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As filed with the Securities and Exchange Commission on July 7, 1998
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
OWENS & MINOR, INC. Virginia 54-1701843
OWENS & MINOR TRUST I Delaware 54-1896890
(Exact name of each registrant as (State or other jurisdiction (I.R.S. Employer
specified in its charter) of incorporation or organization) Identification No.)
4800 Cox Road
Glen Allen, Virginia 23060
(804) 747-9794
(Address, including zip code, and telephone number,
including area code, of registrants' principal
executive offices)
Drew St. J. Carneal
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)
Copies To:
C. Porter Vaughan, III
Hunton & Williams
951 East Byrd Street
Richmond, Virginia 23219-4074
(804) 788-8285
Approximate date of commencement of the proposed sale of the
securities to the public: From time to time after the
effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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(c)
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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Each Class of Aggregate Amount Offering Price Aggregate Offering Amount of
Securities to be Registered to be Registered Per Unit(4) Price(4) Registration Fee
(1)
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$2.6875 Term Convertible Securities,
Series A of Owens & Minor Trust I 2,640,000 $50.00 $132,000,000 $38,940
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5.375% Junior Subordinated
Convertible Debentures of Owens &
Minor, Inc. (2)
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Common Stock of Owens & Minor, Inc.
(including associated Rights) (3)
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Guarantee of $2.6875 Term Convertible
Securities of Owens & Minor Trust I 2,640,000 $50.00 $132,000,000 $38,940
by Owens & Minor, Inc. (5)
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(1) Estimated solely for the purpose of computing the registration fee
in accordance with Rule 457(c) of the Securities Act.
(2) $136,082,500 in aggregate principal amount of 5.375% Junior
Subordinated Debentures (the "Junior Subordinated Debentures") were issued and
sold to Owens & Minor Trust I (the "Trust") in connection with the issuance by
the Trust of 2,640,000 of its $2.6875 Term Convertible Preferred Securities,
Series A (the "Preferred Securities"). The Junior Subordinated Debentures may be
distributed, under certain circumstances, to the holders of Preferred Securities
for no additional consideration.
(3) 6,399,888 shares of Common Stock of the Company ("Common Stock")
are issuable initially upon conversion of the Preferred Securities being
registered hereunder at the conversion rate of 2.4242 shares of Common Stock for
each Preferred Security. An indeterminate number of shares of Common Stock as
may be issuable upon conversion of the Preferred Securities are registered
hereunder, including such shares as may be issuable pursuant to antidilution
adjustments. The Common Stock issuable upon conversion of the Preferred
Securities, if issued, will be issued for no additional consideration and will
be accompanied by Preferred Stock Purchase Rights.
(4) Exclusive of accrued interest and distributions, if any.
(5) No separate consideration will be received for the Guarantee of
Preferred Securities of Owens & Minor Trust I by Owens & Minor, Inc. ("Preferred
Securities Guarantee") or any back-up undertakings. Includes the rights of
holders of the Preferred Securities of the Trust under the Preferred Securities
Guarantee and back-up undertakings, consisting of obligations by Owens & Minor,
Inc. to provide certain indemnities in respect of, and pay and be responsible
for certain expenses, costs, liabilities and debts of the Trust and such other
obligations of Owens & Minor, Inc. set forth in the Amended and Restated
Declaration of Trust, the Junior Subordinated Debentures Indenture and
Supplemental Indenture thereto, in each case as further described in the
Registration Statement.
The Registrants hereby amend this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrants 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.
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SUBJECT TO COMPLETION, DATED JULY _____, 1998
PROSPECTUS
JULY _____, 1998
2,640,000 Securities
Owens & Minor Trust I
$2.6875 Term Convertible Securities, Series A ("TECONS(SM)")
(Liquidation amount $50 per security) fully and unconditionally guaranteed as
set forth herein by and convertible into Common Stock of
Owens & Minor, Inc.
The $2.6875 Term Convertible Securities, Series A (the "TECONS"), liquidation
amount $50 per security, offered for resale hereby (the "Offering") represent
preferred undivided beneficial interests in the assets of Owens & Minor Trust I,
a statutory business trust formed under the laws of the State of Delaware ("O&M
Trust" or the "Trust"). The TECONS were issued and sold (the "Original
Offering") on May 13, 1998 and May 19, 1998 (each an "Original Offering Date")
to certain initial purchasers (the "Initial Purchasers") and were simultaneously
sold by the Initial Purchasers in transactions exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
in the United States to persons reasonably believed by the Initial Purchasers to
be qualified institutional buyers ("Qualified Institutional Buyers") as defined
in Rule 144A under the Securities Act and outside the United States to non-U.S.
persons in offshore transactions in reliance on Regulation S under the
Securities Act.
Owens & Minor, Inc., a Virginia corporation ("O&M" or the "Company"), directly
or indirectly owns all the common securities (the "Common Securities" or the
"Trust Common Securities," and together with the TECONS, the "Trust
Securities"), representing common undivided beneficial interests in the assets
of O&M Trust. O&M Trust exists for the sole purpose of issuing the TECONS and
the Trust Common Securities and investing the proceeds thereof in 5.375% Junior
Subordinated Convertible Debentures due 2013 (the "Junior Subordinated
Debentures") of O&M in an aggregate principal amount equal to the aggregate
liquidation amount of the Trust Securities. The Junior Subordinated Debentures
and the TECONS in respect of which this Prospectus is being delivered are
referred to herein as the "Offered Securities." The Junior Subordinated
Debentures are unsecured obligations of O&M and subordinate and junior in right
of payment to certain other indebtedness of O&M as described herein, including
$150,000,000 aggregate principal amount of the Company's 10 7/8% Senior
Subordinated Notes (the "Existing Notes") outstanding as of the date hereof.
Upon a Declaration Event of Default (as defined herein), the holders of the
TECONS will have a preference over the holders of the Trust Common Securities
with respect to payments in respect of Distributions (as defined herein) and
payments upon redemption, liquidation and otherwise.
The TECONS (and the Junior Subordinated Debentures and the securities issuable
upon conversion) in respect of which this Prospectus is being delivered (the
"Offered Securities") may be offered and sold from time to time by the holders
thereof named herein or in a supplement hereto (collectively, the "Selling
Holders") pursuant to this Prospectus as supplemented. The Offered Securities
may be sold by the Selling Holders from time to time directly to purchasers or
through agents, underwriters or dealers. See "Plan of Distribution" and "Selling
Holders." If required, the names of any such agents or underwriters involved in
the sale of the Offered Securities and the applicable agent's commission,
dealer's purchase price or underwriter's discount, if any, will be set forth in
an accompanying supplement to this Prospectus (the "Prospectus Supplement"). The
Selling Holders will receive all of the net proceeds from the sale of the
Offered Securities and will pay all underwriting discounts and selling
commissions, if any, applicable to any such sale. The Company is responsible for
payment of all other expenses incident to the offer and sale of the Offered
Securities. The Selling Holders and any broker-dealers, agents or underwriters
who participate in the distribution of the Offered Securities may be deemed to
be "underwriters" within the meaning of the Securities Act, and any commission
received by them and any profit on the resale of the Offered Securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution" for a description of
indemnification arrangements.
(continued on page 2)
SEE "RISK FACTORS" FOR A DESCRIPTION OF CERTAIN RISK FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
1
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(continued from cover page)
Holders of the TECONS are entitled to receive cumulative cash distributions at
an annual rate of $2.6875 per TECONS, accumulating from May 13, 1998 and payable
quarterly in arrears on each January 31, April 30, July 31 and October 31,
commencing on July 31, 1998. The term "Distributions" as used herein includes
such cash distributions and any interest payable thereon unless otherwise
stated. The Distribution rate and the Distribution and other payment dates for
the TECONS will correspond to the interest rate and the interest and other
payment dates on the Junior Subordinated Debentures deposited in the Trust as
trust assets. If principal or interest is not paid on the Junior Subordinated
Debentures, including as a result of the Company's election to extend the
interest payment period on the Junior Subordinated Debentures as described
below, the Trust will not make payments on the Trust Securities. The Junior
Subordinated Debentures provide that, so long as the Company shall not be in
default in the payment of interest on the Junior Subordinated Debentures, the
Company shall have the right to defer payments of interest on the Junior
Subordinated Debentures by extending the interest payment period from time to
time for a period not exceeding 20 consecutive quarterly interest periods (each,
an "Extension Period"). No interest shall be due and payable during an Extension
Period and, as a consequence, distributions on the Trust Securities will also be
deferred, but at the end of such Extension Period the Company shall pay all
interest then accrued and unpaid on the Junior Subordinated Debentures, together
with interest thereon at the rate specified for the Junior Subordinated
Debentures to the extent permitted by applicable law, compounded quarterly
("Compounded Interest"). All references herein to interest shall include
Compounded Interest unless otherwise stated. There could be multiple Extension
Periods of varying lengths throughout the term of the Junior Subordinated
Debentures, not to exceed 20 consecutive quarters; provided, that no such period
may extend beyond the stated maturity of the Junior Subordinated Debentures.
During any such Extension Period, the Company may not declare or pay dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its common stock or preferred stock; provided that the
foregoing will not apply to any stock dividends paid by the Company in its
common stock, par value $2.00 per share (the "O&M Common Stock" or the "Common
Stock"). See "Description of the Junior Subordinated Debentures -- Interest" and
" -- Option to Extend Interest Payment Period" and "Risk Factors -- Option to
Extend Interest Payment Period; Tax Impact of Extension."
The payment of Distributions out of moneys held by O&M Trust and payments on
liquidation of O&M Trust and the redemption of TECONS, as set forth below, are
guaranteed by the Company on a subordinated basis (the "Guarantee") as and to
the extent described herein. The Guarantee is a full and unconditional guarantee
from the time of issuance of the TECONS, but the Guarantee covers Distributions
and other payments on the TECONS only if and to the extent that O&M Trust has
funds available therefor, which will not be the case unless the Company has made
a payment to the Property Trustee (as defined herein) of interest or principal
on the Junior Subordinated Debentures deposited in the Trust as trust assets.
The obligations of the Company under the Guarantee are subordinate and junior in
right of payment to all other liabilities of the Company, including the Junior
Subordinated Debentures, and will rank pari passu in right of payment with the
most senior preferred stock issued, from time to time, if any, by O&M. The
obligations of the Company under the Junior Subordinated Debentures are
subordinate and junior in right of payment to all present and future Senior and
Subordinated Debt (as defined herein). Because the Company is a holding company,
the Junior Subordinated Debentures (and the Company's obligations under the
Guarantee) are also effectively subordinated to all existing and future
liabilities, including trade payables, of the Company's subsidiaries, except to
the extent that the Company is a creditor of the subsidiaries recognized as
such.
Each TECONS is convertible in the manner described herein at the option of the
holder, at any time prior to the Conversion Expiration Date (as defined herein),
into O&M Common Stock at the initial rate of 2.4242 shares of O&M Common Stock
for each TECONS (equivalent to an initial conversion price of $20.625 per share
of O&M Common Stock for each TECONS), subject to adjustment in certain
circumstances. See "Description of the TECONS -- Conversion Rights." The O&M
Common Stock is listed on the New York Stock Exchange (the "NYSE") under the
symbol "OMI." On June 30, 1998, the reported last sale price of the O&M Common
Stock on the NYSE Composite Tape was $10.00 per share.
The Junior Subordinated Debentures are redeemable by the Company (in whole or in
part) from time to time, on or after May 2, 2001 at the prices specified herein
or at any time in certain circumstances upon the occurrence of a Tax Event (as
defined herein) at 100% of the principal amount thereof plus accrued and unpaid
interest thereon to the date fixed for redemption (the "Redemption Price"). If
the Company redeems Junior Subordinated Debentures, the Trust must redeem, at
the Redemption Price, Trust Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Junior Subordinated Debentures so
redeemed. See "Description of the TECONS -- Mandatory Redemption." The TECONS
will be redeemed upon maturity of the Junior Subordinated Debentures. The Junior
Subordinated Debentures mature on April 30, 2013. In addition, upon the
occurrence of a Special Event (as defined herein) arising from a change in law
or a change in legal interpretation, unless the Junior Subordinated Debentures
are redeemed in the limited circumstances described below, the Trust shall be
dissolved with the result that the Junior Subordinated Debentures will be
distributed to the holders of the Trust Securities, on a pro rata basis, in lieu
of any cash distribution. In the case of a Special Event that is a Tax Event,
the Company will have the right in certain circumstances to redeem the Junior
Subordinated Debentures, which would result in the redemption by the Trust of
the Trust Securities in the same amount on a pro rata basis. See "Description of
the TECONS -- Special Event Redemption or Distribution" and "Description of the
Junior Subordinated Debentures."
2
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In the event of the voluntary or involuntary dissolution, winding up or
termination of the Trust, the holders of the TECONS will be entitled to receive,
for each TECONS, a liquidation amount of $50 plus accumulated and unpaid
distributions thereon (including interest thereon) to the date of payment,
unless in connection with such dissolution, the Junior Subordinated Debentures
are distributed to the holders of the TECONS. See "Description of the TECONS --
Liquidation Distribution upon Dissolution."
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus (this "Prospectus") in connection with the offer made hereby and if
given or made such information or representation must not be relied upon as
having been authorized by the Company, the Trust or any other person. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company or the Trust since the date hereof or that the
information contained or incorporated by reference herein is correct as of any
time subsequent to its date. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy the securities offered hereby by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to anyone to whom it is unlawful to make such offer or solicitation.
Table of Contents
Page
Prospectus Summary..................................4
Risk Factors.......................................10
Ratio of Earnings to Combined Fixed Charges........17
and Preferred Stock Dividend Requirement...........17
Use of Proceeds....................................17
Price Range of Common Stock and Dividends..........17
Business...........................................19
Owens & Minor Trust I..............................28
Description of the TECONS..........................31
Description of the Guarantee.......................46
Description of the Junior Subordinated Debentures..49
Relationship Among the TECONS, the Junior
Subordinated Debentures and the Guarantee.....57
Certain Federal Tax Consequences...................59
Certain ERISA Considerations.......................64
Selling Holders....................................66
Plan of Distribution...............................67
Legal Matters......................................67
Experts............................................67
Available Information..............................68
Incorporation of Certain Documents by Reference....68
3
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Prospectus Summary
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements
appearing elsewhere and incorporated by reference in this Prospectus. Unless the
context otherwise requires, references in this Prospectus to "O&M" or the
"Company" are to Owens & Minor, Inc., a Virginia corporation, and its
consolidated subsidiaries.
The Company
O&M is one of the two largest distributors of medical and surgical supplies in
the United States. The Company stocks and distributes approximately 140,000
finished medical and surgical products produced by approximately 2,400 suppliers
to approximately 4,000 customers from 42 distribution centers nationwide. The
Company's customers are primarily acute care hospitals and hospital-based
systems, which account for more than 90% of the Company's net sales, and also
include alternate care facilities such as clinics, surgery centers,
rehabilitation facilities, nursing homes, physicians' offices and home
healthcare. The majority of the Company's sales consist of disposable gloves,
dressings, endoscopic products, intravenous products, needles and syringes,
sterile procedure trays, surgical products and gowns, urological products and
wound closure products. In 1997, the Company reported net sales of $3.12 billion
and net income of $24.3 million.
The Company has significantly expanded its national presence over the last five
years through both internal growth and acquisitions. Since 1992, the Company has
grown from 29 medical distribution centers serving 37 states to 42 distribution
centers serving 50 states and the District of Columbia. In May 1994, the Company
acquired Stuart Medical, Inc. ("Stuart"), then the third largest distributor of
medical and surgical supplies in the United States with 1993 net sales of
approximately $890.5 million.
The Company distributes its products in a low-cost, efficient manner through its
use of advanced warehousing, delivery, purchasing and other techniques. The
Company has reduced the cost of its distribution infrastructure by implementing
warehouse technology, rationalizing its supplier relationships and reducing the
number of stock-keeping units ("SKUs") it carries from 250,000 to 140,000 during
1997.
The Company is committed to providing its customers and suppliers with the most
responsive, efficient and cost effective distribution system for the delivery of
medical and surgical products and services. To meet this commitment, the Company
has implemented the following strategy: (i) maintain the highest quality of
service in the medical/surgical supply distribution industry; (ii) develop and
distribute information technology that enables customers to reduce supply chain
costs and manage inventory more effectively; and (iii) service integrated
healthcare networks.
Recent Operating Results and Developments
For the quarter ended March 31, 1998, the Company's net sales were $798.0
million, an increase of 6.4% from net sales of $749.6 million in the quarter
ended March 31, 1997. Net income increased 35.3% to $6.8 million in the first
quarter of 1998, from $5.0 million in the same period last year. Net income per
common share, basic and diluted, was $0.17 in the first quarter of 1998, up
41.7% from $0.12 in the same period last year.
During the first quarter of 1998, gross margin as a percentage of net sales
increased to 10.3% from 10.0% for the same period in 1997. This improvement
reflects the Company's continuing success with supply chain initiatives.
Selling, general and administrative expenses as a percentage of net sales were
7.6%, up from 7.5% for the same period in 1997. The Company incurred
approximately $0.8 million of expense during the first quarter of 1998
associated with Year 2000 systems remediation efforts.
The Company reduced its outstanding financing by $32.6 million in the first
quarter of 1998. The Company's capitalization ratio was 49.4% at the end of the
first quarter of 1998, compared to 52.9% at the end of the first quarter of
1997, excluding the effect of its accounts receivable securitization facility.
On May 13, 1998, O&M applied substantially all of the proceeds of the Original
Offering to repurchase 1,150,000 shares of its Series B Preferred Stock.
On May 26, 1998, Columbia/HCA Healthcare Corporation ("Columbia/HCA") informed
the Company of its intention to cancel its medical/surgical supply contract. The
terms of this contract, which terminates in May 1999, permit cancellation by
either party without cause on 90 days notice. In 1997, approximately 11% of the
Company's net sales were to Columbia/HCA facilities.
The Company and Columbia/HCA have agreed upon a plan for transition of the
Columbia/HCA business. This plan will result in a reduction in purchases by
Columbia/HCA from the Company beginning in the third quarter of 1998. By the end
of the third quarter, the majority of the Columbia/HCA business should have
transferred from the Company.
4
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The Company's preliminary estimates are that net income will be reduced by
approximately $1.5 million to $2.0 million in 1998 and approximately $3.0
million to $4.0 million in 1999, as the result of the early termination
of this contract. In addition, the Company expects to record a one
time restructuring charge of between $7.0 million and $8.5 million
after taxes in the second quarter of 1998, as a result of the
contract termination. This charge will consist primarily of costs
associated with employee separations and reductions in warehouse
space.
***
The Company is a Virginia corporation incorporated in 1926, succeeding a
partnership founded in Richmond, Virginia in 1882. The Company's executive and
administrative offices are located at 4800 Cox Road, Glen Allen, Virginia 23060
and the Company's telephone number is (804) 747-9794.
5
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The TECONS Offering
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Securities Offered.......................... 2,640,000 $2.6875 Term Convertible Securities, Series A ("TECONS").
Issuer...................................... Owens & Minor Trust I, a Delaware business trust. The sole assets
of the Trust will consist of the 5.375% Junior Subordinated
Convertible Debentures due 2013 (the "Junior Subordinated
Debentures") of O&M.
Guarantor................................... Owens & Minor, Inc., a Virginia corporation.
Distributions............................... Distributions on the TECONS will accumulate from May 13, 1998 and
will be payable at an annual rate of $2.6875 per TECONS. Subject to
the Distribution deferral provisions described below, Distributions
will be payable quarterly in arrears on each January 31, April 30,
July 31 and October 31, commencing July 31, 1998. Because
Distributions on the TECONS constitute interest for U.S. federal
income tax purposes, corporate holders thereof will not be entitled
to a dividends received deduction.
Distribution Deferral Provisions............ The ability of the Trust to pay Distributions on the TECONS is
solely dependent on the receipt of interest payments from O&M on the
Junior Subordinated Debentures. So long as O&M shall not be in
default in the payment of interest on the Junior Subordinated
Debentures, O&M has the right to defer payments of interest on the
Junior Subordinated Debentures from time to time for successive
Extension Periods not exceeding 20 consecutive quarters for each
such period; provided that no such period may extend beyond the
stated maturity of the Junior Subordinated Debentures. Quarterly
Distributions on the TECONS would be deferred by the Trust (but
would continue to accumulate quarterly and accrue interest) until
the end of any such Extension Period. Upon the termination of an
Extension Period, payment is due on all accrued and unpaid amounts
on the Junior Subordinated Debentures and upon such payment, the
Trust would be required to pay all accumulated and unpaid
Distributions. O&M will give notice of its deferral of an interest
payment to the Trust no later than ten business days prior to the
related record date (unless the Property Trustee shall be the sole
holder of the Junior Subordinated Debentures, in which case notice
will be given no later than one business day prior to the earlier of
(i) the next succeeding Interest Payment Date (as defined herein) or
(ii) the date the Company is required to give notice of the related
record date). See "Description of the TECONS - Distributions" and
"Description of the Junior Subordinated Debentures - Option to
Extend Interest Payment Period" and "Risk Factors-- Option to Extend
Interest Payment Period; Tax Impact of Extension." If a deferral of
an interest payment occurs, the holders of the TECONS will accrue
income for U.S. federal income tax purposes in advance of any
corresponding cash Distribution. See "Certain Federal Tax
Consequences-- Interest Income and Original Issue Discount" and
"Risk Factors - Option to Extend Interest Payment Period; Tax Impact
of Extension."
Rights Upon Deferral of Distributions....... During any period in which interest payments on the Junior
Subordinated Debentures are deferred, interest will accrue on the
Junior Subordinated Debentures (compounded quarterly) and quarterly
Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law) at the Distribution rate,
compounded quarterly. O&M has agreed, among other things, not to
declare or pay any dividend on its common stock or preferred stock
or make any guarantee payments with respect thereto during any
Extension Period, provided that the foregoing shall not apply to any
stock dividends payable in O&M Common Stock. See "Description of
the Junior Subordinated Debentures - Option to Extend Interest
Payment Period" and "Risk Factors - Option to Extend Interest
Payment Period; Tax Impact of Extension."
6
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Conversion Rights........................... Each TECONS is convertible at any time prior to the close of
business on April 30, 2013 (or, in the case of TECONS called for
redemption, prior to the close of business on the Business Day (as
defined herein) prior to the applicable redemption date) at the
option of the holder into shares of O&M Common Stock, at the rate
of 2.4242 shares of O&M Common Stock for each TECONS (equivalent to
a conversion price of $20.625 per share of O&M Common Stock for
each TECONS), subject to adjustment in certain circumstances. The
reported last sale price of O&M Common Stock on the NYSE Composite
Tape on June 30, 1998, was $10.00 per share. In connection with
any conversion of a TECONS, the Conversion Agent (as defined
herein) will exchange such TECONS for the appropriate principal
amount of the Junior Subordinated Debentures held for the Trust and
immediately convert such Junior Subordinated Debentures into O&M
Common Stock. No fractional shares of O&M Common Stock will be
issued as a result of conversion, but in lieu thereof such
fractional interest will be paid by O&M in cash. See "Description
of the TECONS-- Conversion Rights."
Liquidation Amount.......................... In the event of any liquidation of the Trust, holders will be
entitled to receive $50 per TECONS plus an amount equal to any
accumulated and unpaid Distributions thereon to the date of payment,
unless Junior Subordinated Debentures are distributed to such
holders. See "Description of the TECONS-- Liquidation Distribution
upon Dissolution."
Redemption.................................. The Junior Subordinated Debentures will be redeemable for cash, at
the option of the Company, in whole or in part, from time to time on
or after May 2, 2001 at the prices specified herein or at any time
in certain circumstances upon the occurrence of a Tax Event at a
redemption price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon, including
Compounded Interest, if any, to the date of redemption. If the
Company redeems Junior Subordinated Debentures, the Trust must
redeem, at the Redemption Price, Trust Securities having an
aggregate liquidation amount equal to the aggregate principal amount
of the Junior Subordinated Debentures so redeemed. The TECONS will
not have a stated maturity date, although they will be subject to
mandatory redemption upon the repayment of the Junior Subordinated
Debentures at their stated maturity (April 30, 2013), upon
acceleration, earlier redemption or otherwise. See "Description of
the TECONS - Mandatory Redemption" and "Description of the Junior
Subordinated Debentures-- Optional Redemption."
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Guarantee................................... O&M will irrevocably and unconditionally guarantee, on a
subordinated basis and to the extent set forth herein, the payment
in full of (i) any accumulated and unpaid Distributions and the
amount payable upon redemption of the TECONS to the extent O&M has
made a payment to the Property Trustee of interest or principal on
the Junior Subordinated Debentures and (ii) generally, the
liquidation amount of the TECONS to the extent the Trust has assets
available for distribution to holders of TECONS. The Guarantee will
be unsecured and will be subordinate and junior in right of payment
to all other liabilities of O&M and will rank pari passu in right of
payment with the most senior preferred stock issued, from time to
time, if any, by O&M. See "Description of the Guarantee."
Voting Rights............................... Generally, holders of the TECONS will not have any voting rights.
If (i) the Property Trustee fails to enforce its rights under the
Junior Subordinated Debentures or (ii) the Guarantee Trustee (as
defined herein) fails to enforce its rights under the Guarantee, a
record holder of the TECONS may institute a legal proceeding
directly against O&M to enforce such rights without first
instituting any legal proceeding against any other person or entity.
Notwithstanding the foregoing, if an Indenture Event of Default (as
defined herein) occurs and is continuing and is attributable to the
failure of O&M to pay interest or principal on the Junior
Subordinated Debentures or O&M has failed to make a Guarantee
Payment (as defined herein), a holder of the TECONS may directly
institute a proceeding against O&M for enforcement of the amount of
such payment to be made to such holder. See "Description of the
TECONS - Voting Rights" and " - Declaration Events of Default."
Special Event Distribution; Tax Event
Redemption.................................. Upon the occurrence of a Special Event (as defined herein), except
in certain limited circumstances, O&M may cause the Trust to be
dissolved and cause the Junior Subordinated Debentures to be
distributed to the holders of the TECONS. In the case of a Tax Event
(as defined herein), O&M may also elect to cause the TECONS to
remain outstanding and pay Additional Interest (as defined herein),
if any, on the Junior Subordinated Debentures. In certain
circumstances upon the occurrence of a Tax Event, the Junior
Subordinated Debentures may be redeemed by O&M at 100% of the
principal amount thereof plus accrued and unpaid interest thereon.
See "Description of the TECONS-- Special Event Redemption or
Distribution."
Junior Subordinated Debentures of O&M....... The Junior Subordinated Debentures will mature on April 30, 2013 and
will bear interest at the rate of 5.375% per annum, payable
quarterly in arrears. So long as O&M shall not be in default in the
payment of interest on the Junior Subordinated Debentures, O&M has
the right to defer payments of interest on the Junior Subordinated
Debentures from time to time for successive periods not exceeding 20
consecutive quarters for each such period; provided that no such
period may extend beyond the stated maturity of the Junior
Subordinated Debentures. Prior to the termination of any Extension
Period, O&M may pay all or a portion of the accrued and unpaid
interest or may further defer interest payments provided the
Extension Period, as previously and further extended, does not
exceed 20 consecutive quarters. During any Extension Period no
interest shall be due, but such interest shall continue to accrue
and compound quarterly. Upon termination of the Extension Period,
payment is due on all accrued and unpaid amounts. After the payment
of all amounts then due, O&M may commence a new Extension Period,
subject to the conditions of this paragraph. During any Extension
Period, O&M will be prohibited from paying dividends on any of its
common stock or preferred stock or making any guarantee payments
with respect thereto; provided that the foregoing shall not apply to
any stock dividend or other stock distribution payable by the
Company. The payment of principal and interest on the Junior
Subordinated Debentures will be subordinated in right of payment to
all present and future Senior and Subordinated Debt of O&M. In
addition, payment of principal and interest on the Junior
Subordinated Debentures will be structurally subordinated to the
liabilities of O&M's subsidiaries. As of March 31, 1998, the
Company had $150.0 million of Senior and Subordinated Debt
outstanding. The Indenture (as defined herein), under which the
Junior Subordinated Debentures will be issued, does not limit the
aggregate amount of Senior and Subordinated Debt that may be
incurred by O&M and does not limit the liabilities of the Company's
subsidiaries. The Junior Subordinated Debentures will have
provisions with respect to interest, optional redemption and
conversion into O&M Common Stock and certain other terms
substantially similar or analogous to those of the TECONS. See
"Description of the Junior Subordinated Debentures" and "Risk
Factors - Leverage and Subordination."
8
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Use of Proceeds............................. There will be no proceeds to the Company or the Trust from the sale
of TECONS pursuant to this Prospectus.
Book-Entry; Delivery and Form............... TECONS sold in reliance on Rule 144A are represented by a single
permanent global TECONS certificate registered in the name of a
nominee of DTC. TECONS sold in offshore transactions in reliance on
Regulation S under the Securities Act are represented by a single
permanent global TECONS in definitive, fully registered form
deposited with the Property Trustee, as custodian for, and
registered in the name of, DTC for the accounts of Morgan Guaranty
Trust Company of New York, Brussels office, as operator of the
Euroclear System ("Euroclear"), and Cedel Bank, S.A. ("Cedel").
TECONS resold under this Prospectus will be represented by a single
permanent global TECONS certificate registered in the name of a
nominee of DTC. See "Description of the TECONS-- Book-Entry;
Delivery and Form" and "-- The Global TECONS."
</TABLE>
Risk Factors
Prospective purchasers of the TECONS should carefully consider the specific
matters set forth under "Risk Factors" as well as the other information and data
included, or incorporated by reference, in this Prospectus prior to making an
investment in the TECONS.
9
<PAGE>
Risk Factors
Prospective investors should consider carefully all the information contained
and incorporated by reference in this Prospectus, including the following risk
factors. This Prospectus contains forward-looking statements that are inherently
uncertain. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Factors that might cause or contribute to such
differences include, but are not limited to, the following risk factors. The
Company assumes no obligation to update the forward-looking information to
reflect actual results or changes in the factors affecting such forward-looking
information.
Dependence on Sales to Certain Customers
In 1997, net sales to member hospitals under contract with VHA, Inc. ("VHA"), a
national healthcare network, represented approximately 40% of the Company's net
sales. The termination of the Company's relationship with VHA would not
necessarily result in the loss of all of its member hospitals as customers, but
there can be no assurance of the effects of such a termination on the Company.
See "Business -- Customers."
On May 26, 1998, Columbia/HCA informed the Company of its intention to cancel
its medical/surgical supply contract. The terms of this contract, which
terminates in May 1999, permit cancellation by either party without cause on 90
days notice. In 1997, approximately 11% of the Company's net sales were to
Columbia/HCA facilities.
The Company and Columbia/HCA have agreed upon a plan for transition of the
Columbia/HCA business. This plan will result in a reduction in purchases by
Columbia/HCA from the Company beginning in the third quarter of 1998. By the end
of the third quarter, the majority of the Columbia/HCA business should have
transferred from the Company.
The Company's preliminary estimates are that net income will be reduced by
approximately $1.5 million to $2.0 million in 1998 and approximately $3.0
million to $4.0 million in 1999, as the result of the early termination of this
contract. In addition, the Company expects to record a one time restructuring
charge of between $7.0 million and $8.5 million after taxes in the second
quarter of 1998, as a result of the contract termination. This charge
will consist primarily of costs associated with employee separations and
reductions in warehouse space.
Competition
The medical/surgical supply distribution industry in the United States is highly
competitive and consists of three major nationwide distributors: the Company,
Allegiance Corporation and McKesson Corp., which acquired General Medical
Corporation in February 1997. The industry also includes Bergen Brunswig Medical
Corporation, which is a wholly owned subsidiary of Bergen Brunswig Corporation
and is a smaller national distributor of medical and surgical products, and a
number of regional and local distributors. Competition within the
medical/surgical supply distribution industry exists with respect to total
delivered product cost, product availability, the ability to fill and invoice
orders accurately, delivery time, efficient computer communication capabilities,
services provided, breadth of product line and inventory management, including
the benefits of information technology and the ability to meet special
requirements of customers.
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. Increased competition from
these and future competitors, including those having greater financial and other
resources than the Company, could reduce sales and prices, adversely affecting
the Company's results of operations. See "Business -- Industry Overview" and
"Business -- Competition."
Changing Healthcare Environment
In recent years, the healthcare industry has undergone significant change driven
by various efforts to reduce costs, including potential national healthcare
reform, trends toward managed care, cuts in Medicare, consolidation of
pharmaceutical and medical and surgical supply distributors and the development
of large, sophisticated purchasing groups. The Company cannot predict whether
any healthcare reform efforts will be enacted and what effect any such reforms
may have on the Company, its practices and products or its customers and
suppliers. Changes in governmental support of healthcare services, the method by
which such services are delivered, the prices for such services or other
legislation or regulations governing such services or mandated benefits may have
a material adverse effect on the Company's results of operations.
10
<PAGE>
Readiness for Year 2000
The Company is dependent upon computer-based systems to conduct its business
with both customers and suppliers. During 1997, the Company completed a
comprehensive review of these systems to identify those that could be affected
by the Year 2000 issue and has developed a strategy for remediation. This
strategy includes retirement of outdated software and replacement or repair of
the remaining software. The Company is also working closely with both customers
and suppliers to ensure that they have developed plans to address the Year 2000
issue. The Company expects that its Year 2000 remediation efforts will be
substantially complete by the end of the first quarter of 1999. Although the
Company expects its remediation efforts to be completed on a timely basis,
failure to do so could have a material adverse effect on the Company's results
of operations.
Legal Proceedings
The Company is a party to various legal actions described under the caption
"Business -- Legal Proceedings." There can be no assurance that an adverse
outcome of such legal actions would not have a material adverse effect on the
Company's results of operations. See "Business -- Legal Proceedings."
Holding Company Structure
The Company conducts business through its direct subsidiaries, Owens & Minor
Medical, Inc. ("O&M Medical") and Stuart, and its indirect subsidiaries and has
no operations of its own. The Company will be dependent on the cash flow from
its subsidiaries in order to meet its debt service obligations, including its
obligations under the Junior Subordinated Debentures.
Subordination
The Junior Subordinated Debentures will be subordinated to all Senior and
Subordinated Debt (as defined herein) including, but not limited to,
indebtedness under the Revolving Credit Facility and the 10.875% Senior
Subordinated Notes due 2006. The obligations of the Company under the Guarantee
are subordinate and junior in right of payment to all liabilities of the Company
and pari passu in right of payment with the most senior preferred stock issued,
from time to time, if any, by the Company. As of March 31, 1998, the Company had
approximately $150.0 million in aggregate principal amount of Senior and
Subordinated Debt.
Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, receivership, reorganization, assignment for the
benefit of creditors, marshaling of assets and liabilities or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of Senior and
Subordinated Debt will first be entitled to receive payment in full of all
amounts due or to become due under all Senior and Subordinated Debt before the
holders of the Junior Subordinated Debentures will be entitled to receive any
payment in respect of the principal of, premium, if any, or interest on such
Junior Subordinated Debentures. No payments on account of principal, premium, if
any, or interest in respect of the Junior Subordinated Debentures may be made if
there shall have occurred and be continuing a default in any payment under any
Senior and Subordinated Debt or during certain periods when an event of default
under certain Senior and Subordinated Debt permits the lenders thereunder to
accelerate the maturing of such Senior and Subordinated Debt. See "Description
of Junior Subordinated Debentures -- Subordination." The Guarantee will rank (i)
subordinate and junior in right of payment to all other liabilities of the
Company, including the Junior Subordinated Debentures, except those made pari
passu or subordinated by their terms and (ii) pari passu in right of payment
with the most senior preferred stock issued, from time to time, if any, by the
Company. See "Description of the Guarantee."
11
<PAGE>
The Junior Subordinated Debentures will be effectively subordinated to the
indebtedness and other obligations (including trade payables) of the Company's
subsidiaries. At March 31, 1998, the obligations of the Company's subsidiaries
aggregated approximately $302.8 million. The ability of the Company to pay
principal of, premium, if any, and interest on the Junior Subordinated
Debentures will be dependent upon the receipt of funds from its subsidiaries by
way of dividends, fees, interest, loans or otherwise. There are no terms in the
Junior Subordinated Debentures, the TECONS or the Guarantee that limit the
Company's or its subsidiaries' ability to incur additional indebtedness. The
Company's subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the
Junior Subordinated Debentures or the TECONS or to make any funds available
therefor, whether by dividends, loans or other payments, and do not guarantee
the payment of interest or distributions on or principal of the Junior
Subordinated Debentures or the TECONS. Any right of the Company to receive any
assets of any of its subsidiaries upon any liquidation, dissolution, winding up,
receivership, reorganization, assignment for the benefit of creditors,
marshaling of assets and liabilities or any bankruptcy, insolvency or similar
proceedings of the Company (and the consequent right of the holders of the
Junior Subordinated Debentures and the TECONS to participate in the distribution
of, or to realize proceeds from, those assets) will be effectively subordinated
to the claims of any such subsidiary's creditors (including trade creditors and
holders of debt issued by such subsidiary). The Company currently conducts
substantially all of its operations through its subsidiaries. See "Description
of the Guarantee" and "Description of the Junior Subordinated Debentures --
Subordination."
Risk of Fraudulent Transfer
Various fraudulent conveyance laws have been enacted for the protection of
creditors and may be applied by a court on behalf of any unpaid creditor or a
representative of O&M's creditors in a lawsuit to subordinate or avoid the
Junior Subordinated Debentures in favor of other existing or future creditors of
O&M. Under applicable provisions of the U.S. Bankruptcy Code or comparable
provisions of state fraudulent transfer or conveyance laws, if O&M at the time
of issuance of the Junior Subordinated Debentures, (i) incurred such
indebtedness with intent to hinder, delay or defraud any present or future
creditor of O&M or contemplated insolvency with a design to prefer one or more
creditors to the exclusion in whole or in part of others or (ii) received less
than reasonably equivalent value or fair consideration for issuing the Junior
Subordinated Debentures and O&M (a) was insolvent, (b) was rendered insolvent by
reason of the issuance of the Junior Subordinated Debentures, (c) was engaged or
about to engage in business or a transaction for which the remaining assets of
O&M constitute unreasonably small capital to carry on its business or (d)
intended to incur, or believed that it would incur, debts beyond its ability to
pay such debts as they mature, then, in each case, a court of competent
jurisdiction could void, in whole or in part, the Junior Subordinated
Debentures. Among other things, a legal challenge of the Junior Subordinated
Debentures on fraudulent conveyance grounds may focus on the benefits, if any,
realized by O&M as a result of the issuance by O&M of the Junior Subordinated
Debentures.
The measure of insolvency for purposes of the foregoing will vary depending upon
the law applied in such case. Generally, however, O&M would be considered
insolvent if the sum of its debts, including contingent liabilities, were
greater than all of its assets at fair valuation or if the present fair market
value of its assets were less than the amount that would be required to pay the
probable liability on its existing debts, including contingent liabilities, as
they become absolute and mature. There can be no assurance that, after providing
for all prior claims, there will be sufficient assets to satisfy the claims of
the holders of the Junior Subordinated Debentures.
Management believes that, for purposes of all such insolvency, bankruptcy and
fraudulent transfer or conveyance laws, the Junior Subordinated Debentures are
being incurred without the intent to hinder, delay or defraud creditors and for
proper purposes and in good faith, and that O&M after the issuance of the Junior
Subordinated Debentures will be solvent, will have sufficient capital for
carrying on its business and will be able to pay its debts as they mature. There
can be no assurance, however, that a court passing on such questions would agree
with management's view.
Ability of O&M Trust to Make Distributions
The ability of O&M Trust to make distributions and other payments on the TECONS
is solely dependent upon the Company making interest and other payments on the
Junior Subordinated Debentures deposited as trust assets as and when required.
If the Company were not to make distributions or other payments on the Junior
Subordinated Debentures for any reason, including as a result of the Company's
election to defer the payment of interest on the Junior Subordinated Debentures
by extending the interest period on the Junior Subordinated Debentures, O&M
Trust will not make payments on the Trust Securities. In such an event, holders
of the TECONS would not be able to rely on the Guarantee since distributions and
other payments on the TECONS are subject to the Guarantee only if and to the
extent that the Company has made a payment to the Property Trustee of interest
or principal on the Junior Subordinated Debentures deposited in the Trust as
trust assets. Instead, holders of TECONS would rely on the enforcement by the
Property Trustee of its rights as registered holder of the Junior Subordinated
Debentures against the Company pursuant to the terms of the Indenture (as
defined herein). However, if the Trust's failure to make distributions on the
TECONS is a consequence of the Company's exercise of its right to extend the
interest payment period for the Junior Subordinated Debentures, the Property
Trustee will have no right to enforce the payment of distributions on the TECONS
until an Event of Default (as defined herein) under the Declaration (as defined
herein) shall have occurred.
12
<PAGE>
The Declaration provides that the Company shall pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of O&M Trust, including any taxes and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United States
withholding taxes. No assurance can be given that the Company will have
sufficient resources to enable it to pay such debts, obligations, costs and
expenses on behalf of the Trust.
Option to Extend Interest Payment Period; Tax Impact of Extension
So long as the Company shall not be in default in the payment of interest on the
Junior Subordinated Debentures, the Company has the right under the Indenture to
defer payments of interest on the Junior Subordinated Debentures by extending
the interest payment period from time to time on the Junior Subordinated
Debentures for an extension period not exceeding 20 consecutive quarterly
interest periods (an "Extension Period"), during which no interest shall be due
and payable. In such an event, quarterly distributions on the TECONS would not
be made by the Trust during any such Extension Period. If the Company exercises
the right to extend an interest payment period, the Company may not during such
Extension Period declare or pay dividends on, or redeem, purchase, acquire or
make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock; provided that (i) the Company will be permitted to pay
accumulated dividends upon the exchange or redemption of any series of preferred
stock of the Company as may be outstanding from time to time, in accordance with
the terms of such stock and (ii) the foregoing will not apply to stock dividends
paid by the Company. Under its Amended and Restated Certificate of
Incorporation, the Company is authorized to issue up to 10,000,000 shares of
preferred stock. As of June 30, 1998, no shares of the Company's preferred stock
were outstanding. The Company may from time to time offer shares of its
preferred stock to the public.
Prior to the termination of any Extension Period, the Company may further extend
such Extension Period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. The Company may also prepay at any
time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debentures, not to exceed 20
consecutive quarters or to cause any extension beyond the maturity of the Junior
Subordinated Debentures.
Should an Extension Period occur, a holder of TECONS will accrue income (in the
form of original issue discount) for United States federal income tax purposes
in respect of its pro rata share of the Junior Subordinated Debentures held by
the Trust. As a result, a holder of TECONS will include such interest income in
gross income for United States federal income tax purposes in advance of the
receipt of cash attributable to such original issue discount interest income,
and will not receive the cash related to such income from the Trust if the
holder disposes of the TECONS prior to the record date for the payment of
distributions with respect to such Extension Period. See "Certain Federal Tax
Consequences -- Interest Income and Original Issue Discount" and " -- Sale or
Redemption of TECONS."
13
<PAGE>
The Company has no current intention of exercising its right to defer payments
of interest by extending the interest payment period on the Junior Subordinated
Debentures. However, should the Company elect to exercise such right in the
future, the market price of the TECONS is likely to be affected. A holder that
disposes of its TECONS during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its TECONS.
In addition, as a result of the existence of the Company's right to defer
interest payments, the market price of the TECONS (which represents preferred
undivided beneficial interests in the assets of the Trust) may be more volatile
than the market prices of other securities on which original issue discount
accrues that are not subject to such deferrals.
Special Event Redemption or Distribution
Upon the occurrence and during the continuation of a Tax Event or Investment
Company Event (each as defined herein), which may occur at any time, the Trust
shall, unless the Junior Subordinated Debentures are redeemed in the limited
circumstances described below, be dissolved with the result that Junior
Subordinated Debentures having an aggregate principal amount equal to the
aggregate stated liquidation amount of the TECONS and Common Securities would be
distributed on a Pro Rata Basis (as defined herein) to the holders of the TECONS
and Common Securities in liquidation of such Trust. In the case of a Tax Event,
in certain circumstances, the Company shall have the right to redeem at any time
the Junior Subordinated Debentures in whole or in part, in which event the Trust
will redeem TECONS and Common Securities on a Pro Rata Basis to the same extent
as the Junior Subordinated Debentures are redeemed. There can be no assurance as
to the market prices for TECONS or the Junior Subordinated Debentures which may
be distributed in exchange for TECONS if a dissolution and liquidation of the
Trust were to occur. Accordingly, the TECONS that an investor may purchase, or
the Junior Subordinated Debentures that the investor may receive on dissolution
and liquidation of the Trust, may trade at a discount to the price that the
investor paid to purchase the TECONS, offered hereby. Because holders of TECONS
may receive Junior Subordinated Debentures upon the occurrence of a Special
Event (as defined herein), prospective purchasers of TECONS are also making an
investment decision with regard to the Junior Subordinated Debentures and should
carefully review all the information regarding the Junior Subordinated
Debentures.
There can be no assurance that future federal legislation will not prevent the
Company from deducting interest on the Junior Subordinated Debentures. This
would constitute a Tax Event and could result in the distribution of any Junior
Subordinated Debentures to holders of the TECONS or, in certain circumstances,
the redemption of such securities by the Company and the distribution of the
resulting cash in redemption of the TECONS.
"Tax Event" means that the Regular Trustees (as defined herein) shall have
obtained an opinion of a nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that on
or after the date of the Prospectus as a result of (a) any amendment to, or
change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any legislative
body, court, governmental agency or regulatory authority (including the
enactment of any legislation and the publication of any judicial decision or
regulatory determination), (c) any interpretation or pronouncement that provides
for a position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or effective or which interpretation or
pronouncement is issued or announced or which action is taken, in each case on
or after the date of the Prospectus (including, without limitation, any of the
foregoing arising with respect to, or resulting from, any proposal, proceeding
or other action commencing on or before the date of this Prospectus), there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
of the date thereof, subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Debentures, (ii) the Trust
is, or will be within 90 days of the date thereof, subject to more than a de
minimis amount of other taxes, duties or other governmental charges or (iii)
interest payable by the Company to the Trust on the Junior Subordinated
Debentures is not, or within 90 days of the date thereof will not be, deductible
by the Company for United States federal income tax purposes. According to a
petition recently filed in the United States Tax Court by a corporation
unrelated to the Company and the Trust, the Internal Revenue Service has
challenged the deductibility for United States federal income tax purposes of
interest payments on certain purported debt instruments held by entities
intended to be taxable as partnerships for United States federal income tax
purposes, where those entities, in turn, issued preferred securities to
investors. Although the overall structure of the financing arrangement involved
in that case is somewhat similar to the financing structure for the Junior
Subordinated Debentures and the Trust, the relevant facts in that case appear to
differ significantly from those relating to the Junior Subordinated Debentures
and the Trust. Whether the Internal Revenue Service would attempt to challenge
the deductibility of interest on the Junior Subordinated Debentures cannot be
predicted. The Company, based on the advice of counsel, intends to take the
position that interest payments on the Junior Subordinated Debentures will be
deductible by the Company for United States federal income tax purposes. See
"Certain Federal Tax Consequences -- Classification of the Junior Subordinated
Debentures." Adverse developments relating to the deductibility of interest,
whether arising in connection with the case currently pending in the United
States Tax Court or not, could give rise to a Tax Event.
14
<PAGE>
"Investment Company Event" means that the Regular Trustees shall have received
an opinion of nationally recognized independent counsel experienced in practice
under the Investment Company Act of 1940, as amended (the "1940 Act"), that as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date of any
accompanying Prospectus relating to Junior Subordinated Debentures.
"Special Event" means a Tax Event or an Investment Company Event.
Limited Voting Rights
Generally, holders of TECONS will not have any voting rights, and will not be
able to appoint, remove or replace, or to increase or decrease the number of,
Trustees, which rights are vested exclusively in the holders of the Common
Securities.
Trading Prices of TECONS
The TECONS may trade at a price that does not fully reflect the value of accrued
but unpaid interest with respect to the underlying Junior Subordinated
Debentures. A holder who disposes of its TECONS between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest on the Junior Subordinated Debentures through the date of disposition
in income as ordinary income, and to add such amount to its adjusted tax basis
in its pro rata share of the underlying Junior Subordinated Debentures deemed
disposed of. Accordingly, such a holder will recognize a capital loss to the
extent the selling price (which may not fully reflect the value of accrued but
unpaid interest) is less than the holders adjusted tax basis (which will include
accrued but unpaid interest). Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
Potential Market Volatility During Extension Period
As described above, the Company has the right to extend an interest payment
period on the Junior Subordinated Debentures from time to time for a period not
exceeding 20 consecutive quarterly interest periods. If the Company determines
to extend an interest payment period, or if the Company thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the TECONS is likely to be affected. In
addition, as a result of such rights, the market price of the TECONS (which
represent an undivided interest in Junior Subordinated Debentures) may be more
volatile than other securities on which original issue discount accrues that do
not have such rights. A holder that disposes of its TECONS during an Extension
Period, therefore, may not receive the same return on its investment as a holder
that continues to hold its TECONS.
Possible Price Volatility of the TECONS and Lack of Public Market
There can be no assurance that an active trading market for the TECONS will
develop or be sustained. If such a market were to develop, the TECONS could
trade at prices that may be higher or lower than their offering price depending
upon many factors, including prevailing interest rates, the Company's operating
results and the markets for similar securities. Historically, the market for
non-investment grade debt has demonstrated substantial volatility in the prices
of securities similar to the TECONS. There can be no assurance that the future
market for the TECONS will not be subject to similar volatility. Accordingly, no
assurance can be given as to the liquidity of the TECONS.
15
<PAGE>
The Initial Purchasers have informed the Company that they currently intend to
make a market in the TECONS. However, they are not obligated to do so, and any
such market making may be discontinued at any time without notice. See "Plan of
Distribution."
16
<PAGE>
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividend Requirements
The following table sets forth the ratio of earnings to combined fixed charges
and preferred stock dividend requirements.
<TABLE>
<CAPTION>
Three Months
Year ended December 31, Ended March 31,
----------------------- ---------------
1993 1994 1995 1996 1997 1998
---------------------------------------------------------------
<S> <C>
Ratio of earnings to combined fixed
charges and preferred stock dividend
requirements ............................. 6.23 1.35 0.48(1) 1.32 1.83 1.96
</TABLE>
- -------------------
(1) Earnings are inadequate by $20.4 million to cover combined fixed charges
and preferred stock dividend requirements.
The ratio of earnings to combined fixed charges and preferred stock dividend
requirements represents the number of times combined fixed charges and the
preferred stock dividend requirements are covered by earnings. For purposes of
computing this ratio, earnings consist of income (loss) from continuing
operations before income tax provision (benefit), plus fixed charges. Fixed
charges consist of net interest expense, discount on accounts receivable
securitization, amortization of debt issuance costs and such portion of rental
expense which the Company estimates to be representative of the interest factor
attributable to such rental expense. The preferred stock dividend requirements
are computed by increasing the preferred stock dividend by an amount
representing the pre-tax earnings which would be required to cover such
preferred stock dividend requirements. A statement setting forth the computation
of the above ratios is on file as an exhibit to the Registration Statement of
which this Prospectus is a part.
During the period from May 10, 1994 until May 13, 1998, 1,150,000 shares of the
Company's Series B Preferred Stock were outstanding, and during that period the
Company paid Preferred Stock dividends of approximately $20.7 million. On May
13, 1998, O&M applied substantially all of the proceeds of the Original
Offering to repurchase 1,150,000 shares of its Series B Preferred Stock.
Use of Proceeds
There will be no proceeds to the Company or the Trust from the sale of the
TECONS pursuant to this Prospectus.
Price Range of Common Stock and Dividends
O&M Common Stock trades on the NYSE under the symbol "OMI." The following table
sets forth for the periods indicated the high and low prices for the Common
Stock as reported on the NYSE Composite Tape.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C>
1996
- ----
First Quarter................................................. $12.75 $11.25
Second Quarter................................................ 14.38 11.63
Third Quarter................................................. 11.75 9.25
Fourth Quarter................................................ 10.88 9.25
1997
- ----
First Quarter................................................. $11.38 $9.75
Second Quarter................................................ 16.25 10.75
Third Quarter................................................. 15.38 12.63
Fourth Quarter................................................ 14.88 13.13
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1998
- -----
First Quarter................................................. $19.88 $13.13
Second Quarter................................................ 18.88 10.00
</TABLE>
On June 30, 1998, the reported last sale price of O&M Common Stock on the NYSE
Composite Tape was $10.00 per share. As of June 30, 1998, there were
approximately 14,400 common shareholders.
The Company paid cash dividends to common shareholders of $0.045 per share in
each quarter of 1996 and 1997 and $0.05 per share in each of the first quarter
and the second quarter of 1998. Covenants in the Company's Revolving Credit
Facility and indenture for the Existing Notes restrict the ability of the
Company to pay cash dividends on its common stock.
18
<PAGE>
Business
Overview of the Company
O&M is one of the two largest distributors of medical and surgical supplies in
the United States. The Company stocks and distributes approximately 140,000
finished medical and surgical products produced by approximately 2,400 suppliers
to approximately 4,000 customers from 42 distribution centers nationwide. The
Company's customers are primarily acute care hospitals and hospital-based
systems, which account for more than 90% of the Company's net sales, and also
include alternate care facilities such as clinics, surgery centers,
rehabilitation facilities, nursing homes, physicians' offices and home
healthcare. The majority of the Company's sales consist of disposable gloves,
dressings, endoscopic products, intravenous products, needles and syringes,
sterile procedure trays, surgical products and gowns, urological products and
wound closure products. In 1997, the Company reported net sales of $3.12 billion
and net income of $24.3 million.
The Company has significantly expanded its national presence over the last five
years through both internal growth and acquisitions. Since 1992, the Company has
grown from 29 medical distribution centers serving 37 states to 42 distribution
centers serving 50 states and the District of Columbia. In May 1994, the Company
acquired Stuart, then the third largest distributor of medical and surgical
supplies in the United States with 1993 net sales of approximately $890.5
million.
The Company distributes its products in a low-cost, efficient manner through its
use of advanced warehousing, delivery, purchasing and other techniques. The
Company has reduced the cost of its distribution infrastructure by implementing
warehouse technology, rationalizing its supplier relationships and reducing the
number of SKUs it carries from 250,000 to 140,000 during 1997.
Business Strategy
The Company is committed to providing its customers and suppliers with the most
responsive, efficient and cost effective distribution system for the delivery of
medical and surgical products and services. To meet this commitment, the Company
has implemented the following strategy:
(i) Maintain the highest quality of service in the medical/surgical supply
distribution industry. O&M distributes approximately 140,000 medical and
surgical supplies to approximately 4,000 customers nationwide. The Company
maintains its high quality distribution services by providing customers with
local sales and service support and timely delivery of supplies. In addition,
the Company provides services to assist customers with cost containment,
efficiency and standardization.
(ii) Convert information into knowledge into profits. The Company has created a
valuable database of information from its customers and suppliers as well as
from its own internal activities. The Company uses this information about
product usage, ordering patterns and supplier agreements to help customers
reduce delivery costs and manage inventory more effectively. For example, the
Company's CostTrack activity-based management program enables customers to
select the distribution services that are most valuable to them and to make
process changes that reduce system costs. The Company's Decision Support System
("DSS") enables the Company to provide customers with account-specific
information on product usage and ordering patterns.
(iii) Service integrated healthcare networks. Major acute care hospitals have
become hospital consolidators, aligning with or acquiring outpatient and
long-term care facilities to form integrated healthcare networks ("IHNs"). The
Company works as a partner with IHNs to identify and fulfill the distinct order
management and distribution needs of the various segments of each network. Using
technological tools, the Company assists its IHN customers to operate as unified
networks, align business functions, standardize products and reduce costs. For
instance, with DSS, the Company can provide the IHN with comparisons of product
usage, ordering and pricing patterns for each of the facilities within the
network so that the IHN can standardize its facilities with the appropriate
products at the lowest cost.
19
<PAGE>
Industry Overview
Distributors of medical and surgical supplies provide a wide variety of medical
and surgical products to healthcare providers, including hospitals and
hospital-based systems, IHNs and alternate care providers. In recent years, the
medical/surgical supply distribution industry has grown due to the rising
consumption of medical and surgical supplies. The increase in consumption has
been the result of an aging population and emerging medical technology resulting
in new healthcare procedures and products. The healthcare industry has also been
characterized by the consolidation of healthcare providers into larger and more
sophisticated entities that are increasingly seeking lower procurement costs and
incremental services through a broad distribution network capable of meeting all
of their inventory management needs. In recent years, major acute care hospitals
have become hospital consolidators, aligning with or acquiring any number of
outpatient and long-term care facilities to form IHNs. As a whole, these IHNs
provide a full continuum of inpatient, outpatient and long-term care and are
looking for partners to fulfill the distinct order management and distribution
needs of their entire network.
The traditional role of a distributor involves warehousing and delivering
medical and surgical supplies to a customer. Increasingly, distributors assist
their partners to operate as a more unified network and act as asset managers.
The quality of information generated by a national distributor, in terms of its
ability to discern utilization patterns across a broad spectrum of products,
customers and locations, is more useful to both suppliers and customers than
that of smaller distributors. Larger distributors are offering a wide array of
customized asset management services, including enhanced inventory management
services that provide a continuous inventory replenishment process ("CRP"),
asset management consulting and stockless and just-in-time inventory programs.
These services have been built upon the large distributors' capabilities to
develop and manage large databases of information with the flexibility to
interact with various customer needs. The Company expects that further
consolidation in the medical/surgical supply distribution industry will continue
because of the competitive advantages enjoyed by larger distributors.
Customers
The Company currently markets its distribution services to approximately 4,000
healthcare providers, including hospitals, IHNs and alternate care providers.
O&M contracts with these providers directly and through national healthcare
networks ("Networks") and group purchasing organizations ("GPOs").
National Healthcare Networks and Group Purchasing Organizations
Networks and GPOs are entities that act on behalf of a group of healthcare
providers to obtain pricing and other benefits that may be unavailable to
individual members. Hospitals, physicians and other types of healthcare
providers have joined Networks and GPOs to obtain services from medical and
surgical supply distributors ranging from discounted product pricing to
logistical and clinical support. Networks and GPOs negotiate directly with both
medical and surgical product suppliers and distributors on behalf of their
members, establishing exclusive or multi-supplier relationships.
Networks and GPOs do not issue purchase orders or collect funds on behalf of
their members and they cannot ensure that members will purchase their supplies
from a given supplier. Because the combined purchasing volumes of their member
institutions are very large, Networks and GPOs have the buying power to
negotiate price discounts for the most commonly used medical and surgical
products and for logistical services without having to guarantee minimum
purchasing volumes. Members may belong to more than one Network or GPO, and they
are also free to negotiate directly with distributors and suppliers. As a
result, healthcare providers often select the best pricing and other benefits
from among those offered through several Networks and GPOs. Most Networks and
GPOs do not compel members to use O&M when it is the Network's or the GPO's
primary distributor. O&M believes that, in such circumstances, the incentives
for Network or GPO members to buy supplies through the Network's or GPO's
contract with the Company are strong. The Company plans to continue to maintain
and strengthen its relationships with selected Networks and GPOs as a means of
securing its leading market position. Sales to the Company's top five Network or
GPO customers represented approximately 78% of its net sales in 1997. Since
1985, the Company has been a distributor for VHA, one of the largest provider
networks for not-for-profit hospitals, representing over 1,500 healthcare
organizations. Sales to members of VHA represented approximately 40% of the
Company's net sales in 1997.
20
<PAGE>
Integrated Healthcare Networks
An IHN is an organization which is composed of several healthcare facilities
that jointly offer a variety of healthcare services in a given market. These
providers may be individual not-for-profit or investor-owned entities that are
joined by a formal business arrangement, or they may all be part of the same
legal entity. An IHN is distinguished by the fact that it is typically a network
of different types of healthcare providers that are strategically located within
a defined service area and seeks to offer a broad spectrum of healthcare
services and comprehensive geographic coverage to a particular local market.
Although an IHN may include alternate care facilities, hospitals are usually the
key component of any IHN.
O&M believes that IHNs have become increasingly important because of their
expanding role in healthcare delivery and cost containment and their reliance
upon the hospital, O&M's traditional customer, as a key component of their
organizations. Individual healthcare providers within a multiple-entity IHN may
be able to contract individually for distribution services; however, O&M
believes that the providers' shared economic interests create strong incentives
for participation in distribution contracts which are established at the system
level. Additionally, single-entity IHNs are usually committed to using the
primary distributor designated at the corporate level because they are all part
of the same legal entity. Because IHNs frequently rely on cost containment as a
competitive advantage, IHNs have become an important source of demand for O&M's
enhanced inventory management and other value-added services.
Since 1994, the Company has been the primary distributor for Columbia/HCA, an
investor-owned system of hospitals and alternate care facilities. The Company
provides distribution and other inventory management services to Columbia/HCA
hospitals and alternate care facilities. Columbia/HCA is the Company's largest
IHN customer, owning over 300 hospitals and over 600 alternate care providers
throughout the United States.
