516
Paid-in capital.................................................. 25,030 25,030
Retained earnings................................................ 141,694 134,642
Accumulated other comprehensive loss............................. (623) (623)
------------ -----------
Total shareholders' equity............................................ 233,617 226,565
------------ -----------
Total capitalization/(1)/........................................ $ 522,389 $ 559,237
============ ===========
_____________________
/(1)/ As of June 30, 2001, we had received $105.0 million under our receivables
financing facility. As adjusted to give effect to the note offering of
the outstanding notes on July 2, 2001 and the application of the proceeds
as described in "Use of Proceeds," we would have had $77.0 million
outstanding under the receivables financing facility.
28
SELECTED CONSOLIDATED FINANCIAL DATA
The following table summarizes our selected consolidated financial
data, which you should read in conjunction with our consolidated financial
statements and related notes and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in our Annual Report on
Form 10-K for the year ended December 31, 2000 and Quarterly Report on Form 10-Q
for the period ended June 30, 2001. The selected consolidated financial data as
of and for each of the years in the five-year period ended December 31, 2000
have been derived from our audited consolidated financial statements and the
selected consolidated financial data as of and for the six months ended June 30,
2000 and 2001 have been derived from our unaudited consolidated quarterly
financial statements. The consolidated balance sheets as of December 31, 1999
and 2000 and the consolidated statements of operations for each of the years in
the three-year period ended December 31, 2000, and the independent auditors'
report thereon, are incorporated by reference in this prospectus from our Annual
Report on Form 10-K for the year ended December 31, 2000. The unaudited
consolidated balance sheet as of June 30, 2001 and the unaudited consolidated
statements of operations for the six months ended June 30, 2000 and 2001 are
incorporated by reference in this prospectus from our Quarterly Report on Form
10-Q for the period ended June 30, 2001.
Six Months
Year Ended December 31, Ended June 30,
-------------------------------------------------------- ---------------------
1996 1997 1998 1999/(1)/ 2000 2000 2001
--------- --------- --------- ---------- ---------- --------- ----------
(in thousands, except per share data) (unaudited)
Statement of Income Data/(2)/:
Net sales....................................... $3,025,341 $3,124,062 $3,090,048 $3,194,134 $3,503,583 $1,731,972 $1,878,039
Cost of goods sold.............................. 2,720,613 2,800,044 2,755,158 2,851,556 3,127,911 1,547,208 1,678,435
---------- ---------- ---------- ---------- ---------- ---------- ----------
Gross margin.................................... 304,728 324,018 334,890 342,578 375,672 184,764 199,604
---------- ---------- ---------- ---------- ---------- ---------- ----------
Selling, general and administrative expenses.... 240,042 242,136 247,472 249,960 268,205 134,350 145,995
Depreciation and amortization................... 16,098 17,664 18,270 19,365 21,515 10,431 11,228
Interest expense, net........................... 18,954 15,703 14,066 11,860 12,566 6,358 6,808
Discount on accounts receivable securitization.. 6,521 6,584 4,655 5,240 6,881 3,818 2,905
Distributions on mandatorily redeemable
preferred securities......................... -- -- 4,494 7,095 7,095 3,548 3,548
Restructuring expense (credit)/(3)/............. -- -- 11,200 (1,000) (750) (750) (1,476)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total expenses.................................. 281,615 282,087 300,157 292,520 315,512 157,755 169,008
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income before income taxes...................... 23,113 41,931 34,733 50,058 60,160 27,009 30,596
Income tax provision............................ 10,148 17,611 14,588 22,079 27,072 12,154 13,462
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income...................................... 12,965 24,320 20,145 27,979 33,088 14,855 17,134
Dividends on preferred stock.................... 5,175 5,175 1,898 -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income attributable to common stock......... $ 7,790 $ 19,145 $ 18,247 $ 27,979 $ 33,088 $ 14,855 $ 17,134
========== ========== ========== ========== ========== ========== ==========
Common share information:
Net income per common share--basic.............. $ 0.25 $ 0.60 $ 0.56 $ 0.86 $ 1.01 $ 0.46 $ 0.52
Net income per common share--diluted............ $ 0.25 $ 0.60 $ 0.56 $ 0.82 $ 0.94 $ 0.43 $ 0.48
Average number of shares outstanding--basic..... 31,707 32,048 32,488 32,574 32,712 32,590 33,137
Average number of shares outstanding--diluted... 31,809 32,129 32,591 39,098 39,453 39,274 40,150
Cash dividends per common share................. $ 0.18 $ 0.18 $ 0.20 $ 0.23 $ 0.25 $ 0.12 $ 0.13
Balance Sheet Data (end of period):
Working capital................................. $ 192,990 $ 233,789 $ 235,247 $ 219,448 $ 233,637 $ 211,184 $ 260,356
Inventory....................................... 281,839 285,529 275,094 342,478 315,570 362,485 376,277
Total assets.................................... 679,501 712,563 717,768 865,000 867,548 868,742 911,177
Long-term debt.................................. 167,549 182,550 150,000 174,553 152,872 151,972 156,100
Mandatorily redeemable preferred securities..... -- -- 132,000 132,000 132,000 132,000 132,000
Shareholders' equity/(4)/....................... 242,400 259,301 161,126 182,381 212,772 194,929 233,617
29
Six Months
Year Ended December 31, Ended June 30,
----------------------------------------------- ------------------
1996 1997 1998 1999/(1)/ 2000 2000 2001
------- -------- -------- -------- -------- -------- --------
(unaudited)
Supplemental Non-GAAP Data:
Outstanding financing/(5)/......................... $293,549 $292,550 $225,000 $280,790 $233,533 $260,929 $261,772
Adjusted cash flow from operations/(6)/............ 121,432 24,022 67,485 61,677 68,767 46,180 (16,818)
Capital expenditures............................... 13,227 11,967 12,609 22,105 19,627 9,551 9,205
Historical Ratios/(2)/:
Gross margin as a percent of net sales............. 10.1% 10.4% 10.8% 10.7% 10.7% 10.7% 10.6%
SG&A as a percent of net sales..................... 7.9% 7.8% 8.0% 7.8% 7.7% 7.8% 7.8%
Average receivable days sales outstanding/(7)/..... 37.3 32.4 33.5 34.9 33.3 33.4 32.9
Average inventory turnover......................... 8.9x 9.9x 9.8x 9.2x 9.5x 8.8x 9.8x
Earnings to fixed charges/(8)/..................... 1.3x 1.8x 1.9x 2.5x 2.7x 2.5x 2.7x
_________________________
(1) On July 30, 1999, we acquired certain net assets of Medix, Inc. This
acquisition was accounted for as a purchase.
(2) Net sales, gross margin, selling, general and administrative expenses
and all related ratios have been restated for all periods in
accordance with Emerging Issues Task Force Issue 00-10, Accounting for
Shipping and Handling Fees and Costs. See note 1 to our consolidated
financial statements, which are incorporated by reference in this
prospectus from our Annual Report on Form 10-K for the year ended
December 31, 2000.
(3) In 1998, we incurred $11.2 million, or $6.6 million after taxes, of
restructuring expenses. In the years ended December 31, 1999 and 2000,
and for the six months ended June 30, 2001, we reduced the
restructuring accrual by $1.0 million, $0.8 million and $1.5 million,
respectively, or $0.6 million, $0.4 million and $0.8 million,
respectively, after taxes. See note 3 to our consolidated financial
statements, which are incorporated by reference in this prospectus
from our Annual Report on Form 10-K for the year ended December 31,
2000 and note 6 to our consolidated financial statements, which are
incorporated by reference in this prospectus from our Quarterly Report
on Form 10-Q for the period ended June 30, 2001.
(4) Shareholders' equity included $115.0 million of preferred stock at
December 31, 1996 and 1997.
(5) Outstanding financing includes debt and sales of accounts receivable
under our off balance sheet receivables financing facility. See
"Description of Existing Financing Arrangements."
(6) Cash flow from operations has been adjusted to exclude proceeds from
sales and collections of accounts receivable under our off balance
sheet receivables financing facility. See "Description of Existing
Financing Arrangements."
(7) Excludes the impact of our off balance sheet receivables financing
facility. See "Description of Existing Financing Arrangements."
(8) For purposes of computing this ratio, earnings consist of income
before income taxes and fixed charges. Fixed charges consist of
interest expense, discount on accounts receivable securitization,
amortization of debt issuance costs, distributions on mandatorily
redeemable preferred securities, preferred dividend requirements and
one-third of rental expense (the portion considered representative of
the interest factor).
30
DESCRIPTION OF EXISTING FINANCING ARRANGEMENTS
Revolving Credit Facility
On April 24, 2000, Owens & Minor, Inc., as borrower, certain of our
subsidiaries, as guarantors, and certain lenders, entered into a credit
agreement that provides for our $225.0 million revolving credit facility.
Borrowings under the revolving credit facility are guaranteed by our
subsidiaries Owens & Minor Medical, Inc., National Medical Supply Corporation,
Owens & Minor West, Inc., Koley's Medical Supply, Inc. and Stuart Medical, Inc.
The revolving credit facility expires in April 2003. Borrowings under the
revolving credit facility bear interest based on, at our discretion, the prime
rate of Bank of America, N.A. or LIBOR.
Borrowings under the revolving credit facility are general unsecured
obligations of Owens & Minor, Inc., and rank senior in right of payment to the
notes. The guarantees of the revolving credit facility are general unsecured
obligations of the guarantors and rank senior in right of payment to the
guarantees of the notes. We are charged a commitment fee of between 0.200% and
0.275% on the unused portion of the revolving credit facility and a utilization
fee of 0.250% if borrowings exceed $112.5 million. On June 12, 2001, we amended
the revolving credit facility to authorize the offering of the outstanding notes
and apply the net proceeds as described in this prospectus and to increase the
commitment fee we are charged to between 0.225% and 0.300% on the unused portion
of the revolving credit facility. Under the amendment, the utilization fee
remains unchanged. Lenders under the revolving credit facility were paid a fee
in respect of such amendment. The terms of the revolving credit facility limit
the amount of indebtedness that we may incur, require us to maintain certain
levels of net worth, current ratio, leverage ratio and fixed charge coverage,
and restrict our ability to alter materially the character of our business
through consolidation, merger or purchase or sale of assets. At June 30, 2001,
we were in compliance with these covenants.
Receivables Financing Facility
Under the receivables financing facility, O&M Funding Corp., our
special-purpose subsidiary, is entitled, through July 10, 2002, to transfer,
without recourse, our trade receivables and to receive up to $225.0 million from
such transfer from a group of unrelated third-party purchasers for consideration
that reflects a cost of funds at commercial paper rates, the prime rate or
LIBOR, plus a charge for administrative and credit support services.
The receivables financing facility requires us to maintain certain
levels of net worth, current ratio, leverage ratio and fixed coverage, and
restricts our ability to alter materially the character of our business through
consolidation, merger, or purchase or sale of assets. We continue to service the
receivables that are transferred under the receivables financing facility. At
June 30, 2001, net accounts receivable of $105.0 million had been transferred,
without recourse, under the receivables financing facility, and as a result,
have been de-recognized in the consolidated balance sheet.
2006 Notes
In May 1996, we issued $150.0 million of 10 7/8% Senior Subordinated
Notes due 2006. On June 5, 2001, we commenced a tender offer to purchase any and
all of the 2006 notes. As of 5:00 p.m., New York City time, on Monday, July 2,
2001, the expiration date, we accepted tender of 2006 notes from holders of
$119,740,000 (or 79.8%) of the $150,000,000 outstanding principal amount of the
2006 notes. The remaining $30,260,000 of 2006 notes were redeemed on August 2,
2001 at a redemption price of 105.4375% of the principal amount thereof, plus
accrued and unpaid interest to August 2, 2001. See "Summary--Tender Offer."
Trust Preferred Securities
In May 1998, Owens & Minor Trust I, a statutory business trust
established by us, issued 2,640,000 shares of trust preferred securities, for
aggregate proceeds of $132.0 million. Each trust preferred security has a
liquidation value of $50. The net proceeds were invested by the Trust in our
5.375% Junior Subordinated Convertible Debentures. The junior subordinated
debentures are the sole assets of the Trust. We applied substantially all of the
net proceeds of the junior subordinated debentures to repurchase 1,150,000
shares of our Series B Cumulative Preferred Stock at its par value.
31
The trust preferred securities accrue and pay quarterly cash
distributions at an annual rate of 5.375% of the liquidation value. Each Trust
Preferred Security is convertible into 2.4242 shares of our common stock at the
holder's option prior to May 1, 2013. The trust preferred securities are
mandatorily redeemable upon the maturity of the junior subordinated debentures
on April 30, 2013, and may be redeemed by us in whole or in part after May 1,
2001. The payment obligations of the Trust are fully and unconditionally
guaranteed by us, as provided under the terms of the trust preferred securities.
32
DESCRIPTION OF THE EXCHANGE NOTES
As used below in this "Description of the Exchange Notes" section, the
"Company" means Owens & Minor, Inc., but not any of our subsidiaries, unless
otherwise specified, and the "Notes" means the exchange notes to be issued in
the exchange offer. The Company issued the outstanding notes and will issue the
exchange notes under an indenture, dated as of July 2, 2001 (the "Original
Indenture"), as supplemented by the first supplemental indenture, dated as of
July 2, 2001 (the "First Supplemental Indenture" and together with the Original
Indenture, the "Indenture"), in each case between the Company, the Guarantors
and SunTrust Bank as Trustee (the "Trustee").
The statements under this caption relating to the Notes, the Guarantees
and the Indenture are summaries and do not purport to be complete, and where
reference is made to particular provisions of the Indenture, such provisions,
including the definitions of certain terms, are incorporated by reference as a
part of such summaries or terms, which are qualified in their entirety by such
reference. The Original Indenture and the First Supplemental Indenture have been
filed as exhibits to the registration statement of which this prospectus forms a
part. You are encouraged to read the Indenture because it, and not this
description, defines your rights as holders of the Notes. You can find the
definitions of capitalized terms used in this description under the subheading
"Certain Definitions."
General
The Notes will be general unsecured senior subordinated obligations of
the Company, will be offered in an aggregate principal amount of $200 million
and will rank subordinate in right of payment to all existing and future Senior
Indebtedness of the Company and will be effectively subordinated to all existing
and future indebtedness and other liabilities of subsidiaries of the Company
which are not Guarantors. The Company may issue additional notes from time to
time after this exchange offer. Any issuance of additional notes is subject to
the covenants relating to the Notes. The Notes and any additional Notes
subsequently issued under the Indenture may be treated as a single class for all
purposes under the Indenture, including, without limitation, waivers,
amendments, redemptions and Offers to Purchase. The Notes will rank pari passu
in right of payment with all other senior subordinated indebtedness of the
Company. The Notes will be guaranteed on a joint and several basis by each of
the Guarantors pursuant to the Guarantees described below. The Guarantees will
be general unsecured senior subordinated obligations of the Guarantors and will
rank subordinate in right of payment to all existing and future Guarantor Senior
Indebtedness. The Guarantees will rank pari passu in right of payment with all
other existing and future senior subordinated indebtedness of the Guarantors. At
June 30, 2001, on a pro forma basis after giving effect to the note offering and
the application of the proceeds as described in "Use of Proceeds," the Company
would have had approximately $0.7 million of Senior Indebtedness outstanding,
none of which consisted of borrowings under the Revolving Credit Facility, which
would have been guaranteed by the Guarantors on a senior basis. Secured
creditors of the Company or any Guarantor, if any, will have a claim on the
assets which secure such obligations prior to claims of the Holders of the Notes
against those assets.
The Notes will mature on July 15, 2011 and will bear interest at the
rate per annum shown on the front cover of this prospectus from the date of
issuance or from the most recent interest payment date to which interest has
been paid or provided for. Interest will be payable semiannually on January 15
and July 15 of each year, commencing January 15, 2002, to the Person in whose
name a Note is registered at the close of business on the preceding January 1 or
July 1 (each, a "Record Date"), as the case may be. Interest on the Notes will
be computed on the basis of a 360-day year of twelve 30-day months.
The Notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple thereof. No
service charge will be made for any registration of transfer or exchange of
Notes, but the Company may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.
Initially, the Trustee will act as paying agent and registrar for the
Notes. The Notes may be presented for registration of transfer and exchange at
the offices of the registrar for the Notes.
As of the date of the Indenture, all of the Company's subsidiaries will
be "Restricted Subsidiaries." However, under the circumstances described below
under the subheading "--Covenants--Designation of Restricted and Unrestricted
Subsidiaries," we will be permitted to designate certain of the Company's
subsidiaries
33
as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will not be
subject to many of the restrictive covenants in the Indenture. Our Unrestricted
Subsidiaries will not guarantee the Notes.
If a Holder has given wire transfer instructions to the Company, the
Company will pay all principal, interest and premium and Liquidated Damages, if
any, on that Holder's Notes in accordance with those instructions. All other
payments on Notes will be made at the office or agency of the paying agent and
registrar within the City and State of New York unless the Company elects to
make interest payments by check mailed to the Holders at their address set forth
in the register of Holders. Holders must surrender the Notes to the paying agent
for the Notes to collect principal payments.
Optional Redemption
The Notes will be subject to redemption, at the option of the Company,
in whole or in part, at any time on or after July 15, 2006 and prior to
maturity, upon not less than 30 nor more than 60 days' notice mailed to each
Holder of Notes to be redeemed at his address appearing in the register for the
Notes, in amounts of $1,000 or an integral multiple of $1,000, at the following
redemption prices (expressed as percentages of principal amount) plus accrued
interest and Liquidated Damages, if any, to but excluding the date fixed for
redemption (subject to the right of Holders of record on the relevant Record
Date to receive interest due on an interest payment date that is on or prior to
the date fixed for redemption), if redeemed during the 12-month period beginning
July 15 of the years indicated:
Redemption
Year Price
---- -----
2006................... 104.250%
2007................... 102.833%
2008................... 101.417%
2009 and thereafter.... 100.000%
In addition, prior to July 15, 2004, the Company may redeem up to 35%
of the original principal amount of the Notes with the net cash proceeds
received by the Company from a public offering of Capital Stock of the Company
(other than Disqualified Stock), at a redemption price (expressed as a
percentage of the principal amount) of 108.500% of the principal amount thereof,
plus accrued and unpaid interest and Liquidated Damages, if any, to the date
fixed for redemption; provided, however, that at least 65% of the original
principal amount of the Notes remains outstanding immediately after any such
redemption (excluding any Notes owned by the Company or any of its Affiliates).