On May 26, 1998, Columbia/HCA informed the Company of its intention to cancel
its medical/surgical supply contract. The terms of this contract, which
terminates in May 1999, permit cancellation by either party without cause on
90 days notice. In 1997, approximately 11% of the Company's net sales were
to Columbia/HCA facilities.
The Company and Columbia/HCA have agreed upon a plan for transition of the
Columbia/HCA business. This plan will result in a reduction in purchases by
Columbia/HCA from the Company beginning in the third quarter of 1998. By the end
of the third quarter, the majority of the Columbia/HCA business should have
transferred from the Company.
The Company's preliminary estimates are that net income will be reduced by
approximately $1.5 million to $2.0 million in 1998 and approximately $3.0
million to $4.0 million in 1999, as the result of the early termination of this
contract. In addition, the Company expects to record a one time restructuring
charge of between $7.0 million and $8.5 million after taxes in the second
quarter of 1998, as a result of the contract termination. This charge
will consist primarily of costs associated with employee separations and
reductions in warehouse space.
Individual Providers
In addition to contracting with healthcare providers at the IHN level and
through Networks and GPOs, O&M contracts directly with healthcare providers. In
1997, not-for-profit hospitals represented a majority of these facilities.
Contracts and Pricing
Industry practice is for healthcare providers to negotiate product pricing
directly with suppliers and then negotiate distribution pricing terms with
distributors. Contracts in the medical/surgical supply distribution industry
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. Accordingly, most of the Company's contracts with customers
do not guarantee minimum sales volumes. The Company continuously makes proposals
for the acquisition of new contracts from existing and possible new customers
and the retention of business from existing customers. There can be no assurance
that the Company will retain any particular contracts when they come up for
renewal or that it will obtain any new contracts for which proposals are
requested.
21
<PAGE>
The majority of the Company's contracts compensate the Company on a cost-plus
percentage basis under which a negotiated percentage distributor fee is added to
the product cost agreed to by the customer and the supplier. This negotiated
distributor fee is calculated either on a fixed cost-plus percentage basis or a
variable cost-plus percentage basis that varies according to the services
rendered and the dollar volume of purchases. Under this variable type of
pricing, as the Company's sales to an institution grow, the cost-plus pricing
charged to the customer decreases. Additionally, the Company has contracts that
charge incremental fees for additional distribution and enhanced inventory
management services, such as more frequent deliveries and distribution of
products in small units of measure. Although the Company's marketing and sales
personnel based in the distribution centers negotiate local contracts and
pricing levels with customers, management has established minimum pricing levels
and a contract review process.
Services
The Company's core competency is the timely and accurate delivery of bulk
medical and surgical supplies at a low cost. In addition to these core
distribution services, the Company offers flexible delivery alternatives
supported by inventory management services to meet the varying needs of its
customers. See "Business -- Asset Management."
The Company's information technology ("IT") systems enable the Company to offer
its customers the following services to minimize their inventory holding
requirements:
Focus on Consolidation, Utilization & Standardization (FOCUS). The FOCUS program
drives standardization and consolidation that increases the volume of purchases
from the Company's most efficient suppliers and provides operational benefit for
customers.
CostTrack. CostTrack is an activity-based costing and pricing model that allows
management to identify the cost-drivers in specific distribution activities,
giving customers the information they need to make decisions about the
distribution services they require. CostTrack is also used to price value-added
services accurately.
Decision Support System. DSS enables the Company to customize and analyze
information for its customers so that they can make better, well-supported
business decisions. Through distribution activities, the Company collects and
stores a wealth of information about customers' product usage, ordering patterns
and contractual agreements with suppliers. This leading-edge technology enables
comparisons of information about product usage, ordering and pricing for each of
the facilities within an integrated healthcare network. With this information in
hand, a customer can standardize all facilities on the right products at the
lowest cost.
PANDAC(R). The PANDAC(R) wound closure management system provides customers with
an accurate evaluation of their current wound closure inventories and usage
levels in order to reduce costs for wound closure products. The Company
guarantees that PANDAC(R) will generate a minimum of 5% savings in total wound
closure inventory expenditures during its first year of use.
Information Technology
O&M makes major investments each year in IT to improve operational efficiency,
enhance business decision making and support supply chain management initiatives
with customers and suppliers.
Electronic Data Interchange is an integral part of the Company's IT and business
strategy, and the Company is at the forefront in using electronic commerce
technologies with customers and suppliers for efficient purchasing, invoicing,
funds transfer and contract pricing. Computer-to-computer transfer of data
through EDI significantly reduces the paperwork and manual effort required to
process business transactions and is a key contributor to the Company's
operational efficiency. With the rapid evolution of the Internet, the Company is
responding in 1998 with the introduction of an electronic product catalog and an
Internet-based direct ordering system for use by customers.
In 1997, the Company introduced its data warehousing system and DSS. DSS, which
won the Data Warehousing Institute 1997 Best Practices Award, gives users
throughout the Company the ability to access a repository of business data for
ad hoc reporting and analysis. Selected customers are also using the DSS
information to make cost saving decisions related to product standardization and
utilization. In 1998, the DSS capabilities will be made available to customers
and suppliers.
22
<PAGE>
Currently, the majority of the Company's computing needs is met by traditional
mainframe-based software applications. A new inventory forecasting system
implemented during 1996 was the Company's first client/server application, and
the Company continues to enhance this inventory forecasting system. In 1998, O&M
will be undertaking a major initiative to implement a new client/server
warehouse management system in all operating Divisions. This new system will
enable the Company to standardize warehousing business practices across the
country and to continue to promote operational efficiency.
The Company is working to ensure that its systems are date compliant for the
next millennium, and is either replacing, repairing or retiring computer
hardware, system software and business applications as needed to ensure Year
2000 compliance. The Company is also working closely with customers and
suppliers to ensure that they have developed plans to address the Year 2000
issue. The Company expects that its Year 2000 remediation efforts will be
substantially complete by the end of the first quarter of 1999.
Sales and Marketing
The Company's sales and marketing force is organized on a decentralized basis in
order to provide individualized services to customers by giving the local sales
force at each distribution center the discretion to respond to customers' needs
quickly and efficiently. The sales and marketing force, which is divided into
three tiers, consists of approximately 240 locally based sales personnel. In
order to ensure that all of the Company's customers receive high levels of
customer service, each tier of the sales force is dedicated to specific
functions. The first tier of the Company's sales force focuses on developing
relationships with large hospitals, IHN customers and certain alternate site
customers. The second tier, the sales representatives, aims to increase
penetration of existing accounts and provides daily support services to existing
accounts. The remaining tier, the Company's customer service representatives,
provides general daily support and information to new and existing customers.
Corporate personnel and IT employees work closely with the local sales force to
support the marketing of O&M's inventory management capabilities and the
strengthening of customer relationships.
All division sales and marketing personnel receive performance based
compensation aligned with customer satisfaction and O&M's financial performance.
In addition, the Company, with the support of its suppliers, emphasizes quality
and IT in comprehensive training programs for its sales and marketing force to
sharpen customer service skills. In order to respond rapidly to their customers'
needs, all marketing and sales personnel are equipped with laptop computers that
provide access to (i) order, inventory and payment status, (ii) customized
reporting and data analysis and (iii) computer programs, such as CostTrack and
PANDAC(R).
Suppliers
The Company believes that its size, strong, long-standing relationships and
independence enable it to obtain attractive terms and incentives from suppliers
and contribute significantly to the Company's gross margin. The Company conducts
business with approximately 2,400 suppliers and has well established
relationships with virtually all of the major suppliers of medical and surgical
supplies. Approximately 20% of the Company's net sales in 1997 were sales of
Johnson & Johnson Hospital Services, Inc. products.
Distribution
The Company employs a decentralized approach to sales and customer service,
operating 42 distribution centers throughout the United States. The Company's
distribution centers currently provide products and services to customers in 50
states and the District of Columbia. The range of products and customer and
administrative services provided by a particular distribution facility are
determined by the characteristics of the market it serves. Most distribution
centers are managed as separate profit centers. Most functions, including
purchasing, customer service, warehousing, sales, delivery and basic financial
tasks, are conducted at the distribution center and are supported by corporate
personnel. Although the Company continues to seek opportunities to reduce costs,
it still supports the belief that the decentralized nature of its distribution
system provides customers with flexible and individualized service and
contributes to overall cost reductions.
The Company delivers most medical and surgical supplies with a leased fleet of
trucks. Distribution centers generally service hospitals and other customers
within, on average, a 100 to 150 mile radius. Parcel services are used to
transport all other medical and surgical supplies. The frequency of deliveries
from distribution centers to principal accounts varies by customer account.
23
<PAGE>
Asset Management
The Company aims to provide the highest quality of service in the
medical/surgical supply distribution industry by focusing on providing suppliers
and customers with local sales and service support and the most responsive,
efficient and cost effective distribution of medical and surgical products. The
Company draws on technology to provide a broad range of value-added services in
order to attract and retain customers and suppliers and control inventory and
accounts receivable. The Company has made significant investments in information
technology and advanced warehousing, delivery and purchasing techniques to help
customers reduce delivery costs, manage inventory more effectively and
electronically place orders for supplies.
Inventory
Due to the Company's significant investment in inventory to meet the rapid
delivery requirements of its customers, efficient asset management is essential
to the Company's profitability. O&M maintains inventories of approximately
140,000 finished medical and surgical products produced or distributed by
approximately 2,400 suppliers. The majority of these products consists of
disposable gloves, dressings, endoscopic products, intravenous products, needles
and syringes, sterile procedure trays, surgical products and gowns, urological
products and wound closure products. The significant and ongoing emphasis on
cost control in the healthcare industry puts pressure on distributors and
healthcare providers to create more efficient inventory management systems.
The Company has responded to these ongoing changes by developing and improving
warehousing techniques, including the use of radio-frequency hand-held computers
and bar-coded labels that identify location, routing and inventory picking and
replacement, to allow the Company to monitor inventory throughout its
distribution systems. The Company has implemented additional programs to manage
inventory including a client/server based inventory forecasting system,
warehouse slotting and reconfiguration techniques, CRP and FOCUS. The
forecasting system uses historical information to analyze current and historic
trends to reduce the cost of carrying unnecessary inventory and to increase
inventory turnover. CRP, which utilizes computer-to-computer interfaces, allows
suppliers to monitor daily sales and inventory levels so that they can
automatically and accurately replenish the Company's inventory. The FOCUS
program is the Company's product standardization and consolidation initiative.
By increasing the volume of purchases from its most efficient suppliers, the
Company reduces operational costs for its customers, its suppliers and itself.
To qualify as a FOCUS partner, the Company requires participating suppliers to
satisfy minimum requirements, such as automated purchasing, exceeding minimum
fill rates and offering a flexible returned goods policy.
In 1997, the Company reduced its number of SKUs to approximately 140,000 from
250,000 and also reduced the number of suppliers with which it conducts business
from approximately 3,000 to 2,400. In addition, the Company increased its
inventory turnover to 9.9 times at December 31, 1997 from 8.9 times at December
31, 1996.
Accounts Receivable
The Company's credit practices are consistent with those of other medical and
surgical supply distributors. The Company actively manages its accounts
receivable to minimize credit risk and does not believe that credit risk
associated with accounts receivable poses a significant risk to its results of
operations. The Company reduced accounts receivable days sales outstanding
(excluding the impact of the Receivables Financing Facility) to 33.4 days in
1997 from 36.1 days in 1996.
Competition
The medical/surgical supply distribution industry in the United States is highly
competitive and consists of three major nationwide distributors, the Company,
Allegiance Corporation and McKesson Corp., which acquired General Medical
Corporation in February 1997. The industry also includes Bergen Brunswig Medical
Corporation, which is a wholly owned subsidiary of Bergen Brunswig Corporation
and is a smaller national distributor of medical and surgical supplies, and a
number of regional and local distributors. Competition within the
medical/surgical supply distribution industry exists with respect to total
delivered product cost, product availability, the ability to fill and invoice
orders accurately, delivery time, efficient computer communication capabilities,
services provided, breadth of product line, inventory management including the
benefits of information technology and the ability to meet special requirements
of customers.
24
<PAGE>
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 market place. The Company believes it
competes with large national distributors based on economies of scale. The
Company believes its decentralized approach to distribution enables it to
effectively compete with smaller local distributors by being located near the
customer and offering a high level of customer service.
Regulation
The medical/surgical supply distribution industry is subject to regulation by
federal, state and local government agencies. Each of the Company's distribution
centers is licensed to distribute medical and surgical supply products as well
as certain pharmaceutical and related products. The Company must comply with
regulations, including operating and security standards for each of its
distribution centers, of the Food and Drug Administration, the Drug Enforcement
Agency, the Occupational Safety and Health Administration, state boards of
pharmacy and, in certain areas, state boards of health. The Company believes
that it is in material compliance with all statutes and regulations applicable
to distributors of medical and surgical supply products and pharmaceutical and
related products, as well as other general employee health and safety laws and
regulations. The current government focus on healthcare reform and the
escalating cost of medical care has increased pressure on all participants in
the healthcare industry to reduce the costs of products and services.
Employees
As of March 31, 1998, the Company employed approximately 3,000 employees.
Approximately 33 employees are currently covered by a collective bargaining
agreement at one of the Company's distribution centers. The Company believes
that its relations with its employees are good.
O&M believes that on-going employee training is critical to employee
performance. The Company emphasizes quality and technology in training programs
designed to increase employee efficiency by sharpening overall customer service
skills and by focusing on functional best practices.
Properties
The Company's corporate headquarters are located in western Henrico County, in a
suburb of Richmond, Virginia, in leased facilities. The Company owns two
undeveloped parcels of land, which are adjacent to the Company's corporate
headquarters.
The Company leases offices and warehouses for its 42 distribution centers in 41
cities throughout the United States. In 1997, the Company opened one new
distribution center, relocated one distribution center and expanded one
distribution center. Three distribution centers were consolidated into existing
locations. The Company continuously evaluates the efficiency of its distribution
and administrative support systems. The Company expands or reduces facilities as
needed to meet current and anticipated business needs.
The Company believes that its facilities are adequate to carry on its business
as currently conducted. All of the Company's distribution centers are leased
from unaffiliated third parties. A number of the leases related to the above
properties are scheduled to terminate within the next several years. The Company
believes that, if necessary, it could find facilities to replace these leased
premises without suffering a material adverse effect on its business.
Legal Proceedings
As of January 30, 1998, Stuart is named as a defendant along with product
manufacturers, distributors, healthcare providers, trade associations and others
in approximately 136 lawsuits, filed in various federal and state courts (the
"Cases"). The Cases represent the claims of approximately 145 plaintiffs
claiming personal injuries and approximately 73 spouses asserting claims for
loss of consortium. The Cases seek damages for personal injuries allegedly
attributable to spinal fixation devices. The great majority of the Cases seek
compensatory and punitive damages in unspecified amounts.
25
<PAGE>
Prior to December 1992, Stuart distributed spinal fixation devices manufactured
by Sofamor SNC, a predecessor of Sofamor Danek Group, Inc. ("Sofamor Danek").
Approximately one third of the claims involve plaintiffs implanted with spinal
fixation devices manufactured by Sofamor Danek. Such plaintiffs allege that
Stuart is liable to them under applicable products liability law for injuries
caused by such devices distributed and sold by Stuart. In addition, such
plaintiffs allege that Stuart distributed and sold the spinal fixation devices
through deceptive and misleading means and in violation of applicable law. In
the remaining Cases, plaintiffs seek to hold Stuart liable for injuries caused
by other manufacturers' devices that were neither distributed nor sold by
Stuart. Such plaintiffs allege that Stuart engaged in a civil conspiracy and
concerted action with manufacturers, distributors and others to promote the sale
of spinal fixation devices through deceptive and misleading means and in
violation of applicable law. Stuart never manufactured any spinal fixation
devices. The Company believes that affirmative defenses are available to Stuart.
All Cases filed against Stuart have been, and will continue to be, vigorously
defended.
A majority of the Cases have been transferred to, and consolidated for pretrial
proceedings, in the Eastern District of Pennsylvania in Philadelphia under the
style MDL Docket No. 1014: In re Orthopedic Bone Screw Products Liability
Litigation. Discovery proceedings, including the taking of depositions, have
been ongoing in certain of the Cases, and, in a number of Cases, discovery has
been completed and these Cases have been remanded back for trial to those
jurisdictions where they were originally filed. The Company is unable at this
time to determine with certainty whether or not Stuart may be held liable.
Based upon management's analysis of indemnification agreements between Stuart
and Sofamor Danek, the manufacturer of the devices distributed by Stuart, the
Company believes that Stuart is entitled to indemnification by Sofamor Danek at
least with respect to claims brought by plaintiffs implanted with devices
manufactured by Sofamor Danek. Such Cases are being defended by Stuart's
insurance carriers. Regarding those Cases filed by plaintiffs implanted with
other manufacturers' devices, one of Stuart's primary insurance carriers has
notified a representative of the former shareholders of Stuart that it will
withdraw its provision of defense of such Cases and another one of Stuart's
primary insurance carriers has notified a representative of the former
shareholders of Stuart that it has declined to provide a defense for such Cases,
in both instances asserting that such Cases involve only conspiracy and
concerted action claims. The former shareholders of Stuart are contesting the
insurance companies' withdrawal and declination of the defense of such Cases.
The Company and Stuart are also contractually entitled to indemnification by the
former shareholders of Stuart for any liabilities and related expenses incurred
by the Company or Stuart in connection with the foregoing litigation. The
Company believes that Stuart's available insurance coverage together with the
indemnification rights discussed above are adequate to cover any losses should
they occur, and accordingly has accrued no liability therefor. Except as set
forth above, the Company is not aware of any uncertainty as to the availability
and adequacy of such insurance or indemnification, although there can be no
assurance that Sofamor Danek and the former shareholders will have sufficient
financial resources in the future to meet such obligations.
In addition, as of February 16, 1998, 30 individual lawsuits seeking monetary
damages, in most cases of an unspecified amount, have been filed by multiple
plaintiffs in federal and state courts against the Company, manufacturers, and
other distributors and sellers of natural rubber latex products. These lawsuits
allege injuries ranging from dermatitis and allergic reactions to anaphylactic
shock arising from the use of latex products, principally medical gloves. The
Company may be named as a defendant in additional similar cases in the future.
In the course of its medical supply business, the Company has distributed latex
products, including medical gloves, but it does not, nor has it ever,
manufactured any latex products. The defense costs of these lawsuits are being
paid by the Company's insurers and the Company believes at this time that any
potential liability and future defense costs will also be covered by its
insurance, subject to policy limits and insurer solvency. Since all of these
cases are in early stages of trial preparation, the likelihood of an unfavorable
outcome for the Company or the amount or range of potential loss with respect to
any of these matters cannot be reasonably determined at this time.
The Company is party to a lawsuit claiming failure to meet certain contractual
obligations involving a distribution agreement. The plaintiff is seeking $3.3
million in compensatory damages, and the Company has, in turn, filed a
counterclaim alleging breach of contract. At this time, management believes that
the final outcome of this lawsuit will not materially affect the Company's
financial condition or results of operations.
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The Company is party to various other legal actions that are ordinary and
incidental to its business. While the outcome of legal actions cannot be
predicted with certainty, management believes the outcome of these proceedings
will not have a material adverse effect on the Company's financial condition or
results of operations.
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Owens & Minor Trust I
O&M Trust is a statutory business trust formed under the Delaware Business Trust
Act (the "Business Trust Act") pursuant to a declaration of trust dated May 13,
1998 among certain of the Trustees and the Company (the "Declaration") and the
filing of a certificate of trust with the Secretary of State of the State of
Delaware, copies of which have been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Declaration is qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
Trust Securities
Upon issuance of the TECONS, the holders thereof will own all of the issued and
outstanding TECONS. The Company will acquire Common Securities in an amount
equal to at least 3% of the total capital of the Trust and will own, directly or
indirectly, all of the issued and outstanding Common Securities. The Trust
exists for the purpose of (a) issuing its Trust Securities for cash and
investing the proceeds thereof in an equivalent amount of Junior Subordinated
Debentures and (b) engaging in such other activities as are necessary,
convenient and incidental thereto. The rights of the holders of the Trust
Securities, including economic rights, rights to information and voting rights,
are as set forth in the Declaration, the Business Trust Act and the Trust
Indenture Act. The Declaration does not permit the incurrence by the Trust of
any indebtedness for borrowed money or the making of any investment other than
in the Junior Subordinated Debentures. In the Declaration, the Company has
agreed to pay for all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of the Trust, including the fees
and expenses of the Trustees and any income taxes, duties and other governmental
charges, and all costs and expenses with respect thereto, to which the Trust may
become subject, except for United States withholding taxes.
Powers and Duties and Trustees
The number of trustees (the "Trustees") of O&M Trust shall initially be five.
Three of such Trustees (the "Regular Trustees") are individuals who are
employees or officers of the Company. The fourth such trustee will be The First
National Bank of Chicago, which is unaffiliated with the Company and which will
serve as the property trustee (the "Property Trustee") and act as the indenture
trustee for purposes of the Trust Indenture Act. The fifth such trustee is First
Chicago Delaware Inc., which has its principal place of business in the State of
Delaware (the "Delaware Trustee"). Pursuant to the Declaration, legal title to
the Junior Subordinated Debentures purchased by the Trust will be held by the
Property Trustee for the benefit of the holders of the Trust Securities, and the
Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture with respect to the Junior Subordinated
Debentures. In addition, the Property Trustee will maintain exclusive control of
a segregated non-interest bearing bank account (the "Property Account") to hold
all payments in respect of the Junior Subordinated Debentures purchased by the
Trust for the benefit of the holders of Trust Securities. The Property Trustee
will promptly make distributions to the holders of the Trust Securities out of
funds from the Property Account. The Guarantee is separately qualified under the
Trust Indenture Act and will be held by The First National Bank of Chicago,
acting in its capacity as indenture trustee with respect thereto, for the
benefit of the holders of the TECONS. As used in this Prospectus, the term
"Property Trustee" with respect to the Trust refers to The First National Bank
of Chicago acting either in its capacity as a Trustee under the Declaration and
the holder of legal title to the Junior Subordinated Debentures purchased by the
Trust or in its capacity as indenture trustee under, and the holder of, the
Guarantee, as the context may require. The Company, as the direct or indirect
owner of all of the Common Securities of the Trust, will have the exclusive
right (subject to the terms of the Declaration) to appoint, remove or replace
Trustees and to increase or decrease the number of Trustees, provided that the
number of Trustees shall be, except under certain circumstances, at least five
and the majority of Trustees shall be Regular Trustees. The term of the Trust
set forth in this Prospectus may terminate earlier as provided in the
Declaration.
The duties and obligations of the Trustees of the Trust shall be governed by the
Declaration, the Business Trust Act and the Trust Indenture Act. Under its
Declaration, the Trust shall not, and the Trustees shall cause the Trust not to,
engage in any activity other than as required or authorized by the Declaration.
In particular, the Trust shall not and the Trustees shall cause the Trust not to
(a) invest any proceeds received by the Trust from holding the Junior
Subordinated Debentures purchased by the Trust but shall promptly distribute
from the Property Account all such proceeds to holders of Trust Securities
pursuant to the terms of the Declaration and of the Trust Securities; (b)
acquire, dispose of, or substitute for, any Trust assets other than as expressly
provided in the Declaration; (c) possess Trust property for other than a Trust
purpose; (d) make any loans, other than loans represented by the Junior
Subordinated Debentures; (e) possess any power or otherwise act in such a way as
to vary the assets of the Trust or the terms of its Trust Securities in any way
whatsoever; (f) issue any securities or other evidences of beneficial ownership
of, or beneficial interests in, the Trust other than its Trust Securities; (g)
incur any indebtedness for borrowed money or (h)(i) direct the time, method and
place of exercising any trust or power conferred upon the Indenture Trustee (as
defined under "Description of the Junior Subordinated Debentures") with respect
to the Junior Subordinated Debentures deposited in the Trust as trust assets or
upon the Property Trustee with respect to the TECONS, (ii) waive any past
default that is waivable under the Indenture or the Declaration, (iii) exercise
any right to rescind or annul any declaration that the principal of all of the
Junior Subordinated Debentures deposited in the Trust as trust assets shall be
due and payable or (iv) consent to any amendment, modification or termination of
the Indenture or such Junior Subordinated Debentures, in each case where such
consent shall be required, unless in the case of this clause (h) the Property
Trustee shall have received an unqualified opinion of nationally recognized
independent tax counsel recognized as expert in such matters to the effect that
such action will not cause the Trust to be classified for United States federal
income tax purposes as an association taxable as a corporation or a partnership
and that the Trust will continue to be classified as a grantor trust for United
States federal income tax purposes.
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Books and Records
The books and records of O&M Trust will be maintained at the principal office of
the Trust, located at 4800 Cox Road, Glen Allen, Virginia 23060, and will be
open for inspection by a holder of TECONS or his representative for any purpose
reasonably related to his interest in O&M Trust during normal business hours.
The Property Trustee
The Property Trustee, for the benefit of the holders of the Trust Securities of
the Trust, is authorized under the Declaration to exercise all rights under the
Indenture with respect to the Junior Subordinated Debentures deposited in O&M
Trust as trust assets, including its rights as the holder of such Junior
Subordinated Debentures to enforce the Company's obligations under such Junior
Subordinated Debentures upon the occurrence of an Indenture Event of Default.
The Property Trustee shall also be authorized to enforce the rights of holders
of TECONS under the Guarantee. If the Trust's failure to make distributions on
the TECONS is a consequence of the Company's exercise of any right under the
terms of the Junior Subordinated Debentures deposited in the Trust as trust
assets to extend the interest payment period for such Junior Subordinated
Debentures, the Property Trustee will have no right to enforce the payment of
distributions on such TECONS until an event of default under the Declaration
with respect to the Trust Securities (an "Event of Default" or "Declaration
Event of Default") shall have occurred. Holders of at least a majority in
liquidation amount of the TECONS held by the Trust will have the right to direct
the Property Trustee with respect to certain matters under the Declaration and
the Guarantee. If the Property Trustee fails to enforce its rights under the
Indenture or fails to enforce the Guarantee, to the extent permitted by
applicable law, any holder of TECONS may, after a period of 30 days has elapsed
from such holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding against the Company to enforce such rights
or the Guarantee, as the case may be. In addition, the holders of at least 25%
in aggregate liquidation preference of the outstanding TECONS would have the
right to directly institute proceedings for enforcement of payments to such
holders of principal of, or premium, if any, or interest on the Junior
Subordinated Debentures having a principal amount equal to the aggregate
liquidation preference of the TECONS of such holders (a "Direct Action"). In
connection with such Direct Action, the Company will be subrogated to the rights
of such holder of TECONS under the Declaration to the extent of any payment made
by the Company to such holders of TECONS in such Direct Action.
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Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Junior Subordinated Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of TECONS may directly institute a proceeding
for enforcement of payment to such holder of the principal of or interest on the
Junior Subordinated Debentures having a principal amount equal to the aggregate
liquidation amount of the TECONS of such holder (a "Holder Direct Action") on or
after the respective due date specified in the Junior Subordinated Debentures.
In connection with such Holder Direct Action, the Company will be subrogated to
the rights of such holder of TECONS under the Declaration to the extent of any
payment made by the Company to such holder of TECONS in such Holder Direct
Action.
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Description of the TECONS
The TECONS will be issued pursuant to the terms of the Declaration which is
qualified under the Trust Indenture Act. The Property Trustee, The First
National Bank of Chicago, but not the other Trustees of the Trust, will act as
the indenture trustee for purposes of the Trust Indenture Act. The terms of the
TECONS and the Declaration include those stated in the Declaration and those
made part of the Declaration by the Trust Indenture Act and the Business Trust
Act. The following summarizes the material terms and provisions of the TECONS
and is qualified in its entirety by reference to, the Declaration, the Business
Trust Act and the Trust Indenture Act.
General
The Declaration authorizes the Trust to issue the TECONS, which represent
preferred undivided beneficial interests in the assets of the Trust, and the
Common Securities, which represent common undivided beneficial interests in the
assets of the Trust. All of the Common Securities will be owned, directly or
indirectly, by the Company. The Common Securities and the TECONS rank pari passu
with each other and will have equivalent terms except that (i) if a Declaration
Event of Default occurs and is continuing, the rights of the holders of the
Common Securities to payment in respect of periodic Distributions and payments
upon liquidation, redemption or otherwise are subordinated to the rights of the
holders of the TECONS and (ii) holders of Common Securities have the exclusive
right (subject to the terms of the Declaration) to appoint, remove or replace
Trustees and to increase or decrease the number of Trustees. The Declaration
does not permit the issuance by the Trust of any securities or other evidences
of beneficial ownership of, or beneficial interests in, the Trust other than the
TECONS and the Common Securities, the incurrence of any indebtedness for
borrowed money by the Trust or the making of any investment other than in the
Junior Subordinated Debentures. Pursuant to the Declaration, the Property
Trustee will own and hold the Junior Subordinated Debentures as trust assets for
the benefit of the holders of the TECONS and the Common Securities. The payment
of Distributions out of moneys held by the Property Trustee and payments on
redemption of the TECONS or liquidation of the Trust are guaranteed by the
Company on a subordinated basis as and to the extent described under
"Description of the Guarantee." The Property Trustee will hold the Guarantee for
the benefit of holders of the TECONS. The Guarantee is a full and unconditional
guarantee from the time of issuance of the TECONS, but the Guarantee covers
Distributions and other payments on the TECONS only if and to the extent that
the Company has made a payment to the Property Trustee of interest, premium or
principal on the Junior Subordinated Debentures deposited in the Trust as trust
assets. See " -- Voting Rights."
Distributions
Distributions on the TECONS will be fixed at an annual rate of $2.6875 per
TECONS. Distributions in arrears for more than one calendar quarter will bear
interest thereon at the rate per annum of 5.375% (to the extent permitted by
law), compounded quarterly. The term "Distributions" as used herein includes any
such interest payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30 day months.
Distributions on the TECONS will be cumulative, will accumulate from May 13,
1998 and, except as otherwise described below, will be payable quarterly in
arrears on each January 31, April 30, July 31 and October 31, commencing on July
31, 1998, but only if, and to the extent that, interest payments are made in
respect of Junior Subordinated Debentures held by the Property Trustee.
So long as the Company shall not be in default in the payment of interest on the
Junior Subordinated Debentures, the Company has the right under the Trust
Indenture to defer payments of interest on the Junior Subordinated Debentures by
extending the interest payment period from time to time on the Junior
Subordinated Debentures for a period not exceeding 20 consecutive quarterly
interest periods and, as a consequence, the Trust would defer quarterly
Distributions on the TECONS (though such Distributions would continue to
accumulate, to the extent permitted by applicable law, at the rate of 5.375% per
annum, compounded quarterly) during any such Extension Period; provided that no
such period may extend beyond the stated maturity of the Junior Subordinated
Debentures. If the Company exercises the right to extend an interest payment
period, the Company may not declare or pay dividends on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock during such Extension Period; provided that
the foregoing will not apply to any stock dividends or other stock distribution
payable by the Company. The provisions of the immediately preceding sentence
will not restrict the ability of the Company to redeem rights issued pursuant to
the Amended and Restated Rights Agreement, dated as of May 10, 1994, between the
Company and Wachovia Bank of North Carolina, N.A., as Rights Agent, as it may be
amended from time to time, in an amount per right issued thereunder not to
exceed that in effect on the issue date of the Junior Subordinated Debentures.
Prior to the termination of any such Extension Period, the Company may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. The Company may also prepay at any
time all or any portion of the interest accrued during an Extension Period.
Consequently, there could be multiple Extension Periods of varying lengths
throughout the term of the Junior Subordinated Debentures, not to exceed 20
consecutive quarters or to cause any extension beyond the maturity of the Junior
Subordinated Debentures. See "Description of the Junior Subordinated Debentures
- -- Interest" and " -- Option to Extend Interest Payment Period" and "Risk
Factors -- Option to Extend Interest Payment Period; Tax Impact of Extension."
Payments of accumulated distributions will be payable to holders of TECONS as
they appear on the books and records of the Trust on the first record date after
the end of an Extension Period.
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Distributions on the TECONS must be paid on the dates payable to the extent that
the Property Trustee has cash on hand in the Property Account to permit such
payment. The funds available for distribution to the holders of the TECONS will
be limited to payments received by the Property Trustee in respect of the Junior
Subordinated Debentures that are deposited in the Trust as trust assets. See
"Description of the Junior Subordinated Debentures." If the Company does not
make interest payments on the Junior Subordinated Debentures, the Property
Trustee will not make distributions on the TECONS. Under the Declaration, if and
to the extent the Company does make interest payments on the Junior Subordinated
Debentures deposited in the Trust as trust assets, the Property Trustee is
obligated to make distributions on the Trust Securities on a Pro Rata Basis. As
used in this Prospectus, the term "Pro Rata Basis" shall mean pro rata to each
holder of TECONS according to the aggregate liquidation amount of the Trust
Securities of O&M Trust held by the relevant holder in relation to the aggregate
liquidation amount of all Trust Securities of O&M Trust outstanding unless, in
relation to a payment, a Declaration Event of Default has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each holder of the TECONS pro rata according to the aggregate
liquidation amount of the TECONS held by the relevant holder in relation to the
aggregate liquidation amount of all the TECONS outstanding, and only after
satisfaction of all amounts owed to the holders of TECONS, to each holder of
Common Securities of O&M Trust pro rata according to the aggregate liquidation
amount of all Common Securities outstanding.
The payment of distributions on the TECONS is guaranteed by the Company on a
subordinated basis as and to the extent set forth under "Description of the
Guarantee." The Guarantee is a full and unconditional guarantee from the time of
issuance of the TECONS but the Guarantee covers distributions and other payments
on the TECONS only if and to the extent that the Company has made a payment to
the Property Trustee of interest or principal on the Junior Subordinated
Debentures deposited in the Trust as trust assets. Distributions on the TECONS
will be made to the holders thereof as they appear on the books and records of
the Trust on the relevant record dates, which, as long as the TECONS remain in
book-entry form, will be one Business Day (as defined herein) prior to the
relevant Distribution payment date. Distributions payable on any TECONS that are
not punctually paid on any Distribution payment date as a result of the Company
having failed to make the corresponding interest payment on the Junior
Subordinated Debentures will forthwith cease to be payable to the person whose
name such TECONS is registered on the relevant record date, and such defaulted
Distribution will instead be payable to the person in whose name such TECONS is
registered on the special record date established by the Regular Trustees, which
record date shall correspond to the special record date or other specified date
determined in accordance with the Indenture; provided, however, that
Distributions shall not be considered payable on any Distribution payment date
falling within an Extension Period unless the Company has elected to make a full
or partial payment of interest accrued on the Junior Subordinated Debentures on
such Distribution payment date. Distributions on the TECONS will be paid through
the Property Trustee who will hold amounts received in respect of the Junior
Subordinated Debentures in the Property Account for the benefit of the holders
of the Trust Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as described under
" -- Book-Entry; Delivery and Form" and " -- The Global TECONS" below. In the
event that the TECONS do not continue to remain in book-entry form, the Regular
Trustees shall have the right to select relevant record dates which shall be
more than one Business Day prior to the relevant payment dates. The Declaration
provides that the payment dates or record dates for the TECONS shall be the same
as the payment dates and record dates for the Junior Subordinated Debentures.
All distributions paid with respect to the Trust Securities shall be paid on a
Pro Rata Basis to the holders thereof entitled thereto. If any date on which
distributions are to be made on the TECONS is not a Business Day, then payment
of the distribution to be made on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
"Business Day" shall mean any day other than Saturday, Sunday or any other day
on which banking institutions in the City of New York in the State of New York
are authorized or required by any applicable law to close.
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Conversion Rights
General
The TECONS will be convertible at any time prior to the close of business on
April 30, 2013 (or in the case of the TECONS called for redemption, prior to the
close of the business on the Business Day prior to the Redemption Date) (the
"Conversion Expiration Date"), at the option of the holders thereof and in the
manner described below, into shares of O&M Common Stock at an initial conversion
rate of 2.4242 shares of O&M Common Stock for each TECONS (equivalent to a
conversion price of $20.625 per share of O&M Common Stock for each TECONS (the
"Initial Conversion Price")), subject to adjustment as described under " --
Conversion Price Adjustments -- General" and " -- Conversion Price Adjustments
- -- Fundamental Change" below. If a TECONS is surrendered for conversion after
the close of business on any regular record date for payment of a Distribution
and before the opening of business on the corresponding Distribution payment
date, then, notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose name the
TECONS is registered at the close of business on such record date, and (other
than a TECONS or a portion of a TECONS called for redemption on a redemption
date occurring after such record date and on or prior to such Distribution
payment date) when so surrendered for conversion, the TECONS must be accompanied
by payment of an amount equal to the Distribution payable on such Distribution
payment date.
The terms of the TECONS provide that a holder of a TECONS wishing to exercise
its conversion right shall surrender such TECONS, together with an irrevocable
conversion notice, to the conversion agent (initially the Property Trustee) (the
"Conversion Agent"), which shall, on behalf of such holder, exchange such TECONS
for an equivalent amount of Junior Subordinated Debentures and immediately
convert such Junior Subordinated Debentures into O&M Common Stock. Holders may
obtain copies of the required form of the conversion notice from the Conversion
Agent. So long as a book-entry system for the TECONS is in effect, however,
procedures for converting the TECONS into shares of O&M Common Stock will
differ, as described under " -- Book-Entry; Delivery and Form" and " -- The
Global TECONS."
No fractional shares of O&M Common Stock will be issued as a result of
conversion, but in lieu thereof such fractional interest will be paid by O&M in
cash based on the market price of O&M Common Stock on the date such TECONS are
surrendered for conversion.
Conversion Price Adjustments -- General
The Initial Conversion Price is subject to adjustment (under formulae set forth
in the Trust Indenture) in certain events, including:
(i) the issuance of O&M Common Stock as a dividend or distribution on
O&M Common Stock;
(ii) certain subdivisions and combinations of O&M Common Stock;
(iii) the issuance to all holders of O&M Common Stock of certain rights
or warrants to purchase O&M Common Stock at less than the then
current market price;
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(iv) the distribution to all holders of O&M Common Stock of (A) equity
securities of the Company (other than O&M Common Stock), (B)
evidences of indebtedness of the Company and/or (C) other assets
(including securities, but excluding (1) any rights or warrants
referred to in clause (iii) above, (2) any rights or warrants to
acquire any capital stock of any entity other than the Company, (3)
any dividends or distributions in connection with the liquidation,
dissolution or winding-up of the Company, (4) any dividends payable
solely in cash that may from time to time be fixed by the Board of
Directors of the Company and (5) any dividends or distributions
referred to in clause (i) above);
(v) distributions to all holders of O&M Common Stock,
consisting of cash, excluding (a) any cash dividends on O&M
Common Stock to the extent that the aggregate cash
dividends per share of O&M Common Stock in any consecutive
12-month period do not exceed the greater of (x) the amount
per share of O&M Common Stock of the cash dividends paid on
O&M Common Stock in the immediately preceding 12-month
period, to the extent that such dividends for the
immediately preceding 12-month period did not require an
adjustment of the conversion price pursuant to this clause
(v) (as adjusted to reflect subdivisions or combinations of
O&M Common Stock), and (y) 15% of the average of the daily
Closing Price (as defined in the Trust Indenture) of O&M
Common Stock for the ten consecutive Trading Days (as
defined in the Trust Indenture) immediately prior to the
date of declaration of such dividend, and (b) any dividend
or distribution in connection with the liquidation,
dissolution or winding up of the Company or a redemption of
any rights issued under a rights agreement; provided,
however, that no adjustment shall be made pursuant to this
clause (v) if such distribution would otherwise constitute
a Fundamental Change (as defined below) and be reflected in
a resulting adjustment described below; and
(vi) payment in respect of a tender or exchange offer by the Company or
any subsidiary of the Company for O&M Common Stock to the extent
that the cash and value of any other consideration included in such
payment per share of O&M Common Stock exceed (by more than 10%,
with any smaller excess being disregarded in computing the
adjustment provided hereby) the first reported sale price per share
of O&M Common Stock on the Trading Day next succeeding the
Expiration Time (as defined in the Trust Indenture) for such tender
or exchange offer.
If any adjustment is required to be made as set forth in clause (v) above as a
result of a distribution which is a dividend described in subclause (a) of
clause (v) above, such adjustment would be based upon the amount by which such
distribution exceeds the amount of the dividend permitted to be excluded
pursuant to such subclause (a) of clause (v). If an adjustment is required to be
made as set forth in clause (v) above as a result of a distribution which is not
such a dividend, such adjustment would be based upon the full amount of such
distribution. If an adjustment is required to be made as set forth in clause
(vi) above, such adjustment would be calculated based upon the amount by which
the aggregate consideration paid for the O&M Common Stock acquired in the tender
or exchange offer exceeds 110% of the value of such shares based on the first
reported sale price of O&M Common Stock on the Trading Day next succeeding the
Expiration Time. In lieu of making such a conversion price adjustment in the
case of certain dividends or distributions, the Company may provide that upon
the conversion of the TECONS the holder converting such TECONS will receive, in
addition to the O&M Common Stock to which such holder is entitled, the cash,
securities or other property which such holder would have received if such
holder had, immediately prior to the record date for such dividend or
distribution, converted its TECONS into O&M Common Stock.
No adjustment in the conversion price will be required unless the adjustment
would require a change of at least 1% in the conversion price then in effect;
provided, however, that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
The Company from time to time may, to the extent permitted by law, reduce the
conversion price by any amount for any period of at least 20 Business Days (as
defined in the Trust Indenture), in which case the Company shall give at least
15 days' notice of such reduction. In particular, the Company may, at its
option, make such reduction in the conversion price, in addition to those set
forth above, as the Company deems advisable to avoid or diminish any income tax
to holders of O&M Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for tax
purposes or for any other reasons. See "Certain Federal Tax Consequences --
Adjustment of Conversion Price."
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Conversion Price Adjustments -- Fundamental Change
In the event that the Company shall be a party to any transaction or series of
transactions constituting a Fundamental Change, including, without limitation,
(i) any recapitalization or reclassification of O&M Common Stock (other than a
change in par value or as a result of a subdivision or combination of O&M Common
Stock), (ii) any consolidation or merger of the Company with or into another
corporation as a result of which holders of O&M Common Stock shall be entitled
to receive securities or other property or assets (including cash) with respect
to or in exchange for O&M Common Stock (other than a merger which does not
result in a reclassification, conversion, exchange or cancellation of the
outstanding O&M Common Stock); (iii) any sale or transfer of all or
substantially all of the assets of the Company; or (iv) any compulsory share
exchange, pursuant to any of which holders of O&M Common Stock shall be entitled
to receive other securities, cash or other property, then appropriate provision
shall be made so that the holder of each TECONS then outstanding shall have the
right thereafter to convert such TECONS only into (x) if any such transaction
does not constitute a Common Stock Fundamental Change (as defined below), the
kind and amount of the securities, cash or other property that would have been
receivable upon such recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of O&M
Common Stock issuable upon conversion of such TECONS immediately prior to such
recapitalization, reclassification, consolidation, merger, sale, transfer or
share exchange, after, in the case of a Non-Stock Fundamental Change (as defined
below), giving effect to any adjustment in the conversion price in accordance
with clause (i) of the following paragraph, and (y) if any such transaction
constitutes a Common Stock Fundamental Change, shares of common stock of the
kind received by holders of O&M Common Stock as result of such Common Stock
Fundamental Change in an amount determined in accordance with clause (ii) of the
following paragraph. The company formed by such consolidation or resulting from
such merger or which acquires such assets or which acquires the O&M Common
Stock, as the case may be, shall enter into a supplemental indenture with the
Indenture Trustee (as defined herein), satisfactory in form to the Indenture
Trustee and executed and delivered to the Indenture Trustee, the provisions of
which shall establish such right. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as practical to the
relevant adjustments provided for in the preceding paragraphs and in this
paragraph.
Notwithstanding any other provision in the preceding paragraphs, if any
Fundamental Change occurs, the conversion price in effect will be adjusted
immediately after that Fundamental Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the
conversion price per share of O&M Common Stock immediately
following such Non-Stock Fundamental Change will be the
lower of (A) the conversion price in effect immediately
prior to such Non-Stock Fundamental Change, but after
giving effect to any other prior adjustments effected
pursuant to the preceding paragraphs, and (B) the result
obtained by multiplying the greater of the Applicable Price
(as defined below) or the then applicable Reference Market
Price (as defined below) by a fraction of which the
numerator will be 100 and the denominator of which will be
an amount based on the date such Non-Stock Fundamental
Change occurs. For the 12-month period beginning May 13,
1998, the denominator will be 105.375, and the denominator
will decrease by 0.671875 during each successive 12-month
period; provided that the denominator shall in no event be
less than 100.0.
(ii) in the case of a Common Stock Fundamental Change, the
conversion price per share of O&M Common Stock immediately
following the Common Stock Fundamental Change will be the
conversion price in effect immediately prior to the Common
Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to the preceding
paragraphs, multiplied by a fraction, the numerator of
which is the Purchaser Stock Price (as defined below) and
the denominator of which is the Applicable Price; provided,
however, that in the event of a Common Stock Fundamental
Change in which (A) 100% of the value of the consideration
received by a holder of O&M Common Stock (subject to
certain limited exceptions) is shares of common stock of
the successor, acquiror or other third party (and cash, if
any, paid with respect to any fractional interests in the
shares of common stock resulting from the Common Stock
Fundamental Change) and (B) all of the O&M Common Stock
(subject to certain limited exceptions) shall have been
exchanged for, converted into, or acquired for, shares of
common stock (and cash, if any, with respect to fractional
interests) of the successor, acquiror or other third party,
the conversion price per share of O&M Common Stock
immediately following the Common Stock Fundamental Change
shall be the conversion price in effect immediately prior
to the Common Stock Fundamental Change divided by the
number of shares of common stock of the successor,
acquiror, or other third party received by a holder of one
share of O&M Common Stock as a result of the Common Stock
Fundamental Change.
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The foregoing conversion price adjustments are designed, in "Fundamental Change"
transactions where all or substantially all of the O&M Common Stock is converted
into securities, cash, or property and not more than 50% of the value received
by the holders of O&M Common Stock consists of stock listed or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on the Nasdaq National Market of the Nasdaq Stock Market, Inc. (a
"Non-Stock Fundamental Change," as defined herein), to increase the securities,
cash or property into which each TECONS is convertible.
In a Non-Stock Fundamental Change transaction where the initial value received
per share of O&M Common Stock (measured as described in the definition of
Applicable Price below) is lower than the then applicable conversion price of
the TECONS but greater than or equal to the Reference Market Price (as defined
herein), the conversion price will be adjusted as described above with the
effect that each TECONS will be convertible into securities, cash or property of
the same type received by the holders of O&M Common Stock in such transaction
but in an amount per TECONS equal to the amount indicated as the denominator as
of the date of such transaction as set forth in clause (i) above with respect to
conversion prices for Non-Stock Fundamental Changes.
In a Non-Stock Fundamental Change transaction where the initial value received
per share of O&M Common Stock (measured as described in the definition of
Applicable Price below) is lower than both the conversion price of a TECONS and
the Reference Market Price, the conversion price will be adjusted as described
above but calculated as though such initial value had been the Reference Market
Price.
In a Fundamental Change transaction where all or substantially all the O&M
Common Stock is converted into securities, cash, or property and more than 50%
of the value received by the holders of O&M Common Stock (subject to certain
limited exceptions) consists of listed or Nasdaq National Market traded common
stock (a "Common Stock Fundamental Change," as defined herein), the foregoing
adjustments are designed to provide in effect that (a) where O&M Common Stock is
converted partly into such common stock and partly into other securities, cash,
or property, each TECONS will be convertible solely into a number of shares of
such common stock determined so that the initial value of such shares (measured
as described in the definition of Purchaser Stock Price below) equals the value
of the shares of O&M Common Stock into which such TECONS was convertible
immediately before the transaction (measured as aforesaid) and (b) where O&M
Common Stock is converted solely into such common stock, each TECONS will be
convertible into the same number of shares of such common stock receivable by a
holder of the number of shares of O&M Common Stock into which such TECONS was
convertible immediately before such transaction. In determining the amount and
type of consideration received by a holder of O&M Common Stock in the event of a
Fundamental Change, consideration received by a holder of O&M Common Stock
pursuant to a statutory right of appraisal will be disregarded.
"Applicable Price" means (i) in the event of a Non-Stock Fundamental Change in
which the holders of O&M Common Stock receive only cash, the amount of cash
receivable by a holder of one share of O&M Common Stock and (ii) in the event of
any other Fundamental Change, the average of the Closing Prices (as defined in
the First Supplemental Indenture) for one share of O&M Common Stock during the
ten Trading Days immediately prior to the record date for the determination of
the holders of O&M Common Stock entitled to receive cash, securities, property
or other assets in connection with such Fundamental Change or, if there is no
such record date, prior to the date on which the holders of the O&M Common Stock
will have the right to receive such cash, securities, property or other assets.
"Common Stock Fundamental Change" means any Fundamental Change in which more
than 50% of the value (as determined in good faith by the Company's Board of
Directors) of the consideration received by holders of O&M Common Stock (subject
to certain limited exceptions) pursuant to such transaction consists of shares
of common stock that, for the ten consecutive Trading Days immediately prior to
such Fundamental Change has been approved for listing or approved for listing
subject to notice of issuance or admitted for trading on a national securities
exchange or quoted on the Nasdaq National Market, provided, however, that a
Fundamental Change will not be a Common Stock Fundamental Change unless either
(i) the Company continues to exist after the occurrence of such Fundamental
Change and the outstanding TECONS continue to exist as outstanding TECONS or
(ii) the outstanding TECONS continue to exist as TECONS and are convertible into
shares of common stock of the successor to the Company.
"Fundamental Change" means the occurrence of any transaction or event or series
of transactions or events pursuant to which all or substantially all of the O&M
Common Stock is exchanged for, converted into, acquired for or constitutes
solely the right to receive cash, securities, property or other assets (whether
by means of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise); provided,
however, in the case of a plan involving more than one such transaction or event
for purposes of adjustment of the conversion price, such Fundamental Change will
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be deemed to have occurred when substantially all of the O&M Common Stock has
been exchanged for, converted into, or acquired for or constitutes solely the
right to receive cash, securities, property or other assets but the adjustment
shall be based upon the consideration that the holders of O&M Common Stock
received in the transaction or event as a result of which more than 50% of the
O&M Common Stock shall have been exchanged for, converted into, or acquired for,
or shall constitute solely the right to receive such cash, securities,
properties or other assets.
"Non-Stock Fundamental Change" means any Fundamental Change other than a
Common Stock Fundamental Change.
"Purchaser Stock Price" means, with respect to any Common Stock Fundamental
Change, the average of the Closing Prices for one share of common stock received
by holders of O&M Common Stock in such Common Stock Fundamental Change during
the ten Trading Days immediately prior to the record date for the determination
of the holders of O&M Common Stock entitled to receive such shares of common
stock or, if there is no such record date, prior to the date upon which the
holders of O&M Common Stock shall have the right to receive such shares of
common stock.
"Reference Market Price" will initially mean $11.00 (which represents 66 2/3% of
the last reported sale price per share of O&M's Common Stock on the NYSE on May
7, 1998) and, in the event of any adjustment to the conversion price other than
as a result of a Fundamental Change, the Reference Market Price will also be
adjusted so that the ratio of the Reference Market Price to the conversion price
after giving effect to any adjustment will always be the same as the ratio of
the initial Reference Market Price to the Initial Conversion Price of the
TECONS.
Conversions of the TECONS may be effected by delivering them to the office or
agency of the Company maintained for such purpose in the Borough of Manhattan,
the City of New York.
Conversion price adjustments may, in certain circumstances, result in
constructive distributions that could be taxable as dividends under the Internal
Revenue Code of 1986, as amended (the "Code"), to holders of TECONS or to
holders of O&M Common Stock issued upon conversion thereof. See "Certain Federal
Tax Consequences -- Adjustment of Conversion Price."
No adjustment in the conversion price will be required unless the adjustment
would require a change of at least 1% in the conversion price then in effect;
provided, however, that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment.
Special Event Redemption or Distribution
If, at any time, a Tax Event or an Investment Company Event (each as hereinafter
defined, and each a "Special Event") shall occur and be continuing, the Trust
shall, unless the Junior Subordinated Debentures are redeemed in the limited
circumstances described below, be dissolved with the result that, after
satisfaction of creditors of the Trust, Junior Subordinated Debentures with an
aggregate principal amount equal to the aggregate stated liquidation amount of
the TECONS and the Common Securities would be distributed on a Pro Rata Basis to
the holders of the TECONS and the Common Securities in liquidation of such
holders' interests in the Trust, within 90 days following the occurrence of such
Special Event; provided, however, that in the case of the occurrence of a Tax
Event, as a condition of such dissolution and distribution, the Regular Trustees
shall have received an opinion of nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on any then applicable published revenue rulings of the Internal Revenue
Service, to the effect that the holders of the TECONS will not recognize any
gain or loss for United States federal income tax purposes as a result of such
dissolution and distribution of Junior Subordinated Debentures; and, provided,
further, that, if at the time there is available to the Trust the opportunity to
eliminate, within such 90 day period, the Special Event by taking some
ministerial action, such as filing a form or making an election, or pursuing
some other similar reasonable measure, which has no adverse effect on the Trust
or the Company or the holders of the TECONS, the Trust will pursue such measure
in lieu of dissolution. Furthermore, if in the case of the occurrence of a Tax
Event, (i) the Regular Trustees have received an opinion (a "Redemption Tax
Opinion") of nationally recognized independent tax counsel experienced in such
matters that, as a result of a Tax Event, there is more than an insubstantial
risk that the Company would be precluded from deducting the interest on the
Junior Subordinated Debentures for United States federal income tax purposes
even if the Junior Subordinated Debentures were distributed to the holders of
TECONS and Common Securities in liquidation of such holders' interests in the
Trust as described above or (ii) the Regular Trustees shall have been informed
by such tax counsel that a No Recognition Opinion cannot be delivered to the
Trust, the Company shall have the right, upon not less than 30 nor more than 60
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days notice, to redeem the Junior Subordinated Debentures in whole or in part
for cash within 90 days following the occurrence of such Tax Event, and promptly
following such redemption TECONS and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debentures so redeemed will be redeemed by the Trust at the
Redemption Price on a Pro Rata Basis; provided, however, that if at the time
there is available to the Company or the Regular Trustees the opportunity to
eliminate, within such 90 day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure, which has no adverse effect on the Trust, the
Company or the holders of the TECONS, the Company will pursue such measure in
lieu of redemption and provided further that the Company shall have no right to
redeem the Junior Subordinated Debentures while the Regular Trustees on behalf
of the Trust are pursuing any such ministerial action. The Common Securities
will be redeemed on a Pro Rata Basis with the TECONS, except that if an Event of
Default under the Declaration has occurred and is continuing, the TECONS will
have a priority over the Common Securities with respect to payment of the
Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an opinion of a
nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after the date of this
Prospectus as a result of (a) any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application of
any such laws or regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after the date of this Prospectus
(including, without limitation, any of the foregoing arising with respect to, or
resulting from, any proposal, proceeding or other action commencing on or before
the date of this Prospectus), there is more than an insubstantial risk that (i)
the Trust is, or will be within 90 days of the date thereof, subject to United
States federal income tax with respect to income accrued or received on the
Junior Subordinated Debentures, (ii) the Trust is, or will be within 90 days of
the date thereof, subject to more than a de minimis amount of other taxes,
duties or other governmental charges or (iii) interest payable by the Company to
the Trust on the Junior Subordinated Debentures is not, or within 90 days of the
date thereof will not be, deductible by the Company for United States federal
income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have received
an opinion of nationally recognized independent counsel experienced in practice
under the Investment Company Act of 1940, as amended (the "1940 Act"), that as a
result of the occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the date of this
Prospectus.
On the date fixed for any distribution of Junior Subordinated Debentures, upon
dissolution of the Trust, (i) the TECONS and the Common Securities will no
longer be deemd to be outstanding, (ii) the depositary or its nominee, as the
record holder of the TECONS, will receive a registered global certificate
representing the Junior Subordinated Debentures to be delivered upon such
distribution, and (iii) any certificates representing TECONS not held by the
depositary or its nominee will be deemed to represent Junior Subordinated
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accumulated and unpaid
distributions on, such TECONS, until such certificates are presented to the
Company or its agent for transfer or reissuance.
There can be no assurance as to the market price for the Junior Subordinated
Debentures which may be distributed in exchange for TECONS if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Junior Subordinated
Debentures which the investor may subsequently receive on dissolution and
liquidation of the Trust may trade at a discount to the price of the TECONS
exchanged.
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Mandatory Redemption
Upon the repayment of the Junior Subordinated Debentures, whether at maturity,
upon redemption or otherwise, the proceeds from such repayment or payment will
be promptly applied to redeem TECONS and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Junior
Subordinated Debentures so repaid, upon not less than 30 nor more than 60 days'
notice, at the Redemption Price. The Common Securities will be entitled to be
redeemed on a Pro Rata Basis with the TECONS, except that if an Event of Default
under the Declaration has occurred and is continuing, the TECONS will have a
priority over the Common Securities with respect to payment of the Redemption
Price. Subject to the foregoing, if fewer than all outstanding TECONS and Common
Securities are to be redeemed, the TECONS and Common Securities will be redeemed
on a Pro Rata Basis. In the event fewer than all outstanding TECONS are to be
redeemed, TECONS registered in the name of and held by DTC or its nominee will
be redeemed as described under " -- Redemption Procedures" below.
Redemption Procedures
The Trust may not redeem any outstanding TECONS unless all accumulated and
unpaid distributions have been paid on all TECONS for all quarterly distribution
periods terminating on or prior to the date of redemption.
If the Trust gives a notice of redemption in respect of TECONS (which notice
will be irrevocable) then, by 12:00 noon, New York City time, on the redemption
date, and provided that the Company has paid to the Property Trustee a
sufficient amount of cash in connection with the related redemption or maturity
of the Junior Subordinated Debentures, the Property Trustee will irrevocably
deposit with the Depositary funds sufficient to pay the applicable Redemption
Price and will give the Depositary irrevocable instructions and authority to pay
the Redemption Price to the holders of the TECONS. See " -- The Global TECONS."
If notice of redemption shall have been given and funds deposited as required,
then, immediately prior to the close of business on the date of such deposit,
distributions will cease to accumulate on the TECONS called for redemption, such
TECONS shall no longer be deemed to be outstanding and all rights of holders of
such TECONS so called for redemption will cease, except the right of the holders
of such TECONS to receive the Redemption Price, but without interest on such
Redemption Price. Neither the Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any TECONS which have been so
called for redemption. If any date fixed for redemption of TECONS is not a
Business Day, then payment of the Redemption Price payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If the Company fails to repay Junior
Subordinated Debentures on maturity or on the date fixed for this redemption or
if payment of the Redemption Price in respect of TECONS is improperly withheld
or refused and not paid by the Property Trustee or by the Company pursuant to
the Guarantee described under "Description of the Guarantee," distributions on
such TECONS will continue to accumulate (in accordance with the continued
accrual of interest on the Debentures), from the original redemption date of the
TECONS to the date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating the
Redemption Price.
In the event that fewer than all of the outstanding TECONS are to be redeemed,
the TECONS will be redeemed as described below under " -- Book-Entry; Delivery
and Form" and " -- The Global TECONS."
If a partial redemption of the TECONS would result in the delisting of the
TECONS by any national securities exchange or other organization on which the
TECONS are then listed, pursuant to the Indenture, the Company may only redeem
Junior Subordinated Debentures in whole and, as a result, the Trust may only
redeem the TECONS in whole.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or any of its subsidiaries
may at any time and from time to time purchase outstanding TECONS by tender, in
the open market or by private agreement.
Liquidation Distribution upon Dissolution
In the event of any voluntary or involuntary dissolution, liquidation,
winding-up or termination of the Trust, the holders of the TECONS and Common
Securities at the date of dissolution, liquidation, winding-up or termination of
the Trust will be entitled to receive on a Pro Rata Basis solely out of the
assets of the Trust, after satisfaction of liabilities of creditors (to the
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extent not satisfied by the Company as provided in the Declaration), an amount
equal to the aggregate of the stated liquidation amount of $50 per Trust
Security plus accumulated and unpaid distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, liquidation, winding-up or termination, Junior
Subordinated Debentures in an aggregate principal amount equal to the aggregate
stated liquidation amount of such Trust Securities and bearing accrued and
unpaid interest in an amount equal to the accumulated and unpaid distributions
on such Trust Securities, shall be distributed on a Pro Rata Basis to the
holders of the TECONS and Common Securities in exchange therefor.
If, upon any such dissolution, the Liquidation Distribution can be paid only in
part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the TECONS and the Common Securities shall be paid on a Pro Rata Basis.
The holders of the Common Securities will be entitled to receive distributions
upon any such dissolution on a Pro Rata Basis with the holders of the TECONS,
except that if an Event of Default under the Declaration has occurred and is
continuing, the TECONS shall have a priority over the Common Securities with
respect to payment of the Liquidation Distribution.
Pursuant to the Declaration, the Trust shall terminate: (i) on April 30, 2018,
the expiration of the term of the Trust; (ii) when all of the Trust Securities
shall have been called for redemption and the amounts necessary for redemption
thereof shall have been paid to the holders of Trust Securities in accordance
with the terms of the Trust Securities; (iii) when all of the Junior
Subordinated Debentures shall have been distributed to the holders of Trust
Securities in exchange for all of the Trust Securities in accordance with the
terms of the Trust Securities; or (iv) upon distribution of O&M Common Stock to
all holders of Trust Securities upon conversion of all outstanding TECONS.
No Merger, Consolidation or Amalgamation of the Trust
The Trust may not consolidate, amalgamate, merge with or into, or be replaced
by, or convey, transfer or lease its properties and assets to, any corporation
or other entity.
Declaration Events of Default
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an Event of Default under the Declaration with respect to the Trust
Securities; provided that pursuant to the Declaration, the holder of the Common
Securities will be deemed to have waived any such Event of Default with respect
to the Common Securities until all Events of Default with respect to the TECONS
have been cured or waived. Until all such Events of Default with respect to the
TECONS have been so cured or waived, the Property Trustee will be deemed to be
acting solely on behalf of the holders of the TECONS, and only the holders of
the TECONS will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and consequently under the Indenture. In
the event that any Event of Default with respect to the TECONS is waived by the
holders of the TECONS as provided in the Declaration, such waiver will also
constitute a waiver of such Event of Default with respect to the Common
Securities for all purposes under the Declaration without any further act, vote
or consent of the holders of the Common Securities. See " -- Voting Rights"
below.
Upon the occurrence of an Event of Default, the Property Trustee as the holder
of all of the Junior Subordinated Debentures will have the right under the
Indenture to declare the principal of and interest on the Junior Subordinated
Debentures to be immediately due and payable. In addition, the Property Trustee
will have the power to exercise all rights, powers and privileges of the holder
of the Junior Subordinated Debentures under the Indenture. See "Description of
the Junior Subordinated Debentures."
Registration Rights
The Trust and the Company have agreed with the Initial Purchasers, for the
benefit of the holders of the TECONS, that the Company will use its reasonable
best efforts, and at its cost, to file on or before the 90th day following the
date of original issuance of the TECONS a shelf registration statement (the
"Shelf Registration Statement") with respect to resales of the TECONS, the
Guarantee, the Junior Subordinated Debentures and the shares of O&M Common Stock
issuable upon conversion (the "Registrable Securities") and to keep such
registration statement effective until the earlier of (i) the sale pursuant to
such registration statement or Rule 144 under the Securities Act of all the
Registrable Securities and (ii) two years after the date of the original
issuance of the TECONS. Holders will be required to provide certain information
to the Company to be included in the registration statement in order to use the
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prospectus for resales. The Company shall provide to each holder copies of the
prospectus, notify each holder when such registration statement has become
effective and take certain other actions as are required to permit resales. In
the event that (i) the Shelf Registration Statement is not declared effective on
or prior to the 150th day following the date of original issuance of the TECONS
or (ii) if use of the Shelf Registration Statement for resales is suspended for
any time during the two-year period after the date of original issuance of the
TECONS for a period in excess of 30 days during any three-month period or 60
days during any 12-month period (each, a "permitted black-out period"), then
additional amounts (in addition to amounts otherwise due on the TECONS) will
accrue at an annual rate of 0.50% on the TECONS if clause (i) applies from
October 10, 1998 until such registration statement is declared effective and if
clause (ii) applies, then during the period, other than any permitted black-out
period, use is so suspended. The Registration Statement of which this Prospectus
is a part constitutes the Shelf Registration Statement.
Voting Rights
Except as provided below, under " -- Modification and Amendment of the
Declaration" and "Description of the Guarantee" and as otherwise required by the
Business Trust Act, the Trust Indenture Act and the Declaration, the holders of
the TECONS will have no voting rights.
Subject to the requirements of this paragraph, the holders of a majority in
aggregate liquidation amount of the TECONS have the right (i) on behalf of all
holders of TECONS, to waive any past default that is waivable under the
Declaration and (ii) to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under the Declaration,
including the right to direct the Property Trustee, as the holder of the Junior
Subordinated Debentures, to (A) direct the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee (as defined
herein), or executing any trust or power conferred on the Indenture Trustee with
respect to the Junior Subordinated Debentures, (B) waive any past default that
is waivable under Section 6.06 of the Indenture, or (C) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable; provided that where a consent under the
Indenture would require the consent of (a) holders of Junior Subordinated
Debentures representing a specified percentage greater than a majority in
principal amount of the Junior Subordinated Debentures or (b) each holder of
Junior Subordinated Debentures affected thereby, no such consent shall be given
by the Property Trustee without the prior consent of, in the case of clause (a)
above, holders of TECONS representing such specified percentage of the aggregate
liquidation amount of the TECONS or, in the case of clause (b) above, each
holder of all TECONS affected thereby. The Property Trustee shall not revoke any
action previously authorized or approved by a vote of the holders of TECONS. The
Property Trustee shall notify all holders of record of TECONS of any notice of
default received from the Indenture Trustee with respect to the Junior
Subordinated Debentures. Other than with respect to directing the time, method
and place of conducting any proceeding for any remedy available to the Property
Trustee or the Indenture Trustee as set forth above, the Property Trustee shall
be under no obligation to take any of the foregoing actions at the direction of
the holders of the TECONS unless the Property Trustee shall have obtained an
opinion of nationally recognized independent tax counsel recognized as an expert
in such matters to the effect that the Trust will not be classified for United
States federal income tax purposes as an association taxable as a corporation or
a partnership on account of such action and will be treated as a grantor trust
for United States federal income tax purposes following such action. If the
Property Trustee fails to enforce its rights under the Declaration (including,
without limitation, its rights, powers and privileges as a holder of the Junior
Subordinated Debentures under the Indenture), any holder of TECONS may, to the
extent permitted by applicable law, after a period of 30 days has elapsed from
such holder's written request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against the Company to enforce the
Property Trustee's rights under the Declaration, without first instituting a
legal proceeding against the Property Trustee or any other Person. In addition,
in case of an Event of Default which is attributed to the failure of the Company
to pay interest or principal on the Junior Subordinated Debentures, a holder of
TECONS may directly institute a proceeding for enforcement of payment to such
holder of the principal of, or interest on, the Junior Subordinated Debentures
having a principal amount equal to the aggregate liquidation amount of the
TECONS of such holder. See " -- Declaration Events of Default."
A waiver of an Indenture Event of Default by the Property Trustee at the
direction of holders of the TECONS will constitute waiver of the corresponding
Event of Default under the Declaration in respect of the Trust Securities.
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In the event the consent of the Property Trustee as the holder of the Junior
Subordinated Debentures is required under the Trust Indenture with respect to
any amendment, modification or termination of the Trust Indenture or the Junior
Subordinated Debentures, the Property Trustee shall request the direction of the
holders of the Trust Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification or
termination as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where any
such amendment, modification or termination under the Indenture would require
the consent of holders of Junior Subordinated Debentures representing a
specified percentage greater than a majority in principal amount of the Junior
Subordinated Debentures, the Property Trustee may only give such consent at the
direction of the holders of Trust Securities representing such specified
percentage of the aggregate liquidation amount of the Trust Securities; and,
provided, further, that the Property Trustee shall be under no obligation to
take any such action in accordance with the directions of the holders of the
Trust Securities unless the Property Trustee has obtained an opinion of
nationally recognized independent tax counsel recognized as an expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States federal income tax purposes following such action.
Any required approval or direction of holders of TECONS may be given at a
separate meeting of holders of TECONS convened for such purpose, at a meeting of
all of the holders of Trust Securities or pursuant to written consent. The
Regular Trustees will cause a notice of any meeting at which holders of TECONS
are entitled to vote, or of any matter upon which action by written consent of
such holders is to be taken, to be mailed to each holder of record of TECONS.
Each such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken; (ii) a description of
any resolution proposed for adoption at such meeting on which such holders are
entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of TECONS will be required for the Trust to
redeem and cancel TECONS or distribute Junior Subordinated Debentures in
accordance with the Declaration.
Notwithstanding that holders of TECONS are entitled to vote or consent under any
of the circumstances described above, any of the TECONS at such time that are
owned by the Company or by any entity directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company shall
not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
The procedures by which persons owning TECONS, registered in the name of and
held by DTC or its nominee may exercise their voting rights are described under
" -- The Global TECONS" below. Holders of the TECONS will have no rights to
increase or decrease the number of Trustees or to appoint, remove or replace a
Trustee, which rights are vested exclusively in the holders of the Common
Securities.
Modification and Amendment of the Declaration
The Declaration may be modified and amended on approval of a majority of the
Regular Trustees, provided, that, if any proposed modification or amendment
provides for, or the Regular Trustees otherwise propose to effect, (a) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise, or (b) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the
outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least a majority in liquidation amount of the
Trust Securities, provided that if any amendment or proposal referred to above
would adversely affect only the TECONS or the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
majority in liquidation amount of such class of Securities.
Notwithstanding the foregoing, (i) no amendment or modification may be made to
the Declaration unless the Regular Trustees shall have obtained (a) either a
ruling from the Internal Revenue Service or a written unqualified opinion of
nationally recognized independent tax counsel experienced in such matters to the
effect that such amendment will not cause the Trust to be classified for United
States federal income tax purposes as an association taxable as a corporation or
a partnership and to the effect that the Trust will continue to be treated as a
grantor trust for purposes of United States federal income taxation and (b) a
written unqualified opinion of nationally recognized independent counsel
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experienced in such matters to the effect that such amendment will not cause the
Trust to be an "investment company" which is required to be registered under the
1940 Act; (ii) certain specified provisions of the Declaration may not be
amended without the consent of all of the holders of the Trust Securities; (iii)
no amendment which adversely affects the rights, powers and privileges of the
Property Trustee shall be made without the consent of the Property Trustee; (iv)
Article 4 of the Declaration relating to the obligation of the Company to
purchase the Common Securities and to pay certain obligations and expenses of
the Trust may not be amended without the consent of the Company; and (v) the
rights of holders of Common Securities under Article 5 of the Declaration to
increase or decrease the number of, and to appoint, replace or remove, Trustees
shall not be amended without the consent of each holder of Common Securities.
The Declaration further provides that it may be amended without the consent of
the holders of the Trust Securities to (i) cure any ambiguity; (ii) correct or
supplement any provision in the Declaration that may be defective or
inconsistent with any other provision of the Declaration; (iii) to add to the
covenants, restrictions or obligations of the Company; and (iv) to conform to
changes in, or a change in interpretation or application of certain 1940 Act
requirements by the Commission, which amendment does not adversely affect the
rights, preferences or privileges of the holders.
Debts and Obligations
In the Declaration, the Company has agreed to pay for all debts and obligations
(other than with respect to the Trust Securities) and all costs and expenses of
O&M Trust, including the fees and expenses of its Trustees and any taxes and all
costs and expenses with respect thereto, to which O&M Trust may become subject,
except for United States withholding taxes. The foregoing obligations of the
Company under each Declaration are for the benefit of, and shall be enforceable
by, any person to whom any such debts, obligations, costs, expenses and taxes
are owed (a "Creditor") whether or not such Creditor has received notice
thereof. Any such Creditor may enforce such obligations of the Company directly
against the Company and the Company has irrevocably waived any right or remedy
to require that any such Creditor take any action against O&M Trust or any other
person before proceeding against the Company. The Company has agreed in each
Declaration to execute such additional agreements as may be necessary or
desirable in order to give full effect to the foregoing.
Book-Entry; Delivery and Form
The following describes the delivery and order of TECONS in connection with the
offering of the Offered Securities and transactions in TECONS which are not
being or have not been resold under this Prospectus.
The certificates representing the TECONS will be issued in fully registered
form. TECONS resold in offshore transactions in reliance on Regulation S under
the Securities Act will initially be represented by a single, temporary global
TECONS in definitive, fully registered form (the "Temporary Regulation S Global
TECONS") which will be deposited with the Property Trustee as custodian for DTC
and registered in the name of a nominee of DTC for the accounts of Euroclear and
Cedel. The Temporary Regulation S Global TECONS will be exchangeable for a
single, permanent global TECONS (the "Permanent Regulation S Global TECONS" and,
together with the Temporary Regulation S Global TECONS, the "Regulation S Global
TECONS") on or after May 13, 1999. Prior to May 13, 1999, beneficial interests
in the Temporary Regulation S Global TECONS may only be held through Euroclear
or Cedel, and any resale or other transfer of such interests to U.S. persons
shall not be permitted during such period unless such resale or transfer is made
pursuant to Rule 144A or Regulation S and in accordance with the certification
requirements described below.
TECONS resold in reliance on Rule 144A will be represented by a single,
permanent global TECONS in definitive, fully registered form (the "Restricted
Global TECONS" and, with the Regulation S Global TECONS, the "Global TECONS")
deposited with the Trustee as custodian for DTC and registered in the name of a
nominee of DTC. The Restricted Global TECONS and the Temporary Regulation S
Global TECONS (and any TECONS issued in exchange therefor) are subject to
certain restrictions on transfer set forth therein and will bear a legend
regarding such restrictions. Prior to May 13, 1999, a beneficial interest in the
Temporary Regulation S Global TECONS may be transferred to a person who takes
delivery in the form of an interest in the Restricted Global TECONS only upon
receipt by the Trustee of a written certification from the transferor to the
effect that such transfer is being made to a person who the transferor
reasonably believes is a "qualified institutional buyer" within the meaning of
Rule 144A in a transaction meeting the requirements of Rule 144A and in
accordance with any applicable securities laws of any state of the United States
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or any other jurisdiction. Beneficial interests in the Restricted Global TECONS
may be transferred to a person who takes delivery in the form of an interest in
the Regulation S Global TECONS whether before, on or after May 13, 1999, only
upon receipt by the Trustee of a written certification to the effect that such
transfer is being made in accordance with Regulation S under the Securities Act.
After the TECONS have been registered and resold under the Securities Act, all
certification requirements with respect to the TECONS will cease.
Resales Under this Prospectus
TECONS resold under the Registration Statement of which this Prospectus forms a
part will be represented by a single, permanent global TECONS in definitive,
fully-registered form (the "Unrestricted Global TECONS" and with the Regulation
S Global TECONS and the Restricted Global TECONS, the "Global TECONS"), which is
deposited with the Property Trustee as custodian for DTC and registered in the
name of a nominee of DTC.
Upon each sale by a Selling Holder of TECONS (or the Junior Subordinated
Debentures or shares of O&M Common Stock into which the TECONS or Junior
Subordinated Debentures, as the case may be, may be converted) offered hereby,
such Selling Holder will be required to deliver a notice (the "Notice") of such
sale to the Property Trustee and the Company. The Notice will, among other
things, identify the sale as a sale pursuant to the Registration Statement of
which this Prospectus forms a part, certify that the prospectus deliver
requirements, if any, of the Securities Act have been satisfied, and certify
that the Selling Holder and the number of TECONS (or Junior Subordinated
Debentures or shares of O&M Common Stock, as the case may be) are identified in
the Prospectus in accordance with the applicable rules and regulations under the
Securities Act. A copy of the Notice is included herein in Appendix A.
Additional copies may be requested from the Company, Attention: Drew St. J.
Carneal, Owens & Minor, Inc., P.O. Box 27626, Richmond, Virginia 23261-7626,
telephone number (804) 747-9794.
Upon receipt by the Property Trustee of the Notice relating to a sale of TECONS,
an appropriate adjustment will be made to reflect a decrease in the principal
amount of the Restricted Global TECONS or the Regulation S Global TECONS, as the
case may be, or the cancellation of a TECONS in certificated form upon the
transfer thereof, and a corresponding increase in the principal amount of the
Unrestricted Global TECONS.
Transfers between Global Securities
Any beneficial interest in one of the Global TECONS that is transferred to a
person who takes delivery in the form of an interest in the other Global TECONS,
will, upon transfer, cease to be an interest in such Global TECONS and become an
interest in the other Global TECONS, and, accordingly, will thereafter be
subject to all transfer restrictions, if any, and other procedures applicable to
beneficial interest in such other Global TECONS for as long as it remains such
interest. Except in the limited circumstances described under "The Global
TECONS," owners of beneficial interests in Global TECONS will not be entitled to
receive physical delivery of Certificated TECONS (as defined below). The TECONS
are not issuable in bearer form.
Resales to Institutional Accredited Investors
TECONS which are not resold under this Prospectus and which are transferred to
institutional accredited investors (as defined in Rule 501(a)(1),(2),(3) or (7)
under the Securities Act) ("Institutional Accredited Investors") who are not
qualified institutional buyers ("Non-Global Purchaser") will be issued in
registered form ("Certificated TECONS"). Upon the transfer of Certificated
TECONS initially issued to a Non-Global Purchaser either to a qualified
institutional buyer or in accordance with Regulation S, such Certificated TECONS
will, unless the relevant Global TECONS has previously been exchanged in whole
for Certificated TECONS, be exchanged for an interest in a Global TECONS.
The Global TECONS
Upon the issuance of the Global TECONS, DTC or its custodian have credited, on
its internal system, the respective principal amount of the individual
beneficial interests represented by such Global TECONS to the accounts of
persons who have accounts with such depositary. Such accounts were initially
designated by or on behalf of the Initial Purchasers. Ownership of beneficial
interests in the Global TECONS will be limited to persons who have accounts with
DTC ("participants") or persons who hold interests through participants.
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Ownership of beneficial interests in the Global TECONS will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interest of persons other than participants).
Qualified institutional buyers may hold their interest in the Global TECONS
directly through DTC if they are participants in such system, or indirectly
through organizations which are participants in such system.
Investors may hold their interests in the Regulation S Global TECONS directly
through Cedel or Euroclear, if they are participants in such systems, or
indirectly through organizations that are participants in such systems.
Beginning May 13, 1999 (but not earlier), investors may also hold such interests
through organizations other than Cedel or Euroclear that are participants in the
DTC system. Cedel and Euroclear will hold interests in the Regulation S Global
TECONS on behalf of their participants through DTC.
So long as DTC, or its nominee, is the registered owner or holder of the Global
TECONS, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the TECONS represented by such Global TECONS for all purposes
under the Trust Agreement and the TECONS. No beneficial owner of an interest in
the Global TECONS will be able to transfer that interest except in accordance
with the procedures provided for under "Book Entry; Delivery and Form," as well
as DTC's applicable procedures and, if applicable, those of Euroclear and Cedel.
Payments of the principal of, and interest on, the Global TECONS will be made to
DTC or its nominee, as the case may be, as the registered owner thereof. None of
the Company, the Trust or any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global TECONS or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal or interest in respect of the Global TECONS, will credit participants'
accounts with payments in accounts proportionate to their respective beneficial
interests in the principal amount of the Global TECONS as shown on the records
of DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in the Global TECONS held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the name of nominees for such customers.
Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way in
accordance with DTC rules and will be settled in same-day funds. If a holder
requires physical delivery of a Certificated TECONS for any reason, including to
sell TECONS to persons in states which require such delivery of such TECONS or
to pledge such TECONS, such holder must transfer its interest in the Global
TECONS in accordance with the normal procedures of DTC and the procedures set
forth in "Book Entry; Delivery and Form." Transfers between participants in
Euroclear and Cedel will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
DTC has advised the Company that it will take any action permitted to be taken
by a holder of TECONS (including the presentation of TECONS for exchange as
described below) only at the direction of one or more participants to whose
accounts the DTC interests in the Global TECONS is credited and only in respect
of such portion of the aggregate liquidation amount of TECONS as to which such
participant or participants has or have given such direction.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the Global TECONS as represented
by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). DTC holds securities that its
participants ("Participants") deposit with DTC. DTC also facilitates the
settlement among Participants of securities transactions, such as transfers and
pledges, in deposited securities without electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certification. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the Nasdaq National Market, the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
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to the DTC System is also available to others, such as securities brokers and
dealers, banks and trust companies that clear transactions through or maintain a
direct or indirect custodial relationship with a Direct Participant either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Conversion and redemption notices shall be sent to DTC or its nominee. If less
than all of the TECONS of a Direct Participant are being converted or redeemed,
DTC or such nominee will reduce the amount of the interest of each Direct
Participant in such TECONS in accordance with its normal procedures.
Although voting with respect to the TECONS is limited, in those cases where a
vote is required, neither DTC nor its nominee will itself consent or vote with
respect to TECONS. Under its usual procedures, DTC would mail an Omnibus Proxy
to the Trust as soon as possible after the record date. The Omnibus Proxy
assigns consenting or voting rights to those Direct Participants to whose
accounts the TECONS are credited on the record date (identified in a listing
attached to the Omnibus Proxy). O&M and the Trust believe that the arrangements
among DTC, Direct and Indirect Participants, and Beneficial Owners will enable
the Beneficial Owners to exercise rights equivalent in substance to the rights
that can be directly exercised by a holder of a beneficial interest in the
Trust.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures in
order to facilitate transfers of interest in the Global TECONS among
participants of DTC, Euroclear and Cedel, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Property Trustee will have
any responsibility for the performance by DTC, Euroclear or Cedel or their
respective obligations under the rules and procedures governing their
operations. If DTC discontinues being the Depositary and a successor Depositary
is not obtained, certificates for the TECONS are required to be printed and
delivered. Additionally, the Regular Trustees (with the consent of O&M) may
decide to discontinue use of the system of book-entry transfers through DTC (or
any successor Depositary) with respect to the TECONS.
In that event, certificates for the TECONS will be printed and delivered.
The information in this section concerning DTC, Euroclear and Cedel and DTC's
book-entry system has been obtained from sources that O&M and the Trust believe
to be reliable, but neither O&M nor the Trust takes responsibility for the
accuracy thereof.
Conversion Agent, Registrar, Transfer Agent and Paying Agent
The Property Trustee will act as the initial Conversion Agent. In addition, in
the event the TECONS do not remain in book-entry only form, the following
provisions will apply:
Payment of distributions and payments on redemption of the TECONS will be
payable, the transfer of the TECONS will be registrable, and TECONS will be
exchangeable for TECONS of other denominations of a like aggregate liquidation
amount, at the corporate trust office of the Property Trustee in New York, New
York; provided that payment of distributions may be made at the option of the
Regular Trustees on behalf of the Trust by check mailed to the address of the
persons entitled thereto and that the payment on redemption of any TECONS will
be made only upon surrender of such TECONS to the Property Trustee.
The Property Trustee or one of its affiliates will act as registrar and transfer
agent for the TECONS. The Property Trustee will also act as paying agent and,
with the consent of the Regular Trustees, may designate additional paying
agents.
Registration of transfers of TECONS will be effected without charge by or on
behalf of the Trust, but upon payment (with the giving of such indemnity as the
Trust or the Company may require) in respect of any tax or other governmental
charges that may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of TECONS after such TECONS have been called for redemption.
Information Concerning the Property Trustee
The Property Trustee, prior to a default with respect to the Trust Securities,
undertakes to perform only such duties as are specifically set forth in the
Declaration and, after default, shall exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the Property Trustee is under no obligation to
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exercise any of the powers vested in it by the Declaration at the request of any
holder of TECONS, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might be incurred thereby. The Property
Trustee is not required to expend or risk its own funds or otherwise incur
personal financial liability in the performance of its duties if the Property
Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
The Company and certain of its subsidiaries maintain deposit accounts and
banking relationships with the Property Trustee.
Governing Law
The Declaration and the TECONS will be governed by, and construed in accordance
with, the internal laws of the State of Delaware.
Miscellaneous
The Regular Trustees are authorized and directed to take such action as they
deem reasonable in order that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act or that the Trust will not
be classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership and will be treated as a grantor trust
for United States federal income tax purposes. In this connection, the Regular
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust or the Declaration, that the Regular Trustees
determine in their discretion to be reasonable and necessary or desirable for
such purposes, as long as such action does not adversely affect the interests of
holders of the Trust Securities.
The Company and the Regular Trustees on behalf of the Trust will be required to
provide to the Property Trustee annually a certificate as to whether or not the
Company and the Trust, respectively, is in compliance with all the conditions
and covenants under the Declaration.
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Description of the Guarantee
Set forth below is a summary of information concerning the Guarantee that will
be executed and delivered by the Company for the benefit of the holders from
time to time of TECONS. The Guarantee will be separately qualified under the
Trust Indenture Act and will be held by The First National Bank of Chicago,
acting in its capacity as indenture trustee with respect thereto, for the
benefit of holders of the TECONS. The terms of the Guarantee will be those set
forth in the Guarantee and those made part of such Guarantee by the Trust
Indenture Act. This description summarizes the material terms of the Guarantee
and is qualified in its entirety by reference to the Guarantee (a copy of which
may be obtained from the Trustee) and the Trust Indenture Act. Section and
Article references used herein are references to the provisions of the
Guarantee.
General
Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full, to the holders of the
TECONS, the Guarantee Payments (as defined herein) (without duplication of
amounts theretofore paid by O&M Trust), to the extent not paid by O&M Trust,
regardless of any defense, right of set-off or counterclaim that O&M Trust may
have or assert. The following payments or distributions with respect to TECONS,
to the extent not paid or made by O&M Trust (the "Guarantee Payments"), will be
subject to the Guarantee (without duplication): (i) any accumulated and unpaid
distributions on TECONS, and the redemption price, including all accumulated and
unpaid distributions to the date of redemption, with respect to any TECONS
called for redemption by O&M Trust but if and only to the extent that in each
case the Company has made a payment to the Property Trustee of interest or
principal on the Junior Subordinated Debentures deposited in O&M Trust as trust
assets and (ii) upon a voluntary or involuntary dissolution, winding-up or
termination of O&M Trust (other than in connection with the distribution of such
Junior Subordinated Debentures to the holders of TECONS or the redemption of all
of the TECONS upon the maturity or redemption of such Junior Subordinated
Debentures or distribution of O&M Common Stock upon conversion of all TECONS)
the lesser of (a) the aggregate of the liquidation amount and all accumulated
and unpaid distributions on the TECONS to the date of payment, to the extent O&M
Trust has funds available therefor, or (b) the amount of assets of O&M Trust
remaining available for distribution to holders of the TECONS in liquidation of
O&M Trust. The Company's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Company to the holders of
TECONS or by causing O&M Trust to pay such amounts to such holders.
The Guarantee is a guarantee from the time of issuance of the TECONS, but the
Guarantee covers distributions and other payments on the TECONS only if and to
the extent that the Company has made a payment to the Property Trustee of
interest or principal on the Junior Subordinated Debentures deposited in O&M
Trust as trust assets. If the Company does not make interest or principal
payments on the Junior Subordinated Debentures deposited in O&M Trust as trust
assets, the Property Trustee will not make distributions on the TECONS and O&M
Trust will not have funds available therefor.
The Company's obligations under the Declaration, the Guarantee issued with
respect to TECONS, the Junior Subordinated Debentures purchased by the Trust and
the Indenture in the aggregate will provide a full and unconditional guarantee
on a subordinated basis by the Company of payments due on the TECONS.
Certain Covenants of the Company
The Company will covenant that, so long as any TECONS issued by O&M Trust remain
outstanding, the Company will not (A) declare or pay any dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock or make any guarantee
payment with respect thereto or (B) make any payment of interest, premium (if
any) or principal on any debt securities issued by the Company which rank pari
passu with or junior to the Junior Subordinated Debentures, if at such time (i)
the Company shall be in default with respect to its Guarantee Payments or other
payment obligations under the Guarantee, (ii) there shall have occurred any
Declaration Event of Default under the Declaration or (iii) the Company shall
have given notice of its election to defer payments of interest on the Junior
Subordinated Debentures by extending the interest payment period as provided in
the terms of the Junior Subordinated Debentures and such period, or any
extension thereof, is continuing; provided that the foregoing will not apply to
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stock dividends or other stock distributions paid by the Company. The provisions
of the immediately preceding sentence will not restrict the ability of the
Company to redeem rights issued pursuant to the Amended and Restated Rights
Agreement, dated as of May 10, 1994, between the Company and Wachovia Bank of
North Carolina, N.A., as Rights Agent, as it may be amended from time to time,
in an amount per right issued thereunder not to exceed that in effect on the
issue date of the Junior Subordinated Debentures. In addition, so long as any
TECONS remain outstanding, the Company has agreed (i) to remain the sole direct
or indirect owner of all of the outstanding Common Securities issued by O&M
Trust and not to cause or permit the Common Securities to be transferred except
to the extent permitted by the Declaration; provided that any permitted
successor of the Company under the Indenture may succeed to the Company's
ownership of the Common Securities issued by the applicable O&M Trust and (ii)
not to take any action which would cause the O&M Trust to cease to be treated as
a grantor trust for United States federal income tax purposes except in
connection with a distribution of Junior Subordinated Debentures.
Amendments and Assignment
Except with respect to any changes that do not adversely affect the rights of
holders of TECONS (in which case no consent will be required), the Guarantee may
be amended only with the prior approval of the holders of not less than a
majority in liquidation amount of the outstanding TECONS issued by O&M Trust.
All guarantees and agreements contained in the Guarantee shall bind the
successors, assignees, receivers, trustees and representatives of the Company
and shall inure to the benefit of the holders of the TECONS then outstanding.
Except in connection with a consolidation, merger or sale involving the Company
that is permitted under the Indenture, the Company may not assign its
obligations under the Guarantee.
Termination of the Guarantee
The Guarantee will terminate and be of no further force and effect as to the
TECONS upon full payment of the redemption price of all the TECONS, or upon
distribution of the Junior Subordinated Debentures to the holders of the TECONS
in exchange for all of the TECONS, or upon full payment of the amounts payable
upon liquidation of O&M Trust or upon distribution of O&M Common Stock upon
conversion of all of the TECONS. Notwithstanding the foregoing, the Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of TECONS must restore payment of any sums paid under the
TECONS or the Guarantee.
The Company's obligations under the Guarantee to make the Guarantee Payments
will constitute an unsecured obligation of the Company and will rank subordinate
and junior in right of payment to all other liabilities of the Company,
including the Junior Subordinated Debentures, except those made pari passu or
subordinate by their terms, and pari passu in right of payment with the most
senior preferred stock issued, from time to time, if any, by the Company. The
Company's obligations under the Guarantee will rank pari passu with guarantees
of preferred stock of any affiliate of the Company. Because the Company is a
holding company, the Company's obligations under the Guarantee are also
effectively subordinated to all existing and future liabilities, including trade
payables, of the Company's subsidiaries, except to the extent that the Company
is a creditor of the subsidiaries recognized as such. The Declaration provides
that each TECONS holder's acceptance thereof agrees to the subordination
provisions and other terms of the Guarantee.
Status of the Guarantee
The Guarantee will constitute a guarantee of payment and not of collection (that
is, the guaranteed party may institute a legal proceeding directly against the
guarantor to enforce its rights under the guarantee without first instituting a
legal proceeding against any other person or entity). The Guarantee will be
deposited with The First National Bank of Chicago, as indenture trustee, to be
held for the benefit of the holders of the TECONS issued by O&M Trust. The First
National Bank of Chicago shall enforce the Guarantee on behalf of the holders of
the TECONS. The holders of not less than a majority in aggregate liquidation
amount of the TECONS have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of the Guarantee,
including the giving of directions to The First National Bank of Chicago. If The
First National Bank of Chicago fails to enforce the Guarantee as above provided,
any holder of TECONS may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee, without first instituting a
legal proceeding against O&M Trust or any other person or entity.
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Miscellaneous
The Company will be required to provide annually to The First National Bank of
Chicago a statement as to the performance by the Company of certain of its
obligations under the Guarantee and as to any default in such performance. The
Company is required to file annually with The First National Bank of Chicago an
officer's certificate as to the Company's compliance with all conditions under
the Guarantee.
The First National Bank of Chicago, prior to the occurrence of a default,
undertakes to perform only such duties as are specifically set forth in the
Guarantee and, after default with respect to the Guarantee, shall exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to such provision, The First National Bank of
Chicago is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of TECONS unless it is offered reasonable
indemnity against the costs, expenses and liabilities that might be incurred
thereby.
Governing Law
The Guarantee will be governed by, and construed in accordance with, the laws of
the State of New York.
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Description of the Junior Subordinated Debentures
Set forth below is a description of the Junior Subordinated Debentures in which
the Trust will invest the proceeds from the issuance and sale of the Trust
Securities and which will be deposited in the Trust as trust assets. The terms
of the Junior Subordinated Debentures include those stated in the Indenture
dated as of May 13, 1998 (the "Trust Indenture" or the "Indenture") between the
Company and The First National Bank of Chicago, as trustee (the "Indenture
Trustee"). The following description does not purport to be complete and is
qualified in its entirety by reference to the Indenture and the Trust Indenture
Act. Whenever particular provisions or defined terms in the Indenture are
referred to herein, such provisions or defined terms are incorporated by
reference herein.
The Indenture does not limit the aggregate principal amount of indebtedness
which may be issued thereunder and provides that junior subordinated debentures
may be issued thereunder from time to time in one or more series (collectively,
together with the Junior Subordinated Debentures, the "Subordinated
Debentures"). The Junior Subordinated Debentures constitute a separate series
under the Indenture.
Under certain circumstances involving the dissolution of the Trust following the
occurrence of a Special Event, Junior Subordinated Debentures may be distributed
to the holders of the Trust Securities in liquidation of the Trust. See
"Description of the TECONS -- Special Event Redemption or Distribution."
General
The Junior Subordinated Debentures are unsecured, subordinated obligations of
the Company, limited in aggregate principal amount to an amount equal to the sum
of (i) the stated liquidation amount of the TECONS issued by the Trust and (ii)
the proceeds received by the Trust upon issuance of the Common Securities to the
Company (which proceeds will be used to purchase an equal principal amount of
Junior Subordinated Debentures). Since the Company is a holding company, the
Company's rights and the rights of its creditors, including the holders of
Junior Subordinated Debentures to participate in the assets of any subsidiary
upon the latter's liquidation or recapitalization will be subject to the prior
claims of each subsidiary's creditors, except to the extent that the Company may
itself be a creditor with recognized claims against the subsidiary.
The entire principal amount of the Junior Subordinated Debentures will become
due and payable, together with any accrued and unpaid interest thereon, on April
30, 2013. The Junior Subordinated Debentures are not subject to any sinking
fund.
If Junior Subordinated Debentures are distributed to holders of TECONS in
dissolution of the Trust, such Junior Subordinated Debentures will initially be
issued as a Global Security (as defined below). As described herein, under
certain limited circumstances, Junior Subordinated Debentures may be issued in
certificated form in exchange for a Global Security. See "Book-Entry and
Settlement" below. In the event that Junior Subordinated Debentures are issued
in certificated form, such Junior Subordinated Debentures will be in
denominations of $50 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Junior Subordinated
Debentures issued as a Global Security will be made to DTC, a successor
depositary or, in the event that no depositary is used, to a paying agent for
the Junior Subordinated Debentures.
In the event that Junior Subordinated Debentures are issued in certificated
form, payments of principal and interest will be payable, the transfer of the
Junior Subordinated Debentures will be registrable, and Junior Subordinated
Debentures will be exchangeable for Junior Subordinated Debentures of other
denominations of a like aggregate principal amount, at the corporate trust
office of the Indenture Trustee in New York, New York; provided that payment of
interest may be made at the option of the Company by check mailed to the address
of the persons entitled thereto and that the payment of principal with respect
to any Junior Subordinated Debenture will be made only upon surrender of such
Junior Subordinated Debenture to the Indenture Trustee.
Subordination
The payment of principal of, premium, if any, and interest on the Junior
Subordinated Debentures will, to the extent and in the manner set forth in the
Indenture, be subordinated in right of payment to the prior payment in full, in
cash or cash equivalents, of all Senior and Subordinated Debt of the Company.
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Upon any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding up, receivership, reorganization, assignment for the
benefit of creditors, marshaling of assets and liabilities or any bankruptcy,
insolvency or similar proceedings of the Company, the holders of all Senior and
Subordinated Debt will first be entitled to receive payment in full of all
amounts due or to become due thereon before the holders of the Junior
Subordinated Debentures will be entitled to receive any payment in respect of
the principal of, premium, if any, or interest on the Junior Subordinated
Debentures.
No payments on account of principal, premium, if any, or interest in respect of
the Junior Subordinated Debentures may be made by the Company if there shall
have occurred and be continuing a default in any payment with respect to Senior
and Subordinated Debt, whether at maturity, upon redemption, by declaration or
otherwise. In addition, during the continuance of any other event of default
(other than a payment default) with respect to Designated Senior and
Subordinated Debt pursuant to which the maturity thereof may be accelerated,
from and after the date of receipt by the Trustee of written notice from holders
of such Designated Senior and Subordinated Debt or from an agent of such
holders, no payments on account of principal, premium, if any, or interest in
respect of the Junior Subordinated Debentures may be made by the Company during
a period (the "Payment Blockage Period") commencing on the date of delivery of
such notice and ending 179 days thereafter (unless such Payment Blockage Period
shall be terminated by written notice to the Trustee from the holders of such
Designated Senior and Subordinated Debt or from an agent of such holders, or
such event of default has been cured or waived or has ceased to exist). Only one
Payment Blockage Period may be commenced with respect to the Junior Subordinated
Debentures during any period of 360 consecutive days. No event of default which
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior and Subordinated Debt
initiating such Payment Blockage Period shall be or be made the basis for the
commencement of any subsequent Payment Blockage Period by the holders of such
Designated Senior and Subordinated Debt, unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
By reason of such subordination, in the event of insolvency, funds that would
otherwise be payable to holders of Junior Subordinated Debentures will be paid
to the holders of Senior and Subordinated Debt of the Company to the extent
necessary to pay such Debt in full, and the Company may be unable to meet fully
its obligations with respect to the Junior Subordinated Debentures.
"Debt" is defined to mean, with respect to any person at any date of
determination (without duplication), (i) all indebtedness of such person for
borrowed money, (ii) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments, (iii) all obligations of such
person in respect of letters of credit or bankers' acceptances or other similar
instruments (or reimbursement obligations with respect thereto), (iv) all
obligations of such person to pay the deferred purchase price of property or
services, except trade payables, (v) all obligations of such person as lessee
under capitalized leases, (vi) all Debt of others secured by a lien on any asset
of such person, whether or not such Debt is assumed by such person; provided
that, for purposes of determining the amount of any Debt of the type described
in this clause, if recourse with respect to such Debt is limited to such asset,
the amount of such Debt shall be limited to the lesser of the fair market value
of such asset or the amount of such Debt, (vii) all Debt of others guaranteed by
such person to the extent such Debt is guaranteed by such person, (viii) all
redeemable stock valued at the greater of its voluntary or involuntary
liquidation preference plus accumulated and unpaid dividends and (ix) to the
extent not otherwise included in this definition, all obligations of such person
under currency agreements and interest rate agreements.
"Designated Senior and Subordinated Debt" is defined to mean (i) Debt under the
Credit Agreement dated as of September 15, 1997 (the "Credit Agreement") among
the Company, certain of its Subsidiaries, the various banks and lending
institutions identified on the signature pages thereto, NationsBank, N.A., as
agent, Bank of America NT and SA and Crestar Bank, as co-agents, and
NationsBank, N.A., as administrative agent, as such Credit Agreement has been
and may be amended, restated, supplemented, replaced, refinanced or otherwise
modified from time to time, and (ii) Debt constituting Senior and Subordinated
Debt which, at the time of its determination, (A) has an aggregate principal
amount of at least $30 million and (B) is specifically designated in the
instrument evidencing such Senior and Subordinated Debt as "Designated Senior
and Subordinated Debt" by the Company.
"Senior and Subordinated Debt" is defined to mean the principal of (and premium,
if any) and interest on all Debt of the Company whether created, incurred or
assumed before, on or after the date of the Indenture; provided that such Senior
and Subordinated Debt shall not include (i) Debt of the Company to any
Affiliate, (ii) Debt of the Company that, when incurred and without respect to
any election under Section 1111(b) of Title 11, U.S. Code, was without recourse,
(iii) any other Debt of the Company which by the terms of the instrument
creating or evidencing the same is specifically designated as not being senior
in right of payment to the Junior Subordinated Debentures, and in particular the
Junior Subordinated Debentures shall rank pari passu with all other debt
securities and guarantees issued to any trust, partnership or other entity
affiliated with the Company which is a financing vehicle of the Company in
connection with an issuance of preferred securities by such financing entity,
and (iv) redeemable stock of the Company.
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Optional Redemption
Except as provided below, the Junior Subordinated Debentures may not be redeemed
prior to May 2, 2001. O&M shall have the right to redeem the Junior Subordinated
Debentures, in whole or in part, from time to time, on or after May 2, 2001,
upon not less than 30 nor more than 60 days notice, at the following prices
(expressed as percentages of the principal amount of the Junior Subordinated
Debentures) together with accrued and unpaid interest, including Compounded
Interest to, but excluding, the redemption date, if redeemed during the 12-month
period beginning April 30:
Year Redemption Price
---- ----------------
2001.................... 103.3594%
2002.................... 102.6875%
2003.................... 102.0156%
2004.................... 101.3438%
2005.................... 100.6719%
and 100% if redeemed on or after April 30, 2006.
If the Junior Subordinated Debentures are redeemed on any Interest Payment Date
(as defined), accrued and unpaid interest shall be payable to holders of record
on the relevant record date.
So long as the corresponding TECONS are outstanding, the proceeds from the
redemption of any Junior Subordinated Debentures will be used to redeem TECONS.
The Company will also have the right to redeem the Junior Subordinated
Debentures at any time upon the occurrence of a Tax Event if certain conditions
are met as described under "Description of the TECONS -- Special Event
Redemption or Distribution."
The Company may not redeem any Junior Subordinated Debentures unless all accrued
and unpaid interest thereon, including Compounded Interest, has been or is
simultaneously paid for all quarterly periods terminating on or prior to the
date of notice of redemption.
If the Company gives a notice of redemption in respect of Junior Subordinated
Debentures (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, the Company will deposit irrevocably with the
Indenture Trustee funds sufficient to pay the applicable Redemption Price and
will give irrevocable instructions and authority to pay such Redemption Price to
the holders of the Junior Subordinated Debentures. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit, interest will cease to accrue on the Junior Subordinated Debentures
called for redemption, such Junior Subordinated Debentures will no longer be
deemed to be outstanding and all rights of holders of such Junior Subordinated
Debentures so called for redemption will cease, except the right of the holders
of such Junior Subordinated Debentures to receive the applicable Redemption
Price, but without interest on such Redemption Price. If any date fixed for
redemption of Junior Subordinated Debentures is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If the Company fails to repay the Junior Subordinated Debentures on
maturity or the date fixed for this redemption, or if payment of the Redemption
Price in respect of Junior Subordinated Debentures is improperly withheld or
refused and not paid by the Company, interest on such Junior Subordinated
Debentures will continue to accrue, from the original redemption date to the
date of payment, in which case the actual payment date will be considered the
date fixed for redemption for purposes of calculating the applicable Redemption
Price. If fewer than all of the Junior Subordinated Debentures are to be
redeemed, the Junior Subordinated Debentures to be redeemed shall be selected by
lot or pro rata.
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In the event of any redemption in part, the Company shall not be required to (i)
issue, register the transfer of or exchange any Junior Subordinated Debentures
during a period beginning at the opening of business 15 days before any
selection for redemption of Junior Subordinated Debentures and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Junior Subordinated
Debentures to be redeemed and (ii) register the transfer of or exchange any
Junior Subordinated Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any Junior Subordinated Debentures being
redeemed in part.
Interest
The Junior Subordinated Debentures will bear interest at the rate of 5.375% per
annum from May 13, 1998. Interest will be payable quarterly in arrears on each
January 31, April 30, July 31 and October 31 (each, an "Interest Payment Date"),
commencing on July 31, 1998, to the person in whose name such Junior
Subordinated Debenture is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment Date.
In the event (i) the TECONS shall not continue to remain in book-entry only form
or (ii) if following distribution of the Junior Subordinated Debentures to
holders of Trust Securities upon dissolution of the Trust as described under
"Description of the TECONS," the Junior Subordinated Debentures shall not
continue to remain in book-entry only form, the relevant record date will be the
fifteenth day of the month in which the relevant Interest Payment Date occurs.
Interest payable on any Junior Subordinated Debenture that is not punctually
paid or duly provided for on any Interest Payment Date will forthwith cease to
be payable to the person in whose name such Junior Subordinated Debenture is
registered on the relevant record date, and such defaulted interest will instead
be payable to the person in whose name such Junior Subordinated Debenture is
registered on the special record date or other specified date determined in
accordance with the Indenture; provided, however, that interest shall not be
considered payable by the Company on any Interest Payment Date falling within an
Extension Period unless the Company has elected to make a full or partial
payment of interest accrued on the Junior Subordinated Debentures on such
Interest Payment Date.
The amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30 day months. If any date on which interest is payable
on the Junior Subordinated Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
Option to Extend Interest Payment Period
So long as the Company shall not be in default in the payment of interest on the
Junior Subordinated Debentures, the Company shall have the right to extend the
interest payment period from time to time for a period not exceeding 20
consecutive quarterly interest periods. The Company has no current intention of
exercising its right to extend an interest payment period. No interest shall be
due and payable during an Extension Period, except at the end thereof. During
any Extension Period, the Company shall not (i) declare or pay any dividends on,
or redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock or make any guarantee
payments with respect thereto; provided that the foregoing will not apply to
stock dividends or other stock distributions paid by the Company or (ii) make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Company that rank pari passu with or junior
in interest to the Junior Subordinated Debentures. The provisions of the
immediately preceding sentence will not restrict the ability of the Company to
redeem rights issued pursuant to the Amended and Restated Rights Agreement,
dated as of May 10, 1994, between the Company and Wachovia Bank of North
Carolina, N.A., as Rights Agent, as it may be amended from time to time, in an
amount per right issued thereunder not to exceed that in effect on the issue
date of the Junior Subordinated Debentures. Prior to the termination of any such
Extension Period, the Company may further extend the interest payment period;
provided that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters or extend beyond the
maturity of the Junior Subordinated Debentures. On the Interest Payment Date
occurring at the end of each Extension Period, the Company shall pay to the
holders of Junior Subordinated Debentures of record on the record date for such
Interest Payment Date (regardless of who the holders of record may have been on
other dates during the Extension Period) all accrued and unpaid interest on the
Junior Subordinated Debentures, together with interest thereon at the rate
specified for the Junior Subordinated Debentures to the extent permitted by
applicable law, compounded quarterly. Upon the termination of any Extension
Period and the payment of all amounts then due, the Company may commence a new
Extension Period, subject to the above requirements. The Company may also prepay
at any time all or any portion of the interest accrued during an Extension
Period. Consequently, there could be multiple Extension Periods of varying
lengths throughout the term of the Junior Subordinated Debentures, not to exceed
20 consecutive quarters; provided, that no such period may extend beyond the
stated maturity of the Junior Subordinated Debentures. The failure by the
Company to make interest payments during an Extension Period would not
constitute a default or an event of default under the Indenture or the Company's
currently outstanding indebtedness.
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If the Property Trustee shall be the sole holder of the Junior Subordinated
Debentures, the Company shall give the Property Trustee notice of its selection
of such Extension Period one Business Day prior to the earlier of (i) the date
the distributions on the TECONS are payable or (ii) the date the Trust is
required to give notice to the NYSE or other applicable self-regulatory
organization or to holders of the TECONS of the record date or the date such
distribution is payable. The Trust shall give notice of the Company's selection
of such Extension Period to the holders of the TECONS.
If Junior Subordinated Debentures have been distributed to holders of Trust
Securities, the Company shall give the holders of the Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the next succeeding Interest Payment Date or (ii)
the date the Company is required to give notice to the NYSE (if the Junior
Subordinated Debentures are then listed thereon) or other applicable
self-regulatory organization or to holders of the Junior Subordinated Debentures
of the record or payment date of such related interest payment.
Additional Interest
If at any time the Trust shall be required to pay any taxes, duties, assessments
or governmental charges of whatever nature (other than withholding taxes)
imposed by the United States, or any other taxing authority, then, in any such
case, O&M will pay as additional interest ("Additional Interest") on the Junior
Subordinated Debentures such additional amounts as shall be required so that the
net amounts received and retained by the Trust after paying any such taxes,
duties, assessments or other governmental charges will be equal to the amounts
the Trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
Conversion of the Junior Subordinated Debentures
The Junior Subordinated Debentures are convertible into O&M Common Stock at the
option of the holders of the Junior Subordinated Debentures at any time prior to
the close of business on April 30, 2013 (or, in the case of Junior Subordinated
Debentures called for redemption, the close of business on the Business Day
prior to the Redemption Date) at the Initial Conversion Price subject to the
conversion price adjustments described under "Description of the TECONS --
Conversion Rights." The Trust has agreed not to convert Junior Subordinated
Debentures held by it except pursuant to a notice of conversion delivered to the
Conversion Agent by a holder of TECONS. Upon surrender of a TECONS to the
Conversion Agent for conversion, the Trust will distribute Junior Subordinated
Debentures to the Conversion Agent on behalf of the holder of the TECONS so
converted, whereupon the Conversion Agent will convert such Junior Subordinated
Debentures to O&M Common Stock on behalf of such holder. O&M's delivery to the
holders of the Junior Subordinated Debentures (through the Conversion Agent) of
the fixed number of shares of O&M Common Stock into which the Junior
Subordinated Debentures are convertible (together with the cash payment, if any,
in lieu of fractional shares) will be deemed to satisfy the obligation of O&M to
pay the principal amount of the Junior Subordinated Debentures so converted, and
the accrued and unpaid interest thereon attributable to the period from the last
date to which interest has been paid or duly provided for; provided, however,
that if any Junior Subordinated Debenture is converted after a record date for
payment of interest, the interest payable on the related Interest Payment Date
with respect to such Junior Subordinated Debenture shall be paid to the Trust
(which will distribute such interest to the converting holder) or other holder
of Junior Subordinated Debentures, as the case may be, despite such conversion.
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Compounded Interest
Payments of Compounded Interest on the Junior Subordinated Debentures held by
the Trust will make funds available to pay any interest on distributions in
arrears in respect of the TECONS pursuant to the terms thereof.
Certain Covenants of the Company Applicable to the Junior Subordinated
Debentures The Company covenants in the Indenture that, so long as the
TECONS issued by O&M Trust remain outstanding, the Company will not
declare or pay any dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, or make any
guarantee payment with respect to, any of its common or preferred stock
if at such time (i) the Company shall be in default with respect to its
Guarantee Payments or other payment obligations under the Guarantee,
(ii) there shall have occurred any Indenture Event of Default with
respect to the Junior Subordinated Debentures or (iii) the Company
shall have given notice of its election to defer payments of
interest on such Junior Subordinated Debentures by extending the
interest payment period as provided in the terms of such Junior
Subordinated Debentures and such period, or any extension thereof, is
continuing; provided that (x) the Company will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the
conversion of any preferred stock of the Company as may be outstanding
from time to time, in each case in accordance with the terms of such
stock and (y) the foregoing will not apply to any stock dividends
paid by the Company. The provisions of the immediately preceding
sentence will not restrict the ability of the Company to redeem rights
issued pursuant to the Amended and Restated Rights Agreement, dated
as of May 10, 1994, between the Company and Wachovia Bank of
North Carolina, N.A., as Rights Agent, as it may be amended from time
to time, in an amount per right issued thereunder not to exceed that
in effect on the issue date of the Junior Subordinated Debentures. The
Company has agreed (i) to remain the sole direct or indirect owner of
all of the outstanding Common Securities issued by O&M Trust and
not to cause or permit the Common Securities to be transferred
except to the extent permitted by the Declaration; provided that any
permitted successor of the Company under the Indenture may
succeed to the Company's ownership of the Common Securities issued by
O&M Trust, (ii) to comply fully with all of its obligations and
agreements contained in the related Declaration and (iii) not to
take any action which would cause O&M Trust to cease to be treated
as a grantor trust for United States federal income tax purposes,
except in connection with a distribution of Junior Subordinated
Debentures.
Indenture Events of Default
The Indenture provides that any one or more of the following described events,
which has occurred and is continuing, constitutes an "Indenture Event of
Default" with respect to the Junior Subordinated Debentures:
(a) failure for 30 days to pay interest on the Junior Subordinated
Debentures of such series when due; provided that a valid extension
of the interest payment period by the Company shall not constitute
a default in the payment of interest for this purpose;
(b) failure to pay principal of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon
redemption, by declaration or otherwise;
(c) failure to observe or perform any other covenant contained in the
Indenture for 90 days after written notice to the Company from the
Indenture Trustee or the holders of at least 25% in principal
amount of the outstanding Junior Subordinated Debenture; or
(d) certain events in bankruptcy, insolvency or reorganization of
the Company.
In each and every such case, unless the principal of all the Junior Subordinated
Debentures shall have already become due and payable, either the Indenture
Trustee or the holders of not less than 25% in aggregate principal amount of the
Junior Subordinated Debentures then outstanding, by notice in writing to the
Company (and to the Indenture Trustee if given by such holders), may declare the
principal of all the Junior Subordinated Debentures to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable. (Section 6.01)
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The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee. (Section 6.06) The Indenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of the Junior Subordinated
Debentures may declare the principal due and payable immediately upon an
Indenture Event of Default, but the holders of a majority in aggregate
outstanding principal amount of the Junior Subordinated Debentures may annul
such declaration and waive the default if the default has been cured and a sum
sufficient to pay all matured installments of interest and principal otherwise
than by acceleration and any premium has been deposited with the Indenture
Trustee. (Sections 6.01 and 6.06)
The holders of a majority in aggregate outstanding principal amount of the
Junior Subordinated Debentures may, on behalf of the holders of all the Junior
Subordinated Debentures, waive any past default, except a default in the payment
of principal, premium, if any, or interest (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
otherwise than by acceleration and any premium has been deposited with the
Indenture Trustee) or a call for redemption of Junior Subordinated Debentures.
(Section 6.06) The Company is required to file annually with the Indenture
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants under the Indenture. (Section 5.03)
Under the Declaration, an Indenture Event of Default with respect to the Junior
Subordinated Debentures will constitute a Declaration Event of Default.
Modification of the Indenture
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Junior Subordinated Debentures, to modify
the Indenture or any supplemental indenture affecting the rights of the holders
of such Junior Subordinated Debentures; provided that no such modification may,
without the consent of the holder of each outstanding Junior Subordinated
Debenture affected thereby, (i) extend the fixed maturity of the Junior
Subordinated Debentures, reduce the principal amount thereof, reduce the rate or
extend the time of payment of interest thereon, reduce any premium payable upon
the redemption thereof, or otherwise modify any terms affecting the amount or
timing of payments on any Junior Subordinated Debenture, or (ii) reduce the
percentage of Junior Subordinated Debentures, the holders of which are required
to consent to any modification of the Indenture.
(Section 9.02)
Consolidation, Merger and Sale
The Indenture provides that the Company may not consolidate with or merge into
any other person or transfer or lease its properties and assets substantially as
an entirety to any person and may not permit any person to merge into or
consolidate with the Company unless (i) either the Company will be the resulting
or surviving entity or any successor or purchaser is a corporation organized
under the laws of the United States of America, any State or the District of
Columbia, and any such successor or purchaser expressly assumes the Company's
obligations under the Indenture, and (ii) immediately after giving effect to the
transactions no Event of Default shall have occurred and be continuing. (Section
10.01)
Defeasance and Discharge
Under the terms of the Indenture, the Company will be discharged from any and
all obligations in respect of the Junior Subordinated Debentures (except in each
case for certain obligations to register the transfer or exchange of Junior
Subordinated Debentures, replace stolen, lost or mutilated Junior Subordinated
Debentures, maintain paying agencies and hold moneys for payment in trust) if
(i) the Company irrevocably deposits with the Indenture Trustee cash or U.S.
Government Obligations, as trust funds in an amount certified to be sufficient
to pay at maturity (or upon redemption) the principal of, premium, if any, and
interest on all outstanding Junior Subordinated Debentures; (ii) such deposit
will not result in a breach or violation of, or constitute a default under, any
agreement or instrument to which the Company is a party or by which it is bound;
(iii) the Company delivers to the Indenture Trustee an opinion of counsel to the
effect that the holders of the Junior Subordinated Debentures will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such defeasance and that defeasance will not otherwise alter holders' United
States federal income tax treatment of principal, premium and interest payments
on the Junior Subordinated Debentures (such opinion must be based on a ruling of
the Internal Revenue Service or a change in United States federal income tax law
occurring after the date of the Indenture, since such a result would not occur
under current tax law); (iv) the Company has delivered to the Indenture Trustee
an Officer's Certificate and an opinion of counsel, each stating that all
conditions precedent provided for relating to the defeasance contemplated by
such provision have been complied with; and (v) no event or condition shall
exist that, pursuant to the subordination provisions applicable to such series,
would prevent the Company from making payments of principal of, premium, if any,
and interest on the Junior Subordinated Debentures at the date of the
irrevocable deposit referred to above. (Section 11.01)
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Governing Law
The Indenture and the Junior Subordinated Debentures will be governed by
the laws of the State of New York. (Section 13.05)
Information Concerning the Indenture Trustee
The Indenture Trustee, prior to default, undertakes to perform only such duties
as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. (Section 7.01) Subject to such provision, the
Indenture Trustee is under no obligation to exercise any of the powers vested in
it by the Indenture at the request of any holder of Junior Subordinated
Debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities that might be incurred thereby. (Section 7.02)
The Indenture Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it. (Section 7.01)
The Company and certain of its subsidiaries maintain deposit accounts and
banking relationships with The First National Bank of Chicago.
Miscellaneous
The Company will have the right at all times to assign any of its rights or
obligations under the Indenture to a direct or indirect wholly-owned subsidiary
of the Company; provided that, in the event of any such assignment, the Company
will remain jointly and severally liable for all such obligations. Subject to
the foregoing, the Indenture will be binding upon and inure to the benefit of
the parties thereto and their respective successors and assigns. The Indenture
provides that it may not otherwise be assigned by the parties thereto other than
by the Company to a successor or purchaser pursuant to a consolidation, merger
or sale permitted by the Indenture.
(Section 13.11)
Book-Entry and Settlement
If distributed to holders of TECONS in connection with the involuntary or
voluntary dissolution, winding-up or liquidation of the Trust as a result of the
occurrence of a Special Event, the Junior Subordinated Debentures will be issued
(i) if to owners of beneficial interests in the Global TECONS, in the form of
one or more global certificates (each, a "Global Security") registered in the
name of the Depositary or its nominee or (ii) if to holders of certificated
TECONS, in registered form (each, a "Certificated Security"). Except under the
limited circumstances described below, Junior Subordinated Debentures
represented by the Global Security will not be exchangeable for, and will not
otherwise be issuable as, Junior Subordinated Debentures in definitive form. The
Global Securities described above may not be transferred except by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or to a successor Depositary
or its nominee.
The laws of some jurisdictions require that certain purchasers or securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided herein, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Junior
Subordinated Debentures in definitive form and will not be considered the
holders (as defined in the Indenture) thereof for any purpose under the
Indenture and no Global Security representing Junior Subordinated Debentures
shall be exchangeable, except for another Global Security of like denomination
and tenor to be registered in the name of the Depositary or its nominee.
Accordingly, each beneficial owner of an interest in a Global Security must rely
on the procedures of the Depositary, or, if such person is not a Participant, on
the procedures of the Participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture.
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The Depositary
If Junior Subordinated Debentures are distributed to holders of TECONS in
liquidation of such holders' interests in the Trust, DTC will act as Depositary
for the Junior Subordinated Debentures. For a description of DTC and the
specific terms of the Depositary arrangements, see "Description of the TECONS --
The Global TECONS." As of the date of this Prospectus, the description therein
of DTC's book-entry system and DTC's and Euroclear's and Cedel's practices as
they relate to purchases, transfers, notices and payments with respect to the
TECONS apply in all material respects to any debt obligations represented by one
or more Global Securities held by the Company. The Company may appoint a
successor to DTC or any successor Depositary in the event DTC or such successor
Depositary is unable or unwilling to continue as a Depositary for the Global
Securities.
None of the Company, the Trust, the Property Trustee, any paying agent and any
other agent of the Company or the Indenture Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in a Global Security for such Junior
Subordinated Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
Discontinuance of the Depositary's Services
A Global Security shall be exchangeable for Junior Subordinated Debentures
registered in the names of persons other than the Depositary or its nominee only
if (i) the Depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the Depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act, at which time the Depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) the Company, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Event of Default with respect to such Junior Subordinated
Debentures. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Junior Subordinated Debentures registered in
such names as the Depositary shall direct. It is expected that such instructions
will be based upon directions received by the Depositary from its Participants
with respect to ownership of beneficial interests in such Global Security.
Relationship Among the TECONS, the Junior
Subordinated Debentures and the Guarantee
As set forth in the Declaration, the Trust exists for the sole purpose of (a)
issuing the Trust Securities evidencing undivided beneficial interests in the
assets of the Trust, and investing the proceeds from such issuance and sale in
the Junior Subordinated Debentures and (b) engaging in such other activities as
are necessary and incidental thereto.