Notice of redemption pursuant to this paragraph must be mailed to holders of
Notes not later than 60 days following the consummation of such public offering.
Selection of Notes for any partial redemption shall be made by the
Trustee, in accordance with the rules of any national securities exchange on
which the Notes may be listed or, if the Notes are not so listed, pro rata or by
lot or in such other manner as the Trustee shall deem appropriate and fair.
Notes in denominations larger than $1,000 may be redeemed in part but only in
integral multiples of $1,000. Notice of redemption will be mailed before the
date fixed for redemption to each holder of Notes to be redeemed at his or her
registered address. On and after the date fixed for redemption, interest will
cease to accrue on Notes or portions thereof called for redemption.
The Notes will not have the benefit of any sinking fund.
Subordination
The payment of the principal of, premium, and Liquidated Damages, if
any, and interest on the Notes is subordinated in right of payment, to the
extent and in the manner provided in the Indenture, to the prior payment in full
of all Senior Indebtedness.
Upon any payment or distribution of assets or securities of the Company
of any kind or character, whether in cash, property or securities, upon any
dissolution or winding-up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due with respect
to Senior Indebtedness (including any interest accruing subsequent to an event
of bankruptcy to the extent that such interest is an allowed claim enforceable
against the debtor under the Bankruptcy Law) shall first be paid in full, or
payment provided for, before the Holders of the Notes or the Trustee
34
on behalf of such Holders shall be entitled to receive any payment by the
Company of the principal of, premium, if any, or interest on the Notes, or any
payment to acquire any of the Notes for cash, property or securities, or any
distribution with respect to the Notes of any cash, property or securities.
Before any payment may be made by, or on behalf of, the Company of the principal
of, premium, if any, or interest on the Notes upon any such dissolution or
winding-up or liquidation or reorganization, any payment or distribution of
assets or securities of the Company of any kind or character, whether in cash,
property or securities, to which the Holders of the Notes or the Trustee on
their behalf would be entitled, but for the subordination provisions of the
Indenture, shall be made by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, directly to the holders of the Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders) or their representatives or to the trustee or trustees under
any indenture pursuant to which any of such Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent necessary to pay
all such Senior Indebtedness in full after giving effect to any concurrent
payment, distribution or provision therefor to or for the holders of such Senior
Indebtedness.
No direct or indirect payment by or on behalf of the Company of
principal of, premium, if any, or interest on the Notes, whether pursuant to the
terms of the Notes, upon acceleration or otherwise, will be made if, at the time
of such payment, there exists a default in the payment of all or any portion of
the obligations on any Designated Senior Indebtedness, whether at maturity, on
account of mandatory redemption or prepayment, acceleration or otherwise (and
the Trustee has received written notice thereof), and such default shall not
have been cured or waived or the benefits of this sentence waived by or on
behalf of the holders of such Designated Senior Indebtedness. In addition,
during the continuance of any non-payment default or non-payment event of
default with respect to any Designated Senior Indebtedness pursuant to which the
maturity thereof may be accelerated, and upon receipt by the Trustee of written
notice (a "Payment Blockage Notice") from the holder or holders of such
Designated Senior Indebtedness or the trustee or agent acting on behalf of such
Designated Senior Indebtedness, then, unless and until such default or event of
default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness has been discharged or repaid in full, no direct or indirect
payment will be made by or on behalf of the Company of principal of, premium, if
any, or interest on the Notes, except from those funds held in trust for the
benefit of the Holders of any Notes to such Holders, during a period (a "Payment
Blockage Period") commencing on the date of receipt of such notice by the
Trustee and ending 179 days thereafter. Notwithstanding anything in the
subordination provisions of the Indenture or the Notes to the contrary, (x) in
no event will a Payment Blockage Period extend beyond 179 days from the date the
Payment Blockage Notice in respect thereof was given and (y) in no event will a
Payment Blockage Notice be effective for purposes thereof unless and until 360
days have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice. Not more than one Payment Blockage Period may be commenced with
respect to the Notes during any period of 360 consecutive days. No default or
event of default that existed or was continuing on the date of commencement of
any Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period may be, or be made, the basis for the
commencement of any other Payment Blockage Period by the holder or holders of
such Designated Senior Indebtedness or the trustee or agent acting on behalf of
such Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such default or event of default has been cured or
waived for a period of not less than 90 consecutive days.
The failure to make any payment or distribution for or on account of
the Notes by reason of the provisions of the Indenture described under this
"Subordination" heading will not be construed as preventing the occurrence of an
Event of Default described in clause (a), (b) or (c) of the first paragraph
under "--Events of Default."
By reason of the subordination provisions described above, in the event
of insolvency of the Company, funds which would otherwise be payable to Holders
of the Notes will be paid to the holders of Senior Indebtedness to the extent
necessary to pay the Senior Indebtedness in full, and the Company may be unable
to fully meet its obligations with respect to the Notes. Subject to the
restrictions set forth in the Indenture, in the future the Company may issue
additional Senior Indebtedness.
The Guarantees
The Indenture will provide that each of the Guarantors will
unconditionally guarantee on a joint and several basis all of the Company's
obligations under the Notes, including its obligations to pay principal,
premium, if any, and interest with respect to the Notes. The obligations of each
Guarantor are limited to the maximum amount which, after giving effect to all
other contingent and fixed liabilities of such Guarantor and after giving effect
to any collections from or payments made by or on behalf of any other Guarantor
in respect of the obligations
35
of such other Guarantor under its Guarantee or pursuant to its contribution
obligations under the Indenture, will result in the obligations of such
Guarantor under the Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in an amount pro rata, based on the net assets of each
Guarantor determined in accordance with GAAP. Except as provided in "--
Covenants" below, the Company is not restricted from selling, liquidating,
reorganizing or otherwise disposing of any of the Guarantors.
The Indenture will provide that each Restricted Subsidiary which
guarantees or otherwise provides credit support (pursuant to the grant of a
security interest or otherwise) for any obligation of the Company or any of its
Subsidiaries under the Revolving Credit Facility and each future Restricted
Subsidiary that guarantees or otherwise provides credit support (pursuant to the
grant of a security interest or otherwise) for any obligation of the Company or
any of its Subsidiaries under the Revolving Credit Facility will become a
Guarantor of the Notes.
The Indenture will provide that if (w) any Guarantor is released from
its guarantee and all other obligations (including any Liens) in respect of the
Revolving Credit Facility, (x) the Notes are defeased in accordance with the
terms of the Indenture, (y) if all or substantially all of the assets of any
Guarantor or all of the Capital Stock of any Guarantor is sold (including by
issuance or otherwise) by the Company or any of its Subsidiaries in a
transaction constituting an Asset Disposition, and if (1) the Net Available
Proceeds from such Asset Disposition are used in accordance with the covenant
described under "--Covenants--Limitation on Certain Asset Dispositions" or (2)
the Company delivers to the Trustee an Officers' Certificate to the effect that
the Net Available Proceeds from such Asset Disposition shall be used in
accordance with the covenant described under "--Covenants--Limitation on Certain
Asset Dispositions" and within the time limits specified by such covenant, or
(z) if the Company designates any Restricted Subsidiary that is a Guarantor as
an Unrestricted Subsidiary in accordance with the applicable provisions of the
Indenture, then in each such case, such Guarantor (in the event of a sale or
other disposition of all of the Capital Stock of such Guarantor or in the event
of designation of Restricted Subsidiary as an Unrestricted Subsidiary) or the
corporation acquiring such assets (in the event of a sale or other disposition
of all or substantially all of the assets of such Guarantor) shall be released
and discharged of its Guarantee obligations.
The obligations of each Guarantor under its Guarantee are subordinated
to the prior payment in full of all Guarantor Senior Indebtedness of such
Guarantor to substantially the same extent as the Notes are subordinated to
Senior Indebtedness.
Suspended Covenants
During any period of time that the Notes have an Investment Grade
Rating from both of the Rating Agencies and no Default has occurred and is
continuing under the Indenture, the Company and its Restricted Subsidiaries will
not be subject to the provisions of the Indenture described below under the
following headings under "--Covenants":
. "--Limitation on Indebtedness,"
. "--Limitation on Senior Subordinated Indebtedness,"
. "--Limitation on Restricted Payments,"
. "--Limitation Concerning Distributions and Transfers by
Subsidiaries,"
. "--Limitation on Certain Asset Dispositions,"
. "--Limitation on Issuance and Sale of Capital Stock of
Subsidiaries," and
. "--Limitation on Transactions with Affiliates and Related Persons,"
(collectively, the "Suspended Covenants"); provided, however, such covenants
shall not be suspended if the Investment Grade Rating was obtained, directly or
indirectly, by our merger, consolidation or otherwise with a Person that had an
Investment Grade Rating from either of the Rating Agencies and the Company at
such time did not have an Investment Grade Rating from both of the Rating
Agencies; and provided further, that the provisions of the Indenture described
below under the following headings under "--Covenants:"
36
. "--Merger, Consolidation or Sale of Assets,"
. "--Change of Control,"
. "--Additional Subsidiary Guarantees,"
. "--Limitation on Liens,"
. "--Provision of Financial Information," and
. "--Designation of Restricted and Unrestricted Subsidiaries"
will not be so suspended; and provided further, that if the Company and its
Restricted Subsidiaries are not subject to the Suspended Covenants for any
period of time as a result of the preceding sentence and, subsequently, a Rating
Agency which had given the Notes an Investment Grade Rating withdraws its rating
or downgrades the rating assigned to the Notes below the Investment Grade
Ratings so that the Notes do not have an Investment Grade Rating from both
Rating Agencies, or a Default (other than with respect to the Suspended
Covenants) occurs and is continuing, the Company and its Restricted Subsidiaries
will thereafter again be subject to the Suspended Covenants, subject to the
terms, conditions and obligations set forth in the Indenture (each such date of
reinstatement being the "Reinstatement Date"), including those set forth in the
preceding sentence. Compliance with the Suspended Covenant with respect to
Restricted Payments made after the Reinstatement Date will be calculated in
accordance with the terms of the covenant described under "--Covenants--
Limitation on Restricted Payments" as though such covenant had been in effect
during the entire period of time from which the Notes are issued. As a result,
during any period in which the Company and its Restricted Subsidiaries are not
subject to the Suspended Covenants, the Notes will be entitled to substantially
reduced covenant protection.
Covenants
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness
The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, Incur, directly or indirectly, any
Indebtedness (including Acquired Debt), except:
(i) Indebtedness (including Acquired Debt) of the Company or the
Guarantors, if immediately after giving effect to the Incurrence of such
Indebtedness and the receipt and application of the net proceeds thereof,
the Consolidated Cash Flow Ratio of the Company for the four full fiscal
quarters for which quarterly or annual financial statements are available
preceding the Incurrence of such Indebtedness, calculated on a pro forma
basis as if such Indebtedness had been Incurred on the first day of such
four full fiscal quarters, would be greater than 2.00 to 1.00;
(ii) Indebtedness of the Company, and guarantees of such Indebtedness
by any Guarantor, Incurred under the Revolving Credit Facility in an
aggregate principal amount outstanding at any one time not to exceed the
greater of (x) $300 million less the aggregate amount of all Net Available
Proceeds of Asset Sales applied by the Company or any of its Subsidiaries
to repay any revolving credit Indebtedness under the Revolving Credit
Facility and effect a corresponding commitment reduction thereunder
pursuant to the covenant described below under the caption "--Limitation on
Certain Asset Dispositions;" or (y) the sum of
(A) 85% of Eligible Accounts Receivable and
(B) 50% of Eligible Inventory;
(iii) Indebtedness owed by the Company to any Guarantor or
Indebtedness owed by a Restricted Subsidiary of the Company to the Company
or a Guarantor; provided, however, upon either
(I) the transfer or other disposition by such Subsidiary or
the Company of any Indebtedness so permitted under this clause
(iii) to a Person other than the Company or a Guarantor or
37
(II) the issuance (other than directors' qualifying
shares), sale, transfer or other disposition of shares of Capital
Stock or other ownership interests (including by consolidation or
merger) of such Guarantor to a Person other than the Company or
another such Guarantor,
the provisions of this clause (iii) shall no longer be applicable to such
Indebtedness and such Indebtedness shall be deemed to have been Incurred at
the time of any such issuance, sale, transfer or other disposition, as the
case may be;
(iv) Indebtedness of the Company or its Restricted Subsidiaries under
any interest rate or currency swap agreement to the extent entered into to
hedge any other Indebtedness permitted under the Indenture that are
incurred in the normal course of business for the purpose of fixing or
hedging currency, commodity or interest rate risk (including with respect
to any floating or fixed rate Indebtedness that is permitted by the terms
of the Indenture to be outstanding in connection with the conduct of the
Company or its Subsidiaries businesses and not for speculative purposes)
and any interest rate swap agreement entered into to hedge obligations
under (x) any Qualified Securitization Transaction or (y) the Trust
Obligations;
(v) Indebtedness Incurred to renew, extend, refinance or refund
(collectively for purposes of this clause (v) to "refund") any Indebtedness
outstanding on the Issue Date and Indebtedness Incurred under the prior
clause (i) above or the Notes; provided, however, that
(I) such Indebtedness does not exceed the principal amount
(or accrual amount, if less) of Indebtedness so refunded plus the
amount of any premium required to be paid in connection with such
refunding pursuant to the terms of the Indebtedness refunded or
the amount of any premium reasonably determined by the Company as
necessary to accomplish such refunding by means of a tender
offer, exchange offer, or privately negotiated repurchase, plus
the expenses of the Company or such Restricted Subsidiary
incurred in connection therewith and
(II) (A) in the case of any refunding of (x) Indebtedness
that is pari passu with the Notes and (y) the Trust Securities,
such refunding Indebtedness is made pari passu with or
subordinate in right of payment to the Notes, and, in the case of
any refunding of Indebtedness that is subordinate in right of
payment to the Notes, such refunding Indebtedness is subordinate
in right of payment to the Notes on terms no less favorable to
the Holders than those contained in the Indebtedness being
refunded,
(B) in either case, the refunding Indebtedness by its terms,
or by the terms of any agreement or instrument pursuant to which
such Indebtedness is issued, does not have an Average Life that
is less than the remaining Average Life of the Indebtedness being
refunded and does not permit redemption or other retirement
(including pursuant to any required offer to purchase to be made
by the Company or Restricted Subsidiary of the Company) of such
Indebtedness at the option of the holder thereof prior to the
final stated maturity of the Indebtedness being refunded, other
than a redemption or other retirement at the option of the holder
of such Indebtedness (including pursuant to a required offer to
purchase made by the Company or a Restricted Subsidiary of the
Company) which is conditioned upon a change of control of the
Company pursuant to provisions substantially similar to those
contained in the Indenture described under "--Change of Control"
below and
(C) any Indebtedness Incurred to refund any other
Indebtedness is Incurred by the obligor on the Indebtedness being
refunded or by the Company;
(vi) Indebtedness of the Company or any Restricted Subsidiary
consisting of guarantees, indemnities, hold backs or obligations in respect
of purchase price adjustments in connection with the acquisition or
disposition of assets, including, without limitation shares of Capital
Stock of Subsidiaries, or contingent payment obligations incurred in
connection with the acquisition or disposition of assets acquired or
disposed of;
(vii) Indebtedness represented by
(I) letters of credit for the account of the Company or any
Restricted Subsidiary or
38
(II) other obligations to reimburse third parties pursuant
to any surety bond or other similar arrangements,
to the extent that such letters of credit and other obligations, as the
case may be, are intended to provide security for workers' compensation
claims, payment obligations in connection with self-insurance, in
connection with participation in government reimbursement or other programs
or similar requirements in the ordinary course of business;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings, or purchase money obligations, in each case, incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property, plant or equipment used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount, including all Indebtedness incurred to refund, refinance
or replace any Indebtedness incurred pursuant to this clause (viii), not to
exceed $15 million at any time outstanding;
(ix) Indebtedness of the Company under the Notes (excluding any
additional debt securities issued under the Indenture from time to time)
and Indebtedness of the Guarantors under the Guarantees;
(x) the Trust Obligations and the 2006 Notes;
(xi) the consummation of a Qualified Securitization Transaction; and
(xii) Indebtedness of the Company or its Restricted Subsidiaries, not
otherwise permitted to be Incurred pursuant to clauses (i) through (xi)
above, which, together with any other outstanding Indebtedness Incurred
pursuant to this clause has an aggregate principal amount not in excess of
$35 million at any time outstanding.
Limitation on Senior Subordinated Indebtedness
The Indenture will provide that (i) the Company will not directly or
indirectly Incur any Indebtedness that by its terms would expressly rank senior
in the right of payment to the Notes and expressly rank subordinate in right of
payment to any Senior Indebtedness and (ii) the Company will not permit any
Guarantor to and no Guarantor will directly or indirectly Incur any Indebtedness
that by its terms would expressly rank senior in right of payment to the
Guarantee of such Guarantor and expressly rank subordinate in right of payment
to any Guarantor Senior Indebtedness.