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and other payments due on the TECONS primarily because (i) the
aggregate principal amount of Junior Subordinated Debentures held as trust
assets will be equal to the sum of the aggregate stated liquidation amount of
the TECONS and the proceeds received by the Trust upon issuance of the Common
Securities to the Company; (ii) the interest rate and interest and other payment
dates on the Junior Subordinated Debentures will match the distribution rate and
distribution and other payment dates for the TECONS; (iii) the Declaration
provides that the Company shall pay for all debts and obligations (other than
with respect to the Trust Securities) and all costs and expenses of the Trust,
including any taxes and all costs and expenses with respect thereto, to which
the Trust may become subject, except for United States withholding taxes; and
(iv) the Declaration further provides that the Trustees shall not cause or
permit the Trust, among other things, to engage in any activity that is not
consistent with the limited purposes of the Trust. With respect to clause (iii)
above, however, no assurance can be given that the Company will have sufficient
resources to enable it to pay such debts, obligations, costs and expenses on
behalf of the Trust.
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Payments of distributions and other payments due on the TECONS are guaranteed by
the Company on a subordinated basis as and to the extent set forth under
"Description of the Guarantee." If the Company does not make interest or other
payments on the Junior Subordinated Debentures, the Trust will not make
distributions or other payments on the TECONS. Under the Declaration, if and to
the extent the Company does make interest or other payments on the Junior
Subordinated Debentures, the Property Trustee is obligated to make distributions
or other payments on the TECONS. The Guarantee is a full and unconditional
guarantee from the time of issuance of the TECONS, but the Guarantee covers
distributions and other payments on the TECONS only if and to the extent that
the Company has made a payment to the Property Trustee of interest or principal
on the Junior Subordinated Debentures deposited in the Trust as trust assets.
The Property Trustee will have the power to exercise all rights, powers and
privileges under the Indenture with respect to the Junior Subordinated
Debentures, including its rights as the holder of the Junior Subordinated
Debentures to enforce the Company's obligations under the Junior Subordinated
Debentures upon the occurrence of an Indenture Event of Default, and will also
have the right to enforce the Guarantee on behalf of the holders of the TECONS.
In addition, the holders of at least a majority in liquidation amount of the
TECONS will have the right to direct the Property Trustee with respect to
certain matters under the Declaration and the Guarantee. If the Property Trustee
fails to enforce its rights under the Trust Indenture any holder of TECONS may,
to the extent permitted by applicable law, after a period of 30 days has elapsed
from such holder's written request to the Property Trustee to enforce such
rights, institute a legal proceeding against the Company to enforce such rights.
If the Property Trustee fails to enforce the Guarantee, to the extent permitted
by applicable law, any holder of TECONS may institute a legal proceeding
directly against the Company to enforce the Property Trustee's rights under the
Guarantee. Notwithstanding the foregoing, if the Company has failed to make a
guarantee payment, a holder of TECONS may directly institute a proceeding
against the Company for enforcement of the Guarantee for such payment. See
"Description of the TECONS" and "Description of the Guarantee."
The above mechanisms and obligations, taken together, provide a full and
unconditional guarantee by the Company of payments due on the TECONS.
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Certain Federal Tax Consequences
General
The following is a summary of the principal United States federal income tax
consequences of the purchase, ownership and disposition of TECONS. The
statements of law and legal conclusions set forth in this summary regarding the
tax consequences to the beneficial owners of TECONS represent the opinion of
Hunton & Williams, Richmond, Virginia, counsel to the Company and the Trust.
This summary does not address all tax consequences that may be applicable to a
holder, nor does it address the tax consequences to (i) persons that may be
subject to special treatment under United States federal income tax law, such as
banks, insurance companies, thrift institutions, regulated investment companies,
real estate investment trusts, tax-exempt organizations and dealers in
securities or currencies, (ii) persons that will hold TECONS as part of a
position in a "straddle" or as part of a "hedging," "conversion" or other
integrated investment transaction for federal income tax purposes, (iii) except
with respect to the discussion under the caption "United States Alien Holders,"
persons whose functional currency is not the United States dollar or (iv)
persons that do not hold TECONS as capital assets.
This summary is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations, Internal Revenue Service (the "IRS") rulings and
pronouncements and judicial decisions now in effect, all of which are subject to
change at any time. Such changes may be applied retroactively in a manner that
could cause the tax consequences to vary substantially from the consequences
described below, possibly adversely affecting a beneficial owner of TECONS. In
addition, the authorities on which this summary is based (including authorities
distinguishing debt from equity) are subject to various interpretations, and it
is therefore possible that the federal income tax treatment of the TECONS may
differ from the treatment described below. No ruling has been received from the
IRS regarding the tax consequences of the TECONS. Counsel's opinion regarding
such tax consequences represents only counsel's best legal judgment based on
current authorities and is not binding on the IRS or the courts.
INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN LIGHT OF THEIR
OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX CONSEQUENCES OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF TECONS, AS WELL AS THE EFFECT OF ANY STATE, LOCAL
OR FOREIGN TAX LAWS.
Classification of the Junior Subordinated Debentures
The Junior Subordinated Debentures are intended to be, and the Company intends
to take the position that the Junior Subordinated Debentures will be classified
for United States federal income tax purposes as, indebtedness under current
law. No assurance can be given, however, that such position will not be
challenged by the IRS. According to a petition recently filed in the United
States Tax Court by a corporation unrelated to the Company and the Trust, the
IRS has challenged the status as indebtedness, for United States federal income
tax purposes, of certain purported debt instruments held by entities intended to
be taxable as partnerships for United States federal income tax purposes, where
those entities, in turn, issued preferred securities to investors. Although the
overall structure of the financing arrangement involved in that case is somewhat
similar to the financing structure for the Junior Subordinated Debentures and
the Trust, the relevant facts involved in that case appear to differ
significantly from those relating to the Junior Subordinated Debentures and the
Trust. The remainder of this discussion assumes that the Junior Subordinated
Debentures will be classified for United States federal income tax purposes as
indebtedness of the Company.
Classification of the Trust
In the opinion of Hunton & Williams, counsel to the Company and the Trust,
assuming full compliance with the terms of the Declaration, the Trust will be
classified for United States federal income tax purposes as a grantor trust and
not as an association taxable as a corporation. Accordingly, each holder of
TECONS should be considered the owner of a pro rata portion of the Junior
Subordinated Debentures held by the Trust and will be required to include in
gross income its pro rata share of income received or accrued with respect to
the Junior Subordinated Debentures. No portion of the amounts included in income
with respect to the TECONS will be eligible for the dividends received
deduction.
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Interest Income and Original Issue Discount
Under Treasury Regulations (the "Regulations"), a "remote" contingency that
stated interest will not be timely paid will be ignored in determining whether a
debt instrument is issued with original issue discount ("OID"). The Company
believes that the likelihood of its exercising its option to defer payments of
interest on the Junior Subordinated Debentures is remote. Based on the
foregoing, the Junior Subordinated Debentures should not be considered to be
issued with OID at the time of their original issuance and, accordingly, a
holder of TECONS should include in gross income such holder's allocable share of
interest on the Junior Subordinated Debentures (other than an amount of the
first interest payment attributable to pre-issuance accrued interest, which a
holder may treat as a reduction of the issue price of the Junior Subordinated
Debentures rather than as gross income) in accordance with such holder's usual
method of tax accounting.
Under the Regulations, if the Company should actually exercise its option to
defer any payment of interest, the Junior Subordinated Debentures would at that
time be treated as issued with OID, and all stated interest on the Junior
Subordinated Debentures would thereafter be treated as OID so long as the Junior
Subordinated Debentures remained outstanding. In such event, all of a holder's
taxable interest income with respect to the Junior Subordinated Debentures would
be accounted for as OID on an economic accrual basis regardless of such holder's
usual method of tax accounting. Consequently, a holder would be required to
include OID in gross income even though the Company would not make any cash
payments during an Extension Period.
The Regulations have not been addressed in any rulings or other interpretations
by the IRS, and it is possible that the IRS could take a position contrary to
the interpretation herein.
Market Discount and Amortizable Premium
A secondary market purchaser of TECONS at a discount from the adjusted issue
price (that is, the principal amount plus any accrued but unpaid OID) of the pro
rata share of Junior Subordinated Debentures represented by the TECONS acquires
such TECONS with "market discount" if the discount is not less than the product
of (i) 0.25% of the adjusted issue price multiplied by (ii) the number of
complete years to maturity of the Junior Subordinated Debentures after the date
of purchase. A purchaser of TECONS with market discount generally will be
required to treat any gain on the sale, redemption or other disposition of all
or part of such TECONS as ordinary income to the extent of accrued (but not
previously taxable) market discount. However, accrued market discount should not
be recognized as income on the conversion of a Junior Subordinated Debenture
into O&M Common Stock but the accrued market discount should attach to the
shares of O&M Common Stock received (including any fractional share interest
deemed received) and be recognized as ordinary income upon the disposition of
such O&M Common Stock. Market discount generally will accrue ratably during the
period from the date of purchase to the maturity date, unless the holder elects
to accrue such market discount on the basis of a constant interest rate. A
holder who acquires TECONS at a market discount may be required to defer some
interest deductions attributable to any indebtedness incurred or continued to
purchase or carry the TECONS.
A secondary market purchaser of TECONS at a premium over the stated principal
amount of the pro rata share of Junior Subordinated Debentures (plus accrued
interest) generally may elect to amortize such premium ("Section 171 premium"),
under a constant yield method, as an offset to interest income on the Junior
Subordinated Debentures. If the Junior Subordinated Debentures are deemed to be
issued with OID and TECONS are acquired at a premium, the premium will not be
Section 171 premium but will be amortized as a reduction in the amount of OID
includable in the holder's income.
Distribution of Junior Subordinated Debentures to Holders of TECONS
A distribution by the Trust of the Junior Subordinated Debentures as described
under the caption "Description of TECONS -- Special Event Redemption or
Distribution" is conditioned on receipt by the Company of an opinion of counsel
to the effect that such distribution would be a non-taxable event to holders for
United States federal income tax purposes. Under current law, such a
distribution will be non-taxable and will result in the holder receiving
directly its pro rata share of the Junior Subordinated Debentures previously
held indirectly through the Trust, with a holding period and aggregate tax basis
equal to the holding period and aggregate tax basis such holder had in its
TECONS before such distribution. A holder will account for interest, market
discount and amortizable premium in respect of Junior Subordinated Debentures
received from the Trust in the manner described under " -- Interest Income and
Original Issue Discount" and "-- Market Discount and Amortizable Premium."
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Sale or Redemption of TECONS
Upon a sale (including redemption) of TECONS, a holder will recognize gain or
loss equal to the difference between its adjusted tax basis in the TECONS and
the amount realized on the sale of such TECONS (excluding any amount
attributable to any accrued interest with respect to such holder's pro rata
share of the Junior Subordinated Debentures not previously included in income,
which will be taxable as ordinary income). Provided that the Company does not
exercise its option to defer payment of interest on the Junior Subordinated
Debentures, and the Junior Subordinated Debentures are not considered to be
issued with OID, a holder's adjusted tax basis in the TECONS generally will be
its initial purchase price, increased by any market discount included in income
and reduced by any amortized Section 171 premium with respect to such TECONS. If
the Junior Subordinated Debentures are deemed to be issued with OID as a result
of the Company's deferral of any interest payment, a holder's tax basis in the
TECONS generally will be increased by OID previously includable in such holder's
gross income to the date of disposition and decreased by distributions or other
payments received on the TECONS since and including the commencement date of the
first Extension Period. Such gain or loss, except to the extent of any accrued
market discount, generally will be a capital gain or loss and generally will be
a long-term capital gain or loss if the TECONS have been held for the applicable
long-term holding period.
Should the Company exercise its option to defer any payment of interest on the
Junior Subordinated Debentures, the TECONS may trade at a price that does not
accurately reflect the value of accrued but unpaid interest with respect to the
underlying Junior Subordinated Debentures. As a result, and because a holder
will be required to include in income accrued but unpaid interest on Junior
Subordinated Debentures and to add such amount to its adjusted tax basis, such
holder may recognize a capital loss on a sale of TECONS during an Extension
Period. Subject to certain limited exceptions, capital losses cannot be applied
to offset ordinary income for United States federal income tax purposes.
Conversion of TECONS to O&M Common Stock
A holder of TECONS generally will not recognize income, gain or loss upon the
conversion, through the Conversion Agent, of Junior Subordinated Debentures into
O&M Common Stock. A holder of TECONS will recognize gain upon the receipt of
cash in lieu of a fractional share of O&M Common Stock equal to the amount of
cash received less such holder's tax basis in such fractional share. Such gain
will be taxable as ordinary income to the extent of any accrued market discount
attached to the fractional share interest. See "-- Accrued Market Discount and
Amortizable Premium." Such holder's tax basis in the O&M Common Stock received
upon conversion will generally be equal to such holder's tax basis in the TECONS
delivered to the Conversion Agent for exchange, less the basis allocated to any
fractional share for which cash is received. Such holder's holding period in the
O&M Common Stock received upon conversion will generally include the holder's
holding period of the TECONS delivered to the Conversion Agent for exchange.
Adjustment of Conversion Price
Treasury Regulations promulgated under Section 305 of the Code would treat
holders of TECONS as having received a constructive distribution from O&M in
certain events pursuant to which the conversion rate of the Junior Subordinated
Debentures may be adjusted. Thus, under certain circumstances, a reduction in
the conversion price for the Junior Subordinated Debentures may result in deemed
dividend income to holders of TECONS. Holders of TECONS are advised to consult
their tax advisors as to the income tax consequences of adjustments in the
conversion rate of TECONS.
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Backup Withholding Tax and Information Reporting
The amount of interest paid and any OID accrued on the TECONS or, in the event
of conversion into O&M Common Stock, dividends paid to holders (other than
corporations and other exempt holders) will be reported to the IRS. It is
expected that such income will be reported to holders on Form 1099 and mailed to
holders by January 31 following each calendar year. "Backup" withholding at a
rate of 31% will apply to payments of interest or dividends and payments of
disposition (including redemption) proceeds to a non-exempt holder unless the
holder furnishes to the payor its taxpayer identification number, certifies that
such number is correct, and meets certain other conditions. Any amounts withheld
from a holder under the backup withholding rules will be allowable as a refund
or credit against such holder's United States federal income tax liability.
United States Alien Holders
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, for U.S. federal
income tax purposes, a foreign corporation, a nonresident alien individual, a
foreign partnership, or a foreign estate or trust.
Payments on TECONS. Assuming that the Junior Subordinated Debentures are
classified for U.S. federal income tax purposes as indebtedness of O&M, and that
income with respect to the TECONS is not effectively connected with a trade or
business in the United States in which the United States Alien Holder is
engaged, under present U.S. federal income tax law, payments of interest
(including OID, if any) by the Trust or any of its paying agents to any holder
of a TECONS who or which is a United States Alien Holder generally would not be
subject to U.S. federal withholding tax; provided, that, (a) the beneficial
owner of the TECONS does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of O&M entitled to vote, (b)
the beneficial owner of the TECONS is not a controlled foreign corporation that
is related to O&M through stock ownership, and (c) either (A) the beneficial
owner of the TECONS certifies to the Trust or its agent, under penalties of
perjury, that it is a United States Alien Holder and provides its name and
address or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution"), and holds the TECONS in such capacity,
certifies to the Trust or its agent, under penalties of perjury, that such
statement has been received from the beneficial owner by it or by a Financial
Institution between it and the beneficial owner and furnishes the Trust or its
agent with a copy thereof.
If the Junior Subordinated Debentures were not classified for U.S. federal
income tax purposes as indebtedness of O&M, payments by the Trust or any of its
paying agents to any holder of a TECONS who or which is a United States Alien
Holder would be subject to U.S. withholding tax at a 30% rate (or a lower rate
prescribed by an applicable tax treaty). Prospective investors that would be
United States Alien Holders should consult their tax advisors concerning the
possible application of these rules.
Dividends on O&M Common Stock. Subject to the discussion below, dividends paid
to a United States Alien Holder of O&M Common Stock generally will be subject to
withholding tax at a 30% rate or such lower rate as may be specified by an
applicable income tax treaty. For purposes of determining whether tax is to be
withheld at a 30% rate or at a reduced rate as specified by an income tax
treaty, the Company ordinarily will presume that dividends paid on or before
December 31, 1999, to an address in a foreign country are paid to a resident of
such country, absent knowledge that such presumption is not warranted.
Prospective investors should be aware, however, that in certain instances,
an investor may be required to provide an IRS Form 1001 in order to obtain a
reduced rate of withholding.
Under the recently finalized Treasury Regulations applicable to dividends paid
after December 31, 1999, to obtain a reduced rate of withholding under a treaty,
a United States Alien Holder generally is required to provide an IRS Form W-8
certifying such United States Alien Holder's entitlement to benefits under a
treaty. Those regulations also provide special rules to determine whether, for
purposes of determining the applicability of a tax treaty, dividends paid to a
United States Alien Holder that is an entity should be treated as paid to the
entity or those holding an interest in that entity.
Generally, the payor must report to the IRS the amount of dividends paid, the
name and address of the recipient, and the amount, if any, of tax withheld. A
similar report is sent to the holder. Pursuant to tax treaties or certain other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.
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Sale or Exchange of TECONS or O&M Common Stock. A United States Alien Holder
(other than certain U.S. expatriates) will not be subject to U.S. federal income
tax on gain realized on a sale, exchange or other disposition of the TECONS or
O&M Common Stock unless (i) the United States Alien Holder is an individual who
is present in the U.S. for 183 days or more in the taxable year of disposition,
and certain other conditions are satisfied; (ii) the United States Alien Holder
is engaged in a trade or business in the United States and interest on the
TECONS or dividends on the O&M Common Stock are effectively connected with the
conduct of such trade or business; or (iii) O&M is or has been a "United States
real property holding corporation" within the meaning of section 897(c)(2) of
the Code during the shorter of the United States Alien Holder's holding period
or the five year period ending on the date of the sale, exchange or other
disposition and certain other conditions are satisfied.
The Company believes that it is unlikely that it is or will be treated as a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code. Even if O&M is treated as a "United States real property
holding corporation," gain realized by a United States Alien Holder on a
disposition of TECONS or O&M Common Stock will not be subject to U.S. federal
income tax so long as (i) the United States Alien Holder is deemed to have
beneficially owned not more than 5% of the O&M Common Stock or, in the case of a
disposition of TECONS, not more than 5% of the TECONS, and (ii) the O&M Common
Stock and the TECONS are currently and will be, at the time of disposition,
"regularly traded" on an established securities market (within the meaning of
Section 897(c)(3) of the Code and the temporary Treasury Regulations). There can
be no assurance that O&M Common Stock or the TECONS qualify or will continue to
qualify as "regularly traded" on an established securities market.
Effectively Connected Income. If a United States Alien Holder of TECONS or O&M
Common Stock is engaged in a trade or business in the United States, and if
interest (including any original issue discount) on the TECONS or dividends on
such Common Stock is effectively connected with the conduct of such trade or
business, the United States Alien Holder, although exempt from the withholding
tax on distributions on TECONS and dividends on O&M Common Stock, will generally
be subject to regular United States income tax on the interest (including any
original issue discount) and dividends and on any gain realized on the sale,
exchange or other disposition of TECONS or O&M Common Stock in the same manner
as if it were a United States person. Such a holder will be required to provide
to the payor a properly executed Internal Revenue Service Form 4224 (or a
successor form) in order to claim an exemption from withholding tax. After
December 31, 1999, to comply with this requirement, the United States Alien
Holder also must provide a valid United States taxpayer identification number.
In addition, if such United States Alien Holder is a foreign corporation, it may
be subject to a branch profits tax equal to 30% (or a lower rate prescribed by
an applicable treaty) of its effectively connected earnings and profits for the
taxable year.
Possible Tax Law Changes
In both 1996 and 1997, the Clinton Administration proposed to amend the Code to
deny deductions of interest on instruments with features similar to those of the
Junior Subordinated Debentures when issued under arrangements similar to the
Trust. That proposal was not passed by, and is not currently pending before,
Congress. There can be no assurance, however, that future legislative proposals,
future regulations or official administrative pronouncements or future judicial
decisions will not affect the ability of the Company to deduct interest on the
Junior Subordinated Debentures. Such a change could give rise to a Tax Event,
which may permit the Company to cause a redemption of the TECONS, as described
more fully under "Description of the TECONS -- Special Event Redemption or
Distribution."
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Certain ERISA Considerations
General
Before authorizing an investment in the TECONS, fiduciaries of pension, profit
sharing or other employee benefit plans, individual retirement accounts and
Keogh plans ("Plans") subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or Section 4975 of the Code should consider, among
other matters, (a) ERISA's fiduciary standards (including its prudence and
diversification requirements), (b) whether the investment constitutes
unauthorized delegation of fiduciary authority, (c) whether such fiduciaries
have authority to make such investment in the TECONS under the applicable Plan
investment policies and governing instruments, and (d) rules under ERISA and the
Code that prohibit Plan fiduciaries from causing a Plan to engage in a
"prohibited transaction."
Section 406 of ERISA and Section 4975 of the Code prohibit Plans from, among
other things, engaging in certain transactions involving "plan assets" with
persons who are "parties in interest" under ERISA or "disqualified persons"
under the Code ("Parties in Interest") with respect to such Plan. A violation of
these "prohibited transaction" rules may require "correction" and may result in
an excise tax or other liabilities under ERISA and/or Section 4975 of the Code
for such persons, unless exemptive relief is available under an applicable
statutory or administrative exemption. Employee benefit plans that are
governmental plans (as defined in Section 3(32) of ERISA) and certain church
plans (as defined in Section 3(33) of ERISA) are not subject to the requirements
of ERISA or Section 4975 of the Code. Foreign plans (as described in Section
4(b)(4) of ERISA) are also not subject to the requirements of ERISA. Such plans
may, however, be subject to federal, state or local laws or regulations which
may affect their investment in the TECONS. Any fiduciary of such a governmental,
church or foreign plan considering an investment in the TECONS should determine
the need for, and the availability, if necessary, of any exemptive relief under
such laws or regulations.
Plan Assets
The Department of Labor (the "DOL") has issued a regulation (29 C.F.R. ss.
2510.3-101) (the "Plan Asset Regulation") concerning the definition of what
constitutes the assets of a Plan. The Plan Asset Regulation provides that, as a
general rule, the underlying assets and properties of corporations,
partnerships, trusts and certain other entities in which a Plan makes an
"equity" investment will be deemed, for purposes of ERISA, to be assets of the
investing Plan unless certain exceptions apply.
The Plan Asset Regulation provides an exception where the entity in which the
Plans are investing is an "operating company." The Trust will not be an
operating company for purposes of the Plan Asset Regulations.
Pursuant to another exception contained in the Plan Asset Regulation, the assets
of the Trust would not be deemed to be "plan assets" of investing Plans if,
immediately after the most recent acquisition of any equity interest in the
Trust, less than 25% of the value of each class of equity interests in the Trust
were held by Plans, other employee benefit plans not subject to ERISA or Section
4975 of the Code (such as governmental, church and foreign plans), and entities
holding assets deemed to be "plan assets" of any Plan (collectively, "Benefit
Plan Investors"). No assurance can be given that the value of the TECONS held by
Benefit Plan Investors will be less than 25% of the total value of such TECONS
at the completion of the initial offering or thereafter, and no monitoring or
other measures will be taken with respect to the satisfaction of the conditions
to this exception. All the Common Securities will be purchased and held,
directly or indirectly, by the Company.
Under another exception contained in the Plan Asset Regulation, if the TECONS
were to qualify as "publicly offered securities" under the Plan Asset
Regulation, the assets of the Trust would not be deemed to be "plan assets" by
reason of a Plan's acquisition or holding of such securities. The TECONS would
qualify as "publicly offered securities" if, among other things, they are freely
transferable, are offered pursuant to an effective registration statement, are
owned by 100 or more investors independent of the issuer and each other at the
time of the offering ("widely held"), and are subsequently registered under the
Exchange Act. It is expected that TECONS will be distributed pursuant to an
effective registration statement under the Securities Act and they may
subsequently be registered under the Exchange Act. Prior to an effective
registration statement, however, the TECONS will not constitute "publicly
offered securities." After distribution pursuant to an effective registration
statement it is possible that the TECONS will be "widely held," although such
result cannot be assured. Whether a security is "freely transferable" for
purposes of the Plan Asset Regulation is a factual question to be determined on
the basis of all relevant facts and circumstances.
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<PAGE>
There can be no assurance that any of the exceptions set forth in the Plan Asset
Regulation will apply to the purchase of TECONS offered hereby and, as a result,
an investing Plan's assets could be considered to include an undivided interest
in the Junior Subordinated Debentures held by the Trust for purposes of the
fiduciary responsibility provisions of ERISA. Under ERISA, any person who
exercises any authority or control respecting the management or disposition of
the assets of a Plan is considered to be a fiduciary of such Plan. For example,
the Property Trustee could therefore become a fiduciary of the Plans that invest
in the TECONS and be subject to the general fiduciary requirements of ERISA in
exercising its authority with respect to the management of the assets of the
Trust. However, the Property Trustee will have only limited discretionary
authority with respect to the Trust's assets and the remaining functions and the
responsibilities performed by the Property Trustee will be for the most part
custodial and ministerial in nature. Inasmuch as the Property Trustee or another
person with authority or control respecting the management or disposition of the
Trust assets may become a fiduciary with respect to the Plans that will purchase
the TECONS, there may be an improper delegation by such Plans of the
responsibility to manage plan assets.
Prohibited Transactions
Certain transactions involving the Trust and/or the TECONS could be deemed to
constitute direct or indirect prohibited transactions under ERISA and Section
4975 of the Code with respect to a Plan. For example, if the Company is a Party
in Interest with respect to an investing Plan (either directly or through its
subsidiaries), extension of credit between the Company and the Trust (as
represented by the Junior Subordinated Debentures and the Guarantee) would
likely be prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B)
of the Code.
The DOL has issued five prohibited transaction class exemptions ("PTCEs") that
may provide exemptive relief for direct or indirect prohibited transactions
resulting from the purchase or holding of the TECONS, assuming that assets of
the Trust were deemed to be "plan assets" of Plans investing in the Trust. Those
class exemptions are PTCE 96-23 (for certain transactions effected by in-house
asset managers), PTCE 95-60 (for certain transactions involving insurance
company general accounts), PTCE 91-38 (for certain transactions involving bank
collective investment funds), PTCE 90-1 (for certain transactions involving
insurance company pooled separate accounts), and PTCE 84-14 (for certain
transactions determined by independent qualified asset managers).
Because of ERISA's prohibitions and those of Section 4975 of the Code, the
TECONS may not be purchased or held by any Plan, or any entity whose underlying
assets include "plan assets" by reason of any Plan's investment in the entity (a
"Plan Asset Entity"), unless such purchase or holding is covered by the
exemptive relief provided by PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another
applicable exemption. If a purchaser or holder of the TECONS that is a Plan or a
Plan Asset Entity elects to rely on an exemption other than PTCE 96-23, 95-60,
91-38, 90-1 or 84-14, the Company and the Trust may require a satisfactory
opinion of counsel or other evidence with respect to the availability of such
exemption for such purchase and holding. Any purchaser of the TECONS that is a
Plan or a Plan Asset Entity or is purchasing TECONS on behalf of or with "plan
assets" will be deemed to have represented by its purchase thereof that (a) if
the Company is a Party in Interest with respect to such Plan, then the purchase
of the TECONS is covered by exemptive relief provided by PTCE 96-23, 95-60,
91-38, 90-1 or 84-14 or another applicable exemption and (b) the Company is not
a "fiduciary," within the meaning of Section 3(21) of ERISA and the regulations
thereunder, with respect to such person's interest in the TECONS or the Junior
Subordinated Debentures.
Any plans or other entities whose assets include Plan assets subject to ERISA or
Section 4975 of the Code proposing to acquire TECONS should consult with their
own counsel regarding the consequences of such investment.
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Selling Holders
The holders listed below and the beneficial owners of the TECONS and their
transferees, pledgees, donees or other successors, if not identified hereunder
then so identified in supplements to this Prospectus, are the Selling Holders
under this Prospectus. The following table sets forth, as of a recent
practicable date prior to the effectiveness of the Registration Statement of
which this Prospectus forms a part, certain information with respect to the
Selling Holders named below and the respective number of TECONS owned by each
Selling Holder that may be offered pursuant to this Prospectus. Such information
has been obtained from the Selling Holders, DTC and/or the Property Trustee.
Number
Selling Holder of TECONS
- -------------- ---------
[To Come]
Total 2,640,000
None of the Selling Holders has, or within the past three years has had, any
position, office or other material relationship with the Trust or the Company or
any of their predecessors or affiliates. None of the Selling Holders owns any
shares of O&M Common Stock. Because the Selling Holders may, pursuant to this
Prospectus, offer all or some portion of the TECONS, the Junior Subordinated
Debentures or the O&M Common Stock issuable upon conversion of the TECONS, no
estimate can be given as to the amount of the TECONS, the Junior Subordinated
Debentures or the O&M Common Stock issuable upon conversion of the TECONS that
will be held by the Selling Holders upon termination of any such sales. In
addition, the Selling Holders identified above may have sold, transferred or
otherwise disposed of all or a portion of their TECONS, since the date of which
they provided the information regarding their TECONS, in transactions exempt
from the registration requirements of the Securities Act. See "Plan of
Distribution."
Only Selling Holders identified above who beneficially own the Offered
Securities set forth opposite each such Selling Holder's name in the foregoing
table on the effective date of the Registration Statement of which the
Prospectus forms a part may sell such Offered Securities pursuant to the
Registration Statement. The Company may from time to time, in accordance with
the Registration Rights Agreement, include additional Selling Holders in
supplements to this Prospectus.
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Plan of Distribution
The Offered Securities may be sold from time to time to purchasers directly by
the Selling Holders. Alternatively, the Selling Holders may from time to time
offer the Offered Securities to or through underwriters, broker/dealers or
agents, who may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Holders or the purchasers of such
securities for whom they may act as agents. The Selling Holders and any
underwriters, broker/dealers or agents that participate in the distribution of
Offered Securities may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profit on the sale of such securities any discounts,
commissions, concessions or other compensation received by any such underwriter,
broker/dealer or agent may be deemed to be underwriting discounts and
commissions under the Securities Act.
The Offered Securities may be sold from time to time in one or more transactions
at fixed prices, at the prevailing market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices. The sale of
Offered Securities may be effected in transactions (which may involve crosses or
block transactions) (i) on any national securities exchange or quotation service
on which the Offered Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or in the over-the-counter market or (iv) through the writing of
options. At the time a particular offering of the Offered Securities is made, a
Prospectus Supplement, if required, will be distributed which will set forth the
aggregate amount and type of Offered Securities being offered and the terms of
the offering, including the name or names of any underwriters, broker/dealers or
agents, any discounts, commissions and other terms constituting compensation
from the Selling Holders and any discounts, commissions or concessions allowed
or reallowed or paid to broker/dealers.
To comply with the securities laws of certain jurisdictions, if applicable, the
Offered Securities will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the Offered Securities may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or any exemption from
registration or qualification is available and is complied with.
The Selling Holders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, which provisions may limit the timing
of purchases and sales of any of the Offered Securities by the Selling Holders.
The foregoing may affect the marketability of such securities.
The costs of the registration of the Offered Securities will be paid by the
Company, including, without limitation, Commission filing fees and expenses of
compliance with state securities or "blue sky" laws; provided, however, that the
Selling Holders will pay all underwriting discounts and selling commissions, if
any. The Selling Holders will be indemnified by the Company and the Trust,
jointly and severally against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith. The Company and the Trust will be indemnified by the
Selling Holders severally against certain civil liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection therewith.
Legal Matters
The validity of the Junior Subordinated Debentures, the Common Stock issuable
upon conversion of the TECONS, the Guarantee and certain matters relating
thereto and certain U.S. federal income taxation matters will be passed upon for
O&M and O&M Trust by Hunton & Williams, Richmond, Virginia, and the validity of
the TECONS will be passed upon for the Company and O&M Trust by Richards, Layton
& Finger, P.A., Wilmington, Delaware, special Delaware counsel to the Company
and O&M Trust.
Experts
The consolidated financial statements and financial statement schedule of Owens
& Minor, Inc. and its subsidiaries as of December 31, 1997 and 1996, and for
each of the years in the three-year period ended December 31, 1997, have been
incorporated by reference herein and in the Registration Statement in reliance
upon the reports of KPMG Peat Marwick LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
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Available Information
O&M is subject to the informational requirements of the Exchange Act, and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. These reports, proxy and information statements
and other information may be inspected without charge and copied at the public
reference facilities maintained by the Commission at its principal offices at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such materials also can be obtained at
prescribed rates from the Public Reference Section of the Commission at the
principal offices of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material may also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
Such material may also be accessed electronically by means of the Commission's
home page on the Internet at http:// www.sec.gov.
The Company has agreed that, whether or not it is required to do so by the rules
and regulations of the Commission, for so long as any of the TECONS remain
outstanding, it will furnish to the holders of the TECONS and file with the
Commission (i) all quarterly and annual financial information that would be
required in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such forms, including "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and, with respect to
the annual information only, a report thereon by the Company's certified
independent auditors and (ii) all reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports. In addition, for so long as any of the TECONS remain outstanding, the
Company has agreed to make available to any prospective purchaser of the TECONS
or any beneficial owner of the TECONS in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act.
Incorporation of Certain Documents by Reference
The Company hereby incorporates in this Prospectus by reference thereto and
makes a part hereof, the following documents, heretofore filed with the
Commission pursuant to the Exchange Act: (i) the Company's Annual Report on Form
10-K for the year ended December 31, 1997, (ii) the Company's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1998 and (iii) the Company's
Current Report on Form 8-K filed May 28, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to
termination of the offering being made hereby shall be deemed to be incorporated
in this Prospectus by reference and to be a part hereof from the respective
dates of the filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is, or is deemed to be, incorporated by reference herein, modifies or
supersedes such earlier statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to whom a
copy of this Prospectus has been delivered, upon written or oral request of any
such person, a copy of any and all of the documents referred to above which have
been or may be incorporated in this Prospectus by reference, other than exhibits
to such documents which are not specifically incorporated by reference into such
documents. Requests for such copies should be directed to Drew St. J. Carneal,
Owens & Minor, Inc., P.O. Box 27626, Richmond, Virginia 23261-7626, telephone
(804) 747-9794.
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Appendix A
Notice of Transfer Pursuant to Registration Statement
The First National Bank of Chicago
153 West 51st Street, 5th Floor
New York, New York 10019
Attention: Corporate Trust Services Divisions
Owens & Minor, Inc.
4800 Cox Road
Glen Allen, Virginia 23060
Attention: General Counsel
Re: Owens & Minor Trust I (the "Trust") TECONS
Owens & Minor, Inc. (the "Company")
Dear Sirs:
Please be advised that ______________________ has transferred _________________
TECONS, (or 5.375% Junior Subordinated Convertible Debentures of the Company or
shares of Common Stock of the Company, issued in exchange for or upon conversion
of the TECONS) pursuant to an effective Registration Statement on Form S-3 (File
No.
333-________) filed by the Company and the Trust.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the transferred securities is named as a "Selling Holder" in
the Prospectus dated _____________ _____, 1998 or in supplements thereto, and
that the aggregate amount of the securities transferred are (or are included in)
the securities listed in such Prospectus opposite such owner's name.
Dated: __________________ Sincerely,
----------------------------------
Name:
By: _______________________________
(Authorized Signature)
<PAGE>
[OWENS & MINOR, INC. LOGO]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the expenses in connection with the distribution
of the securities being registered, other than underwriting discounts and
commissions. All of the amounts shown are estimates, except the SEC registration
fee.
SEC Registration filing fee.......................................$38,940
Printing and engraving expenses...................................*
Blue sky fees and expenses (including counsel)....................*
Legal fees and expenses...........................................*
Fees of accountants............................................... 15,000
Fees of trustee................................................... 5,000
Total............................................................$______
*To be supplied by amendment
Item 15. Indemnification of Directors and Officers
Indemnification of Directors and Officers of the Company
The Virginia Stock Corporation Act permits, and the registrant's Bylaws require,
indemnification of the registrant'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 13.1-702 of the Virginia Stock Corporation Act, 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 Virginia Stock Corporation Act (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 Virginia
Stock Corporation Act 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 stockholders 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
Virginia Stock Corporation Act are hereby incorporated by reference herein.
Indemnification of Directors and Officers of the Trust
The Declaration provides that no Trustee, affiliate of any Trustee, paying
agent, or conversion agent, or any officer, director, shareholder, member,
partner, employee, representative or agent of any Trustee, paying agent, or
conversion agent (each an "Indemnified Person") shall be liable, responsible, or
accountable in damages or otherwise to the Trust or any (i) officer, director,
shareholder, partner, representative, employee or agent of the Trust or its
Affiliates, (ii) any officer, director, shareholder, employees, representatives
or agents of the Company and its affiliates or (iii) the holders from the time
of Trust's Common Securities and Preferred Securities (the persons referred to
in (i) - (iii) collectively, the "Covered Persons") for any loss, damage, or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by the Declaration or by law, except that
an Indemnified Person shall be liable for any such loss, damage, or claim
incurred by reason of such Indemnified Person's gross negligence (but, in the
case of the Property Trustee, subject to the Trust Indenture Act) or willful
misconduct with respect to such acts or omissions.
II-1
<PAGE>
The Declaration also provides that, to the full extent permitted by law, the
Company shall indemnify and hold harmless each Indemnified Person from and
against, any loss, damage or claim incurred by such Indemnified Person by reason
of any act or omission performed or omitted by such Indemnified Person in good
faith on behalf of the Trust and in a manner such Indemnified Person reasonably
believed to be within the scope of authority conferred on such Indemnified
Person by the Declaration, except that no Indemnified Person shall be entitled
to be indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of gross negligence (but, in the case of the
Property Trustee, subject to the Trust Indenture Act) or willful misconduct with
respect to such acts or omissions.
The Declaration further provides that, to the full extent permitted by law,
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Company prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Company of an undertaking by or
on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized by the Declaration.
Item 16. Exhibits
Exhibits .........Description of Exhibit
- -------- ----------------------
4.1 Junior Subordinated Debentures Indenture dated as of
May 13, 1998 between the Company and The First
National Bank of Chicago
4.2 First Supplemental Indenture dated as of May 13, 1998
between the Company and The First National Bank of
Chicago
4.3 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.
4.4 Amended and Restated Declaration of Trust of Owens &
Minor Trust I
4.5 Restated Certificate of Trust of Owens & Minor Trust I
(included in Exhibit 4.4)
4.6 Form of Preferred Security (included in Exhibit 4.4)
4.7 Form of Junior Subordinated Debenture (included in
Exhibit 4.2)
4.8 Preferred Securities Guarantee with respect to
Preferred Securities
5.1 Opinion of Hunton & Williams*
5.2 Opinion of Richards, Layton & Finger*
12.1 Statement re: Computation of ratio of earnings to
combined fixed charges and preferred stock dividend
requirements
II-2
<PAGE>
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Hunton & Williams (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (included in
Exhibit 5.2)
24.1 Powers of Attorney for the Company (included on
signature page)
24.2 Powers of Attorney for the Company as sponsor, to sign
the Registration Statement on behalf of Owens & Minor
Trust I (included in Exhibit 4.4)
25.1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The First National Bank of
Chicago, as Trustee, with respect to the Junior
Subordinated Debt Trust Securities Indenture
25.2 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The First National Bank of
Chicago, as Trustee, with respect to the Preferred
Securities of Owens & Minor Trust I
25.3 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of the First National Bank of
Chicago, as Trustee, with respect to the Preferred
Securities Guarantee of the Company
* To be filed by amendment.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that the undertakings set forth in paragraphs (1)(i)
and (1)(ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained
in periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
The undersigned Registrant hereby undertakes 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 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.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions described under Item 15 above, or
otherwise, the registrant has 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 registrar of expenses incurred or paid by a director, officer or
controlling person of the registrant 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 registrant will, unless
in the opinion of counsel the matter has been settled by against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form S-3 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Richmond, Commonwealth of Virginia, on this 7th day of July, 1998.
OWENS & MINOR, INC.
By: /s/ G. Gilmer Minor, III
------------------------
G. Gilmer Minor, III
Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act, this registration statement
has been signed by the following persons in the capacities indicated on this 7th
day of July, 1998. Each person whose signature appears below hereby constitutes
and appoints each of G. Gilmer Minor, III and Drew. St. J. Carneal his true and
lawful attorney-in-fact, for him, and in his name, place and stead, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement and to cause the same to be filed with the Securities and Exchange
Commission, hereby granting to said attorneys-in-fact full power to do and
perform all and every act and thing whatsoever requisite or desirable to be done
in and about the premises as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
acts and things that said attorney-in-fact may do or cause to be done by virtue
of these presents.
<TABLE>
<CAPTION>
Signature and Title Signature and Title
------------------- -------------------
<S> <C>
By: /s/ G. Gilmer Minor, III By:/s/ Ann Greer Rector
------------------------ --------------------
G. Gilmer Minor, III Ann Greer Rector
Chairman, President and Chief Executive Officer Senior Vice President and Chief
Director Financial Officer
(Principal Executive Officer) (Principal Financial Officer)
By: /s/ Olwen B. Cape By: /s/ Henry A. Berling
----------------- --------------------
Olwen B. Cape Henry A. Berling
Vice President and Controller Director
(Principal Accounting Officer)
By: ------------------- By: /s/ R. E. Cabell, Jr.
---------------------
Josiah Bunting, III R. E. Cabell, Jr.
Director Director
By: /s/ James B. Farinholt, Jr. By: ______________________________________
--------------------------
James B. Farinholt, Jr. Vernard W. Henley
Director Director
II-5
<PAGE>
By: ______________________________________ By: /s/ James E. Rogers
-------------------
E. Morgan Massey James E. Rogers
Director Director
By: ______________________________________ By: /s/ Anne Marie Whittemore
-------------------------
James E. Ukrop Anne Marie Whittemore
Director Director
</TABLE>
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Owens & Minor Trust
I certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Forms S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Richmond, State of Virginia on July 7, 1998.
OWENS & MINOR TRUST I
By: Owens & Minor, Inc., as Sponsor
By: /s/ Ann Greer Rector
-------------------------
Name: Ann Greer Rector
Title: Senior Vice President and Chief
Financial Officer
II-7
<PAGE>
EXHIBIT INDEX
4.1 Junior Subordinated Debentures Indenture dated as of
May 13, 1998 between the Company and The First
National Bank of Chicago
4.2 First Supplemental Indenture dated as of May 13, 1998
between the Company and The First National Bank of
Chicago
4.3 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.
4.4 Amended and Restated Declaration of Trust of Owens &
Minor Trust I
4.5 Restated Certificate of Trust of Owens & Minor Trust I
(included in Exhibit 4.4)
4.6 Form of Preferred Security (included in Exhibit 4.4)
4.7 Form of Junior Subordinated Debenture (included in
Exhibit 4.2)
4.8 Preferred Securities Guarantee with respect to
Preferred Securities
5.1 Opinion of Hunton & Williams*
5.2 Opinion of Richards, Layton & Finger*
12.1 Statement re: Computation of ratio of earnings to
combined fixed charges and preferred stock dividend
requirements
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Hunton & Williams (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger (included in
Exhibit 5.2)
24.1 Powers of Attorney for the Company (included on
signature page)
24.2 Powers of Attorney for the Company as sponsor, to sign
the Registration Statement on behalf of Owens & Minor
Trust I (included in Exhibit 4.4)
25.1 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The First National Bank of
Chicago, as Trustee, with respect to the Junior
Subordinated Debt Trust Securities Indenture
25.2 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The First National Bank of
Chicago, as Trustee, with respect to the Preferred
Securities of Owens & Minor Trust I
25.3 Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of the First National Bank of
Chicago, as Trustee, with respect to the Preferred
Securities Guarantee of the Company
* To be filed by amendment.
II-8
<PAGE>
================================================================================
OWENS & MINOR, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO
AS TRUSTEE
--------------------------------------
JUNIOR SUBORDINATED INDENTURE
Dated as of May 13, 1998
--------------------------------------
JUNIOR SUBORDINATED DEBENTURES
================================================================================
<PAGE>
<TABLE>
TRUST INDENTURE ACT
CROSS-REFERENCE TABLE
<CAPTION>
<S> <C>
Trust Indenture Indenture
Act Section Section
----------- -------
ss. 310(a)(1).............................................................. 7.09
(a)(2)............................................................... 7.09
(a)(3)............................................................... N.A.
(a)(4)............................................................... N.A.
(b).................................................................. 7.08; 7.10
(c).................................................................. N.A.
ss. 311(a)................................................................. 7.13(a)
(b).................................................................. 7.13(b)
(c).................................................................. N.A.
ss. 312(a)................................................................. 5.01, 5.02(a)
(b).................................................................. 5.02(c)
(c).................................................................. 5.02(d)
ss.313(a).................................................................. 5.04(a)
(b)(1)............................................................... N.A.
(b)(2)............................................................... 5.04(b)
(c).................................................................. 5.03(c)
(d).................................................................. 5.04(c)
ss.314(a)(1)................................................................ 5.03(a)
(a)(2)............................................................... 5.03(b)
(a)(3)............................................................... 5.03(c)
(a)(4)............................................................... 5.03(d)
(b).................................................................. N.A.
(c)(1)............................................................... 13.06
(c)(2)............................................................... 13.06
(c)(3)............................................................... N.A.
(d).................................................................. N.A.
(e).................................................................. 13.06
(f).................................................................. Omitted
ss.315(a).................................................................. 7.01
(b).................................................................. 6.07
(c).................................................................. 7.01
(d).................................................................. 7.01
(e).................................................................. 6.08
ss.316(a)(1)............................................................... 6.06; 8.04
(a)(2)............................................................... Omitted
(b).................................................................. 6.04
(c).................................................................. 8.01
ss.317(a).................................................................. 6.02
(b).................................................................. 4.03
ss.318(a).................................................................. 13.08
- ----------------
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<CAPTION>
Page
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions....................................................................................1
ARTICLE 2
ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION AND EXCHANGE OF DEBENTURES
SECTION 2.01. Designation, Terms, Amount, Authentication and Delivery of Debentures..........................6
SECTION 2.02. Form of Debenture and Trustee's Certificate....................................................7
SECTION 2.03. Date and Denominations of Debentures and Provisions for Payment of Principal,
Premium and Interest......................................................................8
SECTION 2.04. Execution of Debentures........................................................................9
SECTION 2.05. Exchange of Debentures........................................................................10
SECTION 2.06. Temporary Debentures..........................................................................10
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Debentures...............................................11
SECTION 2.08. Cancellation of Surrendered Debentures........................................................11
SECTION 2.09. Provisions of Indenture and Debentures for Sole Benefit of Parties and
Debentureholders.........................................................................11
SECTION 2.10. Appointment of Authenticating Agent...........................................................12
SECTION 2.11. Global Debenture..............................................................................12
SECTION 2.12. CUSIP Numbers.................................................................................13
SECTION 2.13. Tax Treatment of Debentures...................................................................13
ARTICLE 3
REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS
SECTION 3.01. Redemption of Debentures......................................................................13
SECTION 3.02. Notice of Redemption..........................................................................13
SECTION 3.03. Debentures Due and Payable....................................................................14
SECTION 3.04. Sinking Funds for Debentures..................................................................14
SECTION 3.05. Satisfaction of Sinking Fund Payments With Debentures.........................................15
SECTION 3.06. Redemption of Debentures for Sinking Fund.....................................................15
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Principal of (and Premium, if any) and Interest on Debentures......................15
SECTION 4.02. Maintenance of Office or Agent for Payment of Debentures, Designation of Office
or Agency for Payment, Registration, Transfer and Exchange of Debentures.................15
SECTION 4.03. Duties of Paying Agent; Company as Payment Agent; and Holding Sums of Trust...................16
SECTION 4.04. Appointment to Fill Vacancy in Office of Trustee..............................................16
-i-
<PAGE>
ARTICLE 5
DEBENTUREHOLDER'S LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. Company to Furnish Trustee Information as to Names and Addresses of Debentures................17
SECTION 5.02. Trustee to Preserve Information as to Names and Addresses of Debentureholders.................17
SECTION 5.03. Annual and Other Reports to Be Filed by Company With Trustee..................................18
SECTION 5.04. Trustee to Transmit Annual Report to Debentureholders.........................................18
ARTICLE 6
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT
SECTION 6.01. Events of Default Defined.....................................................................20
SECTION 6.02. Covenant of Company to Pay to Trustee Whole Amount Due on Debentures on Default
in Payment of Interest or Principal (and Premiums, if any)...............................21
SECTION 6.03. Application of Moneys Collected by Trustee....................................................23
SECTION 6.04. Limitation on Suits by Holders of Debentures..................................................23
SECTION 6.05. Remedies Cumulative; Delay or Omission in Exercise of Rights Not Waiver of Default............23
SECTION 6.06. Rights of Holders of Majority in Principal Amount of Debentures to Direct Trustee
and to Waive Defaults....................................................................24
SECTION 6.07. Trustee to Give Notice of Defaults Known To It, But May Withhold in Certain
Circumstances............................................................................24
SECTION 6.08. Requirements of an Undertaking to Pay Costs in Certain Suits Under Indenture or
Against Trustee..........................................................................25
ARTICLE 7
CONCERNING THE TRUSTEE
SECTION 7.01. Upon Event of Default Occurring and Continuing, Trustee Shall Exercise Powers
Vested In It, and Use Same Degree of Care and Skill In Their Exercise, as
Prudent Individual Would Use.............................................................25
SECTION 7.02. Subject to Provisions of Section 7. 01........................................................26
SECTION 7.03. Trustee Not Liable for Recitals In Indenture Or In Debentures.................................27
SECTION 7.04. Trustee, Paying Agent or Debenture Registrar May Own Debentures...............................27
SECTION 7.05. Moneys Received by Trustee to Be Held In Trust Without Interest...............................27
SECTION 7.06. Trustee Entitled to Compensation, Reimbursement and Indemnity.................................27
SECTION 7.07. Right of Trustee to Rely on Certificate of Officer of Company Where No Other
Evidence Specifically Prescribed.........................................................28
SECTION 7.08. Trustee Acquiring Conflicting Interest to Eliminate Conflict or Resign........................28
SECTION 7.09. Requirements for Eligibility of Trustee.......................................................32
SECTION 7.10. Resignation of Trustee and Appointment of Successor...........................................33
SECTION 7.11. Acceptance by Successor to Trustee............................................................34
SECTION 7.12. Successor to Trustee by Merger, Consolidation or Succession to Business.......................35
SECTION 7.13. Limitations on Rights of Trustee as a Creditor to Obtain Payment of Certain
Claims Within Four Months Prior to Default, or During Default or to Realize
on Property as such Creditor Thereafter..................................................35
-ii-
<PAGE>
ARTICLE 8
CONCERNING THE DEBENTURES
SECTION 8.01. Evidence of Action by Debentureholders........................................................38
SECTION 8.02. Proof of Execution of Instruments and of Holding of Debentures................................38
SECTION 8.03. Who May Be Deemed Owners of Debentures........................................................39
SECTION 8.04. Debentures Owned by a Company or Controlled or Controlling Companies Disregarded
for Certain Purposes.....................................................................39
SECTION 8.05. Instrument Executed by Debentureholders Bind Future Holders...................................39
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01. Purposes for Which Supplemental Indenture May Be Entered Into Without Consent of
Debentureholders.........................................................................39
SECTION 9.02. Modification of Indenture with Consent of Debentureholders....................................40
SECTION 9.03. Effect of Supplemental Indentures.............................................................41
SECTION 9.04. Debentures May Bear Notation of Changes By Supplemental Indentures............................41
SECTION 9.05. Opinion of Counsel............................................................................41
ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 10.01. Satisfaction and Discharge of Indenture......................................................42
SECTION 10.02. Successor Corporation Substituted............................................................42
SECTION 10.03. Opinion of Counsel...........................................................................42
ARTICLE 11
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 11.01. Satisfaction and Discharge of Indentures.....................................................42
SECTION 11.02. Application of Trustee of Funds Deposited For Payment of Debentures..........................44
SECTION 11.03. Application by Trustee of Funds Deposited For Payment of Debentures..........................44
SECTION 11.04. Repayment of Moneys Held by Paying Agent.....................................................44
SECTION 11.05. Repayment of Moneys Paid by Trustee..........................................................45
ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. Incorporators, Stockholders, Officers and Directors of Company Exempt From
Individual Liability.....................................................................45
-iii-
<PAGE>
ARTICLE 13
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors and Assigns of Company Bound by Indenture.........................................45
SECTION 13.02. Acts of Board, Committee or Officer of Successor Company Valid...............................45
SECTION 13.03. Surrender of Powers of Company...............................................................45
SECTION 13.04. Required Notices or Demands May Be Served by Mail............................................45
SECTION 13.05. Indenture and Debentures To Be Construed in Accordance with Laws of the State of
New York.................................................................................46
SECTION 13.06. Officer's Certificate and Opinion of Counsel To Be Furnished Upon Application or
Demands by Company; Statements To Be Included in Each Certificate or Opinion
with Respect to Compliance with Condition or Covenant....................................46
SECTION 13.07. Payments Due on Saturdays, Sundays or Holidays...............................................46
SECTION 13.08. Provisions Required by Trust Indenture Act of 1939 to Control................................46
SECTION 13.09. Indenture May Be Executed in Counterparts....................................................46
SECTION 13.10. Separability of Indenture Provisions.........................................................47
SECTION 13.11. Assignment by Company to Subsidiary..........................................................47
SECTION 13.12. Holders of Preferred Securities as Third Party Beneficiaries of the Indenture;
Holders of Preferred Securities May Institute Legal Proceedings Against the
Company in Certain Cases.................................................................47
ARTICLE 14
SUBORDINATION OF DEBENTURES
SECTION 14.01. Agreement to Subordinate.....................................................................47
SECTION 14.02. Payments to Debentureholders.................................................................48
SECTION 14.03. Subrogation of Debentures....................................................................49
SECTION 14.04. Authorization by Debentureholders............................................................50
SECTION 14.05. Notice to Trustee............................................................................50
SECTION 14.06. Trustee's Relation to Senior and Subordinated Debt...........................................50
SECTION 14.07. No Impairment to Subordination...............................................................51
</TABLE>
-iv-
<PAGE>
THIS INDENTURE, is dated as of May 13, 1998, between Owens & Minor,
Inc., a Virginia corporation (the "Company"), and The First National Bank of
Chicago, as Trustee (the "Trustee"):
WHEREAS, for its lawful corporate purposes, the Company has fully
authorized the execution and delivery of this Indenture to provide for the
issuance of unsecured debentures (the "Debentures"), in an unlimited aggregate
principal amount to be issued from time to time in one or more series in
accordance with the terms of this Indenture, as registered Debentures without
coupons, to be authenticated by the certificate of the Trustee;
WHEREAS, to provide the terms and conditions upon which the Debentures
are to be authenticated, issued and delivered, the Company has duly authorized
the execution of this Indenture;
WHEREAS, the Debentures and the certificate of authentication to be
borne by the Debentures (the "Certificate of Authentication") are to be
substantially in such forms as may be approved by the Board of Directors (as
defined below) or set forth in any indenture supplemental to this Indenture;
AND WHEREAS, all acts and things necessary to make the Debentures
issued pursuant hereto, when executed by the Company and authenticated and
delivered by the Trustee in accordance with the terms of this Indenture, the
valid, binding and legal obligations of the Company, and to constitute a valid
indenture and agreement according to its terms, have been done and performed or
will be done and performed prior to the issuance of such Debentures, and the
execution of this Indenture has been and the issuance hereunder of the
Debentures has been or will be prior to issuance in all respects duly
authorized, and the Company, in the exercise of the legal right and power in it
vested, executes this Indenture and proposes to make, execute, issue and deliver
the Debentures;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Debentures are and are to be authenticated, issued and delivered, and in
consideration of the premises and of the acquisition and acceptance of the
Debentures by the holders thereof the Company covenants and agrees with the
Trustee, for the equal and proportionate benefit (subject to the provisions of
this Indenture) of the respective holders from time to time of the Debentures,
without any discrimination, preference or priority of any one Debenture over any
other by reason of priority in the time of issue, sale or negotiation thereof,
or otherwise, except as provided herein, as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. The terms defined in this Section (except as
in this Indenture otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture, any resolution of the Board of
Directors of the Company and of any indenture supplemental hereof shall have the
respective meanings specified in this Section. All other terms used in this
Indenture which are defined in the Trust Indenture Act of 1939, as amended, or
which are by reference in such Act defined in the Securities Act of 1933, as
amended (except as herein otherwise expressly provided or unless the context
otherwise requires), shall have the meanings assigned to such terms in said
Trust Indenture Act and in said Securities Act as in force at the date of this
instrument.
"Affiliate" of the Company means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company; provided, however, that no Owens & Minor Trust to which Securities have
been issued shall be deemed to be an Affiliate of the Company. For the purposes
of this definition, "control" when used with respect to any specified Person
<PAGE>
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.
"Authenticating Agent" means an authenticating agent with respect to
all or any series of Debentures, as the case may be, appointed by the Trustee
pursuant to Section 2.10.
"Bank Credit Agreement" means the Credit Agreement dated as of
September 15, 1997 among the Company, certain of its Subsidiaries, the various
banks and lending institutions identified on the signature pages thereof,
NationsBank, N.A., as agent, Bank of America NT and SA and Crestar Bank, as
co-agents, and NationsBank, N.A., as administrative agent, as such agreement has
been and may be amended, restated, supplemented, replaced, refinanced or
otherwise modified from time to time, and includes any agreement extending the
maturity of or restructuring (including, but not limited to, the inclusion of
additional borrowers thereunder that are Subsidiaries of the Company and whose
obligations are guaranteed by the Company thereunder) all or any portion of the
Debt under such agreement or any successor agreements and includes any agreement
with one or more banks or other lending institutions refinancing all or any
portion of the Debt under such agreement or any successor agreements.
"Board of Directors" means the Board of Directors of the Company, or
any committee of such Board duly authorized to act hereunder.
"Board Resolution" means a copy of one or more resolutions, certified
by the secretary or an assistant secretary of the Company to have been adopted
or consented to by the Board of Directors and to be in full force and effect,
and delivered to the Trustee.
"Business day", with respect to any series of Debentures, means any day
other than a day on which banking institutions in the Borough of Manhattan, the
City and State of New York, are authorized or obligated by law or executive
order to close.
"Certificate" means a certificate signed by the principal executive
officer, the principal financial officer, the principal accounting officer or
the treasurer of the Company. The Certificate need not comply with the
provisions of Section 13.06.
"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the assets of the Company to any Person or group (as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934) of Persons, (ii) a
Person or group (as so defined) of Persons (other than management of the Company
on the date of this Indenture or their Affiliates) shall have become the
beneficial owner of more than 35% of the outstanding voting stock of the
Company, or (iii) during any one-year period, individuals who at the beginning
of such period constitute the Board of Directors (together with any new director
whose election or nomination was approved by a majority of the directors then in
office who were either directors at the beginning of such period or who were
previously so approved) cease to constitute a majority of the Board of
Directors.
"Common Securities" means the common undivided beneficial interests in
the assets of the applicable Owens & Minor Trust.
"Common Stock" means the common stock of the Company, par value $2.00
per share.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this Indenture is located at 153 W. 51st
Street, 5th Floor, Suite 4015, New York, New York 10019, Attention: Corporate
Trust Administration.
-2-
<PAGE>
"Currency Agreement" means, with respect to any Person, any foreign
exchange contract, currency swap agreement or other similar agreement or
arrangement designed to protect such Person or any of its Subsidiaries against
fluctuations in currency values to or under which such Person or any of its
Subsidiaries is a party or a beneficiary on the date hereof or becomes a party
or a beneficiary thereafter.
"Debt" means, with respect to any Person at any date of determination
(without duplication), (i) all indebtedness of such Person for borrowed money,
(ii) all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments, (iii) all obligations of such Person in respect of
letters of credit or bankers' acceptances or other similar instruments (or
reimbursement obligations with respect thereto), (iv) all obligations of such
Person to pay the deferred purchase price of property or services, except Trade
Payables, (v) all obligations of such Person as lessee under capitalized leases,
(vi) all Debt of others secured by a Lien on any asset of such Person, whether
or not such Debt is assumed by such Person; provided that, for purposes of
determining the amount of any Debt of the type described in this clause, if
recourse with respect to such Debt is limited to such asset, the amount of such
Debt shall be limited to the lesser of the fair market value of such asset or
the amount of such Debt, (vii) all Debt of others Guaranteed by such Person to
the extent such Debt is Guaranteed by such Person, (viii) all redeemable stock
valued at the greater of its voluntary or involuntary liquidation preference
plus accrued and unpaid dividends and (ix) to the extent not otherwise included
in this definition, all obligations of such Person under Currency Agreements and
Interest Rate Agreements.
"Declaration of Trust" means the Declaration of Trust of the Owens &
Minor Trust, if any, specified in the applicable Board Resolution or
supplemental indenture establishing a particular series of Debentures pursuant
to Section 2.01 hereof.
"Debenture" or "Debentures" means any Debenture or Debentures, as the
case may be, authenticated and delivered under this Indenture.
"Debentureholder", "holder of Debentures", "registered holder", or
other similar term, means the person or persons in whose name or names a
particular Debenture shall be registered on the books of the Company kept for
the purpose in accordance with the terms of this Indenture.
"Default" means any event, act or condition which with notice or lapse
of time, or both, would constitute an Event of Default.
"Depositary" means with respect to Debentures of any series, for which
the Company shall determine that such Debentures will be issued as a Global
Debenture, The Depository Trust Company, New York, New York, another clearing
agency, or any successor registered as a clearing agency under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or other applicable
statute or regulation, which, in each case, shall be designated by the Company
pursuant to either Section 2.01 or 2.11.
"Designated Senior and Subordinated Debt" means (i) Debt under the Bank
Credit Agreement and (ii) Debt constituting Senior and Subordinated Debt which,
at the time of its determination, (A) has an aggregate principal amount of at
least $30 million and (B) is specifically designated in the instrument
evidencing such Senior and Subordinated Debt as "Designated Senior and
Subordinated Debt" by the Company.
"Event of Default", with respect to Debentures of a particular series
means any event specified in Section 6.01(a), continued for the period of time,
if any, therein designated.
"Global Debenture" means, with respect to any series of Debentures, a
Debenture executed by the Company and delivered by the Trustee to the Depositary
or pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
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"Governmental Obligations" means securities that are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a) (2) of
the Securities Act of 1933, as amended) as custodian with respect to any such
Governmental Obligation or a specific payment of principal of or interest on any
such Governmental Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depository receipt.
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Debt or other obligation of any
other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guarantee Agreement" means the guarantee, if any, that the Company may
enter into that operates directly or indirectly for the benefit of holders of
Preferred Securities issued by a Owens & Minor Trust.
"Indenture" means this instrument as originally executed, or, if
amended or supplemented as herein provided, as so amended or supplemented.
"Interest Payment Date" when used with respect to any installment of
interest on a Debenture of a particular series means the date specified in such
Debenture or in a Board Resolution or in an indenture supplemental hereto with
respect to such series as the fixed date on which an installment of interest
with respect to Debentures of that series is due and payable.
"Interest Rate Agreement" means, with respect to any Person, any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect such Person or any of
its Subsidiaries against fluctuations in interest rates to or under which such
Person or any of its Subsidiaries is a party or a beneficiary on the date hereof
or becomes a party or a beneficiary thereafter.
"Lien" means, with respect to any Property, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Indenture, the Company shall be deemed to own
subject to a Lien any Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"Officers' Certificate" means a certificate signed by the President or
a Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant Secretary
of the Company and who shall be satisfactory to the Trustee. Each such
certificate shall include the statements provided for in Section 13.06, if and
to the extent required by the provisions thereof.
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"Opinion of Counsel" means an opinion in writing signed by legal
counsel who may be an employee of or counsel for the Company and who shall be
satisfactory to the Trustee. Each such opinion shall include the statements
provided for in section 13.06, if and to the extent required by the provisions
thereof.
"Outstanding", when used with reference to Debentures of any series,
subject to the provisions of Section 8.01, means, as of any particular time, all
Debentures of that series theretofore authenticated and delivered by the Trustee
under this Indenture, except (a) Debentures theretofore canceled by the Trustee
or any paying agent, or delivered to the Trustee or any paying agent for
cancellation or which have previously been canceled; (b) Debentures or portions
thereof for the payment or redemption of which moneys or Governmental
Obligations in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust for the holders of such Debentures by the Company
(if the Company shall act as its own paying agent); provided, however, that if
such Debentures or portions of such Debentures are to be redeemed prior to the
maturity thereof, notice of such redemption shall have been given as provided in
Article Three, or provision satisfactory to the Trustee shall have been made for
giving such notice; and (c) Debentures in lieu of or in substitution for which
other Debentures shall have been authenticated and delivered pursuant to the
terms of Section 2.07.
"Owens & Minor Trust" means such statutory business trust created under
the laws of the State of Delaware specified in the applicable Board Resolution
or supplemental indenture establishing a particular series of Debentures
pursuant to Section 2.01 hereof.
"Person" means any individual, partnership, corporation, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Predecessor Debenture" of any particular Debenture means every
previous Debenture evidencing all or a portion of the same debt as that
evidenced by such particular Debenture; and, for the purposes of this
definition, any Debenture authenticated and delivered under Section 2.07 in lieu
of a lost, destroyed or stolen Debenture shall be deemed to evidence the same
debt as the lost, destroyed or stolen Debenture.
"Preferred Securities" means the preferred undivided beneficial
interests in the assets of the applicable Owens & Minor Trust.
"Property Trustee" means the entity performing the function of the
Property Trustee under the applicable Declaration of Trust of an Owens & Minor
Trust.
"Responsible Officer" when used with respect to the Trustee means the
chairman of the board of directors, the president, any vice president, the
secretary, the treasurer, any trust officer, any corporate trust officer or any
other officer or assistant officer of the Trustee customarily performing
functions similar to those performed by the persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Security Exchange" when used with respect to the Debentures of any
series which are held as trust assets of an Owens & Minor Trust pursuant to the
Declaration of Trust of such Owens & Minor Trust, means the distribution of the
Debentures of such series by such Owens & Minor Trust in exchange for the
Preferred Securities and Common Securities of such Owens & Minor Trust in
dissolution of such Owens & Minor Trust pursuant to the Declaration of Trust of
such Owens & Minor Trust.
"Senior and Subordinated Debt" means the principal of (and premium, if
any) and interest on all Debt of the Company whether created, incurred or
assumed before, on or after the date of this Indenture; provided that such
Senior and Subordinated Debt shall not include (i) Debt of the Company to any
Affiliate, (ii) Debt of the Company that, when incurred and without respect to
any election under Section 1111(b) of Title 11, U.S. Code, was without recourse,
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(iii) any other Debt of the Company which by the terms of the instrument
creating or evidencing the same is specifically designated as not being senior
in right of payment to the Debentures, and in particular the Debentures shall
rank pari passu with all other debt securities and guarantees issued to any
trust, partnership or other entity affiliated with the Company which is a
financing vehicle of the Company in connection with an issuance of preferred
securities by such financing entity and (iv) redeemable stock of the Company.
"Subsidiary" means any corporation at least a majority of whose
outstanding voting stock shall at the time be owned by the Company or by one or
more subsidiaries or by the Company and one or more Subsidiaries. For the
purposes only of this definition of the term "Subsidiary", the term "voting
stock", as applied to the stock of any corporation, shall mean stock of any
class or classes having ordinary voting power for the election of a majority of
the directors of such corporation, other than stock having such power only by
reason of the occurrence of a contingency.
"Trade Payables" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries arising
in the ordinary course of business in connection with the acquisition of goods
or services.
"Trustee" means The First National Bank of Chicago, and, subject to the
provisions of Article Seven, shall also include its successors and assigns, and,
if at any time there is more than one person acting in such capacity hereunder,
"Trustee" shall mean each such person. The term "Trustee" as used with respect
to a particular series of the Debentures shall mean the trustee with respect to
that series.
"Trust Indenture Act", subject to the provisions of Section 9.01 and
9.02, means the Trust Indenture Act of 1939, as amended and in effect at the
date of execution of this Indenture.
"Trust Securities" means the Common Securities and the Preferred
Securities of the applicable Owens & Minor Trust.
ARTICLE 2
ISSUE, DESCRIPTION, TERMS, EXECUTION, REGISTRATION
AND EXCHANGE OF DEBENTURES
SECTION 2.01. Designation, Terms, Amount, Authentication and Delivery
of Debentures. The aggregate principal amount of Debentures which may be
authenticated and delivered under this Indenture is unlimited.
The Debentures may be issued in one or more series up to the aggregate
principal amount of Debentures of that series from time to time authorized by or
pursuant to a Board Resolution or pursuant to one or more indentures
supplemental hereto prior to the initial issuance of Debentures of a particular
series. Prior to the initial issuance of Debentures of any series, there shall
be established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto:
(1) the title of the Debentures of the series (which shall
distinguish the Debentures of the series from all other Debentures);
(2) any limit upon the aggregate principal amount of the
Debentures of that series which may be authenticated and delivered
under this Indenture (except for Debentures authenticated and delivered
upon registration of transfer of or in exchange for, or in lieu of,
other Debentures of that series);
(3) the date or dates on which the principal of the Debentures
of the series is payable;
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(4) the rate or rates at which the Debentures of the series
shall bear interest or the manner of calculation of such rate or rates,
if any;
(5) the date or dates from which such interest shall accrue,
the Interest Payment Dates on which such interest will be payable or
the manner of determination of such Interest Payment Dates and the
record date for the determination of holders to whom interest is
payable on any such Interest Payment Dates;
(6) the right, if any, to extend or defer the interest payment
periods and the duration of such extension;
(7) the period or periods within which, the price or prices at
which, and the terms and conditions upon which, Debentures of the
series may be redeemed, in whole or in part, at the option of the
Company;
(8) the obligation, if any, of the Company to redeem or
purchase Debentures of the series pursuant to any sinking fund or
analogous provisions (including payments made in cash in anticipation
of future sinking fund obligations) or at the option of a holder
thereof and the period or periods within which, the price or prices at
which, and the terms and conditions upon which, Debentures of the
series shall be redeemed or purchased, in whole or in part, pursuant to
such obligation;
(9) any exchangeability, conversion or prepayment provisions
of the Debentures;
(10) the form of the Debentures of the series including the form
of the Certificate of Authentication for such series;
(11) if other than denominations of $50 or any integral multiple
thereof the denominations in which the Debentures of the series shall
be issuable;
(12) any and all other terms with respect to such series (which
terms shall not be inconsistent with the terms of this Indenture);
(13) whether the Debentures are issuable as a Global Debenture
and, in such case, the identity of the Depositary for such series; and
(14) If the Debentures of such series are to be deposited as
trust assets in an Owens & Minor Trust, the name of the applicable
Owens & Minor Trust (which shall distinguish such statutory business
trust from all other Owens & Minor Trusts) into which the Debentures of
such series are to be deposited as trust assets and the date of its
Declaration of Trust.
All Debentures of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to any such Board Resolution or in any indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
SECTION 2.02. Form of Debenture and Trustee's Certificate. The
Debentures of any series and the Trustee's certificate of authentication to be
borne by such Debentures shall be substantially of the tenor and purport as set
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forth in one or more indentures supplemental hereto or as provided in a Board
Resolution and as set forth in an Officers' Certificate, and may have such
letters, numbers or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Indenture, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which Debentures of that series may be listed, or to conform to
usage.
SECTION 2.03. Date and Denominations of Debentures and Provisions for
Payment of Principal, Premium and Interest. The Debentures shall be issuable as
registered Debentures and in the denominations of $50 or any integral multiple
thereof, subject to Section 2.01. The Debentures of a particular series shall
bear interest payable on the dates and at the rate specified with respect to
that series. The principal of and the interest on the Debentures of any series,
as well as any premium thereon in case of redemption thereof prior to maturity,
shall be payable in the coin or currency of the United States of America which
at the time is legal tender for public and private debt, at the office or agency
of the Company maintained for that purpose in the Borough of Manhattan, The City
and State of New York. Each Debenture shall be dated the date of its
authentication. Interest on the Debentures shall be computed on the basis of a
360-day year composed of twelve 30-day months.
The interest installment on any Debenture which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date for
Debentures of that series shall be paid to the person in whose name said
Debenture (or one or more Predecessor Debentures) is registered at the close of
business on the regular record date for such interest installment. In the event
that any Debenture of a particular series or portion thereof is called for
redemption and the redemption date is subsequent to a regular record date with
respect to any Interest Payment Date and prior to such Interest Payment Date,
interest on such Debenture will be paid upon presentation and surrender of such
Debenture as provided in Section 3.03.
Any interest on any Debenture which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date for Debentures of the
same series (herein called "Defaulted Interest") shall forthwith cease to be
payable to the registered holder on the relevant regular record date by virtue
of having been such holder; and such Defaulted Interest shall be paid by the
Company, at its election, as provided in clause, (1) or clause (2) below:
(1) The Company may make payment of any Defaulted Interest on
Debentures to the persons in whose names such Debentures (or their
respective Predecessor Debentures) are registered at the close of
business on a special record date for the payment of such Defaulted
Interest, which shall be fixed in the following manner: the Company
shall notify the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each such Debenture and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the persons entitled to such Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date
for the payment of such Defaulted Interest which shall not be more than
15 nor less than 10 days prior to the date of the proposed payment and
not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such special record date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the special record date therefor to be mailed, first class
postage prepaid, to each Debentureholder at his or her address as it
appears in the Debenture Register (as hereinafter defined), not less
than 10 days prior to such special record date. Notice of the proposed
payment of such Defaulted Interest and the special record date therefor
having been mailed as aforesaid, such Defaulted Interest shall be paid
to the persons in whose names such Debentures (or their Predecessor
Debentures) are registered on such special record date and shall be no
longer payable pursuant to the following clause (2).
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(2) The Company may make payment of any Defaulted Interest on
any Debentures in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Debentures may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Unless otherwise set forth in a Board Resolution or one or more
indentures supplemental hereto establishing the terms of any series of
Debentures pursuant to Section 2.01 hereof the term "regular record date" as
used in this Section with respect to a series of Debentures with respect to any
Interest Payment Date for such series shall mean either the fifteenth day of the
month immediately preceding the month in which an Interest Payment Date
established for such series pursuant to Section 2.01 hereof shall occur, if such
Interest Payment Date is the first day of a month, or the last day of the month
immediately preceding the month in which an Interest Payment Date established
for such series pursuant to Section 2.01 hereof shall occur, if such Interest
Payment Date is the fifteenth day of a month, whether or not such date is
business day.
Subject to the foregoing provisions of this Section, each Debenture of
a series delivered under this Indenture upon transfer of or in exchange for or
in lieu of any other Debenture of such series shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Debenture.
SECTION 2.04. Execution of Debentures. The Debentures shall, subject to
the provisions of Section 2.06, be printed on steel engraved borders or fully or
partially engraved, or legibly typed, as the proper officers of the Company may
determine, and shall be signed on behalf of the Company by the Chairman or Vice
Chairman of its Board of Directors or its President or one of its Vice
Presidents and attested by its Secretary or one of its Assistant Secretaries.
The signature of the Chairman, Vice Chairman, President or a Vice President
and/or the signature of the Secretary or an Assistant Secretary in attestation
thereof, may be in the form of a manual or facsimile signature of a present or
any future Chairman, Vice Chairman, President or Vice President and of a present
or any future Secretary or Assistant Secretary and may be imprinted or otherwise
reproduced on the Debentures and for that purpose the Company may use the manual
or facsimile signature of any person who shall have been a Chairman, Vice
Chairman, President or Vice President, or of any person who shall have been a
Secretary or Assistant Secretary, notwithstanding the fact that at the time the
Debentures shall be authenticated and delivered or disposed of such person shall
have ceased to be the Chairman, Vice Chairman, President or a Vice President, or
the Secretary or an Assistant Secretary, of the Company, as the case may be.
Only such Debentures as shall bear thereon a Certificate of
Authentication substantially in the form established for such Debentures,
executed manually by an authorized signatory of the Trustee, or by any
Authenticating Agent with respect to such Debentures, shall be entitled to the
benefits of this indenture or be valid or obligatory for any purpose. Such
certificate executed by the Trustee, or by any Authenticating Agent appointed by
the Trustee with respect to such Debentures, upon any Debenture executed by the
Company shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and made available for delivery hereunder and that the
holder is entitled to the benefits of this Indenture.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Debentures of any series executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Debentures, signed by its
President or any Vice President, and the Trustee in accordance with such written
order shall authenticate and make available for delivery such Debentures.
In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such Debentures, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
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The Trustee shall not be required to authenticate such Debentures if
the issue of such Debentures pursuant to this Indenture will affect the
Trustee's own rights, duties or immunities under the Debentures and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
SECTION 2.05. Exchange of Debentures. (a) Debentures of any series may
be exchanged upon presentation thereof at the office or agency of the Company
designated for such purpose in the Borough of Manhattan, The City and State of
New York, for other Debentures of such series of authorized denominations, and
for a like aggregate principal amount, upon payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, all as provided in
this Section. In respect of any Debentures so surrendered for exchange, the
Company shall execute, the Trustee shall authenticate and such office or agency
shall make available for delivery in exchange therefor the Debenture or
Debentures of the same series which the Debentureholder making the exchange
shall be entitled to receive, bearing numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose in the Borough of Manhattan, The City and
State of New York, or such other location designated by the Company a register
or registers (herein referred to as the "Debenture Register") in which, subject
to such reasonable regulations as it may prescribe, the Company shall register
the Debentures and the transfers of Debentures as in this Article provided and
which at all reasonable times shall be open for inspection by the Trustee. The
registrar for the purpose of registering Debentures and transfer of Debentures
as herein provided shall be appointed as authorized by Board Resolution (the
"Debenture Registrar").
Upon surrender for transfer of any Debenture at the office or agency of
the Company designated for such purpose in the Borough of Manhattan, The City
and State of New York, the Company shall execute, the Trustee shall authenticate
and such office or agency shall make available for delivery in the name of the
transferee or transferees a new Debenture or Debentures of the same series as
the Debenture presented for a like aggregate principal amount.
All Debentures presented or surrendered for exchange or registration of
transfer, as provided in this Section, shall be accompanied (if so required by
the Company or the Debenture Registrar) by a written instrument or instruments
of transfer, in form satisfactory to the Company or the Debenture Registrar,
duly executed by the registered holder or by his duly authorized attorney in
writing.
(c) No service charge shall be made for any exchange or registration of
transfer of Debentures, or issue of new Debentures in case of partial redemption
of any series, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge in relation thereto, other than exchanges
pursuant to Section 2.06, the second paragraph of Section 3.03 and Section 9.04
not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debentures during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
less than all the outstanding Debentures of the same series and ending at the
close of business on the day of such mailing, nor (ii) to register the transfer
of or exchange any Debentures of any series or portions thereof called for
redemption. The provisions of this Section 2.05 are, with respect to any Global
Debenture, subject to Section 2.11 hereof.
SECTION 2.06. Temporary Debentures. Pending the preparation of
definitive Debentures of any series, the Company may execute, and the Trustee
shall authenticate and make available for delivery, temporary Debentures
(printed, lithographed or typewritten) of any authorized denomination, and
substantially in the form of the definitive Debentures in lieu of which they are
issued, but with such omissions, insertions and variations as may be appropriate
for temporary Debentures, all as may be determined by the Company. Every
temporary Debenture of any series shall be executed by the Company and be
authenticated by the Trustee upon the same conditions and in substantially the
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same manner, and with like effect, as the definitive Debentures of such series.
Without unnecessary delay the Company will execute and will furnish definitive
Debentures of such series and thereupon any or all temporary Debentures of such
series may be surrendered in exchange therefor (without charge to the holders),
at the office or agency of the Company designated for the purpose in the Borough
of Manhattan, The City and State of New York, and the Trustee shall authenticate
and such office or agency shall make available for delivery in exchange for such
temporary Debentures an equal aggregate principal amount of definitive
Debentures of such series, unless the Company advises the Trustee to the effect
that definitive Debentures need not be executed and furnished until further
notice from the Company. Until so exchanged, the temporary Debentures of such
series shall be entitled to the same benefits under this Indenture as definitive
Debentures of such series authenticated and delivered hereunder.
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Debentures. In case
any temporary or definitive Debenture shall become mutilated or be destroyed,
lost or stolen, the Company (subject to the next succeeding sentence) shall
execute, and upon its request the Trustee (subject as aforesaid) shall
authenticate and make available for delivery, a new Debenture of the same series
bearing a number not contemporaneously outstanding, in exchange and substitution
for the mutilated Debenture, or in lieu of and in, substitution for the
Debenture so destroyed, lost or stolen. In every case the applicant for a
substituted Debenture shall furnish to the Company and to the Trustee such
security or indemnity as may be required by them to save each of them harmless,
and, in every case of destruction, loss or theft, the applicant shall also
furnish to the Company and to the Trustee evidence to their satisfaction of the
destruction, loss or theft of the applicant's Debenture and of the ownership
thereof. The Trustee may authenticate any such substituted Debenture and make
available for delivery the same upon the written request or authorization of any
officer of the Company. Upon the issuance of any substituted Debenture, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
In case any Debenture which has matured or is about to mature shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Debenture, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debenture) if the applicant
for such payment shall furnish to the Company and to the Trustee such security
or indemnity as they may require to save them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Company and the
Trustee of the destruction, loss or theft of such Debenture and of the ownership
thereof.
Every Debenture issued pursuant to the provisions of this Section in
substitution for any Debenture which is mutilated, destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the mutilated, destroyed, lost or stolen Debenture shall be found at any
time, or be enforceable by anyone, and shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other Debentures of
the same series duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
SECTION 2.08. Cancellation of Surrendered Debentures. All Debentures
surrendered for the purpose of payment, redemption, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent, be delivered
to the Trustee for cancellation, or, if surrendered to the Trustee, shall be
canceled by it, and no Debentures shall be issued in lieu thereof except as
expressly required or permitted by any of the provisions of this Indenture. On
written request of the Company, the Trustee shall deliver to the Company
canceled Debentures held by the Trustee. If the Company shall otherwise acquire
any of the Debentures, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Debentures
unless and until the same are delivered to the Trustee for cancellation.
SECTION 2.09. Provisions of Indenture and Debentures for Sole Benefit
of Parties and Debentureholders. Nothing in this Indenture or in the Debentures,
express or implied, shall give or be construed to give to any person, firm or
corporation, other than the parties hereto and the holders of the Debentures,
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any legal or equitable right, remedy or claim under or in respect of this
Indenture, or under any covenant, condition or provision herein contained; all
such covenants, conditions and provisions being for the sole benefit of the
parties hereto and of the holders of the Debentures.
SECTION 2.10. Appointment of Authenticating Agent. So long as any of
the Debentures of any series remain outstanding there may be one or more
Authenticating Agents for any or all such series of Debentures which the Trustee
shall have the right to appoint. Said Authenticating Agents shall be authorized
to act on behalf of the Trustee to authenticate Debentures of such series issued
upon exchange, transfer or partial redemption thereof and Debentures so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. All references in this Indenture to the authentication of Debentures
by the Trustee shall be deemed to include authentication by an Authenticating
Agent for such series except for authentication upon original issuance or
pursuant to Section 2.07 hereof. Each Authenticating Agent shall be acceptable
to the Company and shall be a corporation which has a combined capital and
surplus, as most recently reported or determined by it, sufficient under the
laws of any jurisdiction under which it is organized or in which it is doing
business to conduct a trust business, and which is otherwise authorized under
such laws to conduct such business and is subject to supervision or examination
by federal or state authorities. If at any time any Authenticating Agent shall
cease to be eligible in accordance with these provisions, it shall resign
immediately.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint an
eligible successor Authenticating Agent acceptable to the Company. Any successor
Authenticating Agent, upon acceptance of its appointment hereunder, shall become
vested with all the rights, powers and duties of its predecessor hereunder as if
originally named as an Authenticating Agent pursuant hereto.
SECTION 2.11. Global Debenture. (a) If the Company shall establish
pursuant to Section 2.01 that the Debentures of a particular series are to be
issued as one or more Global Debentures, then the Company shall execute and the
Trustee shall in accordance with Section 2.04, authenticate and deliver, one or
more Global Debentures which (i) shall represent, and shall be denominated in an
aggregate amount equal to the aggregate Principal amount of, all of the
Outstanding Debentures of such series, (ii) shall be registered in the name of
the Depositary or its nominee, (iii) shall be delivered by the Trustee to the
Depositary or pursuant to the Depositary's instruction and (iv) shall bear a
legend substantially to the following effect: "Except as otherwise provided in-
Section 2.11 of the Indenture, this Debenture may be transferred, in whole but
not in part, only to another nominee of the Depositary or to a successor
Depositary or to a nominee of such successor Depositary."
(b) Notwithstanding the provisions of Section 2.05, the Global
Debenture of a series may be transferred, in whole but not in part and in the
manner provided in Section 2.05, only to another nominee of the Depositary for
such series, or to a successor Depositary for such series selected or approved
by the Company or to a nominee of such successor Depositary.
(c) If at any time the Depositary for a series of Debentures notifies
the Company that it is unwilling or unable to continue as Depositary for such
series or if at any time the Depositary for such series shall no longer be
registered or in good standing under the Exchange Act, or other applicable
statute or regulation and a successor Depositary for such series is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such condition, as the case may be, this Section 2.11 shall
no longer be applicable to the Debentures of such series and the Company will
execute, and subject to Section 2.05, the Trustee will authenticate and make
available for delivery Debentures of such series in definitive registered form
without coupons, in authorized denominations, and in an aggregate principal
amount equal to the principal amount of the Global Debentures of such series in
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exchange for such Global Debenture. In addition, the Company may at any time
determine that the Debentures of any series shall no longer be represented by
one or more Global Debentures and that the provisions of this Section 2.11 shall
no longer apply to the Debentures of such series. In such event the Company will
execute and subject to Section 2.05, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company, will authenticate and
deliver Debentures of such series in definitive registered form without coupons,
in authorized denominations, and in an aggregate principal amount equal to the
principal amount of the Global Debentures of such series in exchange for such
Global Debentures. Upon the exchange of the Global Debentures for such
Debentures in definitive registered form without coupons, in authorized
denominations, the Global Debentures shall be canceled by the Trustee. Such
Debentures in definitive registered form issued in exchange for the Global
Debentures pursuant to this Section 2.11(c) shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Debentures to the Depositary for
delivery to the persons in whose names such Debentures are so registered.
SECTION 2.12. CUSIP Numbers. The Company in issuing the Debentures may
use "CUSIP" and "CINS" numbers (if then generally in use), and the Trustee shall
use CUSIP numbers or CINS numbers, as the case may be, in notices of redemption
or exchange as a convenience to Debentureholders and no representation shall be
made as to the correctness of such numbers either as printed on the Debentures
or as contained in any notice of redemption or exchange.
SECTION 2.13. Tax Treatment of Debentures. The Company shall treat each
series of the Debentures as indebtedness for all federal and state tax purposes,
and shall take or cause to be taken any and all actions necessary to maintain
the characterization of the Debentures as indebtedness.
ARTICLE 3
REDEMPTION OF DEBENTURES AND SINKING FUND PROVISIONS
SECTION 3.01. Redemption of Debentures. The Company may redeem the
Debentures of any series issued hereunder on and after the dates and in
accordance with this Article and the terms established for such series pursuant
to Section 2.01 hereof.
SECTION 3.02. Notice of Redemption. (a) In case the Company shall
desire to exercise such right to redeem all or, as the case may be, a portion of
the Debentures of any series in accordance with the right reserved so to do, it
shall give notice of such redemption to holders of the Debentures of such series
to be redeemed by mailing, first class postage prepaid, a notice of such
redemption not less than 30 days and not more than 60 days before the date fixed
for redemption of that series to such holders at their last addresses as they
shall appear upon the Debenture Register. Any notice which is mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the registered holder receives the notice. In any case, failure
duly to give such notice to the holder of any Debenture of any series designated
for redemption in whole or in part, or any defect in the notice, shall not
affect the validity of the proceedings for the redemption of any other
Debentures of such series or any other series. In the case of any redemption of
Debentures prior to the expiration of any restriction on such redemption
provided in the terms of such Debentures or elsewhere in this Indenture, the
Company shall furnish the Trustee with an Officer's Certificate evidencing
compliance with any such restriction.
Each such notice of redemption shall specify the date fixed for
redemption and the redemption price at which Debentures of that series are to be
redeemed, and shall state that payment of the redemption price of such
Debentures to be redeemed will be made at the office or agency of the Company in
the Borough of Manhattan, the City and State of New York, upon presentation and
surrender of such Debentures, that interest accrued to the date fixed for
redemption will be paid as specified in said notice, that from and after said
date interest will cease to accrue and that the redemption is for a sinking
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fund, if such is the case. If less than all the Debentures of a series are to be
redeemed, the notice to the holders of Debentures of that series to be redeemed
in whole or in part shall specify the particular Debentures to be so redeemed.
In case any Debenture is to be redeemed in part only, the notice which relates
to such Debenture shall state the portion of the principal amount thereof to be
redeemed, and shall state that on and after the redemption date, upon surrender
of such Debenture, a new Debenture or Debentures of such series in principal
amount equal to the unredeemed portion thereof will be issued.
(b) If less than all the Debentures of a series are to be redeemed, the
Company shall give the Trustee at least 45 days' notice in advance of the date
fixed for redemption as to the aggregate principal amount of Debentures of the
series to be redeemed, and thereupon the Trustee shall select, by lot or in such
other manner as it shall deem appropriate and fair in its discretion and which
may provide for the selection of a portion or portions (equal to $50 or any
integral multiple thereof) of the principal amount of such Debentures of a
denomination larger than $50, the Debentures to be redeemed and shall thereafter
promptly notify the Company in writing of the numbers of the Debentures to be
redeemed, in whole or in part.
The Company may, if and whenever it shall so elect, by delivery of
instructions signed on its behalf by its President or any Vice President,
instruct the Trustee or any paying agent to call all or any part of the
Debentures of a particular series for redemption and to give notice of
redemption in the manner set forth in this Section, such notice to be in the
name of the Company or its own name as the Trustee or such paying agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such paying agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such paying agent, as the
case may be, such Debenture Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required under the
provisions of this Section.
SECTION 3.03. Debentures Due and Payable. (a) If the giving of notice
of redemption shall have been completed as above provided, the Debentures or
portions of Debentures of the series to be redeemed specified in such notice
shall become due and payable on the date and at the place stated in such notice
at the applicable redemption price, together with interest accrued to the date
fixed for redemption and interest on such Debentures or portions of Debentures
shall cease to accrue on and after the date fixed for redemption, unless the
Company shall default in the payment of such redemption price and accrued
interest with respect to any such Debenture or portion thereof. On presentation
and surrender of such Debentures on or after the date fixed for redemption at
the place of payment specified in the notice, said Debentures shall be paid and
redeemed at the applicable redemption price for such series, together with
interest accrued thereon to the date fixed for redemption (but if the date fixed
for redemption is an Interest Payment Date, the interest installment payable on
such date shall be payable to the registered holder at the close of business on
the applicable record date pursuant to Section 2.03).
(b) Upon presentation of any Debenture of such series which is to be
redeemed in part only, the Company shall execute and the Trustee shall
authenticate and the office or agency where the Debenture is presented shall
make available for delivery to the holder thereof at the expense of the Company,
a new Debenture or Debentures of the same series, of authorized denominations in
principal amount equal to the unredeemed portion of the Debenture so presented.
SECTION 3.04. Sinking Funds for Debentures. The provisions of Sections
3.04, 3.05 and 3.06 shall be applicable to any sinking fund for the retirement
of Debentures of a series, except as otherwise specified as contemplated by
Section 2.01 for Debentures of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Debentures of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Debentures of any series is herein referred to as on "optional
sinking fund payment". If provided for by the terms of Debentures for any
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series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 3.05. Each sinking fund payment shall be applied to the
redemption of Debentures of any series as provided for by the terms of
Debentures of such series.
SECTION 3.05. Satisfaction of Sinking Fund Payments With Debentures.
The Company (i) may deliver outstanding Debentures of a series (other than any
previously called for redemption) and (ii) may apply as a credit Debentures of a
series which have been redeemed either at the election of the Company pursuant
to the terms of such Debentures or through the application of permitted optional
sinking fund payments pursuant to the terms of such Debentures, in each case in
satisfaction of all or any part of any sinking fund payment with respect to the
Debentures of such series required to be made pursuant to the terms of such
Debentures as provided for by the terms of such series, provided that such
Debentures have not been previously so credited. Such Debentures shall be
received and credited for such purpose by the Trustee at the redemption price
specified in such Debentures for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
SECTION 3.06. Redemption of Debentures for Sinking Fund. Not less than
45 days prior to each sinking fund payment date for any series of Debentures,
the Company will deliver to the Trustee an Officers' Certificate specifying the
amount of the next ensuing sinking fund payment for that series pursuant to the
terms for that series, the portion thereof if any, which is to be satisfied by
delivering and crediting Debentures of that series pursuant to Section 3.05 and
the basis for such credit and will, together with such Officers' Certificate,
deliver to the Trustee any Debentures to be so delivered. Not less than 30 days
before each such sinking fund payment date the Trustee shall select the
Debentures to be redeemed on such sinking fund payment date in the manner
specified in Section 3.02 and cause notice of the redemption thereof to be given
in the name of and at the expense of the Company in the manner provided in
Section 3.02. Such notice having been duly given, the redemption of such
Debentures shall be made upon the terms and in the manner stated in Section
3.03.
ARTICLE 4
PARTICULAR COVENANTS OF THE COMPANY
The Company covenants and agrees for each series of the Debentures as
follows:
SECTION 4.01. Payment of Principal of (and Premium, if any) and
Interest on Debentures. The Company will duly and punctually pay or cause to be
paid the principal of (and premium, if any) and interest on the Debentures of
that series at the time and place and in the manner provided herein and
established with respect to such Debentures.
SECTION 4.02. Maintenance of Office or Agent for Payment of Debentures,
Designation of Office or Agency for Payment, Registration, Transfer and Exchange
of Debentures. So long as any series of the Debentures remain outstanding, the
Company agrees to maintain an office or agency in the Borough of Manhattan, The
City and State of New York, with respect to each such series and at such other
location or locations as may be designated as provided in this Section 4.02,
where (i) Debentures of that series may be presented for payment, (ii)
Debentures of that series may be presented as hereinabove authorized for
registration of transfer and exchange, and (iii) notices and demands to or upon
the Company in respect of the Debentures of that series and this Indenture may
be given or served, such designation to continue with respect to such office or
agency until the Company shall by written notice signed by its President or a
Vice President and delivered to the Trustee, designate some other office or
agency for such purposes or any of them. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
notices and demands.
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SECTION 4.03. Duties of Paying Agent; Company as Payment Agent; and
Holding Sums of Trust. (a) If the Company shall appoint one or more paying
agents for all or any series of the Debentures, other than the Trustee, the
Company will cause each such paying agency to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provisions of this Section:
(1) that it will hold all sums held by it as such agent for the
payment of the principal of (and premium, if any) or interest on the
Debentures of that series (whether such sums have been paid to it by
the Company or by any other obligor of such Debentures) in trust for
the benefit of the persons entitled thereto;
(2) that it will give the Trustee written notice of any failure
by the Company (or by any other obligor of such Debentures) to make any
Payment of the principal of (and premium, if any) or interest on the
Debentures of that series when the same shall be due and payable;
(3) that it will, at any time during the continuance of any
failure referred to in the preceding paragraph (a)(2) above, upon the
written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such paying agent; and
(4) that it will perform all other duties of paying agent as
set forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to
any series of the Debentures, it will on or before each due date of the
principal of (and premium, if any) or interest on Debentures of that series, set
aside, segregate and hold in trust for the benefit of the persons entitled
thereto a sum sufficient to pay such principal (and premium, if any) or interest
so becoming due on Debentures of that series until such sums shall be paid to
such persons or otherwise disposed of as herein provided and will promptly
notify in writing the Trustee of such action, or any failure (by it or any other
obligor on such Debentures) to take such action. Whenever the Company shall have
one or more paying agents for any series of Debentures, it will, prior to each
due date of the principal of (and premium, if any) or interest on any Debentures
of that series, deposit with the paying agent a sum sufficient to pay the
principal (and premium, if any) or interest so becoming due, such sum to be held
in trust for the benefit of the persons entitled to such principal, premium or
interest, and (unless such paying agent is the Trustee) the Company will
promptly notify the Trustee of its action or failure so to act.
(c) Anything in this Section to the contrary notwithstanding, (i) the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Section 11.04, and (ii) the Company may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for any
other purpose, pay, or direct any paying agent to pay, to the Trustee all sums
held in trust by the Company or such paying agent, such sums to be held by the
Trustee upon the same terms and conditions as those upon which such sums were
held by the Company or such paying agent, and, upon such payment by any paying
agent to the Trustee, such paying agent shall be released from all further
liability with respect to such money.
SECTION 4.04. Appointment to Fill Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 7.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
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ARTICLE 5
DEBENTUREHOLDER'S LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
SECTION 5.01. Company to Furnish Trustee Information as to Names and
Addresses of Debentures. The Company will furnish or cause to be furnished to
the Trustee (a) on a quarterly basis on each regular record date (as defined in
Section 2.03) a list, in such form as the Trustee may reasonably require, of the
names and addresses of the holders of each series of Debentures as of such
regular record date, provided, that the Company shall not be obligated to
furnish or cause to furnish such list at any time that the list shall not differ
in any respect from the most recent list furnished to the Trustee by the Company
and (b) at such other times as the Trustee may request in writing within 30 days
after the receipt by the Company of any such request, a list of similar form and
content as of a date not more than 15 days prior to the time such list is
furnished; provided, however, no such list need be furnished for any series for
which the Trustee shall be the Debenture Registrar.
SECTION 5.02. Trustee to Preserve Information as to Names and Addresses
of Debentureholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debentures contained in the most recent list furnished to it as
provided in Section 5.01 and as to the names and addresses of holders of
Debentures received by the Trustee in its capacity as Debenture Registrar (if
acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 5.01 upon receipt of a new list so furnished.
(c) In case three or more holders of Debentures of a series
(hereinafter referred to as "applicants") apply in writing to the Trustee, and
furnish to the Trustee reasonable proof that each such applicant has owned a
Debenture for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other holders of Debentures of such series or holders of all
Debentures with respect to their rights under this Indenture or under such
Debentures, and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within five business days after the receipt of such application, at its
election, either:
(1) afford to such applicants access to the information
preserved at the time by the Trustee in accordance with the provisions
of subsection (a) of this Section 5.02; or
(2) inform such applicants as to the approximate number of
holders of Debentures of such series or of all Debentures, as the case
may be, whose names and addresses appear in the information preserved
at the time by the Trustee, in accordance with the provisions of
subsection (a) of this Section 5.02, and as to the approximate cost of
mailing to such Debentureholders, the form of proxy or other
communication, if any, specified in such application.
(d) If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each holder of such series or of all Debentures, as the case
may be, whose name and address appears in the information preserved at the time
by the Trustee in accordance with the provisions of subsection (a) of this
Section 5.02, a copy of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Trustee of the material to be mailed and of payment, or provision for the
payment, of the reasonable expenses of mailing, unless within five days after
such tender, the Trustee shall mail to such applicants and file with the
Securities and Exchange Commission (the "Commission"), together with a copy of
the material to be mailed, a written statement to the effect that, in the
opinion of the Trustee, such mailing would be contrary to the best interests of
the holders of Debentures of such series or of all Debentures, as the case may
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be, or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If the Commission, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, the Commission shall
find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Debentureholders with reasonable
promptness after the entry of such order and the renewal of such tender,
otherwise, the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(e) Each and every holder of the Debentures, by receiving and holding
the same, agrees with the Company and the Trustee that neither the Company nor
the Trustee nor any paying agent nor any Debenture Registrar shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the holders of Debentures in accordance with the provisions of
subsection (b) of this Section, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under said subsection
(b).
SECTION 5.03. Annual and Other Reports to Be Filed by Company With
Trustee. (a) The Company covenants and agrees to file with the Trustee, within
15 days after the Company is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13 or Section 15(d) of
the Exchange Act; or, if the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file with the
Trustee and the Commission in accordance with the rides and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required pursuant to
Section 13 of the Exchange Act, in respect of a security listed and registered
on a national securities exchange as may be prescribed from time to time in such
rules and regulations. Delivery of such reports, information and documents to
the Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein,
including the Company's compliance with any of its covenants hereunder (as to
which the Trustee is entitled to rely exclusively on Officer's Certificates).
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such additional information, documents and reports with
respect to compliance by the Company with the conditions and covenants provided
for in this Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable over-night delivery service which provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to subsections (a) and (b) of this Section
as may be required by rules and regulations prescribed from time to time by the
Commission.
(d) The Company covenants and agrees to furnish to the Trustee, on or
before May 15 in each calendar year in which any of the Debentures are
outstanding, or on or before such other day in each calendar year as the Company
and the Trustee may from time to time agree upon, a Certificate as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this subsection (d), such compliance shall be
determined without regard to any period of grace or requirement of notice
provided under this Indenture.
SECTION 5.04. Trustee to Transmit Annual Report to Debentureholders.
(a) On or before July 15 in each year in which any of the Debentures are
outstanding, the Trustee shall transmit by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
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Register, a brief report dated as of the preceding May 15, with respect to any
of the following events which may have occurred within the previous twelve
months (but if no such event has occurred within such period no report need be
transmitted):
(1) any change to its eligibility under Section 7.09, and its
qualifications under Section 7.08;
(2) the creation of or any material change to a relationship
specified in paragraphs (1) through (10) of subsection (c) of Section
7.08;
(3) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claim or may
claim a lien or charge, prior to that of the Debentures, on any
property or funds held or collected by it as Trustee if such advances
so remaining unpaid aggregate more than 1/2 of 1% of the principal
amount of the Debentures outstanding on the date of such report;
(4) any change to the amount, interest rate, and maturity date
of all other indebtedness owing by the Company, or by any other obligor
on the Debentures, to the Trustee in its individual capacity, on the
date of such report, with a brief description of any property held as
collateral security therefor, except any indebtedness based upon a
creditor relationship arising in any manner described in paragraph (2),
(3), (4), or (6) of subsection (b) of Section 7.13;
(5) any change to the property and funds, if any, physically in
the possession of the Trustee as such on the date of such report;
(6) any release, or release and substitution, of property
subject to the lien of this Indenture (and the consideration thereof if
any) which it has not previously reported;
(7) any additional issue of Debentures which the Trustee has
not previously reported; and
(8) any action taken by the Trustee in the performance of its
duties under this Indenture which it has not previously reported and
which in its opinion materially affects the Debentures or the
Debentures of any series, except any action in respect of a default,
notice of which has been or is to be withheld by it in accordance with
the provisions of Section 6.07.
(b) The Trustee shall transmit by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
Register, a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee as such since the date of the last
report transmitted pursuant to the provisions of subsection (a) of this Section
(or if no such report has yet been so transmitted, since the date of execution
of this Indenture), for the reimbursement of which it claims or may claim a lien
or charge prior to that of the Debentures of any series on property or funds
held or collected by it as Trustee, and which it has not previously reported
pursuant to this subsection if such advances remaining unpaid at any time
aggregate more than 10% of the principal amount of Debentures of such series
outstanding at such time, such report to be transmitted within 90 days after
such time.
(c) A copy of each such report shall, at the time of such transmission
to Debentureholders, be filed by the Trustee with the Company, with each stock
exchange upon which any Debentures are listed (if so listed) and also with the
Commission. The Company agrees to notify the Trustee when any Debentures become
listed on any stock exchange.
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ARTICLE 6
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
SECTION 6.01. Events of Default Defined. (a) Whenever used herein with
respect to Debentures of a particular series, "Event of Default" means any one
or more of the following events which has occurred and is continuing:
(1) default in the payment of any installment of interest upon
any of the Debentures of that series, as and when the same shall become
due and payable, and continuance of such default for a period of 30
days; provided, however, that a valid extension of an interest payment
period by the Company in accordance with the terms of any indenture
supplemental hereto, shall not constitute a default in the payment of
interest for this purpose;
(2) default in the payment of the principal of (or premium, if
any, on) any of the Debentures of that series as and when the same
shall become due and payable whether at maturity, upon redemption, by
declaration or otherwise, or in any payment required by any sinking or
analogous fund established with respect to that series;
(3) failure on the part of the Company duly to observe or
perform any other of the covenants or agreements on the part of the
Company with respect to that series contained in such Debentures or
otherwise established with respect to that series of Debentures
pursuant to Section 2.01 hereof or contained in this Indenture (other
than a covenant or agreement which has been expressly included in this
Indenture solely for the benefit of one or more series of Debentures
other than such series) for a period of 90 days after the date on which
written notice of such failure, requiring the same to be remedied and
stating that such notice is a "Notice of Default" hereunder, shall have
been given to the Company by the Trustee, by registered or certified
mail, or to the Company and the Trustee by the holders of at least 25%
in principal amount of the Debentures of that series at the time
outstanding;
(4) a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging the Company as bankrupt or
insolvent, or approving as properly filed a petition seeking
liquidation or reorganization of the Company under the Federal
Bankruptcy Code or any other similar applicable Federal or State law,
and such decree or order shall have continued unvacated and unstayed
for a period of 90 days; or an involuntary case shall be commenced
under such Code in respect of the Company and shall continue
undismissed for a period of 90 days or an order for relief in such case
shall have been entered; or a decree or order of a court having
jurisdiction in the premises shall have been entered for the
appointment on the ground of insolvency or bankruptcy of a receiver or
custodian or liquidator or trustee or assignee in bankruptcy, or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, and such decree or order shall have
remained in force unvacated and unstayed for a period of 90 days; or
(5) the Company shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking liquidation or reorganization under the Federal Bankruptcy Code
or any other similar applicable Federal or State law, or shall consent
to the filing of any such petition, or shall consent to the appointment
on the ground of insolvency or bankruptcy of a receiver or custodian or
liquidator or trustee or assignee in bankruptcy or insolvency of it or
of its property, or shall make an assignment for the benefit of
creditors.
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(b) In each and every such case, unless the principal of all the
Debentures of that series shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Debentures of that series then outstanding hereunder, by notice in writing to
the Company (and to the Trustee if given by such Debentureholders), may declare
the principal of all the Debentures of that series to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything contained in this Indenture or in the
Debentures of that series or established with respect to that series pursuant to
Section 2.01 hereof to the contrary notwithstanding.
(c) Section 6.01(b), however, is subject to the condition that if, at
any time after the principal of the Debentures of that series shall have been so
declared due and payable, and before any judgment or decree for the payment of
the moneys due shall have been obtained or entered as hereinafter provided, the
Company shall pay or shall deposit with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Debentures of that series and the
principal of (and premium, if any, on) any and all Debentures of that series
which shall have become due otherwise than by acceleration (with interest upon
such principal and premium, if any, and, to the extent that such payment is
enforceable under applicable law, upon overdue installments of interest, at the
rate per annum expressed in the Debentures of that series to the date of such
payment or deposit) and the amount payable to the Trustee under Section 7.06,
and any and all defaults under the Indenture, other than the nonpayment of
principal on Debentures of that series which shall not have become due by their
terms, shall have been remedied or waived as provided in Section 6.06 then and
in every such case the holders of a majority in aggregate principal amount of
the Debentures of that series then outstanding (subject to, in the case of any
series of Debentures held as trust assets of an Owens & Minor Trust and with
respect to which a Security Exchange has not theretofore occurred, such consent
of the holders of the Preferred Securities and the Common Securities of such
Owens & Minor Trust as may be required under the Declaration of Trust of such
Owens & Minor Trust), by written notice to the Company and to the Trustee, may
rescind and annul such declaration and its consequences with respect to that
series of Debentures; but no such rescission and annulment shall extend to or
shall affect any subsequent default, or shall impair any right consequent
thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures of that series under this Indenture and such proceedings
shall have been discontinued or abandoned because of such rescission or
annulment or for any other reason or shall have been determined adversely to the
Trustee, then and in every such case the Company and the Trustee shall be
restored respectively to their former positions and rights hereunder, and all
rights, remedies and powers of the Company and the Trustee shall continue as
though no such proceedings had been taken.
(e) If, prior to a Security Exchange with respect to the Debentures of
any series, a Default with respect to the Debentures of such series shall have
occurred, the Company expressly acknowledges that under the circumstances set
forth in the applicable Declaration of Trust, any holder of Preferred Securities
of the applicable Owens & Minor Trust may enforce directly against the Company
the applicable Property Trustee's rights hereunder. In furtherance of the
foregoing and for the avoidance of any doubt, the Company acknowledges that,
under the circumstances described in the applicable Declaration of Trust, any
such holder of Preferred Securities, in its own name, in the name of the
applicable Owens & Minor Trust or in the name of the holders of the Preferred
Securities issued by such Owens & Minor Trust, may institute or cause to be
instituted a proceeding, including, without limitation, any suit in equity, an
action at law or other judicial or administrative proceeding to enforce the
applicable Property Trustee's rights hereunder directly against the Company as
issuer of the applicable series of Debentures, and may prosecute such proceeding
to judgment or final decree, and enforce the same against the Company.
SECTION 6.02. Covenant of Company to Pay to Trustee Whole Amount Due on
Debentures on Default in Payment of Interest or Principal (and Premiums, if
any). (a) The Company covenants that (1) in case default shall be made in the
payment of any installment of interest on any of the Debentures of a series, or
any payment required by any sinking or analogous fund established with respect
to that series as and when the same shall have become due and payable, and such
default shall have continued for a period of 15 business days, or (2) in case
default shall be made in the payment of the principal of (or premium, if any,
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on) any of the Debentures of a series when the same shall have become due and
payable, whether upon maturity of the Debentures of a series or upon redemption
or upon declaration or otherwise, then, upon demand of the Trustee, the Company
will pay to the Trustee, for the benefit of the holders of the Debentures of
that series, the whole amount that then shall have become due and payable on all
such Debentures for principal (and premium, if any) or interest, or both, as the
case may be, with interest upon the overdue principal (and premium, if any) and
(to the extent that payment of such interest is enforceable under applicable law
and without duplication of any other amounts paid by the Company or the
applicable Owens & Minor Trust in respect thereof) upon overdue installments of
interest at the rate per annum expressed in the Debentures of that series; and,
in addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, and the amount payable to the Trustee under
Section 7.06.
(b) In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any action or proceedings at law or
in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Company or other obligor upon the
Debentures of that series and collect in the manner provided by law out of the
property of the Company or other obligor upon the Debentures of that series
wherever situated the moneys adjudged or decreed to be payable.
(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or other judicial
proceedings affecting the Company, any other obligor on such Debentures, or the
creditors or property of either, the Trustee shall have the power to intervene
in such proceedings and take any action therein that may be permitted by the
court and shall (except as may be otherwise provided by law) be entitled to file
such proofs of claim and other papers and documents as may be necessary or
advisable in order to have the claim of the Trustee and of the holders of
Debentures of such series allowed for the entire amount due and payable by the
Company or such other obligor under the Indenture at the date of institution of
such proceedings and for any additional amount which may become due and payable
by the Company or such other obligor after such date, and to collect and receive
any moneys or other property payable or deliverable on any such claim, and to
distribute the same after the deduction of the amount payable to the Trustee
under Section 7.06; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the holders of Debentures of such
series to make such payments to the Trustee, and, in the event that the Trustee
shall consent to the making of such payments directly to such Debentureholders,
to pay to the Trustee any amount due it under Section 7.06.
(d) All rights of action and of asserting claims under this Indenture,
or under any of the terms established with respect to Debentures of that series,
may be enforced by the Trustee without the possession of any of such Debentures,
or the production thereof at any trial or other proceeding relative thereto, and
any such suit or proceeding instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment shall,
after provision for payment to the Trustee of any amounts due under Section
7.06, be for the ratable benefit of the holders of the Debentures of such
series.
In case of an Event of Default hereunder, the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either at law or in
equity or in bankruptcy or otherwise, whether for the specific enforcement of
any covenant or agreement contained in the Indenture or in aid of the exercise
of any power granted in this Indenture, or to enforce any other legal or
equitable right vested in the Trustee by this Indenture or by law.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Debentureholder any
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plan of reorganization, arrangement, adjustment or composition affecting the
Debentures of that series or the rights of any holder thereof or to authorize
the Trustee to vote in respect of the claim of any Debentureholder in any such
proceeding.
SECTION 6.03. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to Section 6.02 with respect to a particular
series of Debentures shall be applied in the order following, at the date or
dates fixed by the Trustee and, in case of the distribution of such moneys on
account of principal (or premium, if any) or interest, upon presentation of the
several Debentures of that series, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 7.06;
SECOND: To the payment of the amounts then due and unpaid upon
Debentures of such series for principal (and premium, if any) and
interest, in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any
kind, according to the amounts due and payable on such Debentures for
principal (and premium, if any) and interest, respectively; and
THIRD: To the payment of the remainder, if any, to the Company, its
successors or assigns, or to whomsoever may be lawfully entitled to
receive the same, or as a court of competent jurisdiction may direct.
SECTION 6.04. Limitation on Suits by Holders of Debentures. No holder
of any Debenture of any series shall have any right by virtue or by availing of
any provision of this Indenture to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
such holder previously shall have given to the Trustee written notice of an
Event of Default and of the continuance thereof with respect to Debentures of
such series specifying such Event of Default, as herein before provided, and
unless also the holders of not less than 25% in aggregate principal amount of
the Debentures of such series then outstanding shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee for 30 days after its receipt of
such notice, request and offer of indemnity, shall have failed to institute any
such action, suit or proceeding; it being understood and intended, and being
expressly covenanted by the taker and holder of every Debenture of such series
with every other such taker and holder and Trustee, that no one or more holders
of Debentures of such series shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such Debentures, or to
obtain or seek to obtain priority over or preference to any other such holder,
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all holders of
Debentures of such series. For the protection and enforcement of the provisions
of this Section, each and every Debentureholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Notwithstanding any other provisions of this Indenture, however, the
right of any holder of any Debenture to receive payment of the principal of (and
premium, if any) and interest on such Debenture, as therein provided, on or
after the respective due dates expressed in such Debenture (or in the case of
redemption, on the redemption date), or to institute suit for the enforcement of
any such payment on or after such respective dates or redemption date, shall not
be impaired or affected without the consent of such holder.
SECTION 6.05. Remedies Cumulative; Delay or Omission in Exercise of
Rights Not Waiver of Default. (a) All powers and remedies given by this Article
to the Trustee or to the Debentureholders shall, to the extent permitted by law,
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be deemed cumulative and not exclusive of any others thereof or of any other
powers and remedies available to the Trustee or the holders of the debentures,
by judicial proceedings or otherwise, to enforce performance or observance of
the covenants and agreements contained in this Indenture or otherwise
established with respect to such Debentures.
(b) No delay or omission of the Trustee or of any holder of any of the
Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 6.04, every power and remedy
given by this Article or by law to the Trustee or to the Debentureholders may be
exercised from time to time, and as often as shall be deemed expedient by the
Trustee or by the Debentureholders.
SECTION 6.06. Rights of Holders of Majority in Principal Amount of
Debentures to Direct Trustee and to Waive Defaults. The holders of a majority in
aggregate principal amount of the Debentures of any series at the time
outstanding, determined in accordance with Section 8.04 (with, in the case of
any series of Debentures held as trust assets of an Owens & Minor Trust and with
respect to which a Security Exchange has not theretofore occurred, such consent
of holders of the Preferred Securities and the Common Securities of such Owens &
Minor Trust as may be required under the Declaration of Trust of such Owens &
Minor Trust), shall, 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 with respect to such series;
provided, however, that such direction shall not be in conflict with any rule of
law or with this Indenture or unduly prejudicial to the rights of holders of
Debentures of any other series at the time outstanding determined in accordance
with Section 8.04 not parties thereto. Subject to the provisions of Section
7.01, the Trustee shall have the right to decline to follow any such direction
if the Trustee in good faith shall, by a Responsible Officer or Officers of the
Trustee, determine that the proceeding so directed would involve the Trustee in
personal liability or if the Trustee being advised by an Opinion of Counsel
determines the action so directed may not lawfully be taken. The holders of a
majority in aggregate principal amount of the Debentures of any series at the
time outstanding affected thereby, determined in accordance with Section 8.04
(with, in the case of any series of Debentures held as assets of an Owens &
Minor Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of holders of the Preferred Securities and the Common
Securities of such Owens & Minor Trust as may be required under the Declaration
of Trust of such Owens & Minor Trust), may on behalf of the holders of all of
the Debentures of such series waive any past default in the performance of any
of the covenants contained herein or established pursuant to Section 2.01 with
respect to such series and its consequences, except a default in the payment of
the principal of or premium, if any, or interest on, any of the Debentures of
that series as and when the same shall become due by the terms of such
Debentures otherwise than by acceleration (unless such default has been cured
and a sum sufficient to pay all matured installments of interest and principal
and any premium has been deposited with the Trustee (in accordance with Section
6.01(c)) or a call for redemption of Debentures of that series. Upon any such
waiver, the default covered thereby shall be deemed to be cured for all purposes
of this Indenture and the Company, the Trustee and the holders of the Debentures
of such series shall be restored to their former positions and rights hereunder,
respectively; but no such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
SECTION 6.07. Trustee to Give Notice of Defaults Known To It, But May
Withhold in Certain Circumstances. The Trustee shall, within 90 days after the
occurrence of a default with respect to a particular series, transmit by mail,
first class postage prepaid, to the holders of Debentures of that series, as
their names and addresses appear upon the Debenture Register, notice of all
defaults with respect to that series known to the Trustee, unless such defaults
shall have been cured, remedied or waived before the giving of such notice (the
term "defaults" for the purposes of this Section being hereby defined to be the
events specified in subsections (1), (2), (3), (4) and (5) of Section 6.01(a),
not including any periods of grace provided for therein and irrespective of the
giving of notice provided for by subsection (3) of Section 6.01(a)); provided,
that, except in the case of default in the payment of the principal of (or
premium, if any) or interest on any of the Debentures of that series or in the
payment of any sinking fund installment established with respect to that series,
the Trustee shall be protected in withholding such notice if and so long as the
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board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interests of the holders of Debentures of
that series; provided further, that in the case of any default of the character
specified in Section 6.01(a)(3) with respect to Debentures of such series no
such notice to the holders of the Debentures of that series shall be given until
at least 30 days after the occurrence thereof.
The Trustee shall not be deemed to have knowledge of any default except
(i) a default under subsection (a)(l) or (a)(2) of Section 6.01 as long as the
Trustee is acting as paying agent for such series of Debentures or (ii) any
default as to which the Trustee shall have received written notice or a
Responsible Officer charged with the administration of this Indenture shall have
obtained written notice.
SECTION 6.08. Requirements of an Undertaking to Pay Costs in Certain
Suits Under Indenture or Against Trustee. All parties to this Indenture agree,
and each holder of any Debentures by his or her acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Debentureholder,
or group of Debentureholders, holding more than 10% in aggregate principal
amount of the outstanding Debentures of any series, or to any suit instituted by
any Debentureholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Debenture of such series, on or after the
respective due dates expressed in such Debenture or established pursuant to this
Indenture.
ARTICLE 7
CONCERNING THE TRUSTEE
SECTION 7.01. Upon Event of Default Occurring and Continuing, Trustee
Shall Exercise Powers Vested In It, and Use Same Degree of Care and Skill In
Their Exercise, as Prudent Individual Would Use. (a) The Trustee, prior to the
occurrence of an Event of Default with respect to Debentures of a series and
after the curing, remedying or waiving of all Events of Default with respect to
Debentures of that series which may have occurred, shall undertake to perform
with respect to Debentures of such series such duties and only such duties as
are specifically set forth in this Indenture, and no implied covenants shall be
read into this Indenture against the Trustee. In case an Event of Default with
respect to Debentures of a series has occurred (which has not been cured,
remedied or waived), the Trustee shall exercise with respect to Debentures of
that series such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
(1) prior to the occurrence of an Event of Default with respect
to Debentures of a series and after the curing or waiving of all such
Events of Default with respect to that series which may have occurred:
(i) the duties and obligations of the Trustee shall with
respect to Debentures of such series be determined solely by
the express provisions of this Indenture, and the Trustee
shall not be liable with respect to Debentures of such series
except for the performance of such duties and obligations as
are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
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(ii) in the absence of bad faith on the part of the
Trustee, the Trustee may with respect to Debentures of such
series conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but in the
case of any such certificates or opinions which by any
provision hereof are specifically required to be furnished to
the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Indenture but need not confirm or
investigate the accuracy of mathematical calculations or other
facts stated therein;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of not less than a majority in principal
amount of the Debentures of any series at the time outstanding relating
to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Indenture with respect to the
Debentures of that series;
(4) none of the provisions contained in this Indenture shall
require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if there is reasonable
ground for believing that the repayment of such funds or liability is
not reasonably assured to it under the terms of this Indenture or
adequate indemnity against such risk is not reasonably assured to it;
and
(5) whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Article 7.
SECTION 7.02. Subject to Provisions of Section 7.01. Except as
otherwise provided in Section 7.01:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, security or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board Resolution
or an instrument signed in the name of the Company by the President or
any Vice President and by the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer (unless other evidence in
respect thereof is specifically prescribed herein);
(c) The Trustee may consult with counsel of its selection and
the written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection in respect of any action
taken or suffered or omitted hereunder in good faith and in reliance
thereon;
(d) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Debentureholders, pursuant to the
provisions of this Indenture, unless such Debentureholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or
thereby; nothing herein contained shall, however, relieve the Trustee
of the obligation, upon the occurrence of an Event of Default with
respect to a series of the Debentures (which has not been cured,
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remedied or waived) to exercise with respect to Debentures of that
series such of the rights and powers vested in it by this Indenture,
and to use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the
conduct of his own affairs;
(e) The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture;
(f) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, security, or other papers or documents, unless
requested in writing so to do by the holders of not less than a
majority in principal amount of the outstanding Debentures of the
particular series affected thereby (determined as provided in Section
8.04); provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such costs, expenses or liabilities as a
condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Company or, if paid by the Trustee,
shall be repaid by the Company upon demand; and
(g) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 7.03. Trustee Not Liable for Recitals In Indenture Or In
Debentures. (a) The recitals contained herein and in the Debentures (other than
the Certificate of Authentication on the Debentures) shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for the
correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or application by
the Company of any of the Debentures or of the proceeds of such Debentures, or
for the use or application of any moneys paid over by the Trustee in accordance
with any provision of this Indenture or established pursuant to Section 2.01, or
for the use or application of any moneys received by any paying agent other than
the Trustee.