Limitation on Restricted Payments
The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend, or make any distribution of any kind
or character (whether in cash, property or securities), in respect of any
class of its Capital Stock or to the holders thereof, excluding any (x)
dividends or distributions payable solely in shares of its Capital Stock
(other than Disqualified Stock) or in options, warrants or other rights to
acquire its Capital Stock (other than Disqualified Stock), or (y) in the
case of any Restricted Subsidiary of the Company, dividends or
distributions payable to the Company or a Restricted Subsidiary of the
Company (other than dividends or distributions payable to a Securitization
Subsidiary or the Special Purpose Trust),
(ii) purchase, redeem, or otherwise acquire or retire for value shares
of Capital Stock of the Company or any of its Restricted Subsidiaries, any
options, warrants or rights to purchase or acquire shares of Capital Stock
of the Company or any of its Restricted Subsidiaries or any securities
convertible or exchangeable into shares of Capital Stock of the Company or
any of its Restricted Subsidiaries, excluding any such shares of Capital
Stock, options, warrants, rights or securities which are owned by the
Company or a Restricted Subsidiary of the Company (other than any such
shares, options, warrants or rights that are owned by a Securitization
Subsidiary or the Special Purpose Trust),
39
(iii) make any Investment in (other than a Permitted Investment), or
payment on a guarantee of any obligation of, any Person, other than the
Company or a Guarantor, or
(iv) redeem, defease, repurchase, retire or otherwise acquire or
retire for value, prior to any scheduled maturity, repayment or sinking
fund payment, Indebtedness which is subordinate in right of payment to the
Notes,
(each of the transactions described in clauses (i) through (iv) (other than
any exception to any such clause) being a "Restricted Payment") if at the
time thereof:
(1) an Event of Default, or an event that with the passing of
time or giving of notice, or both, would constitute an Event of
Default, shall have occurred and be continuing, or
(2) upon giving effect to such Restricted Payment, the Company
could not Incur at least $1.00 of additional Indebtedness pursuant to
the terms of the Indenture described in clause (i) of "--Limitation on
Indebtedness" above, or
(3) upon giving effect to such Restricted Payment, the aggregate
of all Restricted Payments made on or after the Issue Date exceeds the
sum of:
(a) 50% of cumulative Consolidated Net Income of the Company
(or, in the case cumulative Consolidated Net Income of the
Company shall be negative, less 100% of such deficit) since
January 1, 2001 through the last day of the fiscal quarter for
which financial statements are available; plus
(b) 100% of the aggregate net proceeds received after the
Issue Date, from the issuance of Capital Stock (other than
Disqualified Stock) of the Company and warrants, rights or
options on Capital Stock (other than Disqualified Stock) of the
Company (other than in respect of any such issuance to a
Restricted Subsidiary of the Company) and the principal amount of
Indebtedness of the Company or any of its Restricted Subsidiaries
(other than a Securitization Subsidiary) that has been converted
into or exchanged for Capital Stock of the Company; plus
(c) in the case of the disposition or repayment of any
Investment constituting a Restricted Payment made after the Issue
Date, an amount equal to the lesser of the return of capital with
respect to such Investment and the cost of such Investment, in
either case, less the cost of the disposition of such Investment;
provided, however, that at the time any such Investment is made
the Company delivers to the Trustee a resolution of its Board of
Directors to the effect that, for purposes of this "--Limitation
on Restricted Payments" covenant, such Investment constitutes a
Restricted Payment made after the Issue Date.
The foregoing provision will not be violated by
(i) any dividend on any class of Capital Stock of the Company or any
Restricted Subsidiary of the Company paid within 90 days after the
declaration thereof if, on the date when the dividend was declared, the
Company or such Restricted Subsidiary, as the case may be, could have paid
such dividend in accordance with the provisions of the Indenture;
(ii) the payments of distribution on any of the outstanding Trust
Securities, in accordance with the terms thereof as in effect on the Issue
Date;
(iii) the renewal, extension, refunding or refinancing of any
Indebtedness (including, without limitation, the Trust Securities)
otherwise permitted pursuant to the terms of the Indenture described in
clause (v) of "--Limitation on Indebtedness" above;
(iv) the exchange or conversion of any Indebtedness of the Company or
any Restricted Subsidiary of the Company (other than a Securitization
Subsidiary) for or into Capital Stock of the Company (other than
Disqualified Stock of the Company);
40
(v) any payments, loans or other advances made pursuant to any
employee benefit plans (including plans for the benefit of directors) or
employment agreements or other compensation arrangements, in each case as
approved by the Board of Directors of the Company in its good faith
judgment;
(vi) the redemption of the Company's rights issued pursuant to the
Amended and Restated Rights Agreement, dated as of May 10, 1994, between
the Company and Bank of New York, as successor Rights Agent, in an amount
per right issued thereunder not to exceed that in effect on the Issue Date;
(vii) so long as no Default or Event of Default has occurred and is
continuing, any investment made with the proceeds of a substantially
concurrent sale of Capital Stock of the Company (other than Disqualified
Stock); provided, however, that the proceeds of such sale of Capital Stock
shall not be (and have not been) included in subclause (b) of clause (3) of
the preceding paragraph;
(viii) the redemption, repurchase, retirement or other acquisition of
any Capital Stock of the Company or the Trust Securities, in exchange for
or out of the net cash proceeds of the substantially concurrent sale (other
than to a Restricted Subsidiary of the Company) of Capital Stock of the
Company (other than Disqualified Stock); provided, however, that the
proceeds of such sale of Capital Stock shall not be (and have not been)
included in subclause (b) of clause (3) of the preceding paragraph;
(ix) so long as no Default or Event of Default has occurred and is
continuing, the payment of cash dividends on the Company's Common Stock not
to exceed $0.085 per share then outstanding in any fiscal quarter of the
Company; or
(x) so long as no Default or Event of Default has occurred and is
continuing, the redemption, repurchase, retirement or other acquisition of
the Trust Securities or the repurchase, retirement or other acquisition of
the Company's common stock if after giving pro forma effect thereto
(including without limitation the financing thereof) the Company's
Consolidated Cash Flow Ratio would be greater than or equal to 3.00 to
1.00; provided, however, that the aggregate amount expended pursuant to
this clause (x) to redeem, repurchase, retire or otherwise acquire the
Company's common stock shall not exceed $35 million.
Each Restricted Payment described in clauses (i), (iv), (v) (only to the extent
such payment, loan or advance is outside the ordinary cause of business) and
(vi) of the previous sentence shall be taken into account for purposes of
computing the aggregate amount of all Restricted Payments pursuant to clause (3)
of the preceding paragraph.
Limitations Concerning Distributions and Transfers by Subsidiaries
The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of the Company to
(i) pay, directly or indirectly, dividends or make any other
distributions in respect of its Capital Stock or pay any Indebtedness or
other obligation owed to the Company or any Restricted Subsidiary of the
Company,
(ii) make loans or advances to the Company or any Restricted
Subsidiary of the Company or guarantee any Indebtedness of the Company or
any of its Restricted Subsidiaries or
(iii) transfer any of its property or assets to the Company or any
Restricted Subsidiary of the Company,
except for such encumbrances or restrictions existing under or by reason of
(a) any agreement in effect on the Issue Date (including
pursuant to the Revolving Credit Facility and agreements entered into
in connection therewith) as any such agreement is in effect on such
date,
(b) any agreement relating to any Indebtedness incurred by such
Restricted Subsidiary prior to the date on which such Restricted
Subsidiary was acquired by the Company and outstanding on such date
and not incurred in anticipation or contemplation of becoming a
Restricted Subsidiary and provided such encumbrance or restriction
shall not apply to any assets of the Company or its Subsidiaries other
than such Restricted Subsidiary,
41
(c) customary provisions contained in an agreement which has
been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Restricted Subsidiary;
provided, however, that such encumbrance or restriction is applicable
only to such Restricted Subsidiary or assets,
(d) an agreement effecting a renewal, exchange, refunding,
amendment or extension of Indebtedness incurred pursuant to an
agreement referred to in clause (a) or (b) above; provided, however,
that the provisions contained in such renewal, exchange, refunding,
amendment or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the
provisions contained in the agreement that is the subject thereof in
the reasonable judgment of the Board of Directors of the Company as
evidenced by a resolution of such Board of Directors filed with the
Trustee,
(e) the Indenture,
(f) applicable law,
(g) customary provisions restricting subletting or assignment
of any lease governing any leasehold interest of any Restricted
Subsidiary of the Company,
(h) Indebtedness or any other contractual requirements
(including pursuant to any corporate governance documents in the
nature of a charter or by-laws) of a Securitization Subsidiary or the
Special Purpose Trust arising in connection with a Qualified
Securitization Transaction or the Trust Obligations, respectively,
provided, however, that any such encumbrance or restriction applies
only to such Securitization Subsidiary or the Special Purpose Trust,
as the case may be, and obligations of Restricted Subsidiaries to
transfer Receivables and Receivables Related Assets to a
Securitization Subsidiary in a Qualified Securitization Transaction,
(i) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the type
referred to in clause (iii) of this covenant, or
(j) restrictions of the type referred to in clause (iii) of
this covenant contained in security agreements securing Indebtedness
of a Restricted Subsidiary of the Company to the extent that such
Liens were otherwise incurred in accordance with "--Limitation on
Liens" below and restrict the transfer of property subject to such
agreements.
Limitation on Liens
The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, Incur any Lien on or with respect
to any property or assets of the Company or any Restricted Subsidiary of the
Company owned on the Issue Date or thereafter acquired or on the income or
profits thereof to secure Indebtedness without making, or causing such
Restricted Subsidiary to make, effective provision for securing the Notes (and,
if the Company shall so determine, any other Indebtedness of the Company or such
Restricted Subsidiary, including Indebtedness which is subordinate in right of
payment to the Notes; provided, however, that Liens securing the Notes and any
Indebtedness pari passu with the Notes are senior to such Liens securing such
subordinated indebtedness) equally and ratably with such Indebtedness or, in the
event such Indebtedness is subordinate in right of payment to the Notes or the
Guarantees, prior to such Indebtedness, as to such property or assets for so
long as such Indebtedness shall be so secured. The foregoing restrictions shall
not apply to
(i) Liens securing Senior Indebtedness of the Company or Guarantor
Senior Indebtedness;
(ii) Liens securing only the Notes;
(iii) Liens in favor of the Company;
(iv) Liens to secure Indebtedness (including, without limitation,
Capital Lease Obligations) permitted by clause (viii) of the covenant
entitled "--Covenants--Limitation on Indebtedness; provided, however, that
(a) the aggregate principal amount of any Indebtedness secured by such a
Lien does not exceed 100% of such
42
purchase price or cost, (b) such Lien does not extend to or cover any other
property other than such item of property and any improvements on such
item, (c) the Indebtedness secured by such Lien is Incurred by the Company
or its Restricted Subsidiary within 180 days of the acquisition,
construction or improvement of such property and (d) the Incurrence of such
Indebtedness is permitted by the provisions of the Indenture described
under "--Limitation on Indebtedness" above;
(v) Liens on property existing immediately prior to the time of
acquisition thereof (and not created in anticipation or contemplation of
the financing of such acquisition),
(vi) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Restricted
Subsidiary of the Company (and not created in anticipation or contemplation
thereof);
(vii) Liens on property of the Company or any Restricted Subsidiary of
the Company in favor of the United States of America, any state thereof, or
any instrumentality of either to secure payments pursuant to any contract
or statute;
(viii) Liens granted in connection with any Qualified Securitization
Transaction;
(ix) Liens existing on the Issue Date securing Indebtedness existing
on the Issue Date;
(x) Liens to secure Indebtedness Incurred to extend, renew, refinance
or refund (or successive extensions, renewals, refinancings or refundings),
in whole or in part, any Indebtedness secured by Liens referred to in the
foregoing clauses (i)-(ix) so long as such Liens do not extend to any other
property and the principal amount of Indebtedness so secured is not
increased except for the amount of any premium required to be paid in
connection with such renewal, refinancing or refunding pursuant to the
terms of the Indebtedness renewed, refinanced or refunded or the amount of
any premium reasonably determined by the Company as necessary to accomplish
such renewal, refinancing or refunding by means of a tender offer, exchange
offer or privately negotiated repurchase, plus the expenses of the Company
or such Restricted Subsidiary incurred in connection with such renewal,
refinancing or refunding; and
(xi) Liens in favor of the Trustee as provided for in the Indenture on
money or property held or collected by the Trustee in its capacity as
Trustee.
Limitation on Certain Asset Dispositions
The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly, make one
or more Asset Dispositions for aggregate consideration of, or in respect of
assets having an aggregate fair market value of $5 million or more in any
12-month period, unless:
(i) the Company or the Restricted Subsidiary, as the case may be,
receives consideration for such Asset Disposition at least equal to the
fair market value of the assets sold or disposed of as determined by the
Board of Directors of the Company in good faith and evidenced by a
resolution of such Board of Directors filed with the Trustee;
(ii) not less than 75% of the consideration for the disposition
consists of cash or readily marketable cash equivalents, Replacement Assets
or the assumption of Indebtedness (other than non-recourse Indebtedness or
any Indebtedness subordinated to the Notes) of the Company or such
Restricted Subsidiary or other obligations relating to such assets (and
release of the Company or such Restricted Subsidiary from all liability on
the Indebtedness or other obligations assumed); and
(iii) all Net Available Proceeds, less any amounts invested within 360
days of such Asset Disposition in assets related to the business of the
Company (including the Capital Stock of another Person (other than the
Company or any Person that is a Restricted Subsidiary of the Company
immediately prior to such investment), provided, however, that immediately
after giving effect to any such investment (and not prior thereto) such
Person shall be a Guarantor), are applied, on or prior to the 360th day
after such Asset Disposition, unless and to the extent that the Company
shall determine to make an Offer to Purchase, either to (A) the permanent
43
reduction and prepayment of any Senior Indebtedness then outstanding
(including a permanent reduction of commitments in respect thereof) or (B)
the permanent reduction and repayment of any Guarantor Senior Indebtedness
then outstanding of any Restricted Subsidiary of the Company (including a
permanent reduction of commitments in respect thereof).
Any Net Available Proceeds from any Asset Disposition which is subject to the
immediately preceding sentence that are not applied as provided in the
immediately preceding sentence shall be used promptly after the expiration of
the 360th day after such Asset Disposition, or promptly after the Company shall
have earlier determined to not apply any Net Available Proceeds therefrom as
provided in subclause (A) or (B) of clause (iii) of the immediately preceding
sentence, to make an Offer to Purchase outstanding Notes at a purchase price in
cash equal to 100% of their principal amount plus accrued interest and
Liquidated Damages, if any, to the Purchase Date. Notwithstanding the foregoing,
the Company may defer making any Offer to Purchase outstanding Notes until there
are aggregate unutilized Net Available Proceeds from Asset Dispositions
otherwise subject to the two immediately preceding sentences equal to or in
excess of $5 million (at which time, the entire unutilized Net Available
Proceeds from Asset Dispositions otherwise subject to the two immediately
preceding sentences, and not just the amount in excess of $5 million, shall be
applied as required pursuant to this paragraph). If any Indebtedness of the
Company ranking pari passu with the Notes requires that prepayment of, or an
offer to prepay, such Indebtedness be made with any Net Available Proceeds, the
Company may apply such Net Available Proceeds pro rata (based on the aggregate
principal amount of the Notes then outstanding and the aggregate principal
amount (or accreted value, if less) of all such other Indebtedness then
outstanding) to the making of an Offer to Purchase the Notes in accordance with
the foregoing provisions and the prepayment or the offer to prepay such pari
passu Indebtedness. The Company shall make a further Offer to Purchase Notes in
an amount equal to any such Net Available Proceeds not utilized to actually
prepay such other Indebtedness at a purchase price in cash equal to 100% of the
principal amount of the Notes plus accrued interest to the Purchase Date if the
amount not so utilized equals or exceeds $5 million. Any remaining Net Available
Proceeds following the completion of the required Offer to Purchase may be used
by the Company for any other purpose (subject to the other provisions of the
Indenture) and the amount of Net Available Proceeds then required to be
otherwise applied in accordance with this covenant shall be reset to zero,
subject to any subsequent Asset Disposition. These provisions will not apply to
a transaction consummated in compliance with the provisions of the Indenture
described under "--Mergers, Consolidations or Sale of Assets" below.
In the event that the Company makes an Offer to Purchase the Notes,
the Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act and any violation of the provisions of the Indenture relating
to such Offer to Purchase occurring as a result of such compliance shall not be
deemed an Event of Default or an event that with the passing of time or giving
of notice, or both, would constitute an Event of Default.
Limitation on Issuance and Sale of Capital Stock of Subsidiaries
The Indenture will provide that the Company (a) will not, and will not
permit any Restricted Subsidiary of the Company to, transfer, convey, sell or
otherwise dispose of any shares of Capital Stock of such Restricted Subsidiary
or any other Restricted Subsidiary (other than to the Company or a Guarantor),
except that the Company and any Restricted Subsidiary may, in any single
transaction, sell all, but not less than all, of the issued and outstanding
Capital Stock of any Restricted Subsidiary to any Person, subject to complying
with the provisions of the Indenture described under "--Limitation on Certain
Asset Dispositions" above and (b) will not permit any Restricted Subsidiary of
the Company to issue shares of its Capital Stock (other than directors'
qualifying shares), or securities convertible into, or warrants, rights or
options to subscribe for or purchase shares of, its Capital Stock to any Person
other than to the Company or a Guarantor. This covenant will not apply to the
Trust Obligations or obligations incurred in connection with a transaction
similar to the Trust Obligations in connection with a refinancing, refunding or
replacement of the Trust Obligations.
Limitation on Transactions with Affiliates and Related Persons
The Indenture will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, enter into, directly or
indirectly, any transaction with an Affiliate or Related Person of the Company
(other than the Company or a Restricted Subsidiary of the Company), including,
without limitation, the purchase, sale, lease or exchange of property, the
rendering of any service, or the making of any guarantee, loan, advance or
44
Investment, either directly or indirectly, which transaction involves aggregate
consideration in excess of $500,000, unless
(i) such transaction is on terms no less favorable to the Company or
such Restricted Subsidiary, as the case may be, than those that could be
obtained in a comparable arm's-length transaction with an entity that is
not an Affiliate or a Related Person, which determination in the case of a
transaction or series of related transactions involving aggregate
consideration in excess of $2.5 million shall be evidenced by a resolution
of a majority of the disinterested directors of the Board of Directors of
the Company filed with the Trustee; and
(ii) with respect to any transaction contemplated by this section or a
series of related transactions involving aggregate consideration in excess
of $10 million, the Company delivers to the Trustee, an opinion as to the
fairness to the Holders of such transaction from a financial point of view
issued by an accounting, appraisal or investment banking firm of national
standing in the United States.
The provisions of this covenant shall not apply to
(i) any Qualified Securitization Transaction or the Trust Obligations,
(ii) any employment agreement entered into by the Company or any of
its Restricted Subsidiaries in the ordinary course of business,
(iii) transactions permitted by the provisions of the Indenture
described above under the caption "--Limitation on Restricted Payments"
above,
(iv) the payment of reasonable fees to directors of the Company or its
Restricted Subsidiaries, and
(v) Investments in employees in the ordinary course of business.