SECTION 7.04. Trustee, Paying Agent or Debenture Registrar May Own
Debentures. The Trustee or any paying agent or Debenture Registrar, in its
individual or any other capacity, may become the owner or pledgee of Debentures
with the same rights it would have if it were not Trustee, paying agent or
Debenture Registrar.
SECTION 7.05. Moneys Received by Trustee to Be Held In Trust Without
Interest. Subject to the provisions of Section 11.04, all moneys received by the
Trustee shall, until used or applied as herein provided, be held in trust for
the purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.
SECTION 7.06. Trustee Entitled to Compensation, Reimbursement and
Indemnity. (a) The Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such reasonable compensation as
the Company and the Trustee shall from time to time agree in writing (which
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shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Company will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Indenture (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as may
arise from its negligence or bad faith. The Company also covenants to indemnify
the Trustee (and its officers, agents, directors and employees) for, and to hold
it harmless against, any loss, liability or expense including taxes (other than
taxes based upon, measured by or determined by the income of the Trustee)
incurred without negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself against any claim of
liability in the premises.
(b) The obligations of the Company under this Section to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debentures upon all property and funds held or collected by the Trustee as such,
except funds held in trust for the benefit of the holders of particular
Debentures.
SECTION 7.07. Right of Trustee to Rely on Certificate of Officer of
Company Where No Other Evidence Specifically Prescribed. Except as otherwise
provided in Section 7.01, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or suffering or omitting to take any
action hereunder, such matter (unless other evidence in respect thereof be
herein specifically prescribed) may, in the absence of negligence or bad faith
on the part of the Trustee, be deemed to be conclusively proved and established
by an Officer's Certificate delivered to the Trustee and such certificate, in
the absence of negligence or bad faith on the part of the Trustee, shall be full
warrant to the Trustee for any action taken, suffered or omitted to be taken by
it under the provisions of this Indenture upon the faith thereof.
SECTION 7.08. Trustee Acquiring Conflicting Interest to Eliminate
Conflict or Resign. (a) If the Trustee has or shall acquire any conflicting
interest as defined in this Section, with respect to the Debentures of any
series and if the Default to which such conflicting interest relates has not
been cured, duly waived or otherwise eliminated, within 90 days after
ascertaining that it has such conflicting interest, it shall either eliminate
such conflicting interest, except as otherwise provided herein, or resign with
respect to the Debentures of that series in the manner and with the effect
specified in Section 7.10 and the Company shall promptly appoint a successor
Trustee in the manner provided herein.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section, with respect to the Debentures of
any series the Trustee shall, within ten days after the expiration of such
90-day period, transmit notice of such failure by mail, first class postage
prepaid, to the Debentureholders of that series as their names and addresses
appear upon the registration books.
(c) For the purposes of this Section the Trustee shall be deemed to
have a conflicting interest with respect to the Debentures of any series if a
Default has occurred and is continuing and:
(1) the Trustee is trustee under this Indenture with respect to
the outstanding Debentures of any series other than that series, or is
trustee under another indenture under which any other securities, or
certificates of interest or participation in any other securities, of
the Company are outstanding unless such other indenture is a collateral
trust indenture under which the only collateral consists of Debentures
issued under this Indenture; provided that there shall be excluded from
the operation of this paragraph the Debentures of any series other than
that series and any other indenture or indentures under which other
securities, or certificates of interest or participation in other
securities, of the Company are outstanding if (i) this Indenture and
such other indenture or indentures and all series of securities
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issuable thereunder are wholly unsecured and rank equally and such
other indenture or indentures (and such series) are hereafter qualified
under the Trust Indenture Act, unless the Commission shall have found
and declared by order pursuant to subsection (b) of Section 305 or
subsection (c) of Section 307 of the Trust Indenture Act, that
differences exist between (A) the provisions of this Indenture with
respect to Debentures of that series and with respect to one or more
other series or (B) the provisions of this Indenture and the provisions
of such other indenture or indentures (or such series), which are so
likely to involve a material conflict of interest as to make it
necessary in the public interest or for the protection of investors to
disqualify the Trustee from acting as such under this Indenture with
respect to the Debentures of that series and such other series or such
other indenture or indentures, or (ii) the Company shall have sustained
the burden of proving, on application to the Commission and after
opportunity for hearing thereon, that the trusteeship under this
Indenture with respect to Debentures of that series and such other
series or such other indenture or indentures is not so likely to
involve a material conflict of interest as to make it necessary in the
public interest or for the protection of investors to disqualify the
Trustee from acting as such under this Indenture with respect to
Debentures of that series and such other series or under such other
indentures;
(2) the Trustee or any of its directors or executive officers
is an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is directly
or indirectly controlled by or is under direct or indirect common
control with or an underwriter for the Company;
(4) the Trustee or any of its directors or executive officers
is a director, officer, partner, employee, appointee or representative
of the Company, or of an underwriter (other than the Trustee itself)
for the Company who is currently engaged in the business of
underwriting except that (A) one individual may be a director and/or an
executive officer of the Trustee and a director and/or an executive
officer of the Company, but may not be at the same time an executive
officer of both the Trustee and the Company; (B) if and so long as the
number of directors of the Trustee in office is more than nine, one
additional individual may be a director and/or an executive officer of
the Trustee and a director of the Company; and (C) the Trustee may be
designated by the Company or by an underwriter for the Company to act
in the capacity of transfer agent, registrar, custodian, paying agent,
fiscal agent, escrow agent, or depository, or in any other similar
capacity, or, subject to the provisions of paragraph (1) of this
subsection (c), to act as trustee whether under an indenture or
otherwise;
(5) 10% or more of the voting securities of the Trustee is
beneficially owned either by the Company or by any director, partner,
or executive officer thereof, or 20% or more of such voting securities
is beneficially owned, collectively, by any two or more of such
persons; or 10% or more of the voting securities of the Trustee is
beneficially owned either by an underwriter for the Company or by any
director, partner, or executive officer thereof, or is beneficially
owned, collectively by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection (c) defined), (A) 5% or more of the
voting securities, or 10% or more of any other class of security, of
the Company, not including the Debentures issued under this Indenture
and securities issued under any other indenture under which the Trustee
is also trustee, or (B) 10% or more of any class of security of an
underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection (c) defined), 5% or more of the voting
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securities of any person who, to the knowledge of the Trustee, owns 10%
or more of the voting securities of, or controls directly or indirectly
or is under direct or indirect common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection (c) defined), 10% or more of any class
of security of any person who, to the knowledge of the Trustee, owns
50% or more of the voting securities of the Company;
(9) the Trustee owns, on the date of Default upon the
Debentures of any series or any anniversary of such Default while such
Default upon the Debentures issued under this Indenture remains
outstanding, in the capacity of executor, administrator, testamentary
or inter vivos trustee, guardian, committee or conservator, or in any
other similar capacity, an aggregate of 25% or more of the voting
securities, or of any class of security, of any person, the beneficial
ownership of a specified percentage of which would have constituted a
conflict of interest under paragraph (6), (7), or (8) of this
subsection (c). As to any such securities of which the Trustee acquired
ownership through becoming executor, administrator or testamentary
trustee of an estate which includes them, the provisions of the
preceding sentence shall not apply, for a period of two years from the
date of such acquisition, to the extent that such securities in such
estate do not exceed 25% of such voting securities or 25% of any such
class of security. Promptly after the dates of any such Default upon
the Debentures issued under this Indenture and annually in each
succeeding year that the Debentures issued under this Indenture remain
in Default, the Trustee shall make a check of its holding of such
securities in any of the above-mentioned capacities as of such dates.
If the Company fails to make payment in full of principal of or
interest on any of the Debentures when and as the same becomes due and
payable, and such failure continues for 30 days thereafter, the Trustee
shall make a prompt check of its holding of such securities in any of
the above-mentioned capacities as of the date of the expiration of such
30-day period, and after such date, notwithstanding the foregoing
provisions of this Paragraph (9), all such securities so held by the
Trustee, with sole or joint control over such securities vested in it,
shall, but only so long as such failure shall continue, be considered
as though beneficially owned by the Trustee for the purposes of
paragraphs (6), (7) and (8) of this subsection (c); or
(10) except under the circumstances described in paragraph (1),
(3), (4), (5) or (6) of subsection (b) of Section 7.13 the Trustee
shall be or shall become a creditor of the Company.
For purposes of paragraph (1) of this subsection (c), and of Section
6.06, the term "series of securities" or "securities" means a series, class or
group of securities issuable under an indenture pursuant to whose terms holders
of one such series may vote to direct the indenture trustee, or otherwise take
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action pursuant to a vote of such holders, separately from holders of another
such series; provided, that, "series of securities" or "series" shall not
include any series of securities issuable under an indenture if all such series
rank equally and are wholly secured.
The specification of percentages in paragraphs (5) to (9), inclusive,
of this subsection (c) shall not be construed as indicating that the ownership
of such percentages of securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection (c).
For the purposes of paragraphs (6), (7), (8) and (9) of this subsection
(c) only, (A) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys lent to a person by one or more banks, trust companies or banking
firms, or any certificate of interest or participation in any such note or
evidence of indebtedness; (B) an obligation shall be deemed to be in "default",
when a default in payment of principal shall have continued for 30 days or more
and shall not have been cured; and (C) the Trustee shall not be deemed to be the
owner or holder of (i) any security which it holds as collateral security (as
trustee or otherwise) for any obligation which is not in default as defined in
clause (B) above, or (ii) any security which it holds as collateral security
under this Indenture, irrespective of any Default hereunder, or (iii) any
security which it holds as agent for collection, or as custodian, escrow agent
or depositary, or in any similar representative capacity.
Except as above provided, the word "security" or securities" as used in
this Indenture shall mean any note, stock, treasury stock, bond, debenture,
evidence of indebtedness, certificate of interest or participation in any
profit-sharing agreement, collateral trust certificate, pre-organization
certificate or subscription, transferable share, investment contract, voting
trust certificate, certificate of deposit for a security, fractional undivided
interest in oil, gas, or other mineral rights, or, in general, any interest or
instrument commonly known as a "security", or any certificate of interest or
participation in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any of the foregoing.
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to the
Company shall mean every person, who, within one year prior to the time
as of which the determination is made, has purchased from the Company
with a view to, or has offered or sold for the Company in connection
with, the distribution of any security of the Company, or has
participated, or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the
direct or indirect underwriting of any such undertaking, but such term
shall not include a person whose interest was limited to a commission
from an underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" shall mean any member of the board of
directors of a corporation or any individual performing similar
functions with respect to any organization whether incorporated or
unincorporated.
(3) The term "person" shall mean an individual a corporation, a
partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include only
a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" shall mean any security
presently entitling the owner or holder thereof to vote in the
direction or management of the affairs of a person, or any security
issued under or pursuant to any trust, agreement or arrangement whereby
a trustee or trustees or agent or agents for the owner or holder of
such security are presently entitled to vote in the direction or
management of the affairs of a person.
(5) The term "Company" shall mean any obligor upon the
Debentures.
(6) The term "executive officer" shall mean the chairman of the
board of directors, president, every vice president, every assistant
vice president, every trust officer, the cashier, the secretary, and
the treasurer of a corporation, and any individual customarily
performing similar functions with respect to any organization whether
incorporated or unincorporated.
(e) The percentages of voting securities and other securities specified
in this Section shall be calculated in accordance with the following provisions:
(1) A specified percentage of the voting securities of the
Trustee, the Company or any other person referred to in this Section
(each of whom is referred to as a "person" in this paragraph) means
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such amount of the outstanding voting securities of such person as
entitles the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a person
means such percentage of the aggregate amount of securities of the
class outstanding.
(3) The term "amount", when used in regard to securities, means
the principal amount if relating to evidences of indebtedness, the
number of shares if relating to capital shares and the number of units
if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by or for
the account of the issuer. The following securities shall not be deemed
outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking fund
relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking fund
relating to another class of securities of the issuer, if the
obligation evidenced by such other class of securities is not
in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to principal
or interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof, provided, however, that any voting securities
of an issuer shall be deemed outstanding if any person other
than the issuer is entitled to exercise the voting rights
thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all of
which are issued under a single indenture, differences in the interest
rates or maturity dates of various series thereof shall not be deemed
sufficient to constitute such series different classes; and provided,
further, that, in the case of unsecured evidences of indebtedness,
differences in the interest rates or maturity dates thereof shall not
be deemed sufficient to constitute them securities of different
classes, whether or not they are issued under a single indenture.
(f) Except in the case of a default in the payment of the principal of
(or premium, if any) or interest on any Debentures issued under this Indenture,
or in the payment of any sinking or analogous fund installment, the Trustee
shall not be required to resign as provided by this Section 7.08 if such Trustee
shall have sustained the burden of proving, on application to the Commission and
after opportunity for hearing thereon, that (i) the default under the Indenture
may be cured or waived during a reasonable period and under the procedures
described in such application and (ii) a stay of the Trustee's duty to resign
will not be inconsistent with the interests of Debentureholders. The filing of
such an application shall automatically stay the performance of the duty to
resign until the Commission orders otherwise.
Any resignation of the Trustee shall become effective only upon the
appointment of a successor trustee and such successor's acceptance of such an
appointment.
SECTION 7.09. Requirements for Eligibility of Trustee. There shall at
all times be a Trustee with respect to the Debentures issued hereunder which
shall at all times be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
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District of Columbia, or a corporation or other person permitted to act as
trustee by the Commission, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
dollars, and subject to supervision or examination by Federal, State,
Territorial, or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 7.
10.
SECTION 7.10. Resignation of Trustee and Appointment of Successor. (a)
The Trustee or any successor hereafter appointed, may at any time resign with
respect to the Debentures of one or more series by giving written notice thereof
to the Company and by transmitting notice of resignation by mail, first class
postage prepaid, to the Debentureholders of such series, as their names and
addresses appear upon the Debenture Register. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor trustee with respect
to Debentures of such series by written instrument, in duplicate, executed by
order of the Board of Directors, one copy of which instrument shall be delivered
to the resigning Trustee and one copy to the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the mailing of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee with respect to Debentures of such series, or any Debentureholder of
that series who has been a bona fide holder of a Debenture or Debentures for at
least six months may, subject to the provisions of Section 6.08, on behalf of
himself and all others similarly situated, petition any such court for the
appointment of a successor trustee. Such court may thereupon after such notice,
if any, as it may deem proper and prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
subsection (a) of Section 7.08 after written request therefor by the
Company or by any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 7.09 and shall fail to resign after written
request therefor by the Company or by any such Debentureholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee with respect to all
Debentures and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee. If
no successor trustee shall have been so appointed and have accepted appointment
within 30 days after the mailing of such notice of removal, the Trustee so
removed may petition any court of competent jurisdiction for the appointment of
a successor trustee with respect to Debentures of such series, or any
Debentureholder of that series who has been a bona fide holder of a Debenture or
Debentures for at least six months may, subject to the provisions of Section
6.08, on behalf of himself and all others similarly situated, petition any such
court for the removal of the Trustee and the appointment of a successor trustee.
Such court may thereupon after such notice, if any, as it may deem proper and
prescribe, remove the Trustee and appoint a successor trustee.
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(c) The holders of a majority in aggregate principal amount of the
Debentures of any series at the time outstanding may at any time remove the
Trustee with respect to such series and appoint a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures of a series pursuant to any of
the provisions of this Section shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 7.11.
(e) Any successor trustee appointed pursuant to this Section may be
appointed with respect to the Debentures of one or more series or all of such
series, and at any time there shall be only one Trustee with respect to the
Debentures of any particular series.
SECTION 7.11. Acceptance by Successor to Trustee. (a) In case of the
appointment hereunder of a successor trustee with respect to all Debentures,
every such successor trustee so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee but, on the request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor trustee all the
rights, powers, and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor trustee all property and money held by
such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor trustee with
respect to the Debentures of one or more (but not all) series, the Company, the
retiring Trustee and each successor trustee with respect to the Debentures of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor trustee shall accept such appointment and which shall (1)
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Debentures of that
or those series to which the appointment of such successor trustee relates, (2)
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Debentures of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental indenture shall constitute such Trustees co-trustees of the
same trust, that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee and that no Trustee shall be responsible for any act or
failure to act on the part of any other Trustee hereunder; and upon the
execution and delivery of such supplemental indenture the resignation or removal
of the retiring Trustee shall become effective to the extent provided therein,
such retiring Trustee shall with respect to the Debentures of that or those
series to which the appointment of such successor trustee relates have no
further responsibility for the exercise of rights and powers or for the
performance of the duties and obligations vested in the Trustee under this
Indenture, and each such successor trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Debentures of that or those series
to which the appointment of such successor trustee relates; but, on request of
the Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor trustee, to the extent contemplated by
such supplemental indenture, the property and money held by such retiring
Trustee hereunder with respect to the Debentures of that or those series to
which the appointment of such successor trustee relates.
(c) Upon request of any such successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, power and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
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(d) No successor trustee shall accept its appointment unless at the
time of such acceptance such successor trustee shall be qualified and eligible
under this Article.
(e) Upon acceptance of appointment by a successor trustee as provided
in this Section, the Company shall transmit notice of the succession of such
trustee hereunder by mail, first class postage prepaid, to the Debentureholders,
as their names and addresses appear upon the Debenture Register. If the Company
fails to transmit such notice within ten days after acceptance of appointment by
the successor trustee, the successor trustee shall cause such notice to be
transmitted at the expense of the Company.
SECTION 7.12. Successor to Trustee by Merger, Consolidation or
Succession to Business. Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be qualified under the provisions of Section
7.08 and eligible under the provisions of Section 7.09, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. In case any Debentures shall
have been authenticated, but not made available for delivery, by the Trustee
then in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and make available for
delivery the Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.
SECTION 7.13. Limitations on Rights of Trustee as a Creditor to Obtain
Payment of Certain Claims Within Four Months Prior to Default, or During Default
or to Realize on Property as such Creditor Thereafter. (a) Subject to the
provisions of subsection (b) of this Section, if the Trustee shall be or shall
become a creditor, directly or indirectly, secured or unsecured, of the Company
within three months prior to a default, as defined in subsection (b) of this
Section, or subsequent to such a default, then, unless and until such default
shall be cured, the Trustee shall set apart and hold in a special account for
the benefit of the Trustee individually, the holders of the Debentures and the
holders of other indenture securities (as defined in subsection (c) of this
Section):
(1) an amount equal to any and all reductions in the amount due
and owing upon any claim as such creditor in respect of principal or
interest, effected after the beginning of such three months' period and
valid as against the Company and its other creditors, except any such
reduction resulting from the receipt or disposition of any property
described in paragraph (2) of this subsection, or from the exercise of
any right of set-off which the Trustee could have exercised if a
petition in bankruptcy had been filed by or against the Company upon
the date of such default; and
(2) all property received by the Trustee in respect of any
claim as such creditor, either as security therefor, or in satisfaction
or composition thereof or otherwise, after the beginning of such three
months' period, or an amount equal to the proceeds of any such
property, if disposed of, subject, however, to the rights, if any, of
the Company and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on account
of any such claim by any person (other than the Company) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim
by the Trustee to a third person, and (iii) distributions made in cash,
securities, or other property in respect of claims filed against the
Company in bankruptcy or receivership or in a case for reorganization
pursuant to the Federal Bankruptcy Code or applicable State law;
(B) to realize, for its own account, upon any property held by
it as security for any such claim, if such property was so held prior
to the beginning of such three months' period;
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(C) to realize, for its own account, but only to the extent of
the claim hereinafter mentioned, upon any property held by it as
security for any such claim, if such claim was created after the
beginning of such three months' period and such property was received
as security therefor simultaneously with the creation thereof and if
the Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to believe
that a default, as defined in subsection (c) of this Section, would
occur within three months; or
(D) to receive payment on any claim referred to in paragraph
(B) or (C), against the release of any property held as security for
such claim as provided in such paragraph (B) or (C), as the case may
be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three months' period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
between the Trustee, the Debentureholders and the holders of other indenture
securities in such manner that the Trustee, the Debentureholders and the holders
of other indenture securities realize, as a result of payments from such special
account and payments of dividends on claims filed against the Company in
bankruptcy or receivership or in a case for reorganization pursuant to the
Federal Bankruptcy Code or applicable State law, the same percentage of their
respective claims, figured before crediting to the claim of the Trustee anything
on account of the receipt by it from the Company of the funds and property in
such special account and before crediting to the respective claims of the
Trustee, the Debentureholders and the holders of other indenture securities
dividends on claim filed against the Company in bankruptcy or receivership or in
a case for reorganization pursuant to the Federal Bankruptcy Code or applicable
State law, but after crediting thereon receipts on account of the indebtedness
represented by their respective claims from all sources other than from such
dividends and from the funds and property so held in such special account. As
used in this paragraph, with respect to any claim, the term "dividends" shall
include any distribution with respect to such claim, in bankruptcy or
receivership or in a case for reorganization pursuant to the Federal Bankruptcy
Code or applicable State law, whether such distribution is made in cash,
securities, or other property, but shall not include any such distribution with
respect to the secured portion, if any, of such claim. The court in which such
bankruptcy, receivership or a case for reorganization is pending shall have
jurisdiction (i) to apportion between the Trustee, the Debentureholders and the
holders of other indenture securities, in accordance with the provisions of this
paragraph, the funds and property held in such special account and the proceeds
thereof, or (ii) in lieu of such apportionment, in whole or in part, to give to
the provisions of this paragraph due consideration in determining the fairness
of the distributions to be made to the Trustee, the Debentureholders and the
holders of other indenture securities with respect to their respective claims,
in which event it shall not be necessary to liquidate or to appraise the value
of any securities or other property held in such special account or as security
for any such claim, or to make a specific allocation of such distributions as
between the secured and unsecured portions of such claims, or otherwise to apply
the provisions of this paragraph as a mathematical formula.
Any Trustee who has resigned or been removed after the beginning of
such three months' period shall be subject to the provisions of this subsection
(a) as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such three months' period, it
shall be subject to the provisions of this subsection (a) if and only if the
following conditions exist:
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(i) the receipt of property or reduction of claim which would
have given rise to the obligation to account, if such Trustee had
continued as trustee, occurred after the beginning of such three
months' period; and
(ii) such receipt of property or reduction of claim occurred
within three months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of
this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year
or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy court
of competent jurisdiction, or by this Indenture, for the purpose of
preserving any property other than cash which shall at any time be
subject to the lien, if any, of this Indenture or of discharging tax
liens or other prior liens or encumbrances thereon, if notice of such
advance and of the circumstances surrounding the making thereof is
given to the Debentureholders at the time and in the manner provided in
this Indenture;
(3) disbursements made in the ordinary course of business in
the capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, subscription agent, fiscal agent or
depositary, or other similar capacity;
(4) an indebtedness created as a result of services rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of
this Section;
(5) the ownership of stock or of other securities of a Company
organized under the provisions of Section 25(a) of the Federal Reserve
Act, as amended, which is directly or indirectly a creditor of the
Company; or
(6) the acquisition, ownership, acceptance or negotiation of
any drafts, bills of exchange, acceptance or obligations which fall
within the classification of self-liquidating paper as defined in
subsection (c) of this Section.
(c) As used in this Section:
(1) The term "default" shall mean any failure to make payment
in full of the principal of (or premium, if any) or interest upon any
of the Debenture or upon the other indenture securities when and as
such principal (or premium, if any) or interest becomes due and
payable.
(2) The term "other indenture securities" shall mean securities
upon which the Company is an obligor (as defined in the Trust Indenture
Act) outstanding under any other indenture (A) under which the Trustee
is also trustee, (B) which contains provisions substantially similar to
the provisions of subsection (a) of this Section, and (C) under which a
default exists at the time of the apportionment of the funds and
property held in said special account.
(3) The term "cash transaction" shall mean any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in checks
or other orders drawn upon banks or bankers and payable upon demand.
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(4) The term "self-liquidating paper" shall mean any draft,
bill of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company for the purpose of financing the
purchase, processing, manufacture, shipment, storage or sale of goods,
wares or merchandise and which is secured by documents evidencing title
to, possession of, or a lien upon , the goods, wares or merchandise or
the receivables or proceeds arising from the sale of the goods, wares
or merchandise previously constituting the security, provided the
security is received by the Trustee simultaneously with the creation of
the creditor relationship with the Company arising from the making,
drawing, negotiating or incurring of the draft bill of exchange,
acceptance or obligation.
(5) The term "Company" shall mean any obligor upon any of the
Debentures.
ARTICLE 8
CONCERNING THE DEBENTURES
SECTION 8.01. Evidence of Action by Debentureholders. Whenever in this
Indenture it is provided that the holders of a majority or specified percentage
in aggregate principal amount of the Debentures of a particular series may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such majority or specified
percentage of that series have joined therein may be evidenced by (i) any
instrument or any number of instruments of similar tenor executed by such
holders of Debentures of that series in person or by agent or proxy appointed in
writing or (ii) the record of any meeting of such Debentureholders duly called
and held or (iii) by a combination of such instrument or instruments and any
such record of such meeting of Debentureholders.
If the Company shall solicit from the Debentureholders of any series
any request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for such series for the determination
of Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining whether Debentureholders of the requisite proportion
of outstanding Debentures of that series have authorized or agreed or consented
to such request, demand, authorization, direction, notice, consent, waiver or
other action, and for that purpose the outstanding Debentures of that series
shall be computed as of the record date; provided that no such authorization,
agreement or consent by such Debentureholders on the record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Indenture not later than six months after the record date.
SECTION 8.02. Proof of Execution of Instruments and of Holding of
Debentures. Subject to the provisions of Section 7.01, proof of the execution of
any instrument by a Debentureholder (such proof will not require notarization)
or his agent or proxy and proof of the holding by any person of any of the
Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such person of
any instrument may be proved in any reasonable manner acceptable to the
Trustee;
(b) The ownership of Debentures shall be proved by the
Debenture Register of such Debentures or by a certificate of the
Debenture Registrar thereof;
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(c) The Trustee may require such additional proof of any
matter referred to in this Section as it shall deem necessary.
SECTION 8.03. Who May Be Deemed Owners of Debentures. Prior to the due
presentment for registration of transfer of any Debenture, the Company, the
Trustee, any paying agent and any Debenture Registrar may deem and treat the
person in whose name such Debenture shall be registered upon the books of the
Company as the absolute owner of such Debenture (whether or not such Debenture
shall be overdue and notwithstanding any notice of ownership or writing thereon
made by anyone other than the Debenture Registrar) for the purpose of receiving
payment of or on account of the principal of, premium, if any, and (subject to
Section 2.03) interest on such Debenture and for all other purposes; and neither
the Company nor the Trustee nor any paying agent nor any Debenture Registrar
shall be affected by any notice to the contrary. All such payments so made to
any such holder for the time being, or upon his order, shall be valid, and to
the extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Debenture.
SECTION 8.04. Debentures Owned by a Company or Controlled or
Controlling Companies Disregarded for Certain Purposes. In determining whether
the holders of the requisite aggregate principal amount of Debentures of a
particular series have concurred in any direction, consent or waiver under this
Indenture, Debentures of that series which are owned by the Company or any other
obligor on the Debentures of that series or by any Subsidiary of the Company or
of such other obligor on the Debentures of that series shall be disregarded and
deemed not to be outstanding for the purpose of any such determination, except
that for the purpose of determining whether the Trustee shall be protected in
relying on any such direction, consent or waiver, only Debentures of such series
which the Trustee actually knows are so owned shall be so disregarded.
Debentures so owned which have been pledged in good faith may be regarded as
outstanding for the purposes of this Section, if the pledgee shall establish to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Debentures and that the pledgee is not a person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In case of a dispute as to such right, any
decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
SECTION 8.05. Instrument Executed by Debentureholders Bind Future
Holders. At any time prior to (but not after) the evidencing to the Trustee, as
provided in Section 8.01, of the taking of any action by the holders of the
majority or percentage in aggregate principal amount of the Debentures of a
particular series specified in this Indenture in connection with such action,
any holder of a Debenture of that series which is shown by the evidence to be
included in the Debentures the holders of which have consented to such action
may, by filing written notice with the Trustee, and upon proof of holding as
provided in Section 8.02, revoke such action so far as concerns such Debenture.
Except as aforesaid any such action taken by the holder of any Debenture shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Debenture, and of any Debenture issued in exchange therefor, on
registration of transfer thereof or in place thereof, irrespective of whether or
not any notation in regard thereto is made upon such Debenture. Any action taken
by the holders of the majority or percentage in aggregate principal amount of
the Debentures of a particular series specified in this Indenture in connection
with such action shall be conclusively binding upon the Company, the Trustee and
the holders of all the Debentures of that series.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.01. Purposes for Which Supplemental Indenture May Be Entered
Into Without Consent of Debentureholders. In addition to any supplemental
indenture otherwise authorized by this Indenture, the Company, when authorized
by a Board Resolution, and the Trustee may from time to time and at any time
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enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as then in effect), without the
consent of the Debentureholders, for one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, and the assumption by any such successor of the covenants of
the Company contained herein or otherwise established with respect to
the Debentures; or
(b) to add to the covenants of the Company such further
covenants, restrictions, conditions or provisions for the protection of
the holders of the Debentures of all or any series as the Board of
Directors and the Trustee shall consider to be for the protection of
the holders of Debentures of all or any series, and to make the
occurrence, or the occurrence and continuance, of a default in any of
such additional covenants, restrictions, conditions or provisions a
default or an Event of Default with respect to such series permitting
the enforcement of all or any of the several remedies provided in this
Indenture as herein set forth; provided, however, that in respect of
any such additional covenant, restriction, condition or provision such
supplemental indenture may provide for a particular period of grace
after default (which period may be shorter or longer than that allowed
in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to
the Trustee upon such default or may limit the right of the holders of
a majority in aggregate principal amount of the Debentures of such
series to waive such default; or
(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may
be defective or inconsistent with any other provision contained herein
or in any supplemental indenture, or to make such other provisions in
regard to matters or questions arising under this Indenture as shall
not be inconsistent with the provisions of this Indenture and shall not
adversely affect the interests of the holders of the Debentures of any
series; or
(d) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Debenture outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, and to make any further
appropriate agreements and stipulations which may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
may be executed by the Company and the Trustee without the consent of the
holders of any of the Debentures at the time outstanding, notwithstanding any of
the provisions of Section 9.02.
SECTION 9.02. Modification of Indenture with Consent of
Debentureholders. With the consent (evidenced as provided in Section 8.01) of
the holders of not less than a majority in aggregate principal amount of the
Debentures of each series affected by such supplemental indenture or indentures
at the time outstanding (and, in the case of any series of Debentures held as
trust assets of an Owens & Minor Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of holders of the Preferred
Securities and the Common Securities of such Owens & Minor Trust as may be
required under the Declaration of Trust of such Owens & Minor Trust), the
Company, when authorized by a Board Resolution, and the Trustee may from time to
time and at any time enter into an indenture or indentures supplemental hereto
(which shall conform to the provisions of the Trust Indenture Act as then in
effect) for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the
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Debentures of such series under this Indenture; provided, however, that no such
supplemental indenture shall (i) extend the fixed maturity of any Debentures of
any series, reduce the principal amount thereof, reduce the rate or extend the
time of payment of interest thereon, reduce any premium payable upon the
redemption thereof or otherwise modify any terms affecting the amount or timing
of payments on any Debenture or (ii) reduce the aforesaid percentage of
Debentures, the holders of which are required to consent to any modification of
the Indenture, without the consent of the holders of each affected Debenture
(and, in the case of any series of Debentures held as trust assets of an Owens &
Minor Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of the holders of the Preferred Securities and the Common
Securities of such Owens & Minor Trust as may be required under the Declaration
of Trust of such Owens & Minor Trust) then outstanding and affected thereby.
Upon the request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Debentureholders (and, in
the case of any series of Debentures held as trust assets of an Owens & Minor
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of holders of the Preferred Securities and the Common
Securities of such Owens & Minor Trust as may be required under the Declaration
of Trust of such Owens & Minor Trust) required to consent thereto as aforesaid,
the Trustee shall join with the Company in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise, in which case the
Trustee may in its discretion but shall not be obligated to enter into such
supplemental indenture.
It shall not be necessary for the consent of the Debentureholders of
any series affected thereby under this Section to approve the particular form of
any proposed supplemental indenture, but it shall be sufficient if such consent
shall approve the substance thereof.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, setting forth in
general term the substance of such supplemental indenture, to the
Debentureholders of all series affected thereby as their names and addresses
appear upon the Debenture Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
SECTION 9.03. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture pursuant to the provisions of this Article or of
Section 10.01, this Indenture shall, with respect to such series, be and be
deemed to be modified and amended in accordance therewith and the respective
rights, limitations of rights, obligations, duties and immunities under this
Indenture of the Trustee, the Company and the holders of Debentures of the
series affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.04. Debentures May Bear Notation of Changes By Supplemental
Indentures. Debentures of any series, affected by a supplemental indenture,
authenticated and delivered after the execution of such supplemental indenture
pursuant to the provisions of this Article or of Section 10.01, may bear a
notation in form approved by the Company, provided such form meets the
requirements of any exchange upon which such series may be listed, as to any
matter provided for in such supplemental indenture. If the Company shall so
determine, new Debentures of that series so modified as to conform, in the
opinion of the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Trustee and delivered in exchange for the Debentures of
that series then outstanding.
SECTION 9.05. Opinion of Counsel. The Trustee, subject to the
provisions of Section 7.01, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this Article is
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authorized or permitted by, and conforms to, the terms of this Article and that
it is proper for the Trustee under the provisions of this Article to join in the
execution thereof.
ARTICLE 10
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 10.01. Satisfaction and Discharge of Indenture. The Company
shall not consolidate with or merge into any other Person or transfer or lease
its properties and assets substantially as an entirety to any Person, and the
Company shall not permit any other Person to consolidate with or merge into the
Company, unless:
(a) either the Company shall be the continuing corporation, or
the corporation (if other than the Company) formed by such
consolidation or into which the Company is merged or to which the
properties and assets of the Company substantially as an entity are
transferred or leased shall be a corporation organized and existing
under the laws of the United States of America or any State thereof or
the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under
the Debentures and this Indenture; and
(b) immediately after giving effect to such transaction no
Event of Default, and no event which, after notice or lapse of time or
both, would become an Event of Default, shall have occurred and be
continuing.
SECTION 10.02. Successor Corporation Substituted. The successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer or lease is made shall succeed to and be substituted for,
and may exercise every right and power of, the Company under this Indenture with
the same effect as if such successor corporation had been named as the Company
herein, and thereafter (except in the case of a lease to another Person) the
predecessor corporation shall be relieved of all obligations and covenants under
the Indenture and the Debentures and, in the event of such conveyance or
transfer, any such predecessor corporation may be dissolved and liquidated.
SECTION 10.03. Opinion of Counsel. The Trustee, subject to the
provisions of Section 7.01, may receive an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance, transfer or
other disposition, and any such assumption, comply with the provisions of this
Article.
ARTICLE 11
SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS
SECTION 11.01. Satisfaction and Discharge of Indentures. (A) If at any
time (a) the Company shall have paid or caused to be paid the principal of and
interest on all the Debentures of any series Outstanding hereunder (other than
Debentures of such series which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.07) as and when the same
shall have become due and payable, or (b) the Company shall have delivered to
the Trustee for cancellation all Debentures of any series theretofore
authenticated (other than any Debentures of such series which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.07) or (c) (i) all the Debentures of series not theretofore
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
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for the giving of notice of redemption, and (ii) the Company shall have
irrevocably deposited or caused to be deposited with the Trustee as trust funds
the entire amount in cash (other than moneys repaid by the Trustee or any paying
agent to the Company in accordance with Section 11.04) or Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will insure the availability of cash, or a combination thereof,
sufficient in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay (A) the principal and interest on all Debentures of such series
on each date that such principal or interest is due and payable and (B) any
mandatory sinking fund payments on the dates on which such payments are due and
payable in accordance with the terms of the Indenture and the Debentures of such
series; and if, in any such case, the Company shall also pay or cause to be paid
all other sums payable hereunder by the Company, then this Indenture shall cease
to be of further effect (except as to (i) rights of registration of transfer and
exchange of Debentures of such series and the Company's right of optional
redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost or
stolen Debentures, (iii) rights of holders of Debentures to receive payments of
principal thereof and interest thereon, upon the original stated due dates
therefor (but not upon acceleration), and remaining rights of the
Debentureholders to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the holders of Debentures of such series as beneficiaries hereof with
respect to the property so deposited with the Trustee payable to all or any of
them, and (vi) the obligations of the Company under Section 4.02) and the
Trustee, on demand of the Company accompanied by an Officers' Certificate and an
Opinion of Counsel and at the cost and expense of the Company, shall execute
proper instruments acknowledging such satisfaction of and discharging this
Indenture; provided, that the rights of Holders of the Debentures to receive
amounts in respect of principal of and interest on the Debentures held by them
shall not be delayed longer than required by then-applicable mandatory rules or
policies of any securities exchange upon which the Debentures are listed.
Notwithstanding the foregoing, in any case where the Debentures are not due and
payable, the Debentures shall remain recourse obligations of the Company. The
Company agrees to reimburse the Trustee for any costs or expenses thereafter
reasonably and properly incurred and to compensate the Trustee for any services
thereafter reasonably and properly rendered by the Trustee in connection with
this Indenture or the Debentures of such series.
(B) The following provisions shall apply to the Debentures of each
series unless specifically otherwise provided in a Board Resolution or indenture
supplemental hereto provided pursuant to Section 2.01. In addition to discharge
of the Indenture pursuant to the next preceding paragraph, the Company shall be
deemed to have paid and discharged the entire indebtedness on all the Debentures
of a series on the date of the deposit referred to in subparagraph (a) below,
and the provisions of this Indenture with respect to the Debentures of such
series shall no longer be in effect (except as to (i) rights of registration of
transfer and exchange of Debentures of such series and the Company's right of
optional redemption, if any, (ii) substitution of mutilated, defaced, destroyed,
lost or stolen Debentures, (iii) rights of holders of Debentures to receive
payments of principal thereof and interest thereon, upon the original stated due
dates therefor (but not upon acceleration), and remaining rights of the holders
of Debentures to receive mandatory sinking fund payments, if any, (iv) the
rights, obligations, duties and immunities of the Trustee hereunder, (v) the
rights of the Holders of Debentures as beneficiaries hereof with respect to the
property so deposited with the Trustee payable to all or any of them, and (vi)
the obligations of the Company under Section 4.02) and the Trustee, at the
expense of the Company, shall at the Company's request, execute proper
instruments acknowledging the same, if
(a) with reference to this provision the Company has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee as trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the holders of the Debentures
of such series (i) cash in an amount, or (ii) Governmental Obligations
maturing as to principal and interest at such times and in such amounts
as will insure the availability of cash, or (iii) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay (A) the principal and interest
on all Debentures of such series on each date that such principal or
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interest is due and payable or is earlier redeemed (irrevocably
provided for under arrangements satisfactory to the Trustee), as the
case may be, and (B) any mandatory sinking fund payments on the dates
on which such payments are due and payable in accordance with the terms
of the Indenture and the Debentures of such series;
(b) such deposit will not result in a breach or violation of,
or constitute a default under, any agreement or instrument to which the
Company is a party or by which it is bound;
(c) the Company has delivered to the Trustee an Opinion of
Counsel based on the fact that (x) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and such
opinion shall confirm that, the holders of the Debentures of such
series will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit, defeasance and discharge and will
be subject to Federal income tax on the same amount and in the same
manner and at the same times, as would have been the case if such
deposit, defeasance and discharge had not occurred;
(d) the Company has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to the defeasance contemplated by this
provision have been complied with; and
(e) no event or condition shall exist that, pursuant to the
provisions of Section 14.02 or 14.03, would prevent the Company from
making payments of the principal of or interest on the Debentures of
such series on the date of such deposit.
SECTION 11.02. Application of Trustee of Funds Deposited For Payment of
Debentures. Subject to Section 11.04, all moneys deposited with the Trustee (or
other trustee) pursuant to Section 11.01 shall be held in trust and applied by
it to the payment, either directly or through any paying agent (including the
Company acting as its own paying agent), to the Holders of the particular
Debentures of such series for the payment or redemption of which such moneys
have been deposited with the Trustee, of all sums due and to become due thereon
for principal and interest; but such money need not be segregated from other
funds except to the extent required by law.
SECTION 11.03. Application by Trustee of Funds Deposited For Payment of
Debentures. In connection with the satisfaction and discharge of this Indenture
with respect to Debentures of any series, all moneys then held by any paying
agent under the provisions of this Indenture with respect to such series of
Debentures shall, upon demand of the Company, be repaid to it or paid to the
Trustee and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 11.04. Repayment of Moneys Held by Paying Agent. Any moneys
deposited with or paid to the Trustee or any paying agent for the payment of the
principal of or interest on any Security of any series and not applied but
remaining unclaimed for two years after the date upon which such principal or
interest shall have become due and payable, shall, upon the written request of
the Company and unless otherwise required by mandatory provisions of applicable
escheat or abandoned or unclaimed property law, be repaid to the Company by the
Trustee for such series or such paying agent, and the Holder of the Debentures
of such series shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, thereafter look only
to the Company for any payment which such holder may be entitled to collect, and
all liability of the Trustee or any paying agent with respect to such moneys
shall thereupon cease; provided, however, that the Trustee or such paying agent,
before being required to make any such repayment with respect to moneys
deposited with it for any payment series, shall at the expense of the Company,
mail by first-class mail to holders of such Debentures at their addresses as
they shall appear on the Debenture Register, notice, that such moneys remain and
that, after a date specified therein, which shall not be less than thirty days
from the date of such mailing or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
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SECTION 11.05. Repayment of Moneys Paid by Trustee. The Company shall
pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the Governmental Obligations deposited pursuant to Section
11.01 or the principal or interest received in respect of such obligations.
ARTICLE 12
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 12.01. Incorporators, Stockholders, Officers and Directors of
Company Exempt From Individual Liability. No recourse under or upon any
obligations, covenant or agreement of this Indenture, or of any Debenture, or
for any claim based thereon or otherwise in respect thereof, shall be had
against any incorporator, stockholder, officer or director, past, present or
future as such, of the Company or of any predecessor or successor corporation,
either directly or through the Company or any such predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever shall attach
to, or is or shall be incurred by, the incorporators, stockholders, officers or
directors as such, of the Company or of any predecessor or successor
corporation, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Debentures or implied therefrom;
and that any and all such personal liability of every name and nature, either at
common law or in equity or by constitution or statute, of, and any and all such
rights and claims against, every such incorporator, stockholder, officer or
director as such, because the creation of the indebtedness hereby authorized, or
under or by reason of the obligations, covenants or agreements contained in this
Indenture or in any of the Debentures or implied therefrom, are hereby expressly
waived and released as a condition of, and as a consideration for, the execution
of this Indenture and the issuance of such Debentures.
ARTICLE 13
MISCELLANEOUS PROVISIONS
SECTION 13.01. Successors and Assigns of Company Bound by Indenture.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company shall bind its successors and assigns,
whether so expressed or not.
SECTION 13.02. Acts of Board, Committee or Officer of Successor Company
Valid. Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
corresponding board, committee or officer of any corporation that shall at the
time be the lawful sole successor of the Company.
SECTION 13.03. Surrender of Powers of Company. The Company by
instrument in writing executed by authority of two-thirds of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company and thereupon such power so surrendered shall terminate both as
to the Company and as to any successor corporation.
SECTION 13.04. Required Notices or Demands May Be Served by Mail.
Except as otherwise expressly provided herein any notice or demand which by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Debentures to or on the Company may be given or
served by being deposited first class postage prepaid in a post-office letterbox
addressed (until another address is filed in writing by the Company with the
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Trustee), as follows: Owens & Minor, Inc., 4800 Cox Road, Glen Allen, Virginia
23060, Attention: General Counsel. Any notice, election, request or demand by
the Company or any Debentureholder to or upon the Trustee shall be deemed to
have been sufficiently given or made, for all purposes, if given or made in
writing at the Corporate Trust Office of the Trustee.
SECTION 13.05. Indenture and Debentures To Be Construed in Accordance
with Laws of the State of New York. This Indenture and each Debenture shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of said State
(without regard to principles of conflicts of laws thereof).
SECTION 13.06. Officer's Certificate and Opinion of Counsel To Be
Furnished Upon Application or Demands by Company; Statements To Be Included in
Each Certificate or Opinion with Respect to Compliance with Condition or
Covenant (a) Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent have been complied with, except that in
the case of any such application or demand as to which the furnishing of such
documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
(b) Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
in this Indenture (other than the certificate provided pursuant to Section
5.03(d) of this Indenture) shall include (1) a statement that the person making
such certificate or opinion has read such covenant or condition; (2) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (3) a statement that, in the opinion of such person, such person has made
such examination or investigation as is necessary to enable such person to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and (4) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with. Any certificate,
statement or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of or representations of
counsel. Any certificate, statement or opinion of counsel may be based, insofar
as it relates to factual matters, upon a certificate, statement or opinion of or
representations of an officer of the Company. Any certificate, statement or
opinion of an officer of the Company or of counsel may be based, insofar as it
relates to accounting matters, upon a certificate or opinion of or
representations of an accountant or firm of accountants.
SECTION 13.07. Payments Due on Saturdays, Sundays or Holidays. Except
as provided pursuant to Section 2.01 pursuant to a Board Resolution, and as set
forth in an Officers' Certificate, or established in one or more indentures
supplemental to the Indenture, in any case where the date of maturity of
interest or principal of any Debenture or the date of redemption of any
Debenture shall not be a business day then payment of interest or principal (and
premium, if any) may be made on the next succeeding business day (except that if
such business day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding business day) with the same force and effect
as if made on the nominal date of maturity or redemption, and no interest or
other payment shall accrue for the period after such nominal date.
SECTION 13.08. Provisions Required by Trust Indenture Act of 1939 to
Control. If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 3.10 to 3.17,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
SECTION 13.09. Indenture May Be Executed in Counterparts. This
Indenture may be executed in any number of counterparts, each of which shall be
an original; but such counterparts shall together constitute but one and the
same instrument.
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SECTION 13.10. Separability of Indenture Provisions. In case any one or
more of the provisions contained in this Indenture or in the Debentures of any
series shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Indenture or of such Debentures, but this Indenture
and such Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 13.11. Assignment by Company to Subsidiary. The Company will
have the right at all times to assign any of its rights or obligations under
this Indenture to a direct or indirect wholly owned Subsidiary of the Company;
provided that, in the event of any such assignment, the Company will remain
jointly and severally liable for all such obligations. Subject to the foregoing,
this Indenture is binding upon and inures to the benefit of the parties thereto
and their respective successors and assigns. This Indenture may not otherwise be
assigned by the parties hereto other than by the Company to a successor or
purchaser pursuant to a consolidation, merger or sale permitted by this
Indenture.
SECTION 13.12. Holders of Preferred Securities as Third Party
Beneficiaries of the Indenture; Holders of Preferred Securities May Institute
Legal Proceedings Against the Company in Certain Cases. The Company hereby
acknowledges that, to the extent specifically set forth herein, prior to a
Security Exchange with respect to the Debentures of any series held as trust
assets of an Owens & Minor Trust, the holders of the Preferred Securities of
such Owens & Minor Trust shall expressly be third party beneficiaries of this
Indenture. The Company further acknowledges that, prior to a Security Exchange
with respect to Debentures of any series held as trust assets of a Owens & Minor
Trust, if the Property Trustee of such Owens & Minor Trust fails to enforce its
rights under this Indenture as the holder of the Debentures of a series held as
trust assets of such Owens & Minor Trust, any holder of the Preferred Securities
of such Owens & Minor Trust, to the extent permitted by applicable law, may
after a period of 30 days has elapsed from such holder's written request to the
Property Trustee to enforce such rights, institute legal proceedings directly
against the Company to enforce such Property Trustee's rights under this
Indenture without first instituting any legal Proceedings against such Property
Trustee or any other person or entity; provided that, if an Event of Default has
occurred and is continuing and such event is attributed to the failure of the
Company to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities of such Owens & Minor
Trust may directly institute a proceeding for enforcement of payment to such
holder of the principal of or interest on the Debentures having a principal
amount equal to the aggregate liquidation amount of the Preferred Securities of
such holder (a "Holder Direct Action") on or after the respective due date
specified in the Debentures. In connection with such Holder Direct Action, the
rights of the holders of the Common Securities of such Owens & Minor Trust will
be subrogated to the rights of such holder of Preferred Securities to the extent
of any payment made by the Company to such holders of Preferred Securities in
such Holder Direct Action. Except as provided in the preceding sentences, the
holders of Preferred Securities of such Owens & Minor Trust will not be able to
exercise directly any other remedy available to the holders of the Debentures.
Reference to a "holder" of Preferred Securities or Common Securities herein
shall mean a "Holder" of such securities as defined in the Declaration of Trust.
ARTICLE 14
SUBORDINATION OF DEBENTURES
SECTION 14.01. Agreement to Subordinate. The Company covenants and
agrees, and each Debentureholder issued hereunder by his acceptance thereof
likewise covenants and agrees, that all Debentures shall be issued subject to
the provisions of this Article; and each person holding any Debenture, whether
upon original issue or upon transfer, assignment or exchange thereof accepts and
agrees that the principal of and interest on all Debentures issued hereunder
shall, to the extent and in the manner herein set forth, be subordinated and
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subject in right to the prior payment in full of all Senior and Subordinated
Debt. The Debentures issued hereunder shall not be subordinated to the Trade
Payables of the Company and shall be senior to all capital stock of the Company.
SECTION 14.02. Payments to Debentureholders. No payments on account of
principal of, premium, if any, or interest on the Debentures shall be made if at
the time of such payment or immediately after giving effect thereto there shall
exist a default in any payment with respect to any Senior and Subordinated Debt,
whether at maturity, upon redemption, by declaration or otherwise and such event
of default shall not have been cured or waived or shall not have ceased to
exist. In addition, during the continuance of any other event of default (other
than a payment default) with respect to Designated Senior and Subordinated Debt
pursuant to which the maturity thereof may be accelerated, from and after the
date of receipt by the Trustee of written notice from the holders of such
Designated Senior and Subordinated Debt or from an agent of such holders, no
payments on account of principal, premium, if any, or interest in respect of the
Debentures may be made by the Company for a period ("Payment Blockage Period")
commencing on the date of delivery of such notice and ending 179 days thereafter
(unless such Payment Blockage Period shall be terminated by written notice to
the Trustee from the holders of such Designated Senior and Subordinated Debt or
from an agent of such holders, or such event of default has been cured or waived
or has ceased to exist). Only one Payment Blockage Period may be commenced with
respect to the Debentures during any period of 360 consecutive days. No event of
default which existed or was continuing on the date of the commencement of any
Payment Blockage Period with respect to the Designated Senior and Subordinated
Debt initiating such Payment Blockage Period shall be or be made the basis for
the commencement of any subsequent Payment Blockage Period by the holders of
such Designated Senior and Subordinated Debt, unless such event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
Upon any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, to creditors upon any
liquidation, dissolution, winding up, receivership, reorganization, assignment
for the benefit of creditors, marshalling of assets and liabilities or any
bankruptcy, insolvency or similar proceedings of the Company, all amounts due or
to become due upon all Senior and Subordinated Debt shall first be paid in full,
in cash or cash equivalents, or payment thereof provided for in accordance with
its terms, before any payment is made on account of the principal of, premium,
if any, or interest on the indebtedness evidenced by the Debentures, and upon
any such liquidation, dissolution, winding up, receivership, reorganization,
assignment, marshalling or proceeding, any payment or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to which the Debentureholders or the Trustee under this Indenture would be
entitled, except for the provisions hereof, shall be paid by the Company or by
any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person
making such payment or distribution, or by the Debentureholders or by the
Trustee under this Indenture if received by them or it, directly to the holders
of Senior and Subordinated Debt (pro rata to such holders on the basis of the
respective amounts of Senior and Subordinated Debt held by such holders) or
their respective representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any of such Senior and
Subordinated Debt may have been issued, as their respective interests may
appear, to the extent necessary to pay all Senior and Subordinated Debt in full
(including, without limitation, except to the extent, if any, prohibited by
mandatory provisions of law, post-petition interest, in any such proceedings),
after giving effect to any concurrent payment or distribution to or for the
holders of Senior and Subordinated Debt, before any payment or distribution is
made to the holders of the indebtedness evidenced by the Debentures or to the
Trustee under this Indenture.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee under this Indenture or the holders of the Debentures before all Senior
and Subordinated Debt is paid in full or provision is made for such payment in
accordance with its terms, such payment or distribution shall be held in trust
for the benefit of and shall be paid over or delivered to the holders of such
Senior and Subordinated Debt or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any instruments
evidencing any of such Senior and Subordinated Debt may have been issued, as
their respective interests may appear, for application to the payment of all
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Senior and Subordinated Debt remaining unpaid until all such Senior and
Subordinated Debt shall have been paid in full in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior and Subordinated Debt.
For purposes of this Article, the words, "cash, property or securities"
shall not be deemed to include shares of stock of the Company as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of arrangement, reorganization or readjustment, the payment of which
is subordinated (at least to the extent provided in this Article with respect to
the Debentures) to the payment of all Senior and Subordinated Debt which may at
the time be outstanding; provided that (i) the Senior and Subordinated Debt is
assumed by the new corporation, if any, resulting from any such arrangement,
reorganization or readjustment, and (ii) the rights of the holders of the Senior
and Subordinated Debt are not, without the consent of such holders, altered by
such arrangement, reorganization or readjustment. The consolidation of the
Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided in Article 10 shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article 10. Nothing in this Section shall apply to claims of, or payments to,
the Trustee under or pursuant to Article 7, except as provided therein. This
Section shall be subject to the further provisions of Section 14.05.
SECTION 14.03. Subrogation of Debentures. Subject to the payment in
full of all Senior and Subordinated Debt, the holders of the Debentures shall be
subrogated to the rights of the holders of Senior and Subordinated Debt to
receive payments or distributions of cash, property or securities of the Company
applicable to the Senior and Subordinated Debt until the principal of and
interest on the Debentures shall be paid in full; and, for the purposes of such
subrogation, no payments or distributions to the holders of the Senior and
Subordinated Debt of any cash, property or securities to which the holders of
the Debentures or the Trustee on their behalf would be entitled except for the
provisions of this Article, and no payment over pursuant to the provisions of
this Article to the holders of Senior and Subordinated Debt by holders of the
Debentures or the Trustee on their behalf shall, as between the Company, its
creditors other than holders of Senior and Subordinated Debt and the holders of
the Debentures, be deemed to be a payment by the Company to or on account of the
Senior and Subordinated Debt; and no payments or distributions of cash, property
or securities to or for the benefit of the Debentureholders pursuant to the
subrogation provision of this Article, which would otherwise have been paid to
the holders of Senior and Subordinated Debt shall be deemed to be a payment by
the Company to or for the account of the Debentures. It is understood that the
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the holders of the Debentures, on the one hand,
and the holders of the Senior and Subordinated Debt, on the other hand.
Nothing contained in this Article or elsewhere in this Indenture or in
the Debentures is intended to or shall impair, as between the Company, its
creditors other than the holders of Senior and Subordinated Debt, and the
holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of and
interest on the Debentures as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Debentures and creditors of the Company other than
the holders of the Senior and Subordinated Debt, nor shall anything herein or
therein prevent the holder of any Debenture or the Trustee on his behalf from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article of the holders
of Senior and Subordinated Debt in respect of cash, property or securities of
the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Article 7, and the
holders of the Debentures shall be entitled to rely upon any order or decree
made by any court of competent jurisdiction in which such liquidation,
dissolution, winding up, receivership, reorganization, assignment or marshalling
proceedings are pending, or a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making such payment or
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distribution, delivered to the Trustee or to the holders of the Debentures, for
the purpose of ascertaining the persons entitled to participate in such
distribution, the holders of the Senior and Subordinated Debt and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article.
SECTION 14.04. Authorization by Debentureholders. Each holder of a
Debenture by his acceptance thereof authorizes the Trustee in his behalf to take
such action as may be necessary or appropriate to effectuate the subordination
provided in this Article and appoints the Trustee his attorney-in-fact for any
and all such purposes.
SECTION 14.05. Notice to Trustee. The Company shall give prompt written
notice to the Trustee and to any paying agent of any fact known to the Company
which would prohibit the making of any payment of moneys to or by the Trustee or
any paying agent in respect of the Debentures pursuant to the provisions of this
Article. Regardless of anything to the contrary contained in this Article or
elsewhere in this Indenture, the Trustee shall not be charged with knowledge of
the existence of any Senior and Subordinated Debt or of any default or event of
default with respect to any Senior and Subordinated Debt or of any other facts
which would prohibit the making of any payment of moneys to or by the Trustee,
unless and until the Trustee shall have received notice in writing at its
principal Corporate Trust Office to that effect signed by an officer of the
Company, or by a holder or agent of a holder of Senior and Subordinated Debt who
shall have been certified by the Company or otherwise established to the
reasonable satisfaction of the Trustee to be such holder or agent, or by the
trustee under any indenture pursuant to which Senior and Subordinated Debt shall
be outstanding, and, prior to the receipt of any such written notice, the
Trustee shall, subject to the provisions of Article 7, be entitled to assume
that no such facts exist; provided that if on a date at least three business
days prior to the date upon which by the terms hereof any such moneys shall
become payable for any purpose (including, without limitation, the payment of
the principal of, or interest on any Debenture) the Trustee shall not have
received with respect to such moneys the notice provided for in this Section,
then, regardless of anything herein to the contrary, the Trustee shall have full
power and authority to receive such moneys and to apply the same to the purpose
for which they were received, and shall not be affected by any notice to the
contrary which may be received by it on or after such prior date.
Regardless of anything to the contrary herein, nothing shall prevent
(a) any payment by the Company or the Trustee to the Debentureholders of amounts
in connection with a redemption of Debentures if (i) notice of such redemption
has been given pursuant to Article 3 prior to the receipt by the Trustee of
written notice as aforesaid, and (ii) such notice of redemption is given not
earlier than 60 days before the redemption date, or (b) any payment by the
Trustee to the Debentureholders of amounts deposited with it pursuant to Article
1.1.
The Trustee shall be entitled to rely on the delivery to it of a
written notice by a person representing himself to be a holder of Senior and
Subordinated Debt (or a trustee on behalf of such holder) to establish that such
notice has been given by a holder of Senior and Subordinated Debt or a trustee
on behalf of any such holder. In the event that the Trustee determines in good
faith that further evidence is required with respect to the right of any person
as a holder of Senior and Subordinated Debt to participate in any payment or
distribution pursuant to this Article, the Trustee may request such person to
furnish evidence to the reasonable satisfaction of the Trustee as to the amount
of Senior and Subordinated Debt held by such person, the extent to which such
person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such person under this Article, and if such
evidence is not furnished the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment.
SECTION 14.06. Trustee's Relation to Senior and Subordinated Debt. The
Trustee and any agent of the Company or the Trustee shall be entitled to all the
rights set forth in this Article with respect to any Senior and Subordinated
Debt which may at any time be held by it in its individual or any other capacity
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to the same extent as any other holder of Senior and Subordinated Debt and
nothing in this Indenture shall deprive the Trustee or any such agent of any of
its rights as such holder. Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Article 7.
With respect to the holders of Senior and Subordinated Debt, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article, and no implied
covenants or obligations with respect to the holders of Senior and Subordinated
Debt shall be read into this Indenture against the Trustee. The Trustee shall
not be deemed to owe any fiduciary duty to the holders of Senior and
Subordinated Debt and, subject to the provisions of Article 7, the Trustee shall
not be liable to any holder of Senior and Subordinated Debt if it shall pay over
or deliver to holders of Debentures, the Company or any other person moneys or
assets to which any holder of Senior and Subordinated Debt shall be entitled by
virtue of this Article or otherwise.
SECTION 14.07. No Impairment to Subordination. No right of any present
or future holder of any Senior and Subordinated Debt to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Company or by any act or failure to
act, in good faith, by any such holder, or by any noncompliance by the Company
with the terms, provisions and covenants of this Indenture, regardless of any
knowledge thereof which any such holder may have or otherwise be charged with.
The First National Bank of Chicago, as Trustee, hereby accepts the
trust in this Indenture declared and provided, upon the terms and conditions
herein above set forth.
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IN WITNESS WHEREOF, the Parties hereto have caused this Indenture to be
duly executed as of the day and year first above written.
OWENS & MINOR, INC.