Change of Control
Within 30 days following the date of the consummation of a transaction
resulting in a Change of Control, the Company will commence an Offer to Purchase
all outstanding Notes at a purchase price in cash equal to 101% of their
principal amount plus accrued interest and Liquidated Damages, if any, to the
Purchase Date. Such Offer to Purchase will be consummated not earlier than 30
days and not later than 60 days after the commencement thereof. Each Holder
shall be entitled to tender all or any portion of the Notes owned by such Holder
pursuant to the Offer to Purchase, subject to the requirement that any portion
of a Note tendered must bear an integral multiple of $1,000 principal amount. A
"Change of Control" will be deemed to have occurred in the event that (whether
or not otherwise permitted by the Indenture), after the Issue Date (a) any
Person or any Persons acting together that would constitute a group (for
purposes of Section 13(d) of the Exchange Act, or any successor provision
thereto) (a "Group"), together with any Affiliates or Related Persons thereof,
shall "beneficially own" (as defined in Rule 13d-3 under the Exchange Act, or
any successor provision thereto) at least 35% of the voting power of the
outstanding Voting Stock of the Company; (b) any sale, lease or other transfer
(in one transaction or a series of related transactions) is made by the Company
or any of its Subsidiaries of all or substantially all of the consolidated
assets of the Company and its Restricted Subsidiaries to any Person other than a
Wholly Owned Subsidiary of the Company which is a Guarantor (other than a
Securitization Subsidiary or the Special Purpose Trust); (c) Continuing
Directors cease to constitute at least a majority of the Board of Directors of
the Company; or (d) the stockholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company.
In the event that the Company makes an Offer to Purchase the Notes,
the Company shall comply with any applicable securities laws and regulations,
including any applicable requirements of Section 14(e) of, and Rule 14e-1 under,
the Exchange Act and any violation of the provisions of the Indenture relating
to such Offer to Purchase occurring as a result of such compliance shall not be
deemed an Event of Default or an event that with the passing of time or giving
of notice, or both, would constitute an Event of Default.
With respect to the sale of assets referred to in the definition of
"Change of Control," the phrase "all or substantially all" of the assets of the
Company and its Restricted Subsidiaries will likely be interpreted under
applicable state law and will be dependent upon particular facts and
circumstances. As a result, there may be a degree of uncertainty in ascertaining
whether a sale or transfer of "all or substantially all" of the assets of the
45
Company has occurred. In addition, no assurances can be given that the Company
will be able to acquire Notes tendered upon the occurrence of a Change of
Control. The ability of the Company to pay cash to the Holders of Notes upon a
Change of Control may be limited by its then existing financial resources. The
Revolving Credit Facility contains certain covenants prohibiting, or requiring
waiver or consent of the lenders thereunder prior to, the repurchase of the
Notes upon a Change of Control and future debt agreements of the Company may
provide the same. If the Company does not obtain such waiver or consent or repay
such Indebtedness, the Company will remain prohibited from repurchasing the
Notes. In such event, the Company's failure to purchase tendered Notes would
constitute an Event of Default under the Indenture which would in turn
constitute a default under the Revolving Credit Facility and possibly other
Senior Indebtedness. In such circumstances, the subordination provisions of the
Indenture would likely restrict payments to the Holders of the Notes. None of
the provisions relating to a repurchase upon a Change of Control are waivable by
the Board of Directors of the Company or the Trustee.
The foregoing provisions will not prevent the Company from entering
into a transaction of the types described above with management or their
affiliates. In addition, such provisions may not necessarily afford the Holders
of the Notes protection in the event of a highly leveraged transaction,
including a reorganization, restructuring, merger or similar transaction
involving the Company that may adversely affect the Holders because such
transactions may not involve a shift in voting power or beneficial ownership, or
even if they do, may not involve a shift of the magnitude required under the
definition of Change of Control to trigger the provisions.
The Company will not be required to make an Offer to Purchase in
accordance with this covenant if a third party makes the Offer to Purchase in
the manner, at the times and otherwise in compliance with the requirements set
forth in the Indenture applicable to an Offer to Purchase made by the Company
and purchases all Notes properly tendered and not withdrawn under the Offer to
Purchase.
Additional Subsidiary Guarantees
The Indenture will provide that each Restricted Subsidiary which
guarantees or otherwise provides credit support (pursuant to the grant of a
security interest or otherwise) for any obligation of the Company or any of its
Subsidiaries under the Revolving Credit Facility and each future Restricted
Subsidiary that guarantees or otherwise provides credit support (pursuant to the
grant of a security interest or otherwise) for any obligation of the Company or
any of its Subsidiaries under the Revolving Credit Facility will become a
Guarantor of the Notes and execute a supplemental indenture and deliver an
opinion of counsel satisfactory to the Trustee within 10 business days after end
of the fiscal quarter in which it was acquired or created.
Provision of Financial Information
Whether or not the Company is subject to Section 13(a) or 15(d) of the
Exchange Act, or any successor provision thereto, the Company shall file with
the Commission the annual reports, quarterly reports and other documents which
the Company would have been required to file with the Commission pursuant to
such Section 13(a) or 15(d) or any successor provision thereto if the Company
were so required, such documents to be filed with the Commission on or prior to
the respective dates (the "Required Filing Dates") by which the Company would
have been required so to file such documents if the Company were so required.
The Company shall also in any event (a) within 15 days of each Required Filing
Date (i) transmit by mail to all Holders, as their names and addresses appear in
the Note Register, without cost to such Holders, and (ii) file with the Trustee,
copies of the annual reports, quarterly reports and other documents which the
Company is required to file with the Commission pursuant to the preceding
sentence, and (b) if, notwithstanding the preceding sentence, filing such
documents by the Company with the Commission is not permitted under the Exchange
Act, promptly upon written request supply copies of such documents to any
prospective Holder.
Merger, Consolidation or Sale of Assets
The Company may not, directly or indirectly: (1) consolidate or merge
with or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:
46
(1) either: (a) the Company is the surviving corporation; or (b) the
Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, conveyance
or other disposition has been made is a corporation organized or existing
under the laws of the United States, any state of the United States or the
District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger
(if other than the Company) or the Person to which such sale, assignment,
transfer, conveyance or other disposition has been made assumes all the
obligations of the Company under the Notes, the Indenture and the
Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) the Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition has been made will,
on the date of such transaction after giving pro forma effect thereto and
any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant
described above under the caption "--Limitation on Indebtedness."
The provisions of this paragraph shall not apply to any merger of a
Restricted Subsidiary (other than the Securitization Subsidiary or O&M Trust) of
the Company with or into the Company or a Restricted Subsidiary of the Company
(other than a Securitization Subsidiary or O&M Trust).
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary to be
an Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by the Company and its
Restricted Subsidiaries in the Restricted Subsidiary properly designated will be
deemed to be an Investment made as of the time of the designation and will
reduce the amount available for Restricted Payments under the first paragraph of
the covenant described above under the caption "--Limitation on Restricted
Payments" or Permitted Investments, as determined by the Company. That
designation will only be permitted if the Investment would be permitted at that
time and if the Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Default.
Events of Default
The following will be Events of Default under the Indenture:
(a) failure to pay principal of (or premium, if any, on) any Note when
due (whether or not prohibited by the provisions of the Indenture described
under "--Subordination" above);
(b) failure to pay any interest on, or Liquidated Damages with respect
to, any Note when due, continued for 30 days (whether or not prohibited by
the provisions of the Indenture described under "--Subordination" above);
(c) default in the payment of principal of and interest on Notes
required to be purchased pursuant to an Offer to Purchase as described
under "--Covenants--Change of Control" and "--Covenants --Limitation on
Certain Asset Dispositions" above when due and payable (whether or not
prohibited by the provisions of the Indenture described under
"--Subordination" above);
(d) failure to perform or comply with any of the provisions described
under "--Covenants --Mergers, Consolidations or Sale of Assets" above;
(e) failure to perform any other covenant or agreement of the Company
under the Indenture or the Notes continued for 30 days after written notice
to the Company by the Trustee or Holders of at least 25% in aggregate
principal amount of outstanding Notes;
47
(f) default under the terms of one or more instruments evidencing or
securing Indebtedness of the Company or any Restricted Subsidiary of the
Company having an outstanding principal amount of $10 million or more
individually or in the aggregate that has resulted in the acceleration of
the payment of such Indebtedness or failure to pay principal when due at
the stated maturity of any such Indebtedness;
(g) the rendering of a final judgment or judgments (not subject to
appeal) against the Company or any Restricted Subsidiary of the Company in
an amount of $5 million or more (net of any amounts covered by reputable
and creditworthy insurance companies) which remains undischarged or
unstayed for a period of 60 days after the date on which the right to
appeal has expired;
(h) certain events of bankruptcy, insolvency or reorganization
affecting the Company or any Guarantor; and
(i) the Guarantee of any Guarantor ceases to be in full force and
effect (other than in accordance with the terms of such Guarantee and the
Indenture) or is declared null and void and unenforceable or found to be
invalid or any Guarantor denies its liability under its Guarantee (other
than by reason of a release of such Guarantor from its Guarantee in
accordance with the terms of the Indenture and such Guarantee).
Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case an Event of Default (as defined) shall occur and be
continuing, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction of any of the
Holders, unless such Holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the Holders of a majority in aggregate principal amount of the outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee.
If an Event of Default (other than an Event of Default with respect to
the Company described in clause (h) of the preceding paragraph) shall occur and
be continuing, either the Trustee or the Holders of at least 25% in aggregate
principal amount of the outstanding Notes may accelerate the maturity of all
Notes; provided, however, that after such acceleration, but before a judgment or
decree based on acceleration, the Holders of a majority in aggregate principal
amount of outstanding Notes may, under certain circumstances, rescind and annul
such acceleration if all Events of Default, other than the non-payment of
accelerated principal, have been cured or waived as provided in the Indenture.
If an Event of Default specified in clause (h) of the preceding paragraph with
respect to the Company occurs, the outstanding Notes will ipso facto become
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder. For information as to waiver of defaults, see
"--Modification and Waiver."
The Indenture provides that the Trustee shall, within 30 days after
the occurrence of any Default or Event of Default with respect to the Notes,
give the Holders thereof notice of all uncured Defaults or Events of Default
known to it; provided, however, that, except in the case of an Event of Default
or a Default in payment with respect to the Notes or a Default or Event of
Default in complying with "--Covenants" "--Mergers, Consolidations or Sale of
Assets," the Trustee shall be protected in withholding such notice if and so
long as the Board of Directors or responsible officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders of the Notes.
No Holder of any Note will have any right to institute any proceeding
with respect to the Indenture or for any remedy thereunder, unless such Holder
shall have previously given to the Trustee written notice of a continuing Event
of Default and unless the Holders of at least 25% in aggregate principal amount
of the outstanding Notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as Trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
Note for enforcement of payment of the principal of and premium, if any, or
interest on such Note on or after the respective due dates expressed in such
Note.
The Company will be required to furnish to the Trustee annually a
statement as to the performance by it of certain of its obligations under the
Indenture and as to any default in such performance.
48
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of
its obligations discharged with respect to the outstanding Notes and all
obligations of the Guarantors discharged with respect to their Subsidiary
Guarantees ("Legal Defeasance") except for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, or interest or premium and Liquidated Damages,
if any, on such Notes when such payments are due from the trust referred to
below;
(2) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost
or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee,
and the Company's and the Guarantor's obligations in connection therewith;
and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to
have the obligations of the Company and the Guarantors released with respect to
certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with those covenants will not constitute a
Default or Event of Default with respect to the Notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default and Remedies" will no longer constitute an Event of Default with respect
to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders of the Notes, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in U.S.
dollars and non-callable Government Securities, in amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of, or interest and premium and
Liquidated Damages, if any, on the outstanding Notes on the stated maturity
or on the applicable redemption date, as the case may be, and the Company
must specify whether the Notes are being defeased to maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, the Company has delivered to the
Trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date
of the Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such opinion
of counsel will confirm that, the Holders of the outstanding Notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company has delivered to
the Trustee an opinion of counsel reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default has occurred and is continuing on
the date of such deposit (other than a Default or Event of Default
resulting from the borrowing of funds to be applied to such deposit);
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
49
(6) the Company must deliver to the Trustee an officers' certificate
stating that the deposit was not made by the Company with the intent of
preferring the Holders of Notes over the other creditors of the Company
with the intent of defeating, hindering, delaying or defrauding creditors
of the Company or others; and
(7) the Company must deliver to the Trustee an officers' certificate
and an opinion of counsel, each stating that all conditions precedent
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
Governing Law
The Indenture, the Notes and the Guarantees will be governed by the
laws of the State of New York without regard to principles of conflicts of laws.
Modification and Waiver
Modifications and amendments of the Indenture may be made by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the outstanding Notes; provided, however, that no
such modification or amendment may, without the consent of the Holder of each
Note affected thereby,
(a) change the Stated Maturity of the principal of or any installment
of interest on any Note or alter the optional redemption or repurchase
provisions of any Note or the Indenture in a manner adverse to the holders
of the Notes,
(b) reduce the principal amount of (or the premium) of any Note,
(c) reduce the rate of or extend the time for payment of interest on
any Note,
(d) change the place or currency of payment of principal of (or
premium) or interest on any Note,
(e) modify any provisions of the Indenture relating to the waiver of
past defaults (other than to add sections of the Indenture subject thereto)
or the right of the holders to institute suit for the enforcement of any
payment on or with respect to any Note or Guarantee or the modification and
amendment of the Indenture and the Notes (other than to add sections of the
Indenture or the Notes which may not be amended, supplemented or waived
without the consent of each holder affected),
(f) reduce the percentage of the principal amount of outstanding Notes
necessary for amendment to or waiver of compliance with any provision of
the Indenture or the Notes or for waiver of any Default,
(g) waive a default in the payment of principal of, interest on,
Liquidated Damages on, or redemption payment with respect to, any Note
(except a recision of acceleration of the Notes by the Holders as provided
in the Indenture and a waiver of the payment default that resulted from
such acceleration),
(h) modify the ranking or priority of the Notes or the Guarantee of
any Guarantor or modify the definition of Senior Indebtedness or Guarantor
Senior Indebtedness or amend or modify the subordination provisions of the
Indenture in any manner adverse to the Holder,
(i) release any Guarantor from any of its obligations under its
Guarantee or the Indenture otherwise than in accordance with the Indenture,
or
(j) modify the provisions relating to any Offer to Purchase (required
pursuant to the covenant described under the caption "--Change of Control"
in a manner materially adverse to the Holders.
The Holders of a majority in aggregate principal amount of the
outstanding Notes, on behalf of all Holders of Notes, may waive compliance by
the Company with certain restrictive provisions of the Indenture. Subject to
certain rights of the Trustee, as provided in the Indenture, the Holders of a
majority in aggregate principal amount of the outstanding Notes, on behalf of
all Holders of Notes, may waive any past default under the Indenture, except a
default in the payment of principal, premium or interest or a default arising
from failure to purchase any Note
50
tendered pursuant to an Offer to Purchase, or a default in respect of a
provision that under the Indenture cannot be modified or amended without the
consent of the Holder of each outstanding Note affected.
Satisfaction and Discharge
The Indenture will be discharged and will cease to be of further
effect as to all Notes issued thereunder, when:
(1) either:
(a) all Notes that have been authenticated, except lost, stolen
or destroyed Notes that have been replaced or paid and Notes for whose
payment money has been deposited in trust and thereafter repaid to the
Company, have been delivered to the Trustee for cancellation; or
(b) all Notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the mailing of a
notice of redemption or otherwise or will become due and payable
within one year and the Company or any Guarantor has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in
trust solely for the benefit of the Holders, cash in U.S. dollars,
non-callable Government Securities, or a combination of cash in U.S.
dollars and non-callable Government Securities, in amounts as will be
sufficient without consideration of any reinvestment of interest, to
pay and discharge the entire indebtedness on the Notes not delivered
to the Trustee for cancellation for principal, premium and Liquidated
Damages, if any, and accrued interest to the date of maturity or
redemption;
(2) no Default or Event of Default has occurred and is continuing on
the date of the deposit or will occur as a result of the deposit and the
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company or any Guarantor
is a party or by which the Company or any Guarantor is bound;
(3) the Company or any Guarantor has paid or caused to be paid all
sums payable by it under the Indenture; and
(4) the Company has delivered irrevocable instructions to the Trustee
under the Indenture to apply the deposited money toward the payment of the
Notes at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an officers' certificate and an
opinion of counsel to the trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
The Trustee
If the Trustee is a creditor of the Company or any Guarantor, the
Indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
occurs and is continuing, the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of Notes, unless such Holder has offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
Additional Information
51
Anyone who receives this prospectus may obtain a copy of the Indenture
and Registration Rights Agreement without charge by writing to Owens & Minor,
Inc., 4800 Cox Road, Glen Allen, Virginia 23060, Attention: General Counsel.
Book-Entry, Delivery and Form
Except as set forth below, Notes will be issued in registered, global
form in minimum denominations of $1,000 and integral multiples of $1,000 in
excess of $1,000.
Notes initially will be represented by one or more notes in
registered, global form without interest coupons (collectively, the "Global
Notes"). The Global Notes will be deposited upon issuance with the Trustee as
custodian for The Depository Trust Company ("DTC"), in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant in DTC as described below.
Except as set forth below, the Global Notes may be transferred, in
whole and not in part, only to another nominee of DTC or to a successor of DTC
or its nominee. Beneficial interests in the Global Notes may not be exchanged
for notes in certificated form except in the limited circumstances described
below. See "--Exchange of Global Notes for Certificated Notes." Except in the
limited circumstances described below, owners of beneficial interests in the
Global Notes will not be entitled to receive physical delivery of notes in
certificated form.
Depository Procedures
The following description of the operations and procedures of DTC are
provided solely as a matter of convenience. These operations and procedures are
solely within the control of DTC's settlement system and are subject to changes
by DTC. The Company takes no responsibility for these operations and procedures
and urges investors to contact the system or their participants directly to
discuss these matters.
DTC has advised the Company that DTC is a limited-purpose trust
company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers (including the Initial Purchasers),
banks, trust companies, clearing corporations and certain other organizations.