By: /s/ Ann Greer Rector
-------------------------------------------
Name: Ann Greer Rector
Title: Senior Vice President
Chief Financial Officer
Attest:
By: /s/ Drew St. J. Carneal
----------------------------------
Name: Drew St. J. Carneal
Title: General Counsel and Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE
By: /s/ Michael Pinzon
-------------------------------------------
Name: Michael Pinzon
Title: Trust Officer
52
================================================================================
OWENS & MINOR, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
--------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of May 13, 1998
TO
JUNIOR SUBORDINATED INDENTURE
Dated as of May 13, 1998
--------------------
5.375% Junior Subordinated Debentures
Due 2013
================================================================================
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
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<S> <C>
ARTICLE 1
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 1.01...........................................................................................2
SECTION 1.02...........................................................................................3
SECTION 1.03...........................................................................................4
SECTION 1.04...........................................................................................5
ARTICLE 2
OPTIONAL REDEMPTION OF THE DEBENTURES
SECTION 2.01..........................................................................................10
SECTION 2.02..........................................................................................11
SECTION 2.03..........................................................................................12
ARTICLE 3
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.01..........................................................................................12
SECTION 3.02..........................................................................................13
SECTION 3.03..........................................................................................14
ARTICLE 4
COVENANTS APPLICABLE TO THE DEBENTURES
SECTION 4.01..........................................................................................14
SECTION 4.02..........................................................................................14
SECTION 4.03..........................................................................................14
SECTION 4.04..........................................................................................15
ARTICLE 5
CONVERSION OF DEBENTURES
SECTION 5.01..........................................................................................15
SECTION 5.02..........................................................................................15
SECTION 5.03..........................................................................................17
SECTION 5.04..........................................................................................24
SECTION 5.05..........................................................................................28
SECTION 5.06..........................................................................................29
SECTION 5.07..........................................................................................29
SECTION 5.08..........................................................................................30
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ARTICLE 6
FORM OF DEBENTURES
SECTION 6.01..........................................................................................30
ARTICLE 7
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.01..........................................................................................48
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.01..........................................................................................48
SECTION 8.02..........................................................................................48
SECTION 8.03..........................................................................................48
SECTION 8.04..........................................................................................48
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<PAGE>
The First Supplemental INDENTURE, dated as of May 13, 1998
(the "First Supplemental Indenture"), between OWENS & MINOR, INC., a Virginia
corporation (hereinafter sometimes referred to as the "Company") and THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, as trustee
(hereinafter sometimes referred to as the "Trustee") under the Junior
Subordinated Indenture dated as of May 13, 1998 between the Company and the
Trustee (the "Indenture") (except as otherwise set forth herein, all terms used
and not defined herein are used as defined in the Indenture or in the
Declaration of Trust);
WHEREAS, the Company executed and delivered the Indenture to
the Trustee to provide for the future issuance of its junior subordinated
securities (the "Debentures"), said Debentures to be issued from time to time in
series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered
thereunder as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a new series of its Debentures to be
known as its 5.375% Junior Subordinated Debentures due 2013 (said series being
hereinafter referred to as the "Series 5.375% Debentures"), the form and
substance of such Series 5.375% Debentures and the terms, provisions and
conditions thereof to be set forth as provided in the Indenture and this First
Supplemental Indenture; and
WHEREAS, the Company has caused to be formed Owens & Minor
Trust I ("O&M Trust I" or the "Trust") as a statutory business trust under the
Business Trust Act of the State of Delaware (12 Del. Code ss. 3801 et seq. )
pursuant to a declaration of trust dated April 29, 1998 (the "Original
Declaration") and the filing of a certificate of trust with the Secretary of
State of the State of Delaware on April 29, 1998; and
WHEREAS, the Original Declaration is to be amended and
restated in its entirety pursuant to an Amended and Restated Declaration of
Trust dated as of May 13, 1998 (such Amended and Restated Declaration of Trust,
as amended from time to time, the "Declaration of Trust"); and
WHEREAS, O&M Trust I desires to issue its $2.6875 Term
Convertible Securities, Series A (the "Preferred Securities" or "TECONS") and
sell such Preferred Securities to initial purchasers; and
WHEREAS, in connection with such purchases of Preferred
Securities and the related purchase by the Company of the Common Securities (as
defined in the Declaration of Trust) of O&M Trust I, O&M Trust I will purchase
as trust assets Series 5.375% Debentures; and
WHEREAS, pursuant to the Declaration of Trust, the legal title
to the Series 5.375% Debentures shall be owned and held of record in the name of
The First National Bank of Chicago or its successor under the Declaration of
<PAGE>
Trust, as Property Trustee (the "Property Trustee"), in trust for the benefit of
holders of the Preferred Securities and the Common Securities; and
WHEREAS, upon the occurrence of a Special Event (as defined in
the Declaration of Trust) the Regular Trustees (as defined in the Declaration of
Trust) of O&M Trust I shall, unless the Series 5.375% Debentures are redeemed as
described herein, dissolve O&M Trust I and cause to be distributed to the
holders of Preferred Securities and Common Securities, on a Pro Rata basis
(determined as provided in the terms of the Preferred Securities and Common
Securities attached as Exhibits B and C to the Declaration of Trust), Series
5.375% Debentures and, in connection with a Liquidation Distribution (as defined
in the Declaration of Trust), the Regular Trustees may cause to be distributed
to holders of Preferred Securities and Common Securities, on such a Pro Rata
basis, Series 5.375% Debentures (each a "Dissolution Event"); and
WHEREAS, the Company desires and has requested the Trustee to
join with it in the execution and delivery of this First Supplemental Indenture,
and all requirements necessary to make this First Supplemental Indenture a valid
instrument, in accordance with its terms, and to make the Series 5.375%
Debentures when executed by the Company and authenticated and delivered by the
Trustee, the valid obligations of the Company, have been performed and
fulfilled, and the execution and delivery hereof have been in all respects duly
authorized;
NOW THEREFORE, in consideration of the purchase and acceptance
of the Series 5.375% Debentures by the holders thereof, and for the purpose of
setting forth, as provided in the Indenture, the form and substance of the
Series 5.375% Debentures and the terms, provisions and conditions thereof, the
Company covenants and agrees with the Trustee as follows:
ARTICLE 1
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 1.01. There shall be and is hereby authorized a series
of Debentures designated the "5.375% Junior Subordinated Debentures Due 2013",
limited in aggregate principal amount to $123,711,350 (except as provided in
Section 1.01 and 7.01). Upon exercise of the over-allotment option set forth in
the Purchase Agreement (as defined in the Declaration of Trust), additional
Series 5.375% Debentures in the aggregate principal amount of up to $18,556,700
may be executed by the Company and delivered to the Trustee for authentication,
and the Trustee shall thereupon authenticate and deliver said Series 5.375%
Debentures to or upon the written order of the Company, which order shall be
accompanied by evidence satisfactory to the Trustee that the over-allotment
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<PAGE>
option has been exercised. The Series 5.375% Debentures shall mature and the
principal shall be due and payable together with all accrued and unpaid interest
thereon, including Compounded Interest (as hereinafter defined) on April 30,
2013 (the "Maturity Date").
SECTION 1.02. (a) Except as provided in Section 1.02(b), the
Series 5.375% Debentures shall be issued in fully registered certificated form
without interest coupons in denominations of $50 or integral multiples thereof.
Principal and interest on the Series 5.375% Debentures issued in certificated
form will be payable, the transfer of such Series 5.375% Debentures will be
registrable and such Series 5.375% Debentures will be exchangeable for Series
5.375% Debentures bearing identical terms and provisions at the office or agency
of the Company in the Borough of Manhattan, The City and State of New York;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall appear
in the Debenture register and that the payment of principal with respect to the
Series 5.375% Debentures will only be made upon surrender of the Series 5.375%
Debentures to the Trustee. Notwithstanding the foregoing, so long as the
Property Trustee is the legal owner and record holder of the Series 5.375%
Debentures, the payment of the principal of and interest (including Compounded
Interest, if any) on the Series 5.375% Debentures held by the Property Trustee
will be made by the Company in immediately available funds on the payment date
therefor at such place and to the Property Account (as defined in the
Declaration of Trust) established and maintained by the Property Trustee
pursuant to the Declaration of Trust.
(b) In connection with a Dissolution Event:
(i) Series 5.375% Debentures in certificated form may be
presented to the Trustee by the Property Trustee in exchange for a
Global Debenture representing the Series 5.375% Debentures in an
aggregate principal amount equal to all Outstanding Series 5.375%
Debentures, to be registered in the name of the Depositary, or its
nominee, and delivered by the Trustee to the Depositary for crediting
to the accounts of its participants pursuant to the instructions of the
Regular Trustees (as defined in the Declaration of Trust). The Company
upon any such presentation shall execute a Global Debenture
representing the Series 5.375% Debentures in such aggregate principal
amount and deliver the same to the Trustee for authentication and
delivery in accordance with the Indenture and this First Supplemental
Indenture. Payments on the Series 5.375% Debentures issued as a Global
Debenture will be made to the Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, Series 5.375% Debentures in certificated form may be
presented to the Trustee by the Property Trustee and any Preferred
Security Certificate (as defined in the Declaration of Trust) which
represents Preferred Securities other than Preferred Securities held by
the Clearing Agency (as defined in the Declaration of Trust) or its
nominee ("Non Book-Entry Preferred Securities") will be deemed to
represent beneficial interests in Series 5.375% Debentures presented to
the Trustee by the Property Trustee having an aggregate principal
amount equal to the aggregate liquidation amount of the Non Book-Entry
Preferred Securities until such Preferred Security Certificate are
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<PAGE>
presented to the Debenture Registrar for transfer or reissuance at
which time such Preferred Security Certificate will be canceled and a
Series 5.375% Debenture, registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder of such
Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the
Preferred Security Certificate canceled will be executed by the Company
and delivered to the Trustee for authentication and delivery in
accordance with the Indenture and this First Supplemental Indenture. On
issue of such Series 5.375% Debentures, Series 5.375% Debentures with
an equivalent aggregate amount that were presented by the Property
Trustee to the Trustee will be deemed to have been canceled.
SECTION 1.03. Each Series 5.375% Debenture will bear interest
at the rate of 5.375% per annum from May 13, 1998 until the principal thereof
becomes due and payable, and on any overdue principal and (to the extent that
payment of such interest is enforceable under applicable law) on any overdue
installment of interest at the same rate per annum, compounded quarterly,
payable (subject to the provisions of Article Three) on each January 31, April
30, July 31 and October 31 in arrears (each an "Interest Payment Date")
commencing on July 31, 1998, to the person in whose name such Series 5.375%
Debenture or any predecessor Series 5.375% Debenture is registered, at the close
of business on the regular record date for such interest installment, which,
except as set forth below, shall be, in respect of any Series 5.375% Debentures
of which the Property Trustee is the registered holder of or a Global Debenture,
the close of business on the business day next preceding that Interest Payment
Date. Notwithstanding the foregoing sentence, if the Preferred Securities are no
longer in book-entry only form or if pursuant to the provisions of Section
2.11(c) of the Indenture the Series 5.375% Debentures are not represented by a
Global Debenture, the regular record dates for such interest installment shall
be the close of business on the fifteenth day of the month in which that
Interest Payment Date occurs. Any such interest installment not punctually paid
or duly provided for shall forthwith cease to be payable to the registered
holders on such regular record date, and may be paid to the person in whose name
the Series 5.375% Debenture (or one or more Predecessor Debentures) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered holders of the Series 5.375% Debentures not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Series 5.375% Debentures may be listed, and upon such notice as may
be required by such exchange, all as more fully provided in the Indenture.
The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months. In the event that any
date on which interest is payable on the Series 5.375% Debentures is not a
business day, then payment of interest payable on such date will be made on the
next succeeding day which is a business day (and without any interest or other
payment in respect of any such delay), except that, if such business day is in
the next succeeding calendar year, such payment shall be made on the immediately
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<PAGE>
preceding business day, in each case with the same force and effect as if made
on such date.
If at any time O&M Trust I shall be required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the U.S., or any other taxing authority, then, in
any such case, the Company will pay as additional interest ("Additional
Interest") on the Series 5.375% Debentures such additional amounts as shall be
required so that the net amounts received and retained by O&M Trust I after
paying any such taxes, duties, assessments or other governmental charges will be
equal to the amounts O&M Trust I would have received had no such taxes, duties,
assessments, or other governmental charges been imposed.
SECTION 1.04. If distributed to holders of Preferred
Securities in connection with a Dissolution Event, the Series 5.375% Debentures
will be issued to such holders in the same form as the Preferred Securities that
such Series 5.375% Debentures replace in accordance with the following
procedures:
So long as Series 5.375% Debentures are eligible for
book-entry settlement with the Depositary, or unless otherwise required by law,
all Series 5.375% Debentures that are so eligible may be represented by one or
more Series 5.375% Debentures in global form registered in the name of the
Depositary or the nominee of the Depositary, except as otherwise specified
below. The transfer and exchange of beneficial interests in any such Series
5.375% Debenture in global form shall be effected through the Depositary in
accordance with this Indenture and the procedures of the Depositary therefor.
Series 5.375% Debentures that are distributed to "qualified
institutional buyers" within the meaning of Rule 144A ("QIBs") under the
Securities Act of 1933, as amended (the "Securities Act") in replacement of
Preferred Securities represented by a global Preferred Security will be
represented by one or more global Series 5.375% Debentures (the "144A Global
Debenture"). Series 5.375% Debentures that are distributed to Non-U.S. Persons
in replacement of Preferred Securities represented by a global Preferred
Security will be represented by one or more global Series 5.375% Debenture (the
"Regulation S Global Debenture"). Each of the 144A Global Debenture and the
Regulation S Global Debenture shall be referred to herein as a Global Debenture.
Series 5.375% Debentures that are distributed to QIBs, IAIs or Non-U.S. Persons
in replacement of Certificated Preferred Securities will be represented by
definitive Series 5.375% Debentures as set forth in this Section 1.04. If Global
Debentures are issued, transfers of interests in the Series 5.375% Debentures
between the 144A Global Debenture and the Regulation S Global Debenture will be
made in accordance with the standing instructions and procedures of the
Depositary and its participants and the Trustee shall make appropriate
endorsements to reflect increases or decreases in the principal amounts of such
Global Debentures to reflect any such transfers.
Except as provided below, beneficial owners of a Series 5.375%
Debenture in global form shall not be entitled to have certificates registered
in their names, will not receive or be entitled to receive physical delivery of
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<PAGE>
certificates in definitive form and will not be considered Holders of such
Series 5.375% Debentures in global form.
(i) Preferred Securities held in certificated form, except
for certificates representing Preferred Securities held by the
Depositary or its nominee (or any successor Clearing Agency or its
nominee), shall upon presentation to the Trustee by the Property
Trustee or by the holder thereof or by the Property Trustee on behalf
of such holders shall be exchanged for Series 5.375% Debentures in
fully registered certificated form of like aggregate principal amount
and tenor.
So long as the Series 5.375% Debentures are eligible for
book-entry settlement, and to the extent that Series 5.375% Debentures are held
by QIBs or Non-U.S. Persons, as the case may be, in a Global Debenture, or
unless otherwise required by law, upon any transfer of a definitive Series
5.375% Debenture to a QIB in accordance with Rule 144A or to a Non-U. S. Person
in accordance with Regulation S, unless otherwise requested by the transferor,
and upon receipt of the definitive Series 5.375% Debentures or Series 5.375%
Debentures being so transferred, together with a certification from the
transferor that the transfer is being made in compliance with Rule 144A or
Regulation S, as the case may be (or other evidence satisfactory to the
Trustee), the Trustee shall make an endorsement on any 144A Global Debenture or
any Regulation S Global Debenture, as the case may be, to reflect an increase in
the aggregate principal amount of the Series 5.375% Debentures represented by
such Global Debenture, and the Trustee shall cancel such definitive Series
5.375% Debenture or Series 5.375% Debentures in accordance with the standing
instructions and procedures of the Depositary, the aggregate principal amount of
Series 5.375% Debentures represented by such Global Debenture to be increased
accordingly; provided that no definitive Series 5.375% Debenture, or portion
thereof, in respect of which the Company or an Affiliate of the Company held any
beneficial interest shall be included in such Global Debenture until such
definitive Series 5.375% Debenture is freely tradable in accordance with Rule
144(k); provided further that the Trustee shall, at the written request of the
Company, issue Series 5.375% Debentures in definitive form upon any transfer of
a beneficial interest in the Global Debenture to the Company or any Affiliate of
the Company.
Any Global Debenture may be endorsed with or have incorporated
in the text thereof such legends or recitals or changes not inconsistent with
the provisions of this Indenture as may be required by the Depositary, by the
National Association of Securities Dealers, Inc. in order for the Series 5.375%
Debentures to be tradeable on the PORTAL Market or as may be required for the
Series 5.375% Debentures to be tradeable on any other market developed for
trading of securities pursuant to Rule 144A or required to comply with any
applicable law or any regulation thereunder or with the rules and regulations of
any securities exchange upon which the Series 5.375% Debentures may be listed or
traded or to conform with any usage with respect thereto, or to indicate any
special limitations or restrictions to which any particular Series 5.375%
Debentures are subject.
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<PAGE>
Each Debenture that bears or is required to bear the legend
set forth in this Section 1.04 (a "Restricted Security") shall be subject to the
restrictions on transfer provided in the legend set forth in this Section 1.04,
unless such restrictions on transfer shall be waived by the written consent of
the Company, and the Holder of each Restricted Security, by such
securityholder's acceptance thereof, agrees to be bound by such restrictions on
transfer. As used in this Section 1.04, the term "transfer" encompasses any
sale, pledge, transfer or other disposition of any Restricted Security.
Prior to the Transfer Restriction Termination Date (as defined
in the Declaration of Trust), any certificate evidencing a Series 5.375%
Debenture or Common Stock issued upon the conversion or exchange of any Series
5.375% Debenture shall bear a legend in substantially the following form, unless
otherwise agreed by the Company (with written notice thereof to the Trustee):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2),(3) OR (7) UNDER THE SECURITIES ACT) (AN
"INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND
IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION; (2) AGREES THAT
IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO
SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO OWENS & MINOR, INC. OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, BEFORE SUCH TRANSFER FURNISHES THE TRUSTEE A SIGNED
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<PAGE>
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE TRUST THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY PRIOR TO THE EXPIRATION
DATE OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE TRANSFEROR MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE PROPERTY TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE TRANSFEROR
MUST, BEFORE SUCH TRANSFER, FURNISH TO THE ISSUER SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Following the Transfer Restriction Termination Date or the
sale of a Debenture or Common Stock issued upon the conversion or exchange of a
Debenture pursuant to an effective registration statement or Rule 144 (or any
successor provision) under the Securities Act, any Debenture or security issued
in exchange or substitution therefor (other than (i) Series 5.375% Debentures
acquired by the Company or any Affiliate thereof since the issue date of the
Preferred Securities and (ii) Common Stock issued upon the conversion or
exchange of any Debenture described in clause (i) above) may upon surrender of
such Debenture for exchange to the Debenture Registrar in accordance with the
provisions of this Section 1.04, be exchanged for a new Debenture or Series
5.375% Debentures, of like tenor and aggregate principal amount, which shall not
bear the restrictive legend required by this Section 1.04.
Notwithstanding any other provisions of the Indenture (other
than the provisions set forth in this Section 1.04), a Global Debenture may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee to a successor Depositary or a nominee of such successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to act
as Depositary with respect to the Series 5.375% Debentures in global form.
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Initially, the Global Debentures shall be issued to the Depositary, registered
in the name of Cede & Co., as the nominee of the Depositary, and deposited with
the Trustee as custodian for Cede & Co.
If at any time the Depositary for the Global Debentures
notifies the Company that it is unwilling or unable to continue as Depositary
for such Series 5.375% Debentures, the Company may appoint a successor
Depositary with respect to such Series 5.375% Debentures. If a successor
Depositary for the Series 5.375% Debentures is not appointed by the Company
within 90 days after the Company receives such notice, the Company will execute,
and the Trustee, upon receipt of an Officers' Certificate for authentication and
delivery of Series 5.375% Debentures, will authenticate and deliver, Series
5.375% Debentures in definitive form, in an aggregate principal amount equal to
the principal amount of the Global Debentures, in exchange for such Global
Debentures.
Definitive Series 5.375% Debentures issued in exchange for all
or a part of a Global Debenture pursuant to this Section 1.04 shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. Upon execution and authentication, the Trustee shall
deliver such definitive Series 5.375% Debentures to the person in whose names
such definitive Series 5.375% Debentures are so registered.
At such time as all interests in a Global Debenture have been
redeemed, converted, exchanged, repurchased or canceled, such Global Debenture
shall be, upon receipt thereof, canceled by the Trustee in accordance with
standing procedures and instructions of the Depositary. At any time prior to
such cancellation, if any interest in a Global Debenture is exchanged for
definitive Series 5.375% Debentures, redeemed by the Company pursuant to Article
2 or canceled, or transferred for part of a Global Debenture, the principal
amount of such Global Debenture shall, in accordance with the standing
procedures and instructions of the Depositary be reduced or increased, as the
case may be, and an endorsement shall be made on such Global Debenture by, or at
the direction of, the Trustee to reflect such reduction or increase. Following
such redemption by the Company or cancellation, or transfer, the Company will
execute and Trustee will authenticate and make available for delivery to the
transferee (or such transferee's nominee, as the case may be), a Series 5.375%
Debenture in the appropriate aggregate principal amount and bearing such
restrictive legends as may be required by this Indenture.
Any Series 5.375% Debenture or Common Stock issued upon the
conversion or exchange of a Series 5.375% Debenture that, prior to the Transfer
Restriction Termination Date, is purchased or owned by the Company or any
Affiliate thereof may not be resold by the Company or such Affiliate unless
registered under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Series 5.375% Debentures or Common Stock, as the case may be, no longer
being "restricted securities" (as defined under Rule 144).
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ARTICLE 2
OPTIONAL REDEMPTION OF THE DEBENTURES
SECTION 2.01. Except as provided in Section 2.02 and subject
to the provisions below, Series 5.375% Debentures may not be redeemed by the
Company prior to May 2, 2001. Subject to the terms of Article Three of the
Indenture, the Company shall have the right to redeem the Series 5.375%
Debentures, in whole or in part, from time to time, on or after May 2, 2001,
upon not less than 30 nor more than 60 days notice to the Holder of the Series
5.375% Debentures, at the following prices (expressed as percentages of the
principal amount of the Series 5.375% Debentures) (the "Optional Redemption
Price"), together with any accrued and unpaid interest thereon, including
Compounded Interest (as defined herein), if any, to, but excluding, the date of
such redemption, if redeemed during the 12-month period beginning April 30.
Year Redemption Price
---- ----------------
2001 103.3594%
2002 102.6875%
2003 102.0156%
2004 101.3438%
2005 100.6719%
and 100% if redeemed on or after April 30, 2006.
If the Series 5.375% Debentures are redeemed on any Interest
Payment Date, accrued and unpaid interest shall be payable to Holders of record
on the relevant record date.
The Company may not redeem any Series 5.375% Debenture unless
all accrued and unpaid interest thereon, including Compounded Interest, if any,
has been or is simultaneously paid for all quarterly periods terminating on or
prior to the date of notice of redemption. So long as the corresponding Trust
Securities are outstanding, the proceeds from the redemption of the Series
5.375% Debentures will be used to redeem the Trust Securities.
If the Company gives a notice of redemption in respect of
Series 5.375% Debentures (which notice will be irrevocable), then, by 12:00
noon, New York City time, on the redemption date, the Company will deposit
irrevocably with the Indenture Trustee funds sufficient to pay the applicable
Redemption Price and will give irrevocable instructions and authority to pay
such Redemption Price to the holders of the Series 5.375% Debentures.
If any date fixed for redemption of Series 5.375% Debentures
is not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
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Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption.
In the event of any redemption in part, the Company shall not
be required to (i) issue, register the transfer of or exchange any Series 5.375%
Debentures during a period beginning at the opening of business 15 days before
any selection for redemption of Series 5.375% Debentures and ending at the close
of business on the earliest date on which the relevant notice of redemption is
deemed to have been given to all holders of Series 5.375% Debentures to be
redeemed and (ii) register the transfer of or exchange any Series 5.375%
Debentures so selected for redemption, in whole or in part, except the
unredeemed portion of any Series 5.375% Debentures being redeemed in part.
SECTION 2.02. If, at any time, a Tax Event (as defined below)
shall occur or be continuing and (i) the Regular Trustees and the Company shall
have received an opinion (a "Redemption Tax Opinion") of a nationally recognized
independent tax counsel experienced in such matters that, as a result of a Tax
Event, there is more than an insubstantial risk that the Company would be
precluded from deducting the interest on the Series 5.375% Debentures for United
States federal income tax purposes even if the Series 5.375% Debentures were
distributed to the holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in O&M Trust I as set forth in the
Declaration of Trust or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion (as defined below) cannot be
delivered to O&M Trust I, the Company shall have the right at any time, upon not
less than 30 nor more than 60 days' notice, to redeem the Series 5.375%
Debentures in whole or in part for cash at a price equal to 100% of the
principal amount thereof, together with any accrued and unpaid interest thereon,
including Compounded Interest, if any, to, but excluding the date of redemption,
within 90 days following the occurrence of such Tax Event; provided, however,
that, if at the time there is available to the Company or the Regular Trustees
on behalf of O&M Trust I the opportunity to eliminate, within such 90 day
period, the Tax Event by taking some ministerial action ("Ministerial Action"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on O&M Trust I, the Company or
the holders of the Preferred Securities in the sole opinion of the Company, the
Company or the Regular Trustees on behalf of O&M Trust I will pursue such
measure in lieu of redemption and provided further that the Company shall have
no right to redeem the Series 5.375% Debentures while the Regular Trustees on
behalf of O&M Trust I are pursuing any such Ministerial Action.
"Tax Event" means that the Company and the Regular Trustees
shall have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that on
or after May 8, 1998 as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application of
any such laws or regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
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position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after May 8, 1998 (including, without
limitation, any of the foregoing arising with respect to, or resulting from, any
proposal, proceeding or other action commencing on or before May 8, 1998), there
is more than an insubstantial risk that (i) O&M Trust I is, or will be within 90
days of the date thereof, subject to United States federal income tax with
respect to income accrued or received on the Series 5.375% Debentures, (ii) O&M
Trust I is, or will be within 90 days of the date thereof, subject to more than
a de minimis amount of taxes, duties or other governmental charges or (iii)
interest payable by the Company to O&M Trust I on the Series 5.375% Debentures
is not, or within 90 days of the date thereof will not be, deductible by the
Company for United States federal income tax purposes.
"No Recognition Opinion" means an opinion of a nationally
recognized independent tax counsel experienced in such matters, which opinion
may rely on any then applicable published revenue ruling of the Internal Revenue
Service, to the effect that the holders of the Preferred Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of a dissolution of O&M Trust I and distribution of the Series 5.375%
Debentures as provided in the Declaration of Trust.
SECTION 2.03. If the Series 5.375% Debentures are only
partially redeemed pursuant to this Article Two, the Series 5.375% Debentures
will be redeemed pro rata or by lot, provided that if at the time of redemption,
the Series 5.375% Debentures are registered as a Global Debenture, the
Depositary shall determine by lot the principal amount of such Series 5.375%
Debentures held by each Debenture Holder to be redeemed in accordance with its
customary procedures. Notwithstanding the foregoing, if a partial redemption of
the Series 5.375% Debentures would result in the delisting of the Preferred
Securities by any national securities exchange or other organization on which
the Preferred Securities are then listed, the Company shall not be permitted to
effect such partial redemption and will only redeem the Series 5.375% Debentures
in whole.
ARTICLE 3
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.01. So long as the Company is not in default in the
payment of interest on the Series 5.375% Debentures, the Company shall have the
right, at any time during the term of the Series 5.375% Debentures, from time to
time to extend the interest payment period of such Series 5.375% Debentures for
up to 20 consecutive quarterly interest periods (the "Extended Interest Payment
Period"), at the end of which period the Company shall pay all interest accrued
and unpaid thereon (together with interest thereon at the rate of 5.375% per
annum to the extent permitted by applicable law, compounded quarterly
("Compounded Interest")); provided that no Extended Interest Payment Period may
extend beyond the Maturity Date or redemption date of the Series 5.375%
Debentures. During such Extended Interest Payment Period the Company shall not
(i) declare or pay any dividend on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock or
preferred stock or make any guarantee payments with respect thereto; provided
that the foregoing will not apply to any stock dividends or other stock
distributions paid by the Company or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
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Series 5.375% Debentures. The provisions of the immediately preceding sentence
will not restrict the ability of the Company to redeem rights issued pursuant to
the Amended and Restated Rights Agreement, dated as of May 10, 1994 between the
Company and Wachovia Bank of North Carolina, N.A., as Rights Agent, as it may be
amended from time to time, in an amount per right issued thereunder not to
exceed that in effect on the date hereof. Prior to the termination of any such
Extended Interest Payment Period, the Company may pay all or any portion of the
interest accrued on the Series 5.375% Debentures on any Interest Payment Date to
holders of record on the regular record date for such Interest Payment Date or
from time to time further extend such Period; provided that such Period together
with all such further extensions thereof shall not exceed 20 consecutive
quarterly interest periods or extend beyond the maturity of the Series 5.375%
Debentures. Upon the termination of any Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest then due, together with
Compounded Interest, the Company may select a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest shall be due and
payable during an Extended Interest Payment Period, except at the end thereof.
At the end of the Extended Interest Payment Period the Company shall pay all
interest accrued and unpaid on the Series 5.375% Debentures including any
Compounded Interest which shall be payable to the holders of the Series 5.375%
Debentures in whose names the Series 5.375% Debentures are registered in the
Debenture register on the first record date after the end of the Extended
Interest Payment Period. The Company may prepay at any time all or any portion
of the interest accrued during an Extension Period.
SECTION 3.02. (a) So long as the Property Trustee is the legal
owner and holder of record of the Series 5.375% Debentures, at the time the
Company selects an Extended Interest Payment Period, the Company shall give both
the Property Trustee and the Trustee written notice of its selection of such
Extended Interest Payment Period one business day prior to the earlier of (i)
the next succeeding date on which distributions on the Preferred Securities are
payable or (ii) the date O&M Trust I is required to give notice to the New York
Stock Exchange or other applicable self-regulatory organization or to the
Holders of the record date or the date such distributions are payable to holders
of the Preferred Securities, but in any event not less than one business day
prior to such record date. The Company shall cause O&M Trust I to give notice of
the Company's selection of such Extended Interest Payment Period to the holders
of the Preferred Securities.
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(b) If as a result of a Dissolution Event Series 5.375%
Debentures have been distributed to holders of Preferred Securities and Common
Securities, at the time the Company selects an Extended Interest Payment Period,
the Company shall give the holders of the Series 5.375% Debentures and the
Trustee written notice of its selection of such Extended Interest Payment Period
at least 10 business days prior to the earlier of (i) the next succeeding
Interest Payment Date or (ii) the date the Company is required to give notice of
the record or payment date of such interest payment to the New York Stock
Exchange (if the Series 5.375% Debentures are then listed thereon) or other
applicable self-regulatory organization or to holders of the Series 5.375%
Debentures.
SECTION 3.03. The quarter in which any notice is given
pursuant to Section 3.02 shall be counted as one of the quarters permitted in
the maximum Extended Interest Payment Period permitted under this Article Three.
ARTICLE 4
COVENANTS APPLICABLE TO THE DEBENTURES
SECTION 4.01. So long as any Preferred Securities remain
outstanding, the Company will not declare or pay any dividends on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect to,
any of its common stock or preferred stock or make any guarantee payments with
respect thereto if at such time (i) the Company shall be in default with respect
to its Guarantee Payments (as defined in the Guarantee Agreement) or other
payment obligations under the Guarantee Agreement, (ii) there shall have
occurred any Event of Default under the Indenture with respect to the Series
5.375% Debentures or (iii) the Company shall have given notice of its election
of an Extended Interest Payment Period and such Period, or any extension
thereof, is continuing; provided that the foregoing will not apply to any stock
dividends or other stock distributions paid by the Company. The provisions of
the immediately preceding sentence will not restrict the ability of the Company
to redeem rights issued pursuant to the Amended and Restated Rights Agreement,
dated as of May 10, 1994 between the Company and Wachovia Bank of North
Carolina, N.A., as Rights Agent, as it may be amended from time to time, in an
amount per right issued thereunder not to exceed that in effect on the date
hereof.
SECTION 4.02. In connection with the distribution of the
Series 5.375% Debentures to the holders of the Preferred Securities upon a
Dissolution Event, the Company will use its best efforts to list such Series
5.375% Debentures on the New York Stock Exchange (if the Preferred Securities
are then listed thereon) or on such other exchange as the Preferred Securities
are then listed and traded.
SECTION 4.03. The Company covenants and agrees for the benefit
of the holders of the Preferred Securities to comply fully with all of its
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obligations and agreements under the Declaration of Trust, including, without
limitation, its obligations under Article 4 thereof.
SECTION 4.04. Prior to the distribution of Series 5.375%
Debentures to the holders of Preferred Securities upon a Dissolution Event, the
Company covenants and agrees for the benefit of the holders of the Preferred
Securities (i) to remain the sole direct or indirect owner of the outstanding
Common Securities issued by the Trust and not to cause or permit the Common
Securities to be transferred except as permitted by the Declaration of Trust;
provided, that any permitted successor of the Company under the Indenture may
succeed to the Company's ownership of the Common Securities issued by the Trust
and (ii) that it will use reasonable efforts to cause the Trust to continue to
be treated as a grantor trust for United States federal income tax purposes,
except in connection with a distribution of the Series 5.375% Debentures as
provided in the Declaration of Trust.
ARTICLE 5
CONVERSION OF DEBENTURES
SECTION 5.01. Subject to and upon compliance with the
provisions of this Article Five, the Series 5.375% Debentures are convertible at
the option of the Holder, at any time through the close of business on April 30,
2013 (or, in the case of Series 5.375% Debentures called for redemption, prior
to the close of business on the business day prior to the corresponding
redemption date) into fully paid and nonassessable shares of Common Stock of the
Company at an initial conversion rate of 2.4242 shares of Common Stock for each
$50 in aggregate principal amount of Series 5.375% Debentures (equal to a
conversion price (as adjusted from time to time, the "Conversion Price") of
$20.625 per share of Common Stock), subject to adjustment as described in this
Article Five. A Holder of Series 5.375% Debentures may convert any portion of
the principal amount of the Series 5.375% Debentures into that number of fully
paid and nonassessable shares of Common Stock obtained by dividing the principal
amount of the Series 5.375% Debentures to be converted by such conversion price.
All calculations under this Article Five shall be made to the nearest cent or to
the nearest 1/100th of a share, as the case may be.
SECTION 5.02. (a) In order to convert all or a portion of the
Series 5.375% Debentures, the Holder thereof shall deliver to the Conversion
Agent an irrevocable Notice of Conversion setting forth the principal amount of
Series 5.375% Debentures to be converted, together with the name or names, if
other than the Holder, in which the shares of Common Stock should be issued upon
conversion and, if such Series 5.375% Debentures are definitive Series 5.375%
Debentures, surrender to the Conversion Agent the Series 5.375% Debentures to be
converted, duly endorsed or assigned to the Company or in blank. In addition, a
holder of Preferred Securities may exercise its right under the Declaration of
Trust to convert such Preferred Securities into Common Stock by delivering to
the Conversion Agent an irrevocable Notice of Conversion setting forth the
information called for by the preceding sentence and directing the Conversion
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Agent to (i) exchange such Preferred Security for a portion of the Series 5.375%
Debentures held by the Trust (at an exchange rate of $50 principal amount of
Series 5.375% Debenture for each Preferred Security) and (ii) immediately
convert such Series 5.375% Debenture, on behalf of such holder, into Common
Stock of the Company pursuant to this Article Five and, if such Preferred
Securities are in definitive form, surrendering such Preferred Securities, duly
endorsed or assigned to the Company or in blank. So long as any Preferred
Securities are outstanding, the Trust shall not convert any Series 5.375%
Debenture except pursuant to a Notice of Conversion delivered to the Conversion
Agent by a holder of Preferred Securities. Any reference herein to a "holder" of
Preferred Securities shall mean a "Holder" of such securities as defined in the
Declaration of Trust.
If a Series 5.375% Debenture is surrendered for conversion
after the close of business on any regular record date for payment of interest
and before the opening of business on the corresponding Interest Payment Date,
then, notwithstanding such conversion, the interest payable on such Interest
Payment Date will be paid in cash to the person in whose name the Series 5.375%
Debenture is registered at the close of business on such record date, and (other
than a Series 5.375% Debenture or a portion of a Series 5.375% Debenture called
for redemption on a redemption date occurring after such record date and on or
prior to such Interest Payment Date) when so surrendered for conversion, the
Series 5.375% Debenture must be accompanied by payment of an amount equal to the
interest payable on such Interest Payment Date. Except as otherwise provided in
the immediately preceding sentence, in the case of any Series 5.375% Debenture
which is converted, interest whose Maturity Date is after the date of conversion
of such Series 5.375% Debenture shall not be payable, and the Company shall not
make nor be required to make any other payment, adjustment or allowance with
respect to accrued but unpaid interest on the Series 5.375% Debenture being
converted, which shall be deemed to be paid in full. Each conversion shall be
deemed to have been effected immediately prior to the close of business on the
day on which the Notice of Conversion was received (the "Conversion Date") by
the Conversion Agent from the Holder or from a holder of the Preferred
Securities effecting a conversion thereof pursuant to its conversion rights
under the Declaration, as the case may be. The Person or Persons entitled to
receive the Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such Common Stock as of the
Conversion Date. As promptly as practicable on or after the Conversion Date, the
Company shall issue and deliver at the office of the Conversion Agent, unless
otherwise directed by the Holder in the Notice of Conversion, a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conversion, together with the cash payment, if any, in lieu of any fraction of
any share to the Person or Persons entitled to receive the same. The Conversion
Agent shall deliver such certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number
of shares of Common Stock into which the Series 5.375% Debentures are
convertible (together with the cash payment, if any, in lieu of fractional
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shares) shall be deemed to satisfy the Company's obligation to pay the principal
amount at maturity of the portion of Series 5.375% Debentures so converted and
any unpaid interest (including Compounded Interest) accrued on such Series
5.375% Debentures at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction of
the Closing Price of such fractional interest on the date on which the Series
5.375% Debentures were duly surrendered to the Conversion Agent for conversion,
or, if such day is not a day on which any securities are traded on the national
securities exchange or quotation system used to determine the Closing Price (a
"Trading Day"), on the next Trading Day, and the Conversion Agent in turn will
make such payment, if any, to the Holder of the Series 5.375% Debentures or the
holder of the Preferred Securities so converted.
(d) In the event of the conversion of any Series 5.375%
Debenture in part only, a new Series 5.375% Debenture or Series 5.375%
Debentures for the unconverted portion thereof will be issued in the name of the
Holder thereof upon the cancellation thereof in accordance with Section 2.05 of
the Indenture.
(e) In effecting the conversion transactions described in this
Section 5.02, the Conversion Agent is acting as agent of the holders of
Preferred Securities (in the exchange of Preferred Securities for Series 5.375%
Debentures) and as agent of the Holders of Series 5.375% Debentures (in the
conversion of Series 5.375% Debentures into Common Stock), as the case may be.
The Conversion Agent is hereby authorized (i) to exchange Series 5.375%
Debentures held by the Trust from time to time for Preferred Securities in
connection with the conversion of such Preferred Securities in accordance with
this Article Five and (ii) to convert all or a portion of the Series 5.375%
Debentures into Common Stock and thereupon to deliver such shares of Common
Stock in accordance with the provisions of this Article Five and to deliver to
the Trust a new Series 5.375% Debenture or Series 5.375% Debentures for any
resulting unconverted principal amount.
SECTION 5.03. (a) The Conversion Price shall be adjusted from
time to time as follows:
(i) In case the Company shall pay or make a dividend or
other distribution on Common Stock in shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the date fixed for the determination of shareholders entitled
to receive such dividend or other distribution shall be reduced by
multiplying such Conversion Price by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the
denominator of which shall be the sum of such number of shares and the
total number of shares constituting such dividend or other
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distribution, such reduction to become effective immediately after the
opening of business on the day following the date fixed for such
determination. For the purposes of this subparagraph (i), the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company (except to the extent such dividend
or distribution is being made with respect to such shares) but shall
include shares issuable in respect of scrip certificates issued in lieu
of fractions of shares of Common Stock.
(ii) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, then the
Conversion Price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective shall
be proportionately reduced, and, conversely, in case the outstanding
shares of Common Stock shall be combined into a smaller amount of
shares of Common Stock, then the Conversion Price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such
reduction or increase, as the case may be, to become effective
immediately after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(iii) In case the Company shall issue rights or warrants to
all holders of Common Stock entitling them (for a period expiring
within 45 days after the record date fixed for a distribution of such
rights or warrants) to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price (as hereinafter
defined) per share (determined as provided in subparagraph (vii) below)
of Common Stock on the date fixed for the determination of shareholders
entitled to receive such rights or warrants (other than pursuant to a
dividend reinvestment plan), then the Conversion Price in effect at the
opening of business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion Price by
a fraction the numerator of which shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of Common
Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares
of Common Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common Stock so
offered for subscription or purchase, such reduction to become
effective immediately after the opening of business on the day
following the date fixed for such determination. For the purposes of
this subparagraph (iii), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The
Company agrees not to issue any rights or warrants in respect of shares
of Common Stock held in the treasury of the Company. To the extent that
shares of Common Stock are not delivered after the expiration of such
rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price which would then be in effect had the adjustments made
in respect of the issuance of such rights or warrants been made on the
basis of delivery of only the number of shares of Common Stock actually
delivered.
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(iv) Subject to the second paragraph of this subparagraph
(iv), in case the Company shall, by dividend or otherwise, distribute
to all holders of Common Stock (A) shares of capital stock of the
Company (other than Common Stock), (B) evidence of indebtedness of the
Company and/or (C) other assets (including securities, but excluding
(1) any rights or warrants referred to in subparagraph (iii) above, (2)
any rights or warrants to obtain capital stock of a company other than
the Company or any subsidiary of the Company (including any rights
offerings of the Company with respect to capital stock of companies in
which the Company has an investment (a "Rights Offering")), (3)
dividends or distributions in connection with the liquidation,
dissolution or winding-up of the Company, (4) dividends payable solely
in cash that may from time to time be fixed by the Board of Directors
of the Company and (5) dividends or distributions referred to in
subparagraph (i) above), then in each case (unless the Company makes
the election referred to in the next sentence) the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
close of business on such record date by a fraction the numerator of
which shall be the Current Market Price per share (determined as
provided in subparagraph (vii) below) of the Common Stock on such
record date (the "Reference Date") less the then fair market value on
the Reference Date (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive and
shall be described in a statement filed with the Depositary and the
Trustee) of the portion of the shares of capital stock of the Company,
evidences of indebtedness or other assets so distributed (and for which
an adjustment to the Conversion Price has not been made previously
pursuant to the terms of this Article Five) applicable to one share of
Common Stock and the denominator shall be such Current Market Price per
share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following the
Reference Date. However, the Company may elect, in its sole discretion,
in lieu of the foregoing adjustment, to make adequate provision so that
each holder of Securities shall have the right to receive upon
conversion thereof the amount and kind of shares of capital stock,
evidences of indebtedness or other assets such holder would have
received had such holder converted such shares on such record date. If
the Board of Directors of the Company determines the fair market value
of any distribution for purposes of this subparagraph (iv) by reference
to the actual or when issued trading market for any securities
(including shares of capital stock or evidence of indebtedness of the
Company) comprising a distribution of securities, it must in doing so
consider the price in such market over the period used in computing the
Current Market Price of the Common Stock.
For purposes of this subparagraph (iv), any dividend or
distribution that includes both (x) any of the items described in
clauses (A), (B) or (C) of the first paragraph of this subparagraph
(iv) and (y) Common Stock or rights or warrants to subscribe for or
purchase Common Stock of the type referred to in subparagraph (iii)
shall be deemed to be (1) a dividend or distribution of shares of
capital stock of the Company (other than Common Stock), evidences of
indebtedness of the Company or other assets of the type referred to in
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clause (C) of the first paragraph of this subparagraph (iv) (making any
Conversion Price reduction required by this subparagraph (iv))
immediately followed by (2) a dividend or distribution of such Common
Stock or rights or warrants to purchase Common Stock of the type
referred to in subparagraph (iii) (making any further Conversion Price
reduction required by subparagraph (1) or (iii) of this Section
5.03(a)). except (A) the Reference Date of such dividend or
distribution as defined in this subparagraph (iv) shall be substituted
as "the date fixed for the determination of shareholders entitled to
receive such rights or warrants" and "the date fixed for such
determination" within the meaning of subparagraphs (i) and (iii) of
this Section 5.03(a) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed "outstanding at the
close of business on the date fixed for such determination" within the
meaning of subparagraph (i) of this Section 5.03(a).
The occurrence of a distribution or the occurrence of any
other event as a result of which holders of Series 5.375% Debentures
converting such notes into Common Stock hereunder will not be entitled
to receive rights issued pursuant to any shareholder protective rights
agreement now or hereafter in effect (the "Other Rights") in the same
amount and manner as if such holders had converted such shares
immediately prior to the occurrence of such distribution or other event
shall be deemed a distribution of Other Rights for the purposes of
conversion adjustments pursuant to this subparagraph (iv). In lieu of
making any adjustment to the Conversion Price under this subparagraph
(iv) as a result of such a distribution of Other Rights, the Company
may elect, in its sole discretion, to provide that Other Rights shall
be issuable in the same amount and manner upon conversion of the Series
5.375% Debentures without regard to whether the shares of Common Stock
issuable upon conversion of the Series 5.375% Debentures were issued
before or after such distribution or other event.
(v) In case the Company shall, by dividend or otherwise, at
any time distribute cash to all holders of Common Stock, excluding (A)
any cash dividends on Common Stock to the extent that the aggregate
cash dividends per share of Common Stock in any consecutive 12-month
period do not exceed the greater of (x) the amount per share of Common
Stock of the cash dividends paid on the Common Stock in the immediately
preceding 12-month period, to the extent that such dividends for the
immediately preceding 12-month period did not require an adjustment to
the Conversion Price pursuant to this subparagraph (v) (as adjusted to
reflect subdivisions or combinations of the Common Stock) and (y) 15%
of the average of the daily Closing Prices (as hereinafter defined) of
the Common Stock for the ten consecutive Trading Days immediately prior
to the date of declaration of such dividend and (B) any dividend or
distribution in connection with the liquidation, dissolution or
winding-up of the Company, whether voluntary or involuntary; or any
redemption of any Other Rights; provided, however, that no adjustment
shall be made pursuant to this subparagraph (v) if such distribution
would otherwise constitute a Fundamental Change (as hereinafter
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defined) and be reflected in a resulting adjustment to the Conversion
Price as provided in this Article Five) then, in each case (unless the
Company makes the election referred to in the proviso following this
clause), the Conversion Price shall be reduced so that the same shall
equal the price determined by multiplying the Conversion Price in
effect at the close of business on such record date by a fraction the
numerator of which shall be the Closing Price of a share of Common
Stock on such record date less the amount of cash so distributed (to
the extent not excluded as provided above) applicable to one share of
Common Stock, and the denominator shall be the Closing Price of a share
of Common Stock, such reduction to become effective immediately prior
to the opening of business on the day following such record date;
provided, however, that the Company may elect, in its sole discretion,
in lieu of the foregoing adjustment, to make adequate provision so that
each holder of Securities shall thereafter have the right to receive
upon conversion the amount of cash such holder would have received had
such holder converted each Security on such record date. If any
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adjustment is required to be made as set forth in this subparagraph (v)
as a result of a distribution which is a dividend described in clause
(A) of this subparagraph (v), such adjustment will be based upon the
amount by which such distribution exceeds the amount of the dividend
permitted to be excluded pursuant to such clause (A) of this
subparagraph (v). If an adjustment is required to be made pursuant to
this subparagraph (v) as a result of a distribution which is not such a
dividend, such adjustment would be based upon the full amount of such
distribution.
(vi) In case of the consummation of a tender or exchange
offer (other than an odd-lot tender offer) made by the Company or any
subsidiary of the Company for all or any portion of the outstanding
shares of Common Stock to the extent that the cash and fair market
value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be conclusive and shall be described
in a resolution of such Board) of any other consideration included in
such payment per share of Common Stock at the last time (the
"Expiration Time") tenders or exchanges may be made pursuant to such
tender or exchange offer (as amended) exceed by more than 10%, with any
smaller excess being disregarded in computing the adjustment to the
Conversion Price provided in this subparagraph (vi), the first reported
sale price per share of Common Stock on the Trading Day next succeeding
the Expiration Time, then the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the Expiration Time by a fraction
the numerator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) on the
Expiration Time multiplied by the first reported sale price of the
Common Stock on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in
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the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as
the "Purchased Shares") and (y) the product of the number of shares of
Common Stock outstanding (less any Purchased Shares) on the Expiration
Time and the first reported sale price of the Common Stock on the
Trading Day next succeeding the Expiration Time, such reduction to
become effective immediately prior to the opening of business on the
day following the Expiration Time.
(vii) For the purpose of any computation under this Article
Five, the "Current Market Price per share" of Common Stock on any day
shall be deemed to be the average of the daily Closing Prices (as
hereinafter defined) per share of Common Stock for the ten consecutive
Trading Days prior to and including the date in question; provided,
however, that (1) if the "ex" date (as hereinafter defined) for any
event (other than the issuance, distribution or Fundamental Change
requiring such computation) that requires an adjustment to the
Conversion Price pursuant to this Article Five (the "Other Event")
occurs during such ten consecutive Trading Days and prior to the "ex"
date for the issuance, distribution or Fundamental Change requiring
such computation (the "Current Event"), the Closing Price for each
Trading Day prior to the "ex" date for such Other Event shall be
adjusted by multiplying such Closing Price by the same fraction by
which the Conversion Price is so required to be adjusted as a result of
such Other Event, (2) if the "ex" date for any Other Event occurs on or
after the "ex" date for the Current Event and on or prior to the date
in question, the Closing Price for each Trading Day on and after the
"ex" date for such Other Event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion
Price is so required to be adjusted as a result of such Other Event
(provided that in the event that such fraction is required to be
determined at a date subsequent to the date in question and with
reference to events taking place subsequent to the date in question,
the Board of Directors of the Company or, to the extent permitted by
applicable law, a duly authorized committee thereof, whose
determination shall be conclusive and described in a resolution of the
Board of Directors of the Company or such duly authorized committee
thereof, as the case may be, shall in good faith estimate such fraction
based on assumptions it deems reasonable regarding such events taking
place subsequent to the date in question, and such estimated fraction
shall be used for purposes of such adjustment until such time as the
actual fraction by which the Conversion Price is so required to be
adjusted as a result of such Other Event is determined), and (3) if the
"ex" date for the Current Event is on or prior to the date in question,
after taking into account any adjustment required pursuant to clause
(1) or (2) of this proviso, the Closing Price for each Trading Day on
or after such "ex" date shall be adjusted by adding thereto the amount
of any cash and the fair market value (as determined in good faith by
the Board of Directors of the Company or, to the extent permitted by
applicable law, a duly authorized committee thereof in a manner
consistent with any determination of such value for purposes of this
Article Five, whose determination shall be conclusive and described in
a resolution of the Board of Directors of the Company or such duly
authorized committee thereof, as the case may be) of the shares of
capital stock, evidences of indebtedness or other assets being
distributed applicable to one share of Common Stock as of the close of
business on the day before such "ex" date. For purposes of this
subparagraph (vii), the term "ex" date, (1) when used with respect to
any issuance, distribution or Fundamental Change, means the first date
on which the Common Stock trades regular way on the relevant exchange
or in the relevant market from which the Closing Price was obtained
without the right to receive such issuance, such distribution or the
cash, securities, property or other assets distributable in such
Fundamental Change to holders of the Common Stock, (2) when used with
respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades regular way on
such exchange or in such market after the time at which such
subdivision or combination becomes effective and (3) when used with
respect to any tender or exchange offer means the first date on which
the Common Stock trades regular way on such exchange or in such market
after the Expiration Time of such offer.
(viii) No adjustment in the Conversion Price shall be required
pursuant to this Section 5.03(a) unless the adjustment would require a
change of at least 1% of such price; provided, however, that any
adjustments which by reason of this subparagraph (viii) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the
nearest cent (with .005 being rounded upward) or to the nearest 1/100
of a share (with .005 of a share being rounded upward), as the case may
be. Notwithstanding anything to the contrary in this Article Five, the
Company from time to time may, to the extent permitted by law, reduce
the Conversion Price by any amount for any period of at least 20
Business Days, in which case the Company shall give at least 15 days'
notice of such reduction to the holders of Series 5.375% Debentures and
the Trustee. In addition, the Company may, at its option, make such
reductions in the Conversion Price in addition to those set forth in
this Article Five, as it considers to be advisable in order to avoid or
diminish any income tax to any holders of shares of Common Stock
resulting from any dividend or distribution of stock or issuance of
rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
(ix) In any case in which this Article Five provides that an
adjustment shall become effective immediately after a record date for
an event, the Company may defer until the occurrence of such event (A)
issuing to the holder of any Series 5.375% Debentures converted after
such record date and before the occurrence of such event the additional
shares of Common Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the Common Stock
issuable upon such conversion before giving effect to such adjustment
and (B) paying to such holder any amount in cash in lieu of any
fractional shares pursuant to this Article Five.
(x) For purposes of this Article Five, "Common Stock"
includes any stock of any class of the Company which has no preference
in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding-up of the
Company and which is not subject to redemption by the Company. However,
subject to the provisions of this Article Five, shares issuable on
conversion of Series 5.375% Debentures shall include only shares of the
class designated as the Company Common Stock on the date of the initial
issuance of Series 5.375% Debentures by the Company or shares of any
class or classes resulting from any reclassification or
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reclassification thereof and which have no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and
which are not subject to redemption by the Company; provided, however,
that if at any time there shall be more than one such resulting class,
the shares of each such class then so issuable shall be substantially
in the proportion which the total number of shares of such class
resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
(b) Whenever the Conversion Price is adjusted as herein
provided:
(i) the Company shall compute the adjusted Conversion Price
and shall prepare a certificate signed by the Chief Financial Officer
or the Treasurer of the Company setting forth the adjusted Conversion
Price and showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall forthwith be filed with
the Trustee and the transfer agent for the Preferred Securities and the
Series 5.375% Debentures; and
(ii) a notice stating the Conversion Price has been adjusted
and setting forth the adjusted Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of Preferred
Securities and the Series 5.375% Debentures at their last addresses as
they appear upon the stock transfer books of the Company and the Trust.
SECTION 5.04. (a) In the event that the Company shall be a
party to any transaction or series of transactions constituting a Fundamental
Change, including, without limitation, (i) any recapitalization or
reclassification of shares of Common Stock (other than a change in the par value
or as a result of a subdivision or combination of the Common Stock), (ii) any
consolidation of the Company with, or merger of the Company into, any other
corporation or any merger of another corporation into the Company as a result of
which holders of Common Stock shall be entitled to receive securities or other
property or assets (including cash) with respect to or in exchange for Common
Stock (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock),
(iii) any sale or transfer of all or substantially all of the assets of the
Company, or (iv) any compulsory share exchange, pursuant to any of which the
holders of Common Stock shall be entitled to receive other securities, cash or
other property, then appropriate provision shall be made as part of the terms of
such transaction or series of transactions so that the holder of each Series
5.375% Debenture then outstanding shall have the right thereafter to convert
such Series 5.375% Debenture only into (A) if any such transaction does not
constitute a Common Stock Fundamental Change (as hereinafter defined), the kind
and amount of the securities, cash or other property that would have been
receivable upon such recapitalization, reclassification, consolidation, merger,
sale, transfer or share exchange by a holder of the number of shares of Common
Stock into which such Series 5.375% Debenture might have been converted
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immediately prior to such recapitalization, reclassification, consolidation,
merger, sale, transfer or share exchange, after, in the case of a Non-Stock
Fundamental Change (as hereinafter defined), giving effect to any adjustment in
the Conversion Price required by the provisions which follow in subparagraph (i)
of Section 5.04(c), and (B) if any such transaction constitutes a Common Stock
Fundamental Change, common stock of the kind received by holders of Common Stock
as a result of such Common Stock Fundamental Change in an amount determined
pursuant to the provisions which follow in subparagraph (ii) of Section 5.04(c).
The company formed by such consolidation or resulting from such merger or which
acquires such assets or which acquires the Common Stock, as the case may be,
shall enter into a supplemental indenture with the Trustee, satisfactory in form
to the Trustee, the provisions of which establishes such right and provide for
adjustments which, for events subsequent to the effective date of such
supplemental indenture, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article Five. The above provisions shall
similarly apply to successive recapitalization, reclassifications,
consolidations, mergers, sales, transfers or share exchanges.
(b) Notwithstanding any other provisions in this Article Five
to the contrary, if any Fundamental Change (as hereinafter defined) occurs, then
the Conversion Price in effect will be adjusted immediately following such
Fundamental Change as described below in Section 5.04(c). In addition, in the
event of a Common Stock Fundamental Change, each Series 5.375% Debenture shall
be convertible solely into common stock of the kind received by holders of
Common Stock as the result of such Common Stock Fundamental Change as more
specifically provided below in Section 5.04(c).
(c) For purposes of calculating any adjustment to be made
pursuant to this Article Five in the event of a Fundamental Change, immediately
following such Fundamental Change (and for such purposes a Fundamental Change
shall be deemed to occur on the earlier of (a) the occurrence of such
Fundamental Change and (b) the date, if any, fixed for determination of
shareholders entitled to receive the cash, securities, property or other assets
distributable in such Fundamental Change to holders of the Common Stock):
(i) in the case of a Non-Stock Fundamental Change, the
Conversion Price per share of Common Stock immediately following such
Non-Stock Fundamental Change shall be the lower of (A) the Conversion
Price in effect immediately prior to such Non-Stock Fundamental Change,
but after giving effect to any other adjustments effected pursuant to
this Article Five, and (B) the product of (1) the greater of the
Applicable Price (as hereinafter defined) or the then applicable
Reference Market Price (as hereinafter defined) and (2) a fraction the
numerator of which shall be 100 and the denominator of which shall be
the amount based on the date on which such Non-Stock Fundamental Change
occurs. For the twelve month period beginning May 13, 1998, the
denominator will be 105.375, and the denominator will decrease by
0.671875 during each successive 12-month period; provided, that the
denominator shall in no event be less than 100.0.
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(ii) in the case of a Common Stock Fundamental Change, the
Conversion Price per share of Common Stock immediately following the
Common Stock Fundamental Change shall be the Conversion Price in effect
immediately prior to such Common Stock Fundamental Change, but after
giving effect to any other adjustments effected pursuant to this
Article Five, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as hereinafter defined) and the denominator of
which is the Applicable Price; provided, however, that in the event of
a Common Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of Common Stock is common stock of
the successor, acquiror or other third party (and cash, if any, paid
with respect to any fractional interests in such common stock resulting
from such Common Stock Fundamental Change) and (B) all of the Common
Stock shall have been exchanged for, converted into or acquired for
common stock (and cash, if any, with respect to fractional interests)
of the successor, acquiror or other third party, the Conversion Price
per share of Common Stock immediately following such Common Stock
Fundamental Change shall be the Conversion Price in effect immediately
prior to such Common Stock Fundamental Change divided by the number of
shares of common stock of the successor, acquiror, or other third party
received by a holder of one share of Common Stock as a result of such
Common Stock Fundamental Change.
(d) The following definitions shall apply to terms used in
this Article Five:
(i) "Applicable Price" shall mean (A) in the event of a
Non-Stock Fundamental Change in which the holders of Common Stock
receive only cash, the amount of cash receivable by a holder of one
share of Common Stock and (B) in the event of any other Fundamental
Change, the average of the Closing Prices for one share of Common Stock
during the ten Trading Days immediately prior to the record date for
the determination of the holders of Common Stock entitled to receive
cash, securities, property or other assets in connection with such
Fundamental Change or, if there is no such record date, prior to the
date upon which the holders of Common Stock shall have the right to
receive such cash, securities, property or other assets.
(ii) "Closing Price" with respect to any securities on any
day shall mean the closing sale price, regular way, on such day or, in
case no such sale takes place on such day, the average of the reported
closing bid and asked prices, regular way, in each case on the New York
Stock Exchange or, if such security is not listed or admitted to
trading on such Exchange, on the principal national securities exchange
or quotation system on which such security is quoted or listed or
admitted to trading or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of
the closing bid and asked prices of such security on the
over-the-counter market on the date in question as reported by the
National Quotation Bureau Incorporated, or a similarly generally
accepted reporting service or, if not so available, in such manner as
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furnished by any New York Stock Exchange member firm selected from time
to time by the Board of Directors of the Company for that purpose or a
price determined in good faith by the Board of Directors of the
Company.
(iii) "Common Stock Fundamental Change" shall mean any
Fundamental Change in which more than 50% of the value (as determined
in good faith by the Board of Directors of the Company) of the
consideration received by the holders of Common Stock pursuant to such
transactions consists of shares of common stock that, for the ten
consecutive Trading Days immediately prior to such Fundamental Change,
has been admitted for listing or admitted for listing subject to notice
of issuance on a national securities exchange or quoted on the Nasdaq
National Market; provided, however, that a Fundamental Change shall not
be a Common Stock Fundamental Change unless either (A) the Company
continues to exist after the occurrence of such Fundamental Change and
the outstanding Preferred Securities continue to exist as outstanding
Preferred Securities, or (B) the outstanding Preferred Securities
continue to exist as Preferred Securities and are convertible into
common stock of the successor to the Company.