Access to DTC's system is also available to other entities such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of DTC only through the Participants or the
Indirect Participants. The ownership interests in, and transfers of ownership
interests in, each security held by or on behalf of DTC are recorded on the
records of the Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures
established by it:
(1) Upon deposit of the Global Notes, DTC will credit the accounts of
Participants with portions of the principal amount of the Global Notes; and
(2) ownership of these interests in the Global Notes will be shown on,
and the transfer of ownership of these interests will be effected only
through, records maintained by DTC (with respect to the Participants) or by
the Participants and the Indirect Participants (with respect to other
owners of beneficial interest in the Global Notes).
Investors in the Global Notes who are Participants in DTC's system may
hold their interests therein directly through DTC. Investors in the Global Notes
who are not Participants may hold their interests therein indirectly through
organizations that are Participants in such system. All interests in a Global
Note may be subject to the procedures and requirements of DTC. The laws of some
states require that certain Persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such Persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants, the ability of a Person having beneficial interests in
a Global Note to pledge such interests to Persons that do not participate in the
DTC system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests.
52
Except as described below, owners of interest in the Global Notes will
not have notes registered in their names, will not receive physical delivery of
notes in certificated form and will not be considered the registered owners or
"Holders" thereof under the Indenture for any purpose.
Payments in respect of the principal of, and interest and premium on a
Global Note registered in the name of DTC or its nominee will be payable to DTC
in its capacity as the registered Holder under the Indenture. Under the terms of
the Indenture, the Company and the Trustee will treat the Persons in whose names
the Notes, including the Global Notes, are registered as the owners of the Notes
for the purpose of receiving payments and for all other purposes. Consequently,
neither the Company, the Trustee nor any agent of the Company or the Trustee has
or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interest in the Global Notes or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Notes; or
(2) any other matter relating to the actions and practices of DTC or
any of its Participants or Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of
any payment in respect of securities such as the Notes (including principal and
interest), is to credit the accounts of the relevant Participants with the
payment on the payment date unless DTC has reason to believe it will not receive
payment on such payment date. Each relevant Participant is credited with an
amount proportionate to its beneficial ownership of an interest in the principal
amount of the relevant security as shown on the records of DTC. Payments by the
Participants and the Indirect Participants to the beneficial owners of Notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of DTC, the Trustee or the Company. Neither the Company
nor the Trustee will be liable for any delay by DTC or any of its Participants
in identifying the beneficial owners of the Notes, and the Company and the
Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee for all purposes.
Transfers between Participants in DTC will be effected in accordance
with DTC's procedures, and will be settled in same-day funds.
DTC has advised the Company that it will take any action permitted to
be taken by a Holder of Notes only at the direction of one or more Participants
to whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC reserves the right
to exchange the Global Notes for legended notes in certificated form, and to
distribute such notes to its Participants.
Although DTC has agreed to the foregoing procedures to facilitate
transfers of interests in the Global Notes among participants in DTC, it is
under no obligation to perform or to continue to perform such procedures, and
may discontinue such procedures at any time. Neither the Company nor the Trustee
nor any of their respective agents will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
Exchange of Global Notes for Certificated Notes
A Global Note is exchangeable for definitive Notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies the Company that it is unwilling or unable to
continue as depositary for the Global Notes and the Company fails to
appoint a successor depositary or (b) has ceased to be a clearing agency
registered under the Exchange Act;
(2) the Company, at its option, notifies the Trustee in writing that
it elects to cause the issuance of the Certificated Notes; or
53
(3) there has occurred and is continuing a Default or Event of Default
with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged
for Certificated Notes upon prior written notice given to the Trustee by or on
behalf of DTC in accordance with the Indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures).
Exchange of Certificated Notes for Global Notes
Notes in certificated form may not be exchanged for beneficial
interests in any Global Note unless the transferor first delivers to the Trustee
a written certificate (in the form provided in the Indenture) to the effect that
such transfer will comply with the appropriate transfer restrictions applicable
to the notes.
Same Day Settlement and Payment
The Company will make payments in respect of the Notes represented by
the Global Notes (including principal, premium, if any, and interest by wire
transfer of immediately available funds to the accounts specified by the Global
Note Holder. The Company will make all payments of principal, interest and
premium with respect to Certificated Notes by wire transfer of immediately
available funds to the accounts specified by the Holders of the Certificated
Notes or, if no such account is specified, by mailing a check to each such
Holder's registered address. The Notes represented by the Global Notes are
expected to trade in DTC's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such Notes will, therefore, be required by
DTC to be settled in immediately available funds. The Company expects that
secondary trading in any Certificated Notes will also be settled in immediately
available funds.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in
the Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Restricted Subsidiary of such
specified Person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other Person merging with or
into, or becoming a Restricted Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person (limited to the maximum amount of liability of the
specified Person with respect to such Lien).
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with any specified Person. For purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, transfer or other disposition
(including, without limitation, by merger, consolidation or sale-and-leaseback
transaction) of (i) shares of Capital Stock of a Restricted Subsidiary of the
Company (other than directors' qualifying shares) or (ii) property or assets of
the Company or any Restricted Subsidiary of the Company; provided, however, that
an Asset Disposition shall not include (a) any sale, transfer or other
disposition of shares of Capital Stock, property or assets by a Restricted
Subsidiary of the Company to the Company or to any Guarantor, (b) any sale,
transfer or other disposition of defaulted receivables for collection or any
sale, transfer or other disposition of property or assets in the ordinary course
of business, (c) any isolated sale, transfer or other disposition that does not
involve aggregate consideration in excess of $500,000 individually, (d) the
grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registrations therefor and other similar intellectual
property, (e) any Lien (or foreclosure thereon) securing Indebtedness to the
54
extent that such Lien is granted in compliance with "--Covenants--Limitation on
Liens" above, (f) any Restricted Payment permitted by "--Covenants--Limitation
on Restricted Payments" above, (g) any disposition of assets or property in the
ordinary course of business to the extent such property or assets are obsolete,
worn-out or no longer useful in the Company's or any of its Subsidiaries'
business, (h) any sale and leaseback of the Company's principal corporate
headquarters consummated within 180 days after the completion of the
construction thereof, or (i) any Qualified Securitization Transaction.
"Average Life" means, as of the date of determination, with respect to any
Indebtedness for borrowed money or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the number of years from the date of
determination to the dates of each successive scheduled principal or liquidation
value payments of such Indebtedness or Preferred Stock, respectively, and the
amount of such principal or liquidation value payments, by (ii) the sum of all
such principal or liquidation value payments.
"Capital Lease Obligations" of any Person means the obligations to pay rent
or other amounts under a lease of (or other Indebtedness arrangements conveying
the right to use) real or personal property of such Person which are required to
be classified and accounted for as a capital lease or liability on the face of a
balance sheet of such Person in accordance with GAAP. The amount of such
obligations shall be the capitalized amount thereof in accordance with GAAP and
the stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such lease
may be terminated by the lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock of
such Person (including any Preferred Stock outstanding on the Issue Date);
provided that the Trust Preferred Securities shall not be considered Capital
Stock of the Company.
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding up
of such Person, to shares of Capital Stock of any other class of such Person.
"Consolidated Cash Flow Available for Fixed Charges" of any Person means
for any period the Consolidated Net Income of such Person and its Restricted
Subsidiaries for such period increased (to the extent Consolidated Net Income
for such period has been reduced thereby) by the sum of (without duplication)
(i) Consolidated Interest Expense of such Person and its Restricted Subsidiaries
for such period, plus (ii) Consolidated Income Tax Expense of such Person for
such period, plus (iii) the consolidated depreciation and amortization expense
included in the income statement of such Person and its Restricted Subsidiaries
for such period, plus (iv) any other non-cash charges to the extent deducted
from or reflected in such Consolidated Net Income except for any non-cash
charges that represent accruals of, or reserves for, cash disbursements to be
made in any future accounting period.
"Consolidated Cash Flow Ratio" of any Person means for any period the ratio
of (i) Consolidated Cash Flow Available for Fixed Charges of such Person for
such period to (ii) the sum of (A) Consolidated Interest Expense of such Person
and its Restricted Subsidiaries for such period, plus (B) the annual interest
expense with respect to any Indebtedness proposed to be Incurred by such Person
or its Restricted Subsidiaries, minus (C) Consolidated Interest Expense of such
Person to the extent included in clause (ii)(A) with respect to any Indebtedness
that will no longer be outstanding as a result of the Incurrence of the
Indebtedness proposed to be Incurred, plus (D) the annual interest expense with
respect to any other Indebtedness Incurred by such Person or its Restricted
Subsidiaries since the end of such period to the extent not included in clause
(ii)(A), minus (E) Consolidated Interest Expense of such Person and its
Restricted Subsidiaries to the extent included in clause (ii)(A) with respect to
any Indebtedness that no longer is outstanding as a result of the Incurrence of
the Indebtedness referred to in clause (ii)(D); provided, however, that in
making such computation, the Consolidated Interest Expense of such Person and
its Restricted Subsidiaries attributable to interest on any Indebtedness bearing
a floating interest rate shall be computed on a pro forma basis as if the rate
in effect on the date of computation (after giving effect to any hedge in
respect of such Indebtedness that will, by its terms, remain in effect until the
earlier of the maturity of such Indebtedness or the date one year after the date
of such determination) had been the applicable rate for the entire period;
provided, further, however, that, in the event such Person or any of its
Restricted Subsidiaries has made any Asset Dispositions or acquisitions of
assets not in the ordinary course of business (including acquisitions of other
Persons by merger, consolidation or purchase of Capital Stock) during or after
such period and on or prior to the date of measurement, such computation shall
be made on a pro forma basis as if the
55
Asset Dispositions or acquisitions had taken place on the first day of such
period. Calculations of pro forma amounts in accordance with this definition
shall be done in accordance with Rule 11-02 of Regulation S-X under the
Securities Act of 1933 or any successor provision.
"Consolidated Income Tax Expense" of any Person means for any period the
consolidated provision for income taxes of such Person and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" for any Person means for any period the
consolidated interest expense included in a consolidated income statement
(without deduction of interest or finance charge income of such Person except to
the extent such interest or finance charge income is received by the Company or
a Restricted Subsidiary in cash) of such Person and its Restricted Subsidiaries
except to the extent such net income is received by the Company or a Restricted
Subsidiary in cash of such Person for such period calculated on a consolidated
basis in accordance with GAAP, plus discount on receivables sold or other
discount related to any receivables securitization transaction (including any
Qualified Securitization Transaction), plus the product of (a) all dividends or
distributions, whether paid or accrued and whether or not in cash, on any series
of preferred stock or the Trust Preferred Securities of such Person or any of
its Restricted Subsidiaries, other than dividends on Equity Interests payable
solely in Equity Interests of the Company (other than Disqualified Stock) or to
the Company or a Restricted Subsidiary, multiplied by (to the extent such
dividends or distributions are not deductible for federal income tax purposes)
(b) a fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local statutory tax rate
of such Person, expressed as a decimal, in each case, on a consolidated basis
and in accordance with GAAP.
"Consolidated Net Income" of any Person means for any period the
consolidated net income (or loss) of such Person for such period determined on a
consolidated basis in accordance with GAAP; provided, however, that there shall
be excluded therefrom (a) the net income (or loss) of any Person acquired by
such Person or a Restricted Subsidiary of such Person in a pooling-of-interests
transaction for any period prior to the date of such transaction, (b) the net
income (but not net loss) of any Restricted Subsidiary of such Person which is
subject to restrictions which prevent or limit the payment of dividends or the
making of distributions to such Person to the extent of such restrictions
(regardless of any waiver thereof), (c) the net income of any Person that is not
a Restricted Subsidiary of such Person, except to the extent of the amount of
dividends or other distributions representing such Person's proportionate share
of such other Person's net income for such period actually paid in cash to such
Person by such other Person during such period, (d) gains or losses on Asset
Dispositions by such Person or its Restricted Subsidiaries, (e) all
extraordinary gains and extraordinary losses determined in accordance with GAAP,
(f) in the case of a successor to the referent Person by consolidation or merger
or as a transferee of the referent Person's assets, any earnings (or losses) of
the successor corporation prior to such consolidation, merger or transfer of
assets and (g) the Net Income (but not loss) of any Unrestricted Subsidiary will
be excluded, whether or not distributed to the specified Person or one of its
Subsidiaries.
"Continuing Director" means a director who either was a member of the Board
of Directors of the Company on the Issue Date or who became a director of the
Company subsequent to the Issue Date and whose election, or nomination for
election by the Company's shareholders, was duly approved by a majority of the
Continuing Directors then on the Board of Directors of the Company, either by a
specific vote or by approval of the proxy statement issued by the Company on
behalf of the entire Board of Directors of the Company in which such individual
is named as nominee for director.
"Default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default.
"Designated Senior Indebtedness" means (i) so long as the Revolving Credit
Facility is outstanding, the Senior Indebtedness incurred under the Revolving
Credit Facility and (ii) thereafter, any other Senior Indebtedness which has at
the time of initial issuance an aggregate outstanding principal amount in excess
of $25 million which has been designated as Designated Senior Indebtedness by
the Board of Directors of the Company at the time of initial issuance in a
resolution delivered to the Trustee.
"Disqualified Stock" of any Person means any Capital Stock of such Person
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
56
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the final maturity of the Notes.
"Eligible Accounts Receivable" means the face value of all "eligible
receivables" of the Company and its Restricted Subsidiaries party to any credit
agreement constituting the Revolving Credit Facility (as such term is defined
for purposes of such credit agreement).
"Eligible Inventory" means the face value of all "eligible inventory" of
the Company and its Restricted Subsidiaries party to any credit agreement
constituting the Revolving Credit Facility (as such term is defined for purposes
of such credit agreement).
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the Commission thereunder.
"GAAP" means generally accepted accounting principles, consistently
applied, as in effect on the Issue Date in the United States of America, as set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as is approved by a significant segment of the
accounting profession.
"guarantee" by any Person means any obligation, contingent or otherwise, of
such Person guaranteeing any Indebtedness of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, and including, without
limitation, any obligation of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any security for the payment
of such Indebtedness, (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and "guaranteed,"
"guaranteeing" and "guarantor" shall have meanings correlative to the
foregoing); provided, however, that the guarantee by any Person shall not
include endorsements by such Person for collection or deposit, in either case,
in the ordinary course of business.
"Guarantee" means the guarantee of the Notes by each Guarantor under the
Indenture.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, at
any date, (i) the maximum amount of all Indebtedness of such Guarantor under the
Revolving Credit Facility, including principal, premium, if any, and interest on
such Indebtedness and all other amounts due on or in connection with such
Indebtedness including all charges, fees and expenses (without regard to any
limitation set forth in the terms thereof and whether or not such Indebtedness
is invalidated or set aside or otherwise legally unenforceable, unless due to
willful misconduct or bad faith on the part of the lenders under the Revolving
Credit Facility or their agent), (ii) all other Indebtedness of such Guarantor
for borrowed money, including principal, premium, if any, and interest on such
Indebtedness, unless the instrument under which such Indebtedness of such
Guarantor for borrowed money is created, incurred, assumed or guaranteed
expressly provides that such Indebtedness for borrowed money is not senior or
superior in right of payment to the Guarantee of such Guarantor, and all
renewals, extensions, modifications, amendments or refinancings thereof and
(iii) all interest on any Indebtedness referred to in clauses (i) and (ii)
during the pendency of any bankruptcy or insolvency proceeding, whether or not
allowed thereunder. Notwithstanding the foregoing, Guarantor Senior Indebtedness
shall not include (a) Indebtedness which is pursuant to its terms or any
agreement relating thereto or by operation of law subordinated or junior in
right of payment or otherwise to any other Indebtedness of such Guarantor
(without regard, with respect to the Revolving Credit Facility, to any
limitation set forth in the terms thereof and other than, with respect to the
Revolving Credit Facility, due to the legal invalidity thereof, unless due to
the willful misconduct or bad faith on the part of the lenders under the
Revolving Credit Facility or their agent); provided, however, that no
Indebtedness of such Guarantor shall be deemed to be subordinated or junior in
right of payment or otherwise to any other Indebtedness of such Guarantor solely
by reason of such other Indebtedness being secured and such Indebtedness not
being secured, (b) the Guarantees, (c) any Indebtedness of such Guarantor to any
of its Subsidiaries, (d) any Indebtedness which, when incurred and without
respect to any election under Section 1111(b) of the Bankruptcy Code, is without
recourse to
57
such Guarantor, and (e) any Indebtedness or other obligation of such Guarantor
pursuant to or in connection with any Qualified Securitization Transaction
(whether entered into before or after the Issue Date) or the Trust Obligations.
"Guarantors" means (i) each of Owens & Minor Medical, Inc., a Virginia
corporation; National Medical Supply Corporation, a Delaware corporation; Owens
& Minor West, Inc., a California corporation; Koley's Medical Supply, Inc., a
Nebraska corporation and Stuart Medical, Inc., a Pennsylvania corporation; and
(ii) each future Restricted Subsidiary that guarantees or otherwise provides
credit support (pursuant to the grant of a security interest or otherwise) for
any obligation of the Company or any of its Subsidiaries under the Revolving
Credit Facility.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "Incurrence," "Incurred" and "Incurring" shall have meanings
correlative to the foregoing). Indebtedness of any Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company (or is merged into or consolidates with the Company or any of its
Subsidiaries), whether or not such Indebtedness was incurred in connection with,
or in contemplation of, such Person becoming a Subsidiary of the Company (or
being merged into or consolidated with the Company or any of its Subsidiaries),
shall be deemed Incurred at the time any such Person becomes a Subsidiary of the
Company or merges into or consolidates with the Company or any of its
Subsidiaries.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business), (v) every Capital Lease
Obligation of such Person, (vi) every net obligation under interest rate swap or
similar agreements or foreign currency hedge, exchange or similar agreements of
such Person and (vii) every obligation of the type referred to in clauses (i)
through (vi) of another Person and all dividends of another Person the payment
of which, in either case, such Person has guaranteed or is responsible or liable
for, directly or indirectly, as obligor, guarantor or otherwise. Indebtedness
shall include the liquidation preference and any mandatory redemption payment
obligations in respect of any Disqualified Stock of the Company, and any
Preferred Stock of a Restricted Subsidiary of the Company. Indebtedness shall
never be calculated taking into account any cash and cash equivalents held by
such Person. Indebtedness shall not include (A) obligations of the Company or
its Subsidiaries in respect of loans against life insurance policies of which
any of them is the owner not in excess of the aggregate cash values thereof, (B)
guarantees entered into prior to the Issue Date by the Company or its
Subsidiaries in respect of Indebtedness of their customers in an aggregate
amount of not more than $5 million or (C) the obligations of the Company or its
Subsidiaries in respect of any Qualified Securitization Transaction.
"Initial Securitization" means the transactions entered into in connection
with the Receivables Purchase Agreement dated as of July 14, 2000, among O&M
Funding Corp., the Company, Falcon Asset Securitization Corporation, Receivables
Capital Corporation, Liberty Street Funding Corp., Bank One, NA, Bank of
America, National Association, and The Bank of Nova Scotia as amended, restated,
supplemented, replaced or otherwise modified from time to time.
"Investment" by any Person means any direct or indirect loan, advance,
guarantee or other extension of credit or capital contribution to (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Indebtedness issued by any other Person.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Moody's and BBB- (or the equivalent) by S&P.
"Issue Date" means the original issue date of the Notes.
58
"Junior Subordinated Debentures" shall mean up to $142,268,050 aggregate
principal amount of Junior Convertible Subordinated Debentures pursuant to the
Junior Subordinated Indenture dated as of May 13, 1998 between the Company and
the First National Bank of Chicago, as Trustee, and the First Supplemental
Indenture dated as of May 13, 1998 to such Indenture, as in effect on the Issue
Date.
"Lien" means, with respect to any property or assets, any mortgage or deed
of trust, pledge, hypothecation, assignment, security interest, lien, charge,
easement (other than any easement not materially impairing usefulness or
marketability), encumbrance, preference, priority or other security agreement
with respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Moody's" means Moody's Investors Service, Inc. or any successor to the
rating agency business thereof.
"Net Available Proceeds" from any Asset Disposition by any Person means
cash or readily marketable cash equivalents received (including by way of sale
or discounting of a note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiror of Indebtedness or other obligations relating to such properties or
assets or received in any other non-cash form) therefrom by such Person,
including any cash received by way of deferred payment or upon the monetization
or other disposition of any non-cash consideration (including notes or other
securities) received in connection with such Asset Disposition, net of (i) all
legal, title and recording tax expenses, commissions and other fees and expenses
incurred and all federal, state, foreign and local taxes required to be accrued
as a liability as a consequence of such Asset Disposition, (ii) all payments
made by such Person or its Restricted Subsidiaries on any Indebtedness which is
secured by such assets (other than Senior Indebtedness or Guarantor Senior
Indebtedness) in accordance with the terms of any Lien upon or with respect to
such assets or which must by the terms of such Lien, or in order to obtain a
necessary consent to such Asset Disposition or by applicable law, be repaid out
of the proceeds from such Asset Disposition, (iii) all payments made with
respect to liabilities associated with the assets which are the subject of the
Asset Disposition, including, without limitation, trade payables and other
accrued liabilities, (iv) appropriate amounts to be provided by such Person or
any Restricted Subsidiary thereof, as the case may be, as a reserve in
accordance with GAAP against any liabilities associated with such assets and
retained by such Person or any Restricted Subsidiary thereof, as the case may
be, after such Asset Disposition, including, without limitation, liabilities
under any indemnification obligations and severance and other employee
termination costs associated with such Asset Disposition, until such time as
such amounts are no longer reserved or such reserve is no longer necessary (at
which time any remaining amounts will become Net Available Proceeds to be
allocated in accordance with the provisions of clause (iii) of the covenant of
the Indenture described under "--Covenants--Limitation on Certain Asset
Dispositions") and (v) all distributions and other payments made to minority
interest holders in Subsidiaries of such Person or joint ventures as a result of
such Asset Disposition.
"Non-Recourse Debt" means Indebtedness: (1) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise,
or (c) constitutes the lender; and (2) no default with respect to which
(including any rights that the holders of the Indebtedness may have to take
enforcement action against an Unrestricted Subsidiary) would permit upon notice,
lapse of time or both any holder of any other Indebtedness of the Company or any
of its Restricted Subsidiaries to declare a default on such other Indebtedness
or cause the payment of the Indebtedness to be accelerated or payable prior to
its stated maturity; and (3) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"O&M Funding Corp." means O&M Funding Corp., a Virginia corporation, and
its successors.
"O&M Trust" means Owens & Minor Trust I, a Delaware business trust, and its
successors.
"Offer to Purchase" means a written offer (the "Offer") sent by the Company
by first class mail, postage prepaid, to each Holder at his address appearing in
the register for the Notes on the date of the Offer offering to purchase up to
the principal amount of Notes specified in such Offer at the purchase price
specified in such Offer (as determined pursuant to the Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Expiration Date") of the Offer to Purchase which shall be not less than 30
days nor more than 60 days after the date of such Offer and a settlement date
(the "Purchase Date") for purchase of Notes within five Business Days after the
Expiration Date. The Company shall notify the Trustee at least 15 Business Days
(or such
59
shorter period as is acceptable to the Trustee) prior to the mailing of the
Offer of the Company's obligation to make an Offer to Purchase, and the Offer
shall be mailed by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company. The Offer shall contain all the
information required by applicable law to be included therein. The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Offer to Purchase. The Offer shall also state:
(1) the Section of the Indenture pursuant to which the Offer to
Purchase is being made;
(2) the Expiration Date and the Purchase Date;
(3) the aggregate principal amount of the outstanding Notes offered
to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such amount has been
determined pursuant to the Section of the Indenture requiring the Offer to
Purchase) (the "Purchase Amount");
(4) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Notes accepted for payment (as specified
pursuant to the Indenture) (the "Purchase Price");
(5) that the Holder may tender all or any portion of the Notes
registered in the name of such Holder and that any portion of a Note
tendered must be tendered in an integral multiple of $1,000 principal
amount;
(6) the place or places where Notes are to be surrendered for tender
pursuant to the Offer to Purchase;
(7) that interest on any Note not tendered or tendered but not
purchased by the Company pursuant to the Offer to Purchase will continue to
accrue;
(8) that on the Purchase Date the Purchase Price will become due and
payable upon each Note being accepted for payment pursuant to the Offer to
Purchase and that interest thereon shall cease to accrue on and after the
Purchase Date;
(9) that each Holder electing to tender all or any portion of a Note
pursuant to the Offer to Purchase will be required to surrender such Note
at the place or places specified in the Offer prior to the close of
business on the Expiration Date (such Note being, if the Company or the
Trustee so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Trustee
duly executed by, the Holder thereof or his attorney duly authorized in
writing);
(10) that Holders will be entitled to withdraw all or any portion of
Notes tendered if the Company (or its Paying Agent) receives, not later
than the close of business on the fifth Business Day next preceding the
Expiration Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note the
Holder tendered, the certificate number of the Note the Holder tendered and
a statement that such Holder is withdrawing all or a portion of his tender;
(11) that (a) if Notes in an aggregate principal amount less than or
equal to the Purchase Amount are duly tendered and not withdrawn pursuant
to the Offer to Purchase, the Company shall purchase all such Notes and (b)
if Notes in an aggregate principal amount in excess of the Purchase Amount
are tendered and not withdrawn pursuant to the Offer to Purchase, the
Company shall purchase Notes having an aggregate principal amount equal to
the Purchase Amount on a pro rata basis (with such adjustments as may be
deemed appropriate so that only Notes in denominations of $1,000 or
integral multiples thereof shall be purchased); and
(12) that in the case of any Holder whose Note is purchased only in
part, the Company shall execute and the Trustee shall authenticate and
deliver to the Holder of such Note without service charge, a new Note or
Notes, of any authorized denomination as requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unpurchased
portion of the Note so tendered.
An Offer to Purchase shall be governed by and effected in accordance
with the provisions above pertaining to any Offer.
60
"Permitted Business" means any business (including stock or assets)
that derives a majority of its revenues from the business engaged in by the
Company and its Restricted Subsidiaries on the date of original issuance of the
Notes and/or activities that are reasonably similar, ancillary or related to, or
a reasonable extension, development or expansion of, the businesses in which the
Company and its Restricted Subsidiaries are engaged on the date of original
issuance of the Notes, including, without limitation, the third party logistics
business.
"Permitted Investments" means (i) Investments in marketable, direct
obligations issued or guaranteed by the United States of America, or any
governmental entity or agency or political subdivision thereof (provided, that
the good faith and credit of the United States of America is pledged in support
thereof), maturing within one year of the date of purchase; (ii) Investments in
commercial paper issued by corporations or financial institutions maturing
within 180 days from the date of the original issue thereof, and rated "P-l" or
better by Moody's or "A-1" or better by S&P or an equivalent rating or better by
any other nationally recognized securities rating agency; (iii) Investments in
certificates of deposit issued or acceptances accepted by or guaranteed by any
bank or trust company organized under the laws of the United States of America
or any state thereof or the District of Columbia, in each case having capital,
surplus and undivided profits totaling more than $500,000,000, maturing within
one year of the date of purchase; (iv) Investments representing Capital Stock or
obligations issued to the Company or any of its Subsidiaries in the course of
the good faith settlement of claims against any other Person or by reason of a
composition or readjustment of debt or a reorganization of any debtor of the
Company or any of its Subsidiaries; (v) deposits, including interest-bearing
deposits, maintained in the ordinary course of business in banks; (vi) any
acquisition of the Capital Stock of any Person; provided, however, that after
giving effect to any such acquisition such Person shall become a Restricted
Subsidiary of the Company; (vii) trade receivables and prepaid expenses, in each
case arising in the ordinary course of business; provided, however, that such
receivables and prepaid expenses would be recorded as assets of such Person in
accordance with GAAP; (viii) endorsements for collection or deposit in the
ordinary course of business by such Person of bank drafts and similar negotiable
instruments of such other Person received as payment for ordinary course of
business trade receivables; (ix) any interest swap or hedging obligation with an
unaffiliated Person otherwise permitted by the Indenture; (x) Investments
received as consideration for an Asset Disposition in compliance with the
provisions of the Indenture described under "--Covenants--Limitation on Certain
Asset Dispositions" above; (xi) Investments for which the sole consideration
provided is Capital Stock of the Company (other than Disqualified Stock); (xii)
loans and advances to employees made in the ordinary course of business; (xiii)
Investments outstanding on the Issue Date; (xiv) so long as no Default or Event
of Default has occurred and is continuing, Investments in Persons or entities in
an aggregate outstanding amount (valued at the cost thereof) not to exceed at
any time $25 million, (xv) payments on the guarantee referred to in the last
sentence of the definition of the term "Indebtedness" and (xvi) Investments made
in or by any Securitization Subsidiary in connection with and required pursuant
to the terms of any Qualified Securitization Transaction or in the Special
Purpose Trust in connection with and required by the terms of the Trust
Obligations.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of such Person of any class or classes (however designated) that
ranks prior, as to the payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution or winding up of such
Person, to shares of Capital Stock of any other class of such Person.
"Purchase Date" has the meaning set forth in the definition of "Offer
to Purchase" above.
"Qualified Securitization Transaction" means the Initial Securitization
and any other transaction or series of transactions that has been or may be
entered into by the Company or any of its Restricted Subsidiaries in connection
with or reasonably related to a transaction or series of transactions in which
the Company or any of its Restricted Subsidiaries may sell, convey or otherwise
transfer to (i) a Securitization Subsidiary or (ii) any other Person, or may
grant a security interest in, any Receivables and Receivables Related Assets or
interests therein secured by the merchandise or services financed thereby
(whether such Receivables and Receivables Related Assets are then existing or
arising in the future) of the Company or any of its Restricted Subsidiaries, and
any assets related thereto including, without limitation, all security interests
in merchandise or services financed thereby, all collections received (including
recoveries) and proceeds of such Receivables and Receivables Related Assets, and
61
other assets which are customarily sold or in respect of which security
interests are customarily granted in connection with securitization transactions
involving such assets.
"Rating Agency" means each of S&P and Moody's, or if S&P or Moody's or
both shall not make a rating on the notes publicly available, a nationally
recognized statistical rating agency or agencies, as the case may be, selected
by us (as certified by a resolution of our Board of Directors) which shall be
substituted for S&P or Moody's, or both, as the case may be.
"Receivables" means any right of payment, whether constituting an
account, chattel paper, instrument, general intangible or otherwise, arising in
connection with the sale, lease or financing by the Company or any Restricted
Subsidiary of the Company of merchandise or rendering of services, and monies
due thereunder.
"Receivables Related Assets" means (i) any rights arising under the
documentation governing or relating to Receivables (including rights in respect
of Liens securing such Receivables and other credit support in respect of such
Receivables), (ii) any proceeds of such Receivables and any lockboxes or
accounts in which such proceeds are deposited, (iii) spread accounts and other
similar accounts (and any amounts on deposit therein) established in connection
with a Qualified Securitization Transaction, (iv) any warranty, indemnity,
dilution and other intercompany claim arising out of the documentation
evidencing such Qualified Securitization Transaction and (v) other assets that
are customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable.
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 5% or more of the outstanding Common Stock of such Person
(or, in the case of a Person that is not a corporation, 5% or more of the equity
interest in such Person) or (b) 5% or more of the combined voting power of the
Voting Stock of such Person.
"Replacement Assets" means properties or assets used or useful in a
Permitted Business.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Credit Agreement, dated as of
April 24, 2000, as amended, among the Company as borrower thereunder, certain
Subsidiaries of the Company as guarantors thereunder, the lenders named therein,
and Bank of America, N.A., as administrative agent, including any deferrals,
renewals, extensions, replacements, refinancings or refundings thereof, or
amendments, modifications or supplements thereto and any agreement providing
therefor whether by or with the same or any other lender, creditors, group of
lenders or group of creditors and including related notes, guarantee agreements
and other instruments and agreements executed in connection therewith.
"S&P" means Standard & Poor's Ratings Group, Inc., or any successor to
the rating agency business thereof.
"Securitization Subsidiary" means O&M Funding Corp. and any other
Wholly Owned Subsidiary of the Company which engages in no activities other than
those reasonably related to or in connection with the entering into of
securitization transactions and which is designated by the Board of Directors of
the Company (as provided below) as a Securitization Subsidiary provided that
with respect to O&M Funding Corp. or any such other Wholly Owned Subsidiary (a)
no portion of the indebtedness or any other obligations (contingent or
otherwise) of any such Restricted Subsidiary (i) is guaranteed by the Company or
any other Restricted Subsidiary of the Company other than pursuant to Standard
Securitization Obligations, (ii) is recourse to or obligates the Company or any
other Restricted Subsidiary of the Company in any way other than pursuant to
Standard Securitization Obligations or (iii) subjects the Company or any other
Restricted Subsidiary of the Company, directly or indirectly, contingently or
otherwise, to any Lien or to the satisfaction thereof, other than pursuant to
Standard Securitization Obligations, (b) neither the Company nor any other
Restricted Subsidiary of the Company (i) provides any credit support to or (ii)
has any material contract, agreement, arrangement or understanding no less
favorable to the Company or such Restricted Subsidiary than could be obtained
from an unrelated person (other than, in the case of subclauses (i) and (ii) of
this clause (b), entered into in the ordinary course of business in connection
with a Qualified Securitization Transaction and intercompany notes relating to
the sale of Receivables to such Securitization Subsidiary) with any such
Restricted Subsidiary and (c) neither the Company nor any Restricted Subsidiary
of the Company has any
62
obligation to maintain or preserve the financial condition of any such
Restricted Subsidiary or to cause such entity to achieve certain levels of
operating results. Any such designation by the Board of Directors of the Company
(other than with respect to O&M Funding Corp.) shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the resolutions of the Board of
Directors of the Company giving effect to such designation.
"Senior Indebtedness" means, at any date, (i) all Indebtedness of the
Company under the Revolving Credit Facility, including principal, premium, if
any, and interest on such Indebtedness and all other amounts due on or in
connection with such Indebtedness including all charges, fees and expenses, (ii)
all other Indebtedness of the Company for borrowed money, including principal,
premium, if any, and interest on such Indebtedness, unless the instrument under
which such Indebtedness of the Company for money borrowed is created, incurred,
assumed or guaranteed expressly provides that such Indebtedness for money
borrowed is not senior or superior in right of payment to the Notes, and all
renewals, extensions, modifications, amendments or refinancings thereof and
(iii) all interest on any Indebtedness referred to in clauses (i) and (ii)
accruing during the pendency of any bankruptcy or insolvency proceeding, whether
or not allowed thereunder. Notwithstanding the foregoing, Senior Indebtedness
shall not include (a) Indebtedness which is pursuant to its terms or any
agreement relating thereto or by operation of law subordinated or junior in
right of payment or otherwise to any other Indebtedness of the Company;
provided, however, that no Indebtedness of the Company shall be deemed to be
subordinate or junior in right of payment or otherwise to any other Indebtedness
of the Company solely by reason of such other Indebtedness being secured and
such Indebtedness not being secured, (b) the Notes, (c) any Indebtedness of the
Company to any Restricted Subsidiary of the Company, (d) any Indebtedness which,
when incurred and without respect to any election under Section 1111(b) of the
Bankruptcy Code, is without recourse to the Company, and (e) any Indebtedness or
other obligation of the Company pursuant to or in connection with any Qualified
Securitization Transaction or the Trust Obligations (whether entered into before
or after the Issue Date).
"Special Purpose Trust" means O&M Trust a statutory business trust
established by the Company for the purpose of issuing the Trust Preferred
Securities for aggregate gross proceeds of up to $138,000,000 and issuing up to
$4,268,050 of common beneficial interests.
"Standard Securitization Obligations" means representations,
warranties, covenants and indemnities (including those related to servicing)
entered into by the Company or any Restricted Subsidiary which are reasonably
customary in Qualified Securitization Transactions.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more other Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and voting power relating to the
policies, management and affairs thereof.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"Trust Obligations" means the obligations of the Company and its
Restricted Subsidiaries under the Trust Preferred Securities, the related Junior
Subordinated Debentures and the agreements entered into in connection therewith,
all as in effect on the Issue Date.
"Trust Preferred Securities" means the 2,640,000 $2.6875 Term
Convertible Securities of the Special Purpose Trust outstanding as of the Issue
Date, as in effect at such time, less the aggregate liquidation amount of such
Trust Preferred Securities that is prepaid, redeemed, repurchased or retired
from time to time.