(iv) "Fundamental Change" shall mean the occurrence of any
transaction or event or series of transactions or events pursuant to
which all or substantially all of the Common Stock shall be exchanged
for, converted into. acquired for or constitutes solely the right to
receive cash, securities, property or other assets (whether by means of
an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise);
provided, however, in the case of a plan involving more than one such
transaction or event, for purposes of adjustment of the Conversion
Price, such Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock has been exchanged for, converted
into, or acquired for or constitutes solely the right to receive cash,
securities, property or other assets, but the adjustment shall be based
upon the consideration which the holders of Common Stock received in
such transaction or event as a result of which more than 50% of the
Common Stock shall have been exchanged for, converted into, or acquired
for or shall constitute solely the right to receive cash, securities,
property or other assets.
(v) "Non-Stock Fundamental Change" shall mean any
Fundamental Change other than a Common Stock Fundamental Change.
(vi) "Purchaser Stock Price" shall mean, with respect to any
Common Stock Fundamental Change, the average of the Closing Prices for
one share of the common stock received by holders of Common Stock in
such Common Stock Fundamental Change during the ten Trading Days
immediately prior to the record date for the determination of the
holders of Common Stock entitled to receive such common stock or, if
there is no such record date, prior to the date upon which the holders
of Common Stock shall have the right to receive such common stock.
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(vii) "Reference Market Price" shall initially mean $11.00
(which is an amount equal to 66-2/3% of the last reported sale price
for the Common Stock on the New York Stock Exchange on May 7, 1998)
and, in the event of any adjustment to the Conversion Price other than
as a result of a Fundamental Change, the Reference Market Price shall
also be adjusted so that the ratio of the Reference Market Price to the
Conversion Price after giving effect to any such adjustment shall
always be the same as the ratio of the initial Reference Market Price
to the initial Conversion Price set forth in this Article Five.
(e) In determining the amount and type of consideration
received by a holder of Common Stock in the event of a Fundamental Change,
consideration received by a holder of Common Stock pursuant to a statutory right
of appraisal will be disregarded.
SECTION 5.05. In case:
(i) the Company shall declare a dividend (or any other
distribution) on Common Stock that would cause an adjustment to the
Conversion Price of the Series 5.375% Debentures pursuant to the terms
of any of the subparagraphs above (including such an adjustment that
would occur but for the terms of the first sentence of Section
5.03(a)(viii) above); or
(ii) the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock or combined
into a smaller number of shares of Common Stock; or
(iii) the Company shall authorize the granting to the holders
of Common Stock generally of rights or warrants (for a period expiring
within 45 days after the record date fixed for a distribution of such
rights and warrants) to subscribe for or purchase any shares of the
Company's capital stock or other capital stock of any class or of any
other rights (including any Rights Offerings); or
(iv) of any reclassification of Common Stock (other than a
subdivision or combination of the outstanding shares of Common Stock),
or of any consolidation, merger or share exchange to which the Company
is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the
assets of the Company or a compulsory share exchange; or
(v) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then the Company shall (i) if any Preferred Securities are outstanding, cause to
be filed with the transfer agent for the Preferred Securities, and shall cause
to be mailed to the holders of record of the Preferred Securities, at their last
addresses as they shall appear upon the stock transfer books of the Trust or
(ii) shall cause to be mailed to all Holders at their last addresses as they
shall appear in the books and records of the Trust, at least 15 days prior to
the applicable record or effective date hereinafter specified, a notice stating
(A) the date on which a record (if any) is to be taken for the purpose of such
dividend, distribution, rights or warrants or, if a record is not to be taken,
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the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution, rights or warrants are to be determined or (B) the
date on which such reclassification, consolidation, merger, sale, transfer,
share exchange, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up (but no failure to mail such notice or any defect therein or in
the mailing thereof shall affect the validity of the corporate action required
to be specified in such notice).
SECTION 5.06. The Company shall reserve, free from pre-emptive
rights, out of its authorized but unissued shares, sufficient shares to provide
for the conversion of the Series 5.375% Debentures from time to time as such
Series 5.375% Debentures are presented for conversion, provided, that nothing
contained herein shall be construed to preclude the Company from satisfying its
obligations in respect of the conversion of Series 5.375% Debentures by delivery
of repurchased shares of Common Stock which are held in the treasury of the
Company.
If any shares of Common Stock to be reserved for the purpose
of conversion of Series 5.375% Debentures hereunder require registration with or
approval of any governmental authority under any Federal or State law before
such shares may be validly issued or delivered upon conversion, then the Company
covenants that it will in good faith and as expeditiously as possible endeavor
to secure such registration or approval, as the case may be, provided, however,
that nothing in this Section 5.06 shall be deemed to affect in any way the
obligations of the Company to convert Series 5.375% Debentures into Common Stock
as provided in this Article Five.
Before taking any action which would cause an adjustment
reducing the Conversion Price below the then par value, if any, of the Common
Stock, the Company will take all corporate action which may, in the Opinion of
Counsel, be necessary in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock at such adjusted Conversion
Price.
The Company covenants that all shares of Common Stock which
may be issued upon conversion of Series 5.375% Debentures will upon issue be
fully paid and non-assessable by the Company and free of pre-emptive rights.
SECTION 5.07. Notwithstanding the foregoing provisions, the
issuance of any shares of Common Stock pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the Company and
the investment of additional optional amounts in shares of Common Stock under
any such plan, and the issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any employee benefit plan or program
of the Company or pursuant to any option, warrant, right or exercisable,
exchangeable or convertible security outstanding as of May 13, 1998, shall not
be deemed to constitute an issuance of Common Stock or exercisable, exchangeable
or convertible securities by the Company to which any of the adjustment
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provisions described above applies. There shall also be no adjustment of the
Conversion Price in case of the issuance of any stock (or securities convertible
into or exchangeable for stock) of the Company except as specifically described
in this Article Five.
SECTION 5.08. In case the Company shall, by dividend or
otherwise, declare or make a distribution on the Common Stock referred to in
Section 5.03(a)(iv) or 5.03(a)(v) (including, without limitation, dividends or
distributions referred to in the last sentence of Section 5.03(a)(vi)), the
Holder of the Series 5.375% Debenture, upon the conversion thereof subsequent to
the close of business on the date fixed for the determination of stockholders
entitled to receive such distribution and prior to the effectiveness of the
Conversion Price adjustment in respect of such distribution, shall also be
entitled to receive for each share of Common Stock into which the Series 5.375%
Debentures are converted, the portion of the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash and assets so
distributed applicable to one share of Common Stock; provided, however, that, at
the election of the Company (whose election shall be evidenced by a resolution
of the Board of Directors) with respect to all Holders so converting, the
Company may, in lieu of distributing to such Holder any portion of such
distribution not consisting of cash or securities of the Company, pay such
Holder an amount in cash equal to the fair market value thereof (as determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors). If any conversion of
Series 5.375% Debentures described in the immediately preceding sentence occurs
prior to the payment date for a distribution to holders of Common Stock which
the Holder of Series 5.375% Debentures so converted is entitled to receive in
accordance with the immediately preceding sentence, the Company may elect (such
election to be evidenced by a resolution of the Board of Directors) to
distribute to such Holder a due bill for the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock, cash or assets to
which such Holder is so entitled, provided, that such due bill (a) meets any
applicable requirements of the principal national securities exchange or other
market on which the Common Stock is then traded and (b) requires payment or
delivery of such shares of Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets no later than the date of
payment or delivery thereof to holders of shares of Common Stock receiving such
distribution.
ARTICLE 6
FORM OF DEBENTURES
SECTION 6.01. The Series 5.375% Debentures and the Trustee's
Certificate of Authentication to be endorsed thereon are to be substantially in
the following forms:
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(FORM OF FACE OF DEBENTURE)
[IF THE NOTE IS TO BE A GLOBAL DEBENTURE, INSERT - This
Debenture is a Global Debenture within the meaning of the Indenture hereinafter
referred to and is registered in the name of a Depositary or a nominee of a
Depositary. This Debenture is exchangeable for Debentures registered in the name
of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and no transfer of this Debenture
(other than a transfer of this Debenture as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary) may be registered except in limited
circumstances.
Unless this Debenture is presented by an authorized
representative to The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any Debenture issued is registered in the name of Cede & Co. or
such other name as requested by an authorized representative of The Depository
Trust Company and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
[IF THE DEBENTURE IS TO BE A DEFINITIVE CERTIFICATE ISSUED TO AN INSTITUTIONAL
ACCREDITED INVESTOR ATTACH "ACCREDITED INVESTOR LETTER" IN THE FORM ATTACHED
HERETO]
No. $
CUSIP NO. _____________
5.375% JUNIOR SUBORDINATED DEBENTURE
DUE 2013
[If prior to the Transfer Restriction Termination Date or sale
pursuant to an effective registration statement or Rule 144, add legend from
Section 1.04 of this First Supplemental Indenture.]
Owens & Minor, Inc., a Virginia corporation (herein referred
to as the "Company", which term includes any successor corporation under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to _____________ or registered assigns, the principal sum of $____________ on
April 30, 2013, and to pay interest on said principal sum from May 13, 1998 or
from the most recent interest payment date (each such date, an "Interest Payment
Date") to which interest has been paid or duly provided for on each January 31,
April 30, July 31 and October 31 (subject to deferral as set forth herein) in
arrears commencing July 31, 1998 at the rate of 5.375% per annum plus Compounded
Interest, if any, until the principal hereof shall have become due and payable,
and on any overdue principal and premium, if any, and (without duplication and
to the extent that payment of such interest is enforceable under applicable law)
on any overdue installment of interest at the same rate per annum. The amount of
interest payable on any Interest Payment Date shall be computed on the basis of
a 360-day year twelve 30-day months. In the event that any date on which
interest is payable on this Debenture is not a business day, then payment of
interest payable on such date will be made on the next succeeding day which is a
business day (and without any interest or other payment in respect of any such
delay), except that, if such business day is in the next succeeding calendar
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year, such payment shall be made on the immediately preceding business day, in
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in, the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor Debentures, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment, [which shall be the close of business on the
day next preceding such Interest Payment Date, provided if the Preferred
Securities of Owens & Minor Trust I ("O&M Trust I") are no longer in book-entry
only form, the regular record dates shall be the close of business on the
fifteenth (15th) day of the month in which such Interest Payment Date occurs]
[IF PURSUANT TO THE PROVISIONS OF SECTION 2.11 (c) OF THE INDENTURE OR SECTION
1.04 OF THE FIRST SUPPLEMENTAL INDENTURE THE SERIES 5.375% DEBENTURES ARE NOT
REPRESENTED BY A GLOBAL DEBENTURE -- which shall be the close of business on the
fifteenth (15th) day of the month in which such Interest Payment Date occurs.]
Any such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered holders on such regular record
date, and may be paid to the person in whose name this Debenture (or one or more
Predecessor Debentures) is registered at the close of business on a special
record date to be fixed by the Trustee for the payment of such defaulted
interest, notice whereof shall be given to the registered holders of this series
of Debentures not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture. The principal of (and premium, if any) and the
interest on this Debenture shall be payable at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City and
State of New York, in any coin or currency of the United States of America which
at the time of payment is legal tender for payment of public and private debts;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall appear
in the Debenture register and that the payment of principal will only be made
upon the surrender of this Debenture to the Trustee. Notwithstanding the
foregoing, so long as the owner and record holder of this Debenture is the
Property Trustee (as defined in the Indenture referred to on the reverse
hereof), the payment of the principal of (and premium, if any) and interest
(including Compounded Interest, if any) on this Debenture will be made at such
place and to such account of the Property Trustee as may be designated by the
Property Trustee.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior and Subordinated Debt, and this Debenture is
issued subject to the provisions of the Indenture with respect thereto. Each
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Holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on its behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee its
attorney-in-fact for any and all such purposes. Each Holder hereof, by its
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder of
Senior and Subordinated Debt, whether now outstanding or hereafter incurred, and
waives reliance by each such Holder upon said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or on
behalf of the Trustee.
The provisions of this Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to
be executed.
Dated:
------------------------------
Owens & Minor, Inc.
By:
--------------------------------------
Attest:
By:
------------------------------
Secretary
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CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures
described in the within-mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
or as Authentication Agent
By: By:
------------------------------------- -----------------------------
Authorized Signatory Authorized Signatory
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(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of
Debentures of the Company (herein sometimes referred to as the "Debentures"),
specified in the Indenture, all issued or to be issued in one or more series
under and pursuant to an Indenture dated as of May 13, 1998 duly executed and
delivered between the Company and The First National Bank of Chicago, a national
banking association, as Trustee (herein referred to as the "Trustee"), as
supplemented by the First Supplemental Indenture dated as of May 13, 1998
between the Company and the Trustee (said Indenture as so supplemented being
hereinafter referred to as the "Indenture"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Debentures, and, to the
extent specifically set forth in the Indenture, the holders of Senior and
Subordinated Debt and Preferred Securities. By the terms of the Indenture, the
Debentures are issuable in series which may vary as to amount, date of maturity,
rate of interest and in other respects as in the Indenture provided. This series
of Debentures is designated the 5.375% Junior Subordinated Debentures due 2013
and is limited in aggregate principal amount to $123,711,350 ($142,268,050 if
the over-allotment set forth in the Purchase Agreement (as defined in the
Declaration of Trust) is exercised in full).
The Debentures are not subject to any sinking fund. Except as
provided in the next paragraph, the Debentures may not be redeemed by the
Company prior to May 2, 2001. The Company shall have the right to redeem this
Debenture at the option of the Company, in whole or in part at any time on or
after May 2, 2001 (an "Optional Redemption"), upon not less than 30 nor more
than 60 days notice to the Holder of the Series 5.375% Debentures, at the
following prices (as expressed as percentages of the principal amount of the
Debentures) (the "Optional Redemption Price"), together with any accrued but
unpaid interest, including any Compounded Interest, if any, to, but including,
the date of such redemption, if redeemed during the 12-month period beginning
April 30:
Year Redemption Price
---- ----------------
2001 103.3594%
2002 102.6875%
2003 102.0156%
2004 101.3438%
2005 100.6719%
and 100% if redeemed on or after April 30, 2006.
If the Series 5.375% Debentures are redeemed on any Interest
Payment Date, accrued and unpaid interest shall be payable to Holders of record
on the relevant record date.
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The Company may not redeem any Series 5.375% Debentures unless
all accrued and unpaid interest thereon, including Compounded Interest, if any,
has been or is simultaneously paid for all quarterly periods terminating on or
prior to the date of notice of redemption. So long as the corresponding
Preferred Securities are outstanding, the proceeds from the redemption of the
Series 5.375% Debentures will be used to redeem the Preferred Securities.
If the Debentures are only partially redeemed by the Company
pursuant to an Optional Redemption, the Debentures will be redeemed pro rata or
by lot; provided if, at the time of redemption, the Debentures are registered as
a Global Debenture, the Depositary shall determine the principal amount of such
Debentures held by each holder of Debentures to be redeemed in accordance with
its customary procedures.
If, at any time, a Tax Event (as defined below) shall occur or
be continuing after receipt of a Dissolution Tax Opinion (as defined below) and
(i) the Regular Trustees and the Company shall have received an opinion (a
"Redemption Tax Opinion") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Debentures for United States federal income tax purposes even if
the Debentures were distributed to the holders of Preferred Securities and
Common Securities in liquidation of such holder's interest in O&M Trust I as set
forth in the Declaration of Trust or (ii) the Regular Trustees shall have been
informed by such tax counsel that a No Recognition Opinion (as defined below)
cannot be delivered to O&M Trust I, the Company shall have the right at any
time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash at a price equal to 100% of the
principal amount thereof, together with any accrued and unpaid interest thereon,
including Compounded Interest if any, to, but excluding the date of redemption,
within 90 days following the occurrence of such Tax Event; provided, however,
that, if at the time there is available to the Company or the Regular Trustees
on behalf of O&M Trust I the opportunity to eliminate, within such 90 day
period, the Tax Event by taking some ministerial action ("Ministerial Action"),
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on O&M Trust I, the Company or
the holders of the Preferred Securities, the Company or the Regular Trustees on
behalf of O&M Trust I will pursue such measure in lieu of redemption and
provided further that the Company shall have no right to redeem the Debentures
while the Regular Trustees on behalf of O&M Trust I are pursuing any such
Ministerial Action.
"Tax Event" means that the Company and the Regular Trustees
shall have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that on
or after May 8, 1998, as a result of (a) any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein, (b) any amendment to, or change in, an interpretation or application of
any such laws or regulations by any legislative body, court, governmental agency
or regulatory authority (including the enactment of any legislation and the
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publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
effective or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after May 8, 1998 (including, without
limitation, any of the foregoing arising with respect to, or resulting from, any
proposal, proceeding or other action commencing on or before May 8, 1998), there
is more than an insubstantial risk that (i) O&M Trust I is, or will be within 90
days of the date thereof, subject to United States federal income tax with
respect to income accrued or received on the Debentures, (ii) O&M Trust I is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest payable
by the Company to O&M Trust I on the Debentures is not, or within 90 days of the
date thereof will not be, deductible by the Company for United States federal
income tax purposes.
"No Recognition Opinion" means an opinion of a nationally
recognized independent tax counsel experienced in such matters, which opinion
may rely on any then applicable published revenue ruling of the Internal Revenue
Service, to the effect that the holders of the Preferred Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of a dissolution of O&M Trust I and distribution of the Debentures as
provided in the Declaration of Trust.
If the Debentures are only partially redeemed by the Company
pursuant to an Optional Redemption or as a result of a Tax Event as described
above, the Debentures will be redeemed pro rata or by lot. Notwithstanding the
foregoing, if a partial redemption of the Debentures would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and will only
redeem the Debentures in whole.
In the event of redemption of this Debenture in part only, a
new Debenture or Debentures of this series for unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture,
shall have occurred and be continuing, the principal of all of the Debentures
may be declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for defeasance at any time
of the entire indebtedness of this Debenture upon compliance by the Company with
certain conditions set forth therein.
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The Indenture contains provisions permitting the Company and
the Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture (and, in the case of any series of
Debentures held as trust assets of an O&M Trust and with respect to which a
Security Exchange has not theretofore occurred, such consent of holders of the
Preferred Securities and the Common Securities of such O&M Trust) as may be
required under the Declaration of Trust of such O&M Trust to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders
of the Debentures; provided, however, that no such supplemental indenture shall
(i) extend the fixed maturity of any Debentures of any series, reduce the
principal amount thereof, reduce the rate or extend the time of payment of
interest thereon, reduce any premium payable upon the redemption thereof, or
otherwise modify any terms effecting the amount or timing of payments on any
Debenture or (ii) reduce the aforesaid percentage of Debentures, the Holders of
which are required to consent to any such modification of the Indenture, in each
case without the consent of the Holders of each Debenture affected thereby (and,
in the case of any series of Debentures held as trust assets of an O&M Trust and
with respect to which a Security Exchange has not theretofore occurred, such
consent of the holders of the Preferred Securities and the Common Securities of
such O&M Trust as may be required under the Declaration of Trust of such O&M
Trust) then outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Debentures of a series at the time outstanding affected thereby (subject, in
the case of any series of Debentures held as trust assets of an O&M Trust and
with respect to which a Securities Exchange has not theretofore occurred, to
such consent of holders of Preferred Securities and Common Securities of such
O&M Trust as may be required under the Declaration of Trust of such O&M Trust),
on behalf of the Holders of the Debentures of such series, to waive any past
default in the performance of any of the covenants contained in the Indenture,
or established pursuant to the Indenture with respect to such series, and its
consequences, except a default in the payment of the principal of or premium, if
any, or interest on any of the Debentures of such series. Any such consent or
waiver by the registered Holder of this Debenture (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Debenture and of any Debenture issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.
Subject to Section 13.12 of the Indenture, no reference herein
to the Indenture (other than such Section) and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place at the rate and in the money
herein prescribed.
So long as the Company is not in default in the payment of
interest on the Debentures, the Company shall have the right, at any time during
the term of the Debentures, from time to time to extend the interest payment
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period of such Debentures for up to 20 consecutive quarterly interest periods
(the "Extended Interest Payment Period"), at the end of which period the Company
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate of 5.375% per annum to the extent permitted by applicable law,
compounded quarterly ("Compounded Interest")); provided that no Extended
Interest Payment Period may extend beyond the date of maturity or any redemption
date of the Debentures. During such Extended Interest Payment Period the Company
shall not (i) declare or pay any dividend on, or redeem, purchase, acquire or
make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock, or make any guarantee payments with respect thereto,
provided that the foregoing will not apply to any stock dividends or other stock
distributions paid by the Company, or (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu with or junior in interest to the
Debentures. The provisions of the immediately preceding sentence will not
restrict the ability of the Company to redeem rights issued pursuant to the
Amended and Restated Rights Agreement, dated as of May 10, 1994 between the
Company and Wachovia Bank of North Carolina, N.A., as Rights Agent, as it may be
amended from time to time, in an amount per right issued thereunder not to
exceed that in effect on the date hereof. Prior to the termination of any such
Extended Interest Payment Period, the Company may pay all or any portion of the
interest accrued on the Debentures on any Interest Payment Date to holders of
record on the regular record date for such Interest Payment Date or from time to
time further extend such Extended Interest Payment Period, provided that such
Period together with all such further extensions thereof shall not exceed 20
consecutive quarterly interest periods. At the termination of any such Extended
Interest Payment Period and upon the payment of all accrued and unpaid interest
then due, together with Compounded Interest, the Company may select a new
Extended Interest Payment Period, subject to the foregoing requirements. No
interest on this Debenture shall be due and payable during an Extended Interest
Payment Period, except at the end thereof. At the end of the Extended Interest
Payment Period the Company shall pay all interest accrued and unpaid on the
Debentures including any Compounded Interest which shall be payable to the
holders of the Debentures in whose names the Debentures are registered in the
Debenture register on the first record date after the end of the Extended
Interest Payment Period.
As provided in the Indenture and subject to certain
limitations therein set forth, this Debenture is transferable by the registered
holder hereof on the Debenture register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company in
the Borough of Manhattan, The City and State of New York accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount and series
will be issued to the designated transferee or transferees. No service charge
will be made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
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Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute owner
hereof (whether or not this Debenture shall be overdue and notwithstanding any
notice of ownership or writing hereon made by anyone other than the Debenture
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any paying agent nor any
Debenture Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of
or the interest on this Debenture, or for any claim based hereon, or otherwise
in respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Holder of any Debenture has the right, exercisable at any
time through the close of business (New York time) on April 30, 2013 (or, in the
case of a Debenture called for redemption, prior to the close of business on the
Business Day prior to the corresponding redemption date), to convert the
principal amount thereof (or any portion thereof that is an integral multiple of
$50) into shares of Common Stock at the initial conversion rate of 2.4242 shares
of Common Stock for each Debenture (equivalent to a Conversion Price of $20.625
per share of Common Stock), subject to adjustment under certain circumstances.
To convert a Debenture, a Holder must (a) complete and sign a
conversion notice substantially in the form attached hereto, (b) surrender the
Debenture to a Conversion Agent, (c) furnish appropriate endorsements or
transfer documents if required by the Conversion Agent and (d) pay any transfer
or similar tax, if required. If a Debenture is surrendered for conversion after
the close of business on any regular record date for payment of a Distribution
and before the opening of business on the corresponding Distribution payment
date, then, notwithstanding such conversion, the Distribution payable on such
Distribution payment date will be paid in cash to the person in whose name the
Debenture is registered at the close of business on such record date, and (other
than a Debenture or a portion of a Debenture called for redemption on a
redemption date occurring after such record date and on or prior to such
Distribution payment date) when so surrendered for conversion, the Debenture
must be accompanied by payment of an amount equal to the Distribution payable on
such Distribution payment date. The number of shares issuable upon conversion of
a Debenture is determined by dividing the principal amount of the Debenture
converted by the Conversion Price in effect on the Conversion Date. No
fractional shares will be issued upon conversion but a cash adjustment will be
made for any fractional interest. The outstanding principal amount of any
Debenture shall be reduced by the portion of the principal amount thereof
converted into shares of Common Stock.
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[If CERTIFICATED DEBENTURES - The Debentures of this series
are issuable only in registered form without coupons in denominations of $50 and
any integral multiple thereto.] [If GLOBAL DEBENTURE - This Global Debenture is
exchangeable for Debentures in definitive form under certain limited
circumstances set forth in the Indenture. Debentures of this series so issued
are issuable only in registered form without coupons in denominations of $50 or
any integral multiple thereof.] As provided in the Indenture and subject to
certain limitations [If GLOBAL DEBENTURE - herein and] therein set forth,
Debentures of this series [If GLOBAL DEBENTURE - so issued] are exchangeable for
a like aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Debenture or any
beneficial interest therein, the holder of, and any Person that acquires a
beneficial interest in, this Debenture agrees that for United States federal,
state and local tax purposes it is intended that this Debenture constitute
indebtedness.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
-41-
<PAGE>
[FORM OF ELECTION TO CONVERT]
ELECTION TO CONVERT
To: Owens & Minor, Inc.
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture, or the portion below designated, into
Common Stock of OWENS & MINOR, INC., in accordance with the terms of the
Indenture referred to in this Debenture, and directs that the shares issuable
and deliverable upon conversion, together with any check in payment for
fractional shares, be issued in the name of and delivered to the undersigned,
unless a different name has been indicated in the assignment below. If shares
are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto.
Date:
-----------,-----
in whole Portions of Debenture to be converted ($50
or integral multiples thereof):
$
---------------
----------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
----------------------------------------------
----------------------------------------------
----------------------------------------------
Signature Guarantee:1
---------------------
- ---------------------------
1 Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Conversion Agent, which
requirements include membership of participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Conversion Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
-42-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Debenture to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
--------------------------------------------------------
agent to transfer
- ---------------------------------------------------------------
this Debenture on the books of the Trust. The agent may substitute another to
act for him or her.
Date:
---------------------------------
Signature:
----------------------------
(Sign exactly as your name appears on the other side of this Debenture)
Signature Guarantee:2
--------------------------------------
- ------------------------
2 Signature must be guaranteed by an "eligible guarantor institution"
that is a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Conversion Agent, which
requirements include membership of participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Conversion Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities and Exchange Act of 1934, as amended.
-43-
<PAGE>
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH (I) TRANSFERS OF INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL DEBENTURE AND
(II) TRANSFERS OF INTEREST TO NON-U.S. PERSONS
The First National Bank of Chicago
153 W. 51st Street
5th Floor
Suite 4015
New York, NY 10019
Attention: Corporate Trust Administration
Re: Owens & Minor, Inc. (the "Company")
Series 5.375% Debentures
-----------------------------------
Dear Sirs or Mesdames:
In connection with our proposed sale of the number of Series
5.375% Debentures designated below, the undersigned owner confirms that such
sale has been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended, and, accordingly, represents that:
(1) the offer of the Series 5.375% Debentures was not made
to a person in the United States;
(2) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable, and
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the U.S. Securities Act of 1933.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
-44-
<PAGE>
Date:
----------------,-----------
Very Truly yours,
[Name of Transferor]
By:
--------------------------------------
Authorized Signature
Number if Series 5.375% Debentures to be
sold:
-----------------------------------------
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number:
-----------------------------------------
-----------------------------------------
-----------------------------------------
-45-
<PAGE>
Accredited Investor Letter
,
The First National Bank of Chicago
153 W. 51st Street
5th Floor
Suite 4015
New York, NY 10019
Dear Sirs:
In connection with our proposed transfer of 5.375% Junior
Subordinated Debentures due 2013 described below (the "Debentures") of Owens &
Minor, Inc. (the "Company"), we confirm that:
1. We agree to be bound by, and not to resell, pledge or
otherwise transfer the Debentures except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended
(the "Securities Act").
2. We understand that any subsequent transfer of the
Debentures is subject to certain restrictions and conditions set forth
in the Indenture as amended by the First Supplemental indenture
relating to the Debentures and the undersigned agrees to be bound by,
and not to resell, pledge or otherwise transfer the Debentures except
in compliance with, such restrictions and conditions and the Securities
Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and the sale of the Debentures
has not been registered under the Securities Act, and that the
Debentures may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we
should sell any Debentures or Common Stock (together, the "Securities")
prior to the expiration of the holding period applicable to sales of
the security evidenced hereby under Rule 144(k) under the Securities
Act (or any successor provision), we will do so only (A) to the Company
or any subsidiary thereof, (B) inside the United States in accordance
with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to
such transfer, furnishes to the Trustee a signed letter containing
certain representations and agreements relating to the restrictions on
transfer of the Debenture (the form of which letter can be obtained
from the Trustee) and, if such transfer is in respect of Debenture with
an aggregate liquidation preference of less than $250,000, an opinion
-46-
<PAGE>
of counsel acceptable to the Company that such transfer is in
compliance with the Securities Act, (D) outside the United States in
accordance with the Rule 904 under the Securities Act (E) pursuant to
the exemption from registration provided by Rule 144 under the
Securities Act (if available) or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree
to provide to any person purchasing any of the Debenture from us a
notice advising such purchaser that resales of the Debenture are
restricted as stated herein.
4. We understand that, on any proposed resale of any
Securities, we will be required to furnish to the Company and the
Trustee such certifications, legal opinions and other information as
the Company and the Trustee may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend to
the foregoing effect.
5. We are a institutional "accredited investor" (as defined in
rule 501 (a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Preferred Securities, and we and any accounts for
which we are acting are each able to bear the economic risks of our or
their investment.
6. We are acquiring the Debenture purchased by us for our own
account for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
The Company and the Trustee are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Very truly yours,
By:
--------------------------------------
Name:
Title:
-47-
<PAGE>
ARTICLE 7
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.01. Except as provided in Section 1.01 and this
Section 7.01, Series 5.375% Debentures in the aggregate principal amount equal
to $123,711,350 may, upon execution of this First Supplemental Indenture, be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and make available for delivery said
Debentures to or upon the written order of the Company, signed by its Chairman,
its President, or any Vice President and its Treasurer or an Assistant Treasurer
or Secretary or an Assistant Secretary, without any further action by the
Company. Upon exercise of the over-allotment option set forth in the Purchase
Agreement, additional Series 5.375% Debentures in the aggregate principal amount
of up to $18,556,700 may be executed by the Company and delivered to the Trustee
for authentication, and the Trustee shall thereupon authenticate and make
available for delivery said Series 5.375% Debentures executed as aforesaid by
the Company, to or upon the written order of the Company, which order shall be
accompanied by evidence satisfactory to the Trustee that the over-allotment
option has been exercised.
ARTICLE 8
MISCELLANEOUS PROVISIONS
SECTION 8.01. Except as otherwise expressly provided in this
First Supplemental Indenture or in the form of Series 5.375% Debenture or
otherwise clearly required by the context hereof or thereof, all terms used
herein or in said form of Series 5.375% Debenture that are defined in the
Indenture shall have the several meanings respectively assigned to them thereby.
SECTION 8.02. The Indenture, as supplemented by this First
Supplemental Indenture, is in all respects ratified and confirmed. This First
Supplemental Indenture shall be deemed part of the Indenture in the manner and
to the extent herein and therein provided.
SECTION 8.03. The recitals herein contained are made by the
Company and not by the Trustee, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representation as to the validity
or sufficiency of this First Supplemental Indenture.
SECTION 8.04. This First Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.
-48-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
OWENS & MINOR, INC.
By: /s/ Ann Greer Rector
-------------------------------------------
Name: Ann Greer Rector
Title: Senior Vice President
Chief Financial Officer
Attest:
By: /s/ Drew St. J. Carneal
----------------------------------
Name: Drew St. J. Carneal
Title: General Counsel and Secretary
THE FIRST NATIONAL BANK OF CHICAGO,
AS TRUSTEE
By: /s/ Michael Pinzon
-------------------------------------------
Name: Michael Pinzon
Title: Trust Officer
</TABLE>
=============================
REGISTRATION RIGHTS AGREEMENT
=============================
Dated as of May 13, 1998
among
OWENS & MINOR, INC.
OWENS & MINOR TRUST I
and
J.P. MORGAN SECURITIES INC.,
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated
as of May 13, 1998, by and among OWENS & MINOR, INC., a Virginia corporation
(the "Company"), OWENS & MINOR TRUST I, a statutory business trust organized
under the Business Trust Act of the State of Delaware (the "Trust") and J.P.
MORGAN SECURITIES INC., DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, and
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED (collectively, the "Initial
Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of May 13, 1998, among the Company, the Trust and the
Initial Purchasers (the "Purchase Agreement") relating to the sale by the Trust
to the Initial Purchasers, severally, of up to 2,760,000 shares of its $2.6875
Term Convertible Securities, Series A ("TECONS"). The TECONS are convertible
into shares of common stock, par value $2.00 per share, of the Company (such
shares, the "Common Stock"). In order to induce the Initial Purchasers to enter
into the Purchase Agreement, each of the Company and the Trust has agreed to
provide the registration rights set forth in this Agreement for the equal
benefit of the Initial Purchasers and their direct and indirect transferees. The
execution and delivery of this Agreement is a condition to the Initial
Purchasers' obligation to purchase the TECONS under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Advice: See Section 4.
Closing Date: The Closing Date as defined in the Purchase
Agreement.
Common Stock: See the introductory paragraph to this
Agreement.
Company: Owens & Minor, Inc.
Declaration: The Declaration of Trust among the Trustees and
the Trust.
DTC: See Section 4(a).
<PAGE>
-2-
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: See Section 2(a).
Event Date: See Section 3(b).
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Filing Date: The 90th day after the Issue Date.
Holder: Any record holder of Registrable Securities.
Guarantee: The Guarantee by the Company of certain payments to
be made by the Trust in accordance with the Guarantee Agreement.
Guarantee Agreement: The Guarantee Agreement, dated May 13,
1998, executed and delivered by the Company for the benefit of the Holders as
amended or supplemented from time to time in accordance with the terms thereof.
Indemnified Person: See Section 6.
Indemnifying Person: See Section 6.
Indenture: The Indenture, dated as of May 13, 1998, between
the Company and The First National Bank of Chicago, as trustee, pursuant to
which the Junior Subordinated Debentures are being issued, as amended or
supplemented from time to time in accordance with the terms thereof.
Initial Purchasers: J.P. Morgan Securities Inc., Donaldson
Lufkin & Jenrette Securities Corporation, and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
Initial Shelf Registration: See Section 2(a).
Issue Date: The original issue date of the TECONS.
Junior Subordinated Debentures: The 5.375% Junior Subordinated
Convertible Debentures due 2013 of the Company issued to the Trust pursuant to
the terms of the Indenture.
Liquidated Damages: See Section 3.
NASD: See Section 4(p).
<PAGE>
-3-
Participant: See Section 6.
Person: An individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Registrable Securities: The Securities upon original issuance
of the Securities and at all times subsequent thereto until (i) a Registration
Statement covering such Securities has been declared effective by the SEC and
such Securities have been disposed of in accordance with such effective
Registration Statement, (ii) such Securities are sold in compliance with Rule
144, or (iii) Securities cease to be outstanding.
Registrants: The Company and the Trust, collectively.
Registration Statement: Any registration statement of the
Registrants that covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
<PAGE>
-4-
SEC: The Securities and Exchange Commission.
Securities: The TECONS, the Junior Subordinated Debentures,
the Guarantee and the Common Stock, until the TECONS have all been converted
into Common Stock, in which case Securities shall mean the Common Stock.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Registration: See Section 2(b).
Subsequent Shelf Registration: See Section 2(b).
TECONS: See the introductory paragraph to this Agreement.
TIA: The Trust Indenture Act of 1939, as amended.
Trustees: The trustees under the Declaration.
Underwritten registration or underwritten offering: A
registration in which securities of the Registrants are sold to an underwriter
for reoffering to the public.
2. Shelf Registration
(a) The Registrants shall prepare and file with the SEC a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Registrable Securities (the
"Initial Shelf Registration");provided, that, with respect to any
particular Registrable Security, the Holder thereof shall have provided
all information regarding such Holder and the distribution of such
Registrable Security as may be required to be in a registration
statement filed under the Securities Act. The Registrants shall use
their reasonable best efforts to file with the SEC the Initial Shelf
Registration on or prior to the Filing Date. The Initial Shelf
Registration shall be on Form S-3 or another appropriate form
permitting registration of such Registrable Securities for resale by
such holders in the manner or manners reasonably designated by them
(including, without limitation, one or more underwritten offerings).
The Registrants shall not permit any securities other than the
Registrable Securities to be included in the Initial Shelf Registration
or any Subsequent Shelf Registration (as defined below). The
Registrants shall use their reasonable best efforts to cause the
Initial Shelf Registration to be declared effective under the
Securities Act on or prior to the 150th following the Issue Date and to
keep the Initial Shelf Registration continuously effective under the
<PAGE>
-5-
Securities Act until the date which is 24 months from the Issue Date
(subject to extension pursuant to the last paragraph of Section 4
hereof) (the "Effectiveness Period"), or such shorter period ending
when (i) none of the Securities constitute Registrable Securities or
(ii) a Subsequent Shelf Registration covering all of the Registrable
Securities has been declared effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be
effective for any reason at any time during the Effectiveness Period,
the Registrants shall use their reasonable best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof,
and in any event shall within 45 days of such cessation of
effectiveness amend the Shelf Registration in a manner reasonably
expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration
Statement pursuant to Rule 415 covering all of the Registrable
Securities covered by the Initial Shelf Registration Statement and not
theretofore sold (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Registrants shall use their reasonable
best efforts to cause the Subsequent Shelf Registration to be declared
effective as soon as practicable after such filing and to keep such
Registration Statement continuously effective for a period equal to the
number of days in the Effectiveness Period less the aggregate number of
days during which the Initial Shelf Registration or any Subsequent
Shelf Registration was previously continuously effective. As used
herein the term "Shelf Registration" means the Initial Shelf
Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Registrants shall promptly
supplement and amend the Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used
for such Shelf Registration, if required by the Securities Act, or if
reasonably requested by the Holders of a majority of the shares of
Common Stock constituting, or issuable upon conversion of, the
Registrable Securities covered by such Registration Statement or by any
underwriter of such Registrable Securities.
3. Liquidated Damages
(a) The Registrants and the Initial Purchasers agree that the
Holders of Registrable Securities will suffer damages if the
Registrants fail to fulfill their obligations under Section 2 hereof
and that it would not be feasible to ascertain the extent of such
damages with precision. Accordingly, the Registrants agree to pay, as
liquidated damages, additional cumulative cash distributions on the
Registrable Securities ("Liquidated Damages") (i) if the Initial Shelf
Registration Statement is not declared effective by the Commission on
or prior to the Effectiveness Date and (ii) if the effectiveness of the
Initial Shelf Registration Statement for resales thereunder is
suspended at any time during the Effectiveness Period in excess of 30
days in any consecutive three month period or 60 days in any
consecutive 12-month period (the "Black Out Period"), then, in each
case, Liquidated Damages shall accumulate on the Registrable Securities
<PAGE>
-6-
included or that should have been included in such Registration
Statement over and above the stated dividend at a rate of $0.25 per
TECON per annum, commencing on (x) the 181st day after the Issue Date
in the case of clause (i) above and (y) the day such Initial Shelf
Registration Statement ceases to be effective in excess of the Black
Out Period in the case of clause (ii) above; provided, however, that
(1) upon the effectiveness of the Shelf Registration as required
hereunder (in the case of clause (a)(i) of this Section 3) or (2) upon
the effectiveness of the Shelf Registration which had ceased to remain
effective (in the case of (a)(ii) of this Section 3), Liquidated
Damages on the Registrable Securities as a result of such clause, shall
cease to accrue.
(b) The Registrants shall notify the Trustees within five
business days after each and every date on which an event occurs in
respect of which Liquidated Damages are required to be paid (an "Event
Date"). The Registrants shall pay the Liquidated Damages due on the
Registrable Securities by paying an increased cash distribution on the
applicable quarterly distribution payment date, or, if cash
distributions are not being paid on the TECONS in accordance with the
Declaration, by accumulating distributions at the higher rate. The
Liquidated Damages due shall be payable on each distribution payment
date to the record Holder of Registrable Securities entitled to receive
the distribution payment to be made on such date as set forth in the
Declaration. The amount of Liquidated Damages will be determined by
multiplying the applicable Liquidated Damages by the number of shares
of Common Stock constituting, or issuable upon conversion of, the
affected Registrable Securities of such Holders, multiplied by a
fraction, the numerator of which is the number of days such Liquidated
Damages were applicable during such period (determined on the basis of
a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator
of which is 360. Each obligation to pay Liquidated Damages shall be
deemed to accumulate immediately following the occurrence of the
applicable Event Date. The parties hereto agree that the Liquidated
Damages provided for in this Section 3 constitutes a reasonable
estimate of the damages that may be incurred by Holders of Registrable
Securities by reason of the failure of a Shelf Registration to be
declared effective or to remain effective, as the case may be, in
accordance with this Section 3.
4. Registration Procedures
In connection with the registration of any Registrable
Securities pursuant to Section 2 hereof, the Registrants shall effect such
registrations to permit the sale of such Registrable Securities in accordance
with the intended method or methods of disposition thereof, and pursuant thereto
the Registrants shall:
<PAGE>
-7-
(a) Use their reasonable best efforts to prepare and file with
the SEC prior to the Filing Date, a Registration Statement as
prescribed by Section 2, and to use their reasonable best efforts to
cause such Registration Statement to become effective and remain
effective as provided herein, provided that, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Registrants shall upon written request furnish to and
afford the Holders of the Registrable Securities (which in the case of
Registrable Securities in the form of global certificates shall be The
Depository Trust Company ("DTC")) to be covered by such Registration
Statement, a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement, as the
case may be, as may be necessary to keep such Registration Statement
continuously effective for the Effectiveness Period; cause the related
Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and comply with the
provisions of the Securities Act, the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to it with
respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented.
(c) Notify the selling Holders of Registrable Securities named
in the Shelf Registration Statement promptly (but in any event within
five business days), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, without charge, one conformed copy of
such Registration Statement or post-effective amendment), (ii) of the
<PAGE>
-8-
issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use
of any preliminary prospectus or the initiation of any proceedings for
that purpose, (iii) of the receipt by the Registrants of any
notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the
Registrable Securities for offer or sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, (iv) of
the happening of any event or any information becoming known that makes
any statement made in such Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes in such Registration Statement, Prospectus or documents so
that, in the case of the Registration Statement, it will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will
not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading, and (v) of the Registrants' reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate.
(d) Use their reasonable best efforts to prevent the issuance
of any order suspending the effectiveness of a Registration Statement
or of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any
of the Registrable Securities for sale in any jurisdiction, and, if any
such order is issued, to use their reasonable best efforts to obtain
the withdrawal of any such order at the earliest possible moment.
(e) If requested by the Holders of a majority of the shares of
Common Stock constituting, or issuable upon conversion of, the
Registrable Securities being sold in connection with an underwritten
offering, (i) promptly incorporate in a prospectus supplement or
post-effective amendment such information as such Holders reasonably
request to be included therein, or (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Registrants have received notification of the
matters to be incorporated in such prospectus supplement or
post-effective amendment.
(f) Deliver to each selling Holder of Registrable Securities,
without charge, as many copies of the Prospectus or Prospectuses
(including each form of preliminary prospectus) and each amendment or
supplement thereto and any documents incorporated by reference therein
as such Persons may reasonably request; and, subject to the last
<PAGE>
-9-
paragraph of this Section 4, the Registrants hereby consent to the use
of such Prospectus and each amendment or supplement thereto by each of
the selling holders of Registrable Securities and the underwriters or
agents, if any, and dealers (if any), in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and
any amendment or supplement thereto.
(g) Prior to any public offering of Registrable Securities, to
use their reasonable best efforts to register or qualify, and to
cooperate with the selling Holders of Registrable Securities in
connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder reasonably
requests in writing, provided that where Registrable Securities are
offered other than through an underwritten offering, the Registrants
agree to cause their counsel to perform Blue Sky investigations and
file registrations and qualifications required to be filed pursuant to
this Section 4(h); keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration
Statement is required to be kept effective and do any and all other
reasonable acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered
by the applicable Registration Statement, provided that neither the
Company nor the Trust shall be required to (A) qualify generally to do
business in any jurisdiction where it is then so qualified, (B) take
any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself
to taxation in excess of a nominal dollar amount in any such
jurisdiction.
(h) Reasonably cooperate with the selling Holders of
Registrable Securities and the managing underwriters, if any, to
facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends and shall be in a form eligible
for deposit with DTC; and enable such Registrable Securities to be
registered in such names as the managing underwriter or underwriters,
if any, or Holders may request.
(i) Use their reasonable best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with
or approved by such other United States governmental agencies or
authorities of the United States as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Registrable Securities, except as may be
required solely as a consequence of the nature of such selling Holder's
business, in which case the Registrants will cooperate in all
reasonable respects with the filing of such Registration Statement and
the granting of such approvals.
<PAGE>
-10-
(j) Upon the occurrence of any event contemplated by paragraph
4(c)(iv) or 4(c)(v) above, as promptly as practicable prepare and
(subject to Section 4(a) above) file with the SEC, solely at the
expense of the Registrants, a supplement or post-effective amendment to
the Registration Statement or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold
thereunder, any such Prospectus will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(k) Prior to the effective date of the first Registration
Statement relating to the Registrable Securities, (i) provide the
Trustees with printed certificates for the Registrable Securities in a
form eligible for deposit with DTC and (ii) provide a CUSIP number for
the Registrable Securities.
(l) Provide an indenture trustee for the Junior Subordinated
Debentures and cause the Indenture and the Guarantee Agreement to be
qualified under the TIA not later than the effective date of the first
Registration Statement relating to the Registrable Securities; and in
connection therewith, cooperate with the trustee under the Indenture
and the holders of the Registrable Securities, to effect such changes
to the Indenture and the Guarantee Agreement as may be required for the
Indenture and the Guarantee Agreement to be so qualified in accordance
with the terms of the TIA; and execute, and use their reasonable best
efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable the Indenture and the
Guarantee Agreement to be so qualified in a timely manner.
(m) Comply in all material respects with all applicable rules
and regulations of the SEC and make generally available to its
securityholders earning statements satisfying the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder (or any similar
rule promulgated under the Securities Act) no later than 90 days after
the end of any 12-month period (i) commencing at the end of any fiscal
quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day
of the first fiscal quarter of the Company after the effective date of
a Shelf Registration Statement.
(n) Reasonably cooperate with each seller of Registrable
Securities covered by any Registration Statement participating in the
disposition of such Registrable Securities and their respective counsel
<PAGE>
-11-
in connection with any filings required to be made with the National
Association of Securities Dealers, Inc. (the "NASD").
(o) Use their reasonable best efforts to take all other steps
necessary to effect the registration of the Registrable Securities
covered by a Registration Statement contemplated hereby.
The Registrants may require each seller of Registrable
Securities to furnish to the Registrants such information regarding such seller
and the distribution of such Registrable Securities as the Registrants may, from
time to time, reasonably request. The Registrants may exclude from such
registration the Registrable Securities of any seller who fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration is being effected is deemed to agree to
furnish promptly to the Registrants all information required to be disclosed in
order to make the information previously furnished to the Registrants by such
seller not materially misleading.
Each Holder of Registrable Securities agrees by acquisition of
such Registrable Securities that, upon receipt of any notice from the
Registrants of the happening of any event of the kind described in Section
4(c)(ii), 4(c)(iii), 4(c)(iv), or 4(c)(v), such Holder will forthwith
discontinue disposition of such Registrable Securities covered by such
Registration Statement or Prospectus until such holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 4(k), or until
it is advised in writing (the "Advice") by the Registrants that the use of the
applicable Prospectus may be resumed, and has received copies of any amendments
or supplements thereto. In the event the Registrants shall give any such notice,
the Effectiveness Period shall be extended by the number of days during such
period from and including the date of the giving of such notice to and including
the date when each seller of Registrable Securities covered by such Registration
Statement shall be given (x) the copies of the supplemented or amended
Prospectus contemplated by Section 4(k) or (y) the Advice.
5. Registration Expenses
All fees and expenses incident to the performance of or
compliance with this Agreement by the Registrants shall be borne by the
Registrants whether or not a Shelf Registration is filed or becomes effective,
including, without limitation, (i) all registration and filing fees (including,
without limitation, (A) fees with respect to filings required to be made with
the NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of one counsel in connection with
Blue Sky qualifications of the Registrable Securities and determination of the
eligibility of the Registrable Securities for investment under the laws of such
<PAGE>
-12-
jurisdictions in the United States as provided in Section 4(g)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Securities, by the Holders
of a majority of shares of the Registrable Securities included in any
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Registrants, (v) fees and
disbursements of all independent certified public auditors for the Registrants,
(vi) rating agency fees, (vii) Securities Act liability insurance, if the
Registrants desire such insurance, (viii) fees and expenses of all other Persons
retained by the Registrants, (ix) internal expenses of the Registrants
(including, without limitation, all salaries and expenses of officers and
employees of the Registrants performing legal or accounting duties), (x) the
expense of any annual audit, (xi) the fees and expenses incurred in connection
with the listing of the securities to be registered on any securities exchange,
if applicable, (xii) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, securities
sales agreements, indentures and any other documents necessary in order to
comply with this Agreement and (xiii) fees and expenses of the Trustees and the
trustee under the Indenture (including reasonable fees and expenses of counsel
to such trustees).
6. Indemnification
The Registrants agree, jointly and severally, to indemnify and
hold harmless each Holder of Registrable Securities, the officers and directors
of each such person, and each person, if any, who controls any such person
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (each, a "Participant"), from and against any and all losses,
claims, damages, liabilities and judgments caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Registrants shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Participant furnished in writing to the Registrants by or on behalf of such
Participant expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Participant (or to the benefit of any person controlling
such Participant) from whom the person asserting any such losses, claims,
damages, liabilities or judgments purchased Registrable Securities if a copy of
the Prospectus (as then amended or supplemented if the Registrants shall have
furnished any amendments or supplements thereto) was not sent or given by or on
<PAGE>
-13-
behalf of such Participant to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of such
Registrable Securities to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses, claims,
damages, liabilities or judgments.
Each Participant will be required to agree, severally and not
jointly, to indemnify and hold harmless each of the Company and the Trust, its
respective directors, officers and each person, if any, who controls the Company
or the Trust within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Registrants to each Participant, but only with reference to information relating
to such Participant furnished in writing to the Registrants by or on behalf of
such Participant expressly for use in any Registration Statement or Prospectus,
any amendment or supplement thereto, or any preliminary prospectus. The
liability of any Participant under this paragraph shall in no event exceed the
proceeds received by such Participant from sales of Registrable Securities
giving rise to such obligations.
In case any action shall be brought against any person in
respect of which indemnity may be sought pursuant to either of the two preceding
paragraphs, such person (the "Indemnified Person") shall promptly notify the
person against whom such indemnity may be sought (the "Indemnifying Person") in
writing and the Indemnifying Person shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Person and
payment of all fees and expenses. Any Indemnified Person shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the employment of such counsel has been
specifically authorized in writing by the Indemnifying Person, (ii) the
Indemnifying Person has failed to assume the defense and employ counsel or (iii)
the named parties to any such action (including any impleaded parties) include
both the Indemnifying Person and the Indemnified Person and such Indemnified
Party shall have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or additional to those
available to the Indemnifying Person (in which case the Indemnifying Person
shall not have the right to assume the defense of such action on behalf of such
Indemnified Person, it being understood, however, that the Indemnifying Person
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred). Any such separate firm for the Participants
and such control persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Securities sold by
all such Participants and any such separate firm for the Registrants, their
respective directors, officers and such control persons of the Registrants shall
<PAGE>
-14-
be designated in writing by the Registrants. The Indemnifying Person shall not
be liable for any settlement of any such action effected without its written
consent, but if settled with the written consent, the Indemnifying Person agrees
to indemnify and hold harmless any Indemnified Person from and against any loss
or liability by reason of such settlement. Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 10 business days after receipt by such Indemnifying
Person of the aforesaid request and (ii) such Indemnifying Person shall not have
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the Indemnification provided for in the first and second
paragraphs of this Section 6 is unavailable to an Indemnified Person in respect
of any losses, claims, damages, liabilities or judgments referred to therein,
then each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages, liabilities
or judgments in such proportion as is appropriate to reflect the relative fault
of the Registrants on the one hand and the Participants on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities, or judgments as well as any other relevant
equitable considerations. The relative fault of the Registrants on the one hand
and the Participants on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Registrants or by the Participants and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The parties shall agree that it would not be just and
equitable if contribution pursuant to the prior paragraph were determined by pro
rata allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
<PAGE>
-15-
forth above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 6, no Participant shall be
required to contribute any amount in excess of the amount by which proceeds
received by such Participant from sales of Registrable Securities exceeds the
amount of any damages that such Participant has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section 6 will be in addition to any liability which the Indemnifying Persons
may otherwise have to the Indemnified Persons referred to above.
7. Rule 144 and Rule 144A
The Registrants covenant that they will file the reports
required to be filed by them under the Securities Act and the Exchange Act in a
timely manner and, if at any time the Registrants are not required to file such
reports, they will, upon the request of any Holder of Registrable Securities,
make publicly available other information so long as necessary to permit sales
pursuant to Rule 144 and Rule 144A under the Securities Act. The Registrants
further covenant that they will take such further action as any Holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by (a) Rule 144 and Rule 144A under the Securities Act, as such rules
may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC.
8. Underwritten Registrations
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will manage the offering will
be selected by the Holders of a majority of the shares of such Registrable
Securities included in such offering and be reasonably acceptable to the
Registrants.
No Holder of Registrable Securities may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
<PAGE>
-16-
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
9. Miscellaneous
(a) Remedies. In the event of a breach by the Registrants of
any of their respective obligations under this Agreement, each Holder
of Registrable Securities, in addition to being entitled to exercise
all rights provided herein, in the Declaration, the Indenture, the
Guarantee Agreement or, in the case of the Initial Purchasers, in the
Purchase Agreement or granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this
Agreement. The Registrants agree that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement and hereby further agree
that, in the event of any action for specific performance in respect of
such breach, the Registrants shall waive the defense that a remedy at
law would be adequate.
(b) No Inconsistent Agreements. The Registrants have not, as
of the date hereof, entered and shall not, after the date of this
Agreement, enter into any agreement with respect to any of its
respective securities that restricts the rights granted to the Holders
of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The Registrants have not entered and will not
enter into any agreement with respect to any of its respective
securities which will grant to any Person piggy-back rights with
respect to a Registration Statement.
(c) Adjustments Affecting Registrable Securities. The
Registrants shall not, directly or indirectly, take any action with
respect to the Registrable Securities as a class that would adversely
affect the ability of the Holders of Registrable Securities to include
such Registrable Securities in a registration undertaken pursuant to
this Agreement.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified
or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Registrants have
obtained the written consent of Holders of at least a majority of
shares of Common Stock constituting, or issuable upon conversion of,
the Registrable Securities. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable
Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair,
limit or compromise the rights of other Holders of Registrable
<PAGE>
-17-
Securities may be given by Holders of at least a majority of shares of
Common Stock constituting, or issuable upon conversion of, the
Registrable Securities being sold by such Holders pursuant to such
Registration Statement, provided that the provisions of this sentence
may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustees)
provided for or permitted hereunder shall be made in writing by
hand-delivery, registered first-class mail, next-day air courier or
telecopier:
(i) if to a Holder of Registrable Securities, at the most
current address given by the Trustees to the Registrants; and
(ii) if to the Registrants, at 4800 Cox Road, Glen Allen,
Virginia 23060, Attention: General Counsel; with a copy to
Hunton & Williams, 951 East Byrd Street, Richmond, Virginia
23219, Attention: C. Porter Vaughan, III.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the trustee
under the Indenture at the address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of
the parties, including without limitation and without the need for an
express assignment, subsequent Holders of Registrable Securities;
provided, that, with respect to the indemnity and contribution
agreements in Section 6, each Holder of Registrable Securities
subsequent to the Initial Purchasers shall be bound by the terms
thereof if such Holder elects to include Registrable Securities in a
Shelf Registration; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign holds
Registrable Securities.
<PAGE>
-18-
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES
HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE
OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set
forth herein shall remain in full force and effect and shall in no way
be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid,
illegal, void or unenforceable.
(k) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement, and is intended to be
a complete and exclusive statement of the agreement and understanding
of the parties hereto in respect of the subject matter contained herein
and therein.
(l) Securities Held by the Registrants or Their Affiliates.
Whenever the consent or approval of holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities
held by the Registrants or any of their affiliates (as such term is
defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE>
S-1
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
OWENS & MINOR TRUST I,
a Delaware statutory business trust
By: OWENS & MINOR, INC.,
as Sponsor
By: /s/ Ann Greer Rector
------------------------------------------------
Name: Ann Greer Rector
Title: Senior Vice President and Chief Financial
Officer
OWENS & MINOR, INC.
By: /s/ Ann Greer Rector
------------------------------------------------
Name: Ann Greer Rector
Title: Senior Vice President and Chief Financial
Officer
J.P. MORGAN SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By: J.P. Morgan Securities Inc.
By: /s/ David F. Bozett
------------------------------------------------
Name: David F. Bozett
Title: Vice President
================================================================================
AMENDED AND RESTATED DECLARATION OF TRUST
OF
OWENS & MINOR TRUST I
-------------------------
Dated as of May 13, 1998
-------------------------
================================================================================
<PAGE>
<TABLE>
TABLE OF CONTENTS
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<S> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.............................................................................2
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application........................................................9
SECTION 2.02. Lists of Holders of Preferred Securities................................................9
SECTION 2.03. Reports by the Property Trustee.........................................................9
SECTION 2.04. Periodic Reports to Property Trustee....................................................9
SECTION 2.05. Evidence of Compliance with Conditions Precedent.......................................10
SECTION 2.06. Events of Default; Waiver..............................................................10
SECTION 2.07. Disclosure of Information..............................................................12
ARTICLE 3
ORGANIZATION
SECTION 3.01. Name...................................................................................12
SECTION 3.02. Office.................................................................................12
SECTION 3.03. Issuance of the Trust Securities.......................................................12
SECTION 3.04. Purchase of Debentures.................................................................13
SECTION 3.05. Purpose................................................................................13
SECTION 3.06. Authority..............................................................................14
SECTION 3.07. Title to Property of the Trust.........................................................14
SECTION 3.08. Powers and Duties of the Regular Trustees..............................................14
SECTION 3.09. Prohibition of Actions by Trust and Trustees...........................................17
SECTION 3.10. Powers and Duties of the Property Trustee..............................................18
SECTION 3.11. Delaware Trustee.......................................................................21
SECTION 3.12. Certain Rights and Duties of the Property Trustee......................................21
SECTION 3.13. Filing of Amendments to Certificate of Trust...........................................23
SECTION 3.14. Execution of Documents by Regular Trustees.............................................23
SECTION 3.15. Trustees Not Responsible for Recitals or Issuance of Securities........................23
SECTION 3.16. Duration of Trust......................................................................24
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ARTICLE 4
SPONSOR
SECTION 4.01. Purchase of Common Securities by Sponsor...............................................24
SECTION 4.02. Expenses...............................................................................24
SECTION 4.03. Other Actions..........................................................................24
ARTICLE 5
TRUSTEES
SECTION 5.01. Number of Trustees; Qualifications.....................................................25
SECTION 5.02. Appointment, Removal and Resignation of Trustees.......................................27
SECTION 5.03. Vacancies among Trustees...............................................................29
SECTION 5.04. Effect of Vacancies....................................................................29
SECTION 5.05. Meetings...............................................................................29
SECTION 5.06. Delegation of Power....................................................................30
ARTICLE 6
DISTRIBUTIONS
SECTION 6.01. Distributions..........................................................................30
ARTICLE 7
ISSUANCE OF SECURITIES
SECTION 7.01. General Provisions Regarding Securities................................................30
SECTION 7.02. Conversion Agent.......................................................................32
ARTICLE 8
TERMINATION OF TRUST
SECTION 8.01. Termination of Trust...................................................................32
-ii-
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ARTICLE 9
TRANSFER OF INTERESTS
SECTION 9.01. Transfer of Securities.................................................................33
SECTION 9.02. Transfer of Certificates...............................................................35
SECTION 9.03. Deemed Security Holders................................................................36
SECTION 9.04. Book-Entry Interests...................................................................36
SECTION 9.05. Notices to Holders of Certificates.....................................................39
SECTION 9.06. Appointment of Successor Clearing Agency...............................................39
SECTION 9.07. Definitive Preferred Securities Certificates...........................................39
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen Certificates......................................40
ARTICLE 10
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.01. Exculpation...........................................................................40
SECTION 10.02. Indemnification.......................................................................41
SECTION 10.03. Outside Business......................................................................41
ARTICLE 11
ACCOUNTING
SECTION 11.01. Fiscal Year...........................................................................42
SECTION 11.02. Certain Accounting Matters............................................................42
SECTION 11.03. Banking