"Trust Securities" means the Trust Preferred Securities and the Junior
Subordinated Debentures.
"Unrestricted Subsidiary" means any Subsidiary of the Company (or any
successor to any of them) that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a Board Resolution, but only to the extent
that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2)
is not party to any agreement, contract, arrangement or understanding with the
Company or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (3) is a Person with
respect to which neither the Company nor any of its Restricted
63
Subsidiaries has any direct or indirect obligation (a) to subscribe for
additional Equity Interests or (b) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; (4) has not guaranteed or otherwise directly or indirectly
provided credit support for any Indebtedness of the Company or any of its
Restricted Subsidiaries; and (5) has at least one director on its Board of
Directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries.
Any designation of a Subsidiary of the Company as an Unrestricted
Subsidiary will be evidenced to the Trustee by filing with the Trustee a
certified copy of the Board Resolution giving effect to such designation and an
officers' certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described above under the
caption "--Covenants--Limitation on Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted
Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary
will be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "--Covenants--Limitation on
Indebtedness," the Company will be in default of such covenant. The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation will be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation will only be permitted if (1) such Indebtedness is permitted under
the covenant described under the caption "--Covenants--Limitation on
Indebtedness," calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence following such designation.
"Voting Stock" of any Person means the Capital Stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount
of each then remaining installment, sinking fund, serial maturity or other
required payments or principal, including payment at final maturity, in
respect of the Indebtedness, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of
such payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Restricted Subsidiary
of such Person all of the outstanding Capital Stock or other ownership interests
of which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
64
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income tax
considerations relating to the exchange of outstanding notes for exchange notes
in the exchange offer. It does not contain a complete analysis of all the
potential tax considerations relating to the exchange. This summary is limited
to holders of outstanding notes who hold the outstanding notes as "capital
assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986
(in general, assets held for investment). Special situations, such as the
following, are not addressed:
. tax consequences to holders who may be subject to special tax
treatment, such as tax-exempt entities, dealers in securities or
currencies, financial institutions, insurance companies,
regulated investment companies, traders in securities that elect
to use a mark-to-market method of accounting for their securities
holdings or corporations that accumulate earnings to avoid U.S.
federal income tax;
. tax consequences to persons holding notes as part of a hedging,
integrated, constructive sale or conversion transaction or a
straddle or other risk reduction transaction;
. tax consequences to holders whose "functional currency" is not
the U.S. dollar;
. tax consequences to persons who hold notes through a partnership
or similar pass-through entity;
. alternative minimum tax consequences, if any; or
. any state, local or foreign tax consequences.
The discussion below is based upon the provisions of the Code,
existing and proposed Treasury regulations promulgated under the Code, and
rulings, judicial decisions and administrative interpretations under the Code,
as of the date of the prospectus. Those authorities may be changed, perhaps
retroactively, so as to result in U.S. federal income tax consequences different
from those discussed below.
Consequences of Tendering Notes
The exchange of your outstanding notes for exchange notes in the
exchange offer would not constitute an exchange for federal income tax purposes.
Accordingly, the exchange offer would have no federal income tax consequences to
you if you exchange your outstanding notes. For example, there would be no
change in your tax basis and your holding period would carry over to the
exchange notes. In addition, the federal income tax consequences of holding and
disposing of your exchange notes would also be the same as those applicable to
your outstanding notes.
The preceding discussion of certain U.S. federal income tax
considerations is for general information only and is not tax advice.
Accordingly, each investor should consult its own tax advisor as to particular
tax consequences to it of exchanging outstanding notes for exchange notes,
including the applicability and effect of any state, local or foreign tax laws,
and of any proposed changes in applicable laws.
65
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes in the exchange offer
for its own account must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of the
exchange notes. We reserve the right in our sole discretion to purchase or make
offers for, or to offer exchange notes for, any outstanding notes that remain
outstanding after the expiration of the exchange offer pursuant to this
prospectus or otherwise and, to the extent permitted by applicable law, purchase
outstanding notes in the open market, in privately negotiated transactions or
otherwise. This prospectus, as it may be amended or supplemented from time to
time, may be used by all persons subject to the prospectus delivery requirements
of the Securities Act, including broker-dealers in connection with resales of
exchange notes received in the exchange offer, where the exchange notes were
acquired as a result of market-making activities or other trading activities and
may be used by us to purchase any outstanding notes that remain outstanding
after expiration of the exchange offer. We have agreed that, for a period of 180
days after the expiration of the exchange offer, we will make this prospectus,
as amended or supplemented, available to any broker-dealer for use in connection
with such a resale.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers in the exchange offer
for their own account may be sold from time to time in one or more transactions
in the over-the counter market, in negotiated transactions, through the writing
of options on the exchange notes or a combination of those methods of resale, at
market prices prevailing at the time of resale, at prices related to the
prevailing market prices or negotiated prices. Any resale may be made directly
to purchasers or to or through brokers or dealers who may receive compensation
in the form of commissions or concessions from any broker-dealer and/or the
purchasers of any of the exchange notes. Any broker-dealer that resells exchange
notes that were received by it in the exchange offer for its own account and any
broker or dealer that participates in a distribution of the exchange notes may
be deemed to be an "underwriter" within the meaning of the Securities Act and
any profit on such a resale of the exchange notes and any commissions or
concessions received by those persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration of the exchange offer,
we will promptly send additional copies of this prospectus and any amendment or
supplement to this prospectus to any broker-dealer that requests these documents
in the letter of transmittal. We have agreed to pay certain expenses incident to
our performance of or compliance with the exchange and registration rights
agreement, other than commissions or concessions of any brokers or dealers, and
will indemnify holders of the outstanding notes against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the exchange notes offered by this prospectus and
certain other matters will be passed upon for us by Hunton & Williams.
EXPERTS
The consolidated financial statements of Owens & Minor, Inc. and
subsidiaries as of December 31, 2000 and 1999 and for each of the years in the
three-year period ended December 31, 2000, incorporated by reference herein in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Securities and Exchange
Commission filings are also available to the public at the Securities and
Exchange Commission's web site at http://www.sec.gov. Our common stock,
preferred stock purchase rights and
66
2006 notes are listed on the New York Stock Exchange. Our reports, proxy
statements and other information can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York 10005.
We are "incorporating by reference" the documents listed below that we
have filed with the Securities and Exchange Commission, which means we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus. We incorporate by reference the documents listed below:
1. Our Annual Report on Form 10-K for the year ended December 31,
2000;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2001;
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30,
2001;
4. Our Current Report on Form 8-K filed on March 20, 2001;
5. Our Current Report on Form 8-K filed on June 5, 2001;
6. Our Current Report on Form 8-K filed on June 18, 2001;
7. Our Current Report on Form 8-K filed on July 5, 2001; and
8. All documents that we file with the SEC under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus until the expiration of the exchange offer.
You may request a copy of those filings, at no cost, by writing or
telephoning us at the following:
Owens & Minor, Inc.
4800 Cox Road
Glen Allen, VA 23060
(804) 747-9794
Information that we file later with the Securities and Exchange
Commission and that is incorporated by reference in this prospectus will
automatically update and supersede information contained in this prospectus as
if that information were included in this prospectus.
67
[LOGO of Owens & Minor, Inc.]
OFFER TO EXCHANGE
up to $200,000,000 Principal Amount Outstanding
8 1/2 % Senior Subordinated Notes due 2011
for
a like Principal Amount of
8 1/2% Senior Subordinated Notes due 2011
That Have Been Registered under the Securities Act of 1933
--------------------------
Prospectus
______________, 2001
--------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
The Virginia Stock Corporation Act (the "VSCA") permits, and the Bylaws
of Owens & Minor, Inc. (the "Company") require, indemnification of the Company's
directors and officers in a variety of circumstances, which may include
indemnification for liabilities under the Securities Act of 1933, as amended
(the "Securities Act"). Under Sections 13.1-697 and 13.1-704 of the VSCA, a
Virginia corporation generally is authorized to indemnify its directors and
officers in civil or criminal actions if they acted in good faith and believed
their conduct to be in the best interests of the corporation and, in the case of
criminal actions, had no reasonable cause to believe that the conduct was
unlawful. The Company's Bylaws require indemnification of directors and officers
with respect to certain liabilities, expenses and other amounts imposed upon
them by reason of having been a director or officer, except in the case of
willful misconduct or a knowing violation of criminal law. In addition, the
Company carries insurance on behalf of directors, officers, employees or agents
that may cover liabilities under the Securities Act. The Company's Bylaws also
provide that, to the full extent the VSCA (as it presently exists or may
hereafter be amended) permits the limitation or elimination of the liability of
directors and officers, no director or officer of the Company shall be liable to
the Company or its shareholders for monetary damages with respect to any
transaction, occurrence or course of conduct. Section 13.1-692.1 of the VSCA
presently permits the elimination of liability of directors and officers in any
proceeding brought by or in the right of the Company or brought by or on behalf
of shareholders of the Company, except for liability resulting from such
person's having engaged in willful misconduct or a knowing violation of the
criminal law or any federal or state securities law, including, without
limitation, any unlawful insider trading or manipulation of the market for any
security. Sections 13.1-692.1 and 13.1-696 through 704 of the VSCA are hereby
incorporated by reference herein.
Item 21. Exhibits and Financial Schedules.
3.1 - Amended and Restated Articles of Incorporation of the
Company (incorporated herein by reference to the
Company's Annual Report on Form 10-K, Exhibit 3(a),
for the year ended December 31, 1994).
3.2 - Amended and Restated Bylaws of the Company
(incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q, Exhibit 3, for the
period ended June 30, 2001).
4.1 - Senior Subordinated Indenture, dated as of July 2,
2001, between the Company, as Issuer, Owens & Minor
Medical, Inc., National Medical Supply Corporation,
Owens & Minor West, Inc., Koley's Medical Supply, Inc.
and Stuart Medical, Inc., as Guarantors (the
"Guarantors"), and SunTrust Bank, as Trustee
(incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q, Exhibit 4.1, for the
period ended June 30, 2001).
4.2 - First Supplemental Indenture, dated as of July 2,
2001, between the Company, the Guarantors and SunTrust
Bank, as Trustee (incorporated herein by reference to
the Company's Quarterly Report on Form 10-Q, Exhibit
4.2, for the period ended June 30, 2001).
4.3 - Form of Global Note (included in Exhibit 4.2).
4.4 - Exchange and Registration Rights Agreement, dated as
of July 2, 2001, by and among the Company, the
Guarantors and Lehman Brothers Inc., Banc of America
Securities LLC, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, First Union Securities, Inc., Goldman
Sachs & Co. and J.P. Morgan Securities Inc.
(incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q, Exhibit 4.3, for the
period ended June 30, 2001).
4.5 - First Amendment, dated as of June 12, 2001, to Credit
Agreement, dated as of April 24, 2000 among the
Company, the Guarantors, First Union National Bank,
SunTrust Bank, Bank One, N.A., The Bank of Nova Scotia
and Bank of America, N.A. (incorporated herein by
reference to the Company's Quarterly Report on Form
10-Q, Exhibit 4.4, for the period ended June 30,
2001).
II-1
4.6 - Indenture, dated as of May 29, 1996 among the Company,
as Issuer, Owens & Minor Medical, Inc., National
Medical Supply Corporation, Owens & Minor West, Inc.,
Koley's Medical Supply, Inc., Lyons Physician Supply
Company, A. Kuhlman & Co., Stuart Medical, Inc., as
Guarantors, and Crestar Bank, as Trustee ("Notes
Indenture") (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q, Exhibit 4(a),
for the quarter ended June 30, 1996).
4.7 - Supplemental Indenture No. 1, dated as of May 12,
1998, to Notes Indenture (incorporated herein by
reference to the Company's Quarterly Report on Form
10-Q, Exhibit 4.1, for the quarter ended June 30,
1998).
4.8 - Amended and Restated Rights Agreement, dated as of May
10, 1994, between the Company and Bank of New York, as
successor Rights Agent (incorporated herein by
reference to the Company's Quarterly Report on Form
10-Q, Exhibit 4, for the quarter ended June 30, 1995).
4.9 - Credit Agreement, dated as of April 24, 2000, by and
among the Company, as Borrower, certain of its
Subsidiaries, as Guarantors, the banks identified
therein, First Union National Bank and SunTrust Bank,
as Syndication Agents, Bank One, N.A., as Managing
Agent, The Bank of Novia Scotia, as Co-Agent, and Bank
of America, N.A., as Administrative Agent
(incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q, Exhibit 4, for the
quarter ended March 31, 2000).
4.10 - Junior Subordinated Debentures Indenture, dated as of
May 13, 1998, between the Company and The First
National Bank of Chicago (incorporated herein by
reference to the Company's Registration Statement on
Form S-3, Registration No. 333-58665, Exhibit 4.1).
4.11 - First Supplement Indenture, dated as of May 13, 1998,
between the Company and The First National Bank of
Chicago (incorporated herein by reference to the
Company's Registration Statement on Form S-3,
Registration No. 333-58665, Exhibit 4.2).
4.12 - Registration Rights Agreement, dated as of May 13,
1998, between the Company and J.P. Morgan Securities
Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and Merrill Lynch & Co. (incorporated
herein by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-58665,
Exhibit 4.3).
4.13 - Amended and Restated Declaration of Trust of Owens &
Minor Trust I (incorporated herein by reference to the
Company's Registration Statement on Form S-3,
Registration No. 333-58665, Exhibit 4.4).
4.14 - Restated Certificate of Trust of Owens & Minor
Trust I (inc in Exhibit 4.12)
4.15 - Form of $2.6875 Term Convertible Security (included in
Exhibit 4.12).
4.16 - Form of 5.375% Junior Subordinated Convertible
Debenture (included in Exhibit 4.10).
4.17 - Owens & Minor, Inc. Guarantee Agreement, dated as of
May 13, 1998, (incorporated herein by reference to the
Company's Registration Statement on Form S-3,
Registration No. 333-58665, Exhibit 4.8).
10.1 - Amendment No. 1, dated as of July 12, 2001, to
Receivables Purchase Agreement among O&M Funding
Corp., Owens & Minor Medical, Inc., the Company,
Falcon Asset Securitization Corporation, Receivables
Capital Corporation, Liberty Street Funding
Corporation, Bank One, N.A., Bank of America, N.A.,
and The Bank of Nova Scotia (incorporated herein by
reference to the Company's Quarterly Report on Form
10-Q, Exhibit 10, for the period ended June 30, 2001).
10.2 - Owens & Minor, Inc. Annual Incentive Plan
(incorporated herein by reference to the Company's
definitive Proxy Statement, dated March 25, 1991).*
10.3 - Owens & Minor, Inc. Management Equity Ownership
Program, as amended effective December 18, 2000
(incorporated herein by reference to the Company's
Annual Report on Form 10-K, Exhibit 10.2, for the year
ended December 31, 2000).
10.4 - Owens & Minor, Inc. Supplemental Executive Retirement
Plan, as amended and restated effective July 1, 2000
(incorporated herein by reference to the Company's
Annual Report on Form 10-K, Exhibit 10.3, for the year
ended December 31, 2000).
10.5 - Forms of Owens & Minor, Inc. Executive Severance
Agreements (incorporated herein by reference to the
Company's Annual Report on Form 10-K, Exhibit 10.8,
for the year ended December 31, 1998).*
II-2
10.6 - Owens & Minor, Inc. 1993 Stock Option Plan
(incorporated herein by reference to the Company's
Annual Report on Form 10-K, Exhibit 10(k), for the
year ended December 31, 1993).*
10.7 - Amended and Restated Owens & Minor, Inc. 1993
Directors' Compensation Plan ("Directors' Plan")
(incorporated herein by reference to the Company's
Annual Report on Form 10-K, Exhibit 10(k), for the
year ended December 31, 1996).*
10.8 - The forms of agreement with directors entered into
pursuant to (i) the Stock Option Program, (ii) the
Deferred Fee Program and (iii) the Stock Purchase
Program of the Directors' Plan (incorporated herein by
reference to the Company's Quarterly Report on Form
10-Q, Exhibit (10), for the quarter ended March 31,
1996).*
10.9 - Owens & Minor, Inc. 1998 Stock Option and Incentive
Plan (incorporated herein by reference to Annex A of
the Company's definitive Proxy Statement, dated March
13, 1998).*
10.10 - Amendment to 1998 Stock Option and Incentive Plan
(incorporated herein by reference to the Company's
Annual Report on Form 10-K, Exhibit 10.14, for the
year ended December 31, 1999).*
10.11 - Owens & Minor, Inc. 1998 Directors' Compensation Plan
(incorporated herein by reference from Annex B of the
Company's definitive Proxy Statement, dated March 13,
1998).*
10.12 - Amendment No. 1 to Owens & Minor, Inc. 1998 Director's
Compensation Plan (incorporated herein by reference to
the Company's Annual Report on Form 10-K, Exhibit
10.15, for the year ended December 31, 1998).*
10.13 - Form of Enhanced Authorized Distribution Agency
Agreement, dated as of August 20, 1997, between VHA,
Inc. and the Company (incorporated herein by reference
to the Company's Quarterly Report on Form 10-Q,
Exhibit 10(d), for the quarter ended September 30,
1997).**
10.14 - Receivables Purchase Agreement, dated as of July 14,
2000, among O&M Funding Corp., Owens & Minor Medical,
Inc., the Company, Falcon Asset Securitization
Corporation, Receivables Capital Corporation, Liberty
Street Funding Corporation, Bank One, N.A., Bank of
America, National Association, and The Bank of Novia
Scotia (incorporate herein by reference to the
Company's Quarterly Report on Form 10-Q, Exhibit
10(a), for the quarter ended June 30, 2000).
10.15 - Receivables Sale Agreement, dated as of July 14, 2000,
among Koley's Medical Supply, Inc., Owens & Minor
Medical, Inc., Owens & Minor West, Inc., Stuart
Medical, Inc. and O&M Funding Corp. (incorporated
herein by reference to the Company's Quarterly Report
on Form 10-Q, Exhibit 10(b), for the quarter ended
June 30, 2000).
5.1 - Opinion of Hunton & Williams.
12.1 - Computation of Ratios.
23.1 - Consent of KPMG LLP.
23.2 - Consent of Hunton & Williams (included in Exhibit
5.1).
24.1 - Powers of Attorney (contained on the signature pages
of this Registration Statement).
25.1 - Statement of Eligibility of Trustee under the Trust
Indenture Act of 1939, as amended.
99.1 - Letter of Transmittal.
99.2 - Notice of Guaranteed Delivery.
* Management contract or compensatory plan or arrangement.
** The Company has requested confidential treatment by the Securities and
Exchange Commission (the "Commission") of certain portions of this
Agreement, which portions have been omitted and filed separately with
the Commission.
Item 22. Undertakings.
(a) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration
II-3
statement shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the foregoing provisions, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the
Registrants in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrants
will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(c) Each of the undersigned Registrants hereby undertakes to
respond to requests for information that is incorporated by reference
into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request.
(d) Each of the undersigned Registrants hereby undertakes to supply
by means of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein, that was
not the subject of and included in the registration statement when it
became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Henrico,
Commonwealth of Virginia, on the 10th day of September, 2001.
OWENS & MINOR, INC.
/s/ G. Gilmer Minor, III
------------------------------------
G. Gilmer Minor, III
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints G. Gilmer Minor, III, Jeffrey Kaczka and
Drew St. J. Carneal, and each of them (with full power to act alone) as true and
lawful attorneys-in-fact, and stead, in any and all capacities, to sign any
amendments to this registration statement and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ G. Gilmer Minor, III Chairman and Chief Executive September 10, 2001
--------------------------------------------------- Officer and Director
G. Gilmer Minor, III (principal executive officer)
/s/ Jeffrey Kaczka Senior Vice President September 10, 2001
--------------------------------------------------- and Chief Financial Officer
Jeffrey Kaczka (principal financial officer)
/s/ Olwen B. Cape Vice President and Controller
--------------------------------------------------- (principal accounting officer) September 10, 2001
Olwen B. Cape
/s/ A. Marshall Acuff, Jr. Director September 10, 2001
---------------------------------------------------
A. Marshall Acuff, Jr.
/s/ Henry A. Berling Director September 10, 2001
---------------------------------------------------
Henry A. Berling
/s/ Josiah Bunting, III Director September 10, 2001
---------------------------------------------------
Josiah Bunting, III
Director September 10, 2001
---------------------------------------------------
John T. Crotty
/s/ James B. Fairnholt, Jr. Director September 10, 2001
---------------------------------------------------
James B. Farinholt, Jr.
II-5
/s/ Vernard W. Henley Director September 10, 2001
---------------------------------------------------
Vernard W. Henley
/s/ Peter S. Redding Director September 10, 2001
---------------------------------------------------
Peter S. Redding
/s/ James E. Rogers Director September 10, 2001
---------------------------------------------------
James E. Rogers
/s/ James E. Ukrop Director September 10, 2001
---------------------------------------------------
James E. Ukrop
/s/ Anne Marie Whittemore Director September 10, 2001
---------------------------------------------------
Anne Marie Whittemore
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Henrico,
Commonwealth of Virginia, on the 10th day of September, 2001.
OWENS & MINOR MEDICAL, INC.
/s/ G. Gilmer Minor, III
-----------------------------------
G. Gilmer Minor, III
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints G. Gilmer Minor, III, Jeffrey Kaczka and
Drew St. J. Carneal, and each of them (with full power to act alone) as true and
lawful attorneys-in-fact, and stead, in any and all capacities, to sign any
amendments to this registration statement and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- -----
/s/ G. Gilmer Minor, III Chairman and Chief Executive September 10, 2001
---------------------------------------------------
G. Gilmer Minor, III Officer and Director
(principal executive officer)
/s/ Jeffrey Kaczka Senior Vice President and Chief September 10, 2001
---------------------------------------------------
Jeffrey Kaczka Financial Officer and Director
(principal financial officer and
principal accounting officer)
/s/ Craig R. Smith
---------------------------------------------------
Craig R. Smith Director September 10, 2001
/s/ Henry A. Berling Director September 10, 2001
---------------------------------------------------
Henry A. Berling
/s/ Drew St. J. Carneal Director September 10, 2001
---------------------------------------------------
Drew St. J. Carneal
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Henrico,
Commonwealth of Virginia, on the 10th day of September, 2001.
NATIONAL MEDICAL SUPPLY CORPORATION
/s/ G. Gilmer Minor, III
---------------------------------------
G. Gilmer Minor, III
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints G. Gilmer Minor, III, Jeffrey Kaczka and
Drew St. J. Carneal, and each of them (with full power to act alone) as true and
lawful attorneys-in-fact, and stead, in any and all capacities, to sign any
amendments to this registration statement and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ G. Gilmer Minor, III Chairman and Chief Executive September 10, 2001
------------------------------ Officer and Director
G. Gilmer Minor, III (principal executive officer)
/s/ Jeffrey Kaczka Senior Vice President and Chief September 10, 2001
------------------------------ Financial Officer and Director
Jeffrey Kaczka (principal financial officer and
principal accounting officer)
/s/ Craig R. Smith
------------------------------
Craig R. Smith Director September 10, 2001
/s/ Henry A. Berling Director September 10, 2001
------------------------------
Henry A. Berling
/s/ Drew St. J. Carneal Director September 10, 2001
------------------------------
Drew St. J. Carneal
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Henrico,
Commonwealth of Virginia, on the 10th day of September, 2001.
OWENS & MINOR WEST, INC.
/s/ G. Gilmer Minor, III
----------------------------------------
G. Gilmer Minor, III
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints G. Gilmer Minor, III, Jeffrey Kaczka and
Drew St. J. Carneal, and each of them (with full power to act alone) as true and
lawful attorneys-in-fact, and stead, in any and all capacities, to sign any
amendments to this registration statement and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ G. Gilmer Minor, III Chairman and Chief Executive September 10, 2001
-------------------------------- Officer and Director
G. Gilmer Minor, III (principal executive officer)
/s/ Jeffrey Kaczka Senior Vice President and Chief September 10, 2001
-------------------------------- Financial Officer and Director
Jeffrey Kaczka (principal financial officer and
principal accounting officer)
/s/ Craig R. Smith September 10, 2001
--------------------------------
Craig R. Smith Director
/s/ Henry A. Berling Director September 10, 2001
--------------------------------
Henry A. Berling
/s/ Drew St. J. Carneal Director September 10, 2001
--------------------------------
Drew St. J. Carneal
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Henrico,
Commonwealth of Virginia, on the 10th day of September, 2001.
KOLEY'S MEDICAL SUPPLY, INC.
/s/ G. Gilmer Minor, III
-------------------------------------
G. Gilmer Minor, III
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints G. Gilmer Minor, III, Jeffrey Kaczka and
Drew St. J. Carneal, and each of them (with full power to act alone) as true and
lawful attorneys-in-fact, and stead, in any and all capacities, to sign any
amendments to this registration statement and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ G. Gilmer Minor, III Chairman and Chief Executive September 10, 2001
------------------------------------ Officer and Director
G. Gilmer Minor, III (principal executive officer)
/s/ Jeffrey Kaczka Senior Vice President and Chief September 10, 2001
------------------------------------ Financial Officer and Director
Jeffrey Kaczka [principal financial officer and
principal accounting officer)
/s/ Craig R. Smith Director September 10, 2001
------------------------------------
Craig R. Smith
/s/ Henry A. Berling Director September 10, 2001
------------------------------------
Henry A. Berling
/s/ Drew St. J. Carneal Director September 10, 2001
------------------------------------
Drew St. J. Carneal
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Co-
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Henrico,
Commonwealth of Virginia, on the 10th day of September, 2001.
STUART MEDICAL, INC.
/s/ G. Gilmer Minor, III
----------------------------------------
G. Gilmer Minor, III
Chairman and Chief Executive Officer
POWER OF ATTORNEY
KNOWN ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints G. Gilmer Minor, III, Jeffrey Kaczka and
Drew St. J. Carneal, and each of them (with full power to act alone) as true and
lawful attorneys-in-fact, and stead, in any and all capacities, to sign any
amendments to this registration statement and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and conforming all that
said attorney-in-fact, or their substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ G. Gilmer Minor, III Chairman and Chief Executive September 10, 2001
----------------------------------- Officer and Director
G. Gilmer Minor, III (principal executive officer)
/s/ Jeffrey Kaczka Senior Vice President and Chief September 10, 2001
----------------------------------- Financial Officer and Director
Jeffrey Kaczka (principal financial officer and
principal accounting officer)
/s/ Craig R. Smith Director September 10, 2001
-----------------------------------
Craig R. Smith
/s/ Henry A. Berling Director September 10, 2001
-----------------------------------
Henry A. Berling
/s/ Drew St. J. Carneal Director September 10, 2001
-----------------------------------
Drew St. J. Carneal
II-11
INDEX TO EXHIBITS
3.1 - Amended and Restated Articles of Incorporation of the Company
(incorporated herein by reference to the Company's Annual Report
on Form 10-K, Exhibit 3(a), for the year ended December 31,
1994).
3.2 - Amended and Restated Bylaws of the Company (incorporated herein
by reference to the Company's Quarterly Report on Form 10-Q,
Exhibit 3, for the period ended June 30, 2001).
4.1 - Senior Subordinated Indenture, dated as of July 2, 2001, between
the Company, as Issuer, Owens & Minor Medical, Inc., National
Medical Supply Corporation, Owens & Minor West, Inc., Koley's
Medical Supply, Inc. and Stuart Medical, Inc., as Guarantors (the
"Guarantors"), and SunTrust Bank, as Trustee (incorporated herein
by reference to the Company's Quarterly Report on Form 10-Q,
Exhibit 4.1, for the period ended June 30, 2001).
4.2 - First Supplemental Indenture, dated as of July 2, 2001, between
the Company, the Guarantors and SunTrust Bank, as Trustee
(incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q, Exhibit 4.2, for the period ended June 30,
2001).
4.3 - Form of Global Note (included in Exhibit 4.2).
4.4 - Exchange and Registration Rights Agreement, dated as of July 2,
2001, by and among the Company, the Guarantors and Lehman
Brothers Inc., Banc of America Securities LLC, Merrill Lynch,
Pierce, Fenner & Smith Incorporated, First Union Securities,
Inc., Goldman Sachs & Co. and J.P. Morgan Securities Inc.
(incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q, Exhibit 4.3, for the period ended June 30,
2001).
4.5 - First Amendment, dated as of June 12, 2001, to Credit Agreement,
dated as of April 24, 2000 among the Company, the Guarantors,
First Union National Bank, SunTrust Bank, Bank One, N.A., The
Bank of Nova Scotia and Bank of America, N.A. (incorporated
herein by reference to the Company's Quarterly Report on Form 10-
Q, Exhibit 4.4, for the period ended June 30, 2001).
4.6 - Indenture, dated as of May 29, 1996 among the Company, as Issuer,
Owens & Minor Medical, Inc., National Medical Supply Corporation,
Owens & Minor West, Inc., Koley's Medical Supply, Inc., Lyons
Physician Supply Company, A. Kuhlman & Co., Stuart Medical, Inc.,
as Guarantors, and Crestar Bank, as Trustee ("Notes Indenture")
(incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q, Exhibit 4(a), for the quarter ended June 30,
1996).
4.7 - Supplemental Indenture No. 1, dated as of May 12, 1998, to Notes
Indenture (incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q, Exhibit 4.1, for the quarter ended
June 30, 1998).
4.8 - Amended and Restated Rights Agreement, dated as of May 10, 1994,
between the Company and Bank of New York, as successor Rights
Agent (incorporated herein by reference to the Company's
Quarterly Report on Form 10-Q, Exhibit 4, for the quarter ended
June 30, 1995).
4.9 - Credit Agreement, dated as of April 24, 2000, by and among the
Company, as Borrower, certain of its Subsidiaries, as Guarantors,
the banks identified therein, First Union National Bank and
SunTrust Bank, as Syndication Agents, Bank One, N.A., as Managing
Agent, The Bank of Novia Scotia, as Co-Agent, and Bank of
America, N.A., as Administrative Agent (incorporated herein by
reference to the Company's Quarterly Report on Form 10-Q, Exhibit
4, for the quarter ended March 31, 2000).
4.10 - Junior Subordinated Debentures Indenture, dated as of May 13,
1998, between the Company and The First National Bank of Chicago
(incorporated herein by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-58665, Exhibit 4.1).
4.11 - First Supplement Indenture, dated as of May 13, 1998, between the
Company and The First National Bank of Chicago (incorporated
herein by reference to the Company's Registration Statement on
Form S-3, Registration No. 333-58665, Exhibit 4.2).
II-12
4.12 - Registration Rights Agreement, dated as of May 13, 1998, between
the Company and J.P. Morgan Securities Inc., Donaldson, Lufkin &
Jenrette Securities Corporation and Merrill Lynch & Co.
(incorporated herein by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-58665, Exhibit 4.3).
4.13 - Amended and Restated Declaration of Trust of Owens & Minor Trust
I (incorporated herein by reference to the Company's Registration
Statement on Form S-3, Registration No. 333-58665, Exhibit 4.4).
4.14 - Restated Certificate of Trust of Owens & Minor Trust I (included
in Exhibit 4.12).
4.15 - Form of $2.6875 Term Convertible Security (included in Exhibit
4.12).
4.16 - Form of 5.375% Junior Subordinated Convertible Debenture
(included in Exhibit 4.10).
4.17 - Owens & Minor, Inc. Guarantee Agreement, dated as of May 13,
1998, (incorporated herein by reference to the Company's
Registration Statement on Form S-3, Registration No. 333-58665,
Exhibit 4.8).
10.1 - Amendment No. 1, dated as of July 12, 2001, to Receivables
Purchase Agreement among O&M Funding Corp., Owens & Minor
Medical, Inc., the Company, Falcon Asset Securitization
Corporation, Receivables Capital Corporation, Liberty Street
Funding Corporation, Bank One, N.A., Bank of America, N.A., and
The Bank of Nova Scotia (incorporated herein by reference to the
Company's Quarterly Report on Form 10-Q, Exhibit 10, for the
period ended June 30, 2001).
10.2 - Owens & Minor, Inc. Annual Incentive Plan (incorporated herein by
reference to the Company's definitive Proxy Statement, dated
March 25, 1991).*
10.3 - Owens & Minor, Inc. Management Equity Ownership Program, as
amended effective December 18, 2000 (incorporated herein by
reference to the Company's Annual Report on Form 10-K, Exhibit
10.2, for the year ended December 31, 2000).
10.4 - Owens & Minor, Inc. Supplemental Executive Retirement Plan, as
amended and restated effective July 1, 2000 (incorporated herein
by reference to the Company's Annual Report on Form 10-K, Exhibit
10.3, for the year ended December 31, 2000).
10.5 - Forms of Owens & Minor, Inc. Executive Severance Agreements
(incorporated herein by reference to the Company's Annual Report
on Form 10-K, Exhibit 10.8, for the year ended December 31,
1998).*
10.6 - Owens & Minor, Inc. 1993 Stock Option Plan (incorporated herein
by reference to the Company's Annual Report on Form 10-K, Exhibit
10(k), for the year ended December 31, 1993).*
10.7 - Amended and Restated Owens & Minor, Inc. 1993 Directors'
Compensation Plan ("Directors' Plan") (incorporated herein by
reference to the Company's Annual Report on Form 10-K, Exhibit
10(k), for the year ended December 31, 1996).*
10.8 - The forms of agreement with directors entered into pursuant to
(i) the Stock Option Program, (ii) the Deferred Fee Program and
(iii) the Stock Purchase Program of the Directors' Plan
(incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q, Exhibit (10), for the quarter ended March
31, 1996).*
10.9 - Owens & Minor, Inc. 1998 Stock Option and Incentive Plan
(incorporated herein by reference to Annex A of the Company's
definitive Proxy Statement, dated March 13, 1998).*
10.10 - Amendment to 1998 Stock Option and Incentive Plan (incorporated
herein by reference to the Company's Annual Report on Form 10-K,
Exhibit 10.14, for the year ended December 31, 1999).*
10.11 - Owens & Minor, Inc. 1998 Directors' Compensation Plan
(incorporated herein by reference from Annex B of the Company's
definitive Proxy Statement, dated March 13, 1998).*
10.12 - Amendment No. 1 to Owens & Minor, Inc. 1998 Director's
Compensation Plan (incorporated herein by reference to the
Company's Annual Report on Form 10-K, Exhibit 10.15, for the year
ended December 31, 1998).*
10.13 - Form of Enhanced Authorized Distribution Agency Agreement, dated
as of August 20, 1997, between VHA, Inc. and the Company
(incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q, Exhibit 10(d), for the quarter ended
September 30, 1997).**
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10.14 - Receivables Purchase Agreement, dated as of July 14, 2000, among
O&M Funding Corp., Owens & Minor Medical, Inc., the Company,
Falcon Asset Securitization Corporation, Receivables Capital
Corporation, Liberty Street Funding Corporation, Bank One, N.A.,
Bank of America, National Association, and The Bank of Novia
Scotia (incorporate herein by reference to the Company's
Quarterly Report on Form 10-Q, Exhibit 10(a), for the quarter
ended June 30, 2000).
10.15 - Receivables Sale Agreement, dated as of July 14, 2000, among
Koley's Medical Supply, Inc., Owens & Minor Medical, Inc., Owens
& Minor West, Inc., Stuart Medical, Inc. and O&M Funding Corp.
(incorporated herein by reference to the Company's Quarterly
Report on Form 10-Q, Exhibit 10(b), for the quarter ended June
30, 2000).
5.1 - Opinion of Hunton & Williams.
12.1 - Computation of Ratios.
23.1 - Consent of KPMG LLP.
23.2 - Consent of Hunton & Williams (included in Exhibit 5.1).
24.1 - Powers of Attorney (contained on the signature pages of this
Registration Statement).
25.1 - Statement of Eligibility of Trustee under the Trust Indenture Act
of 1939, as amended.
99.1 - Letter of Transmittal.
99.2 - Notice of Guaranteed Delivery.
* Management contract or compensatory plan or arrangement.
** The Company has requested confidential treatment by the Securities and
Exchange Commission (the "Commission") of certain portions of this
Agreement, which portions have been omitted and filed separately with the
Commission.
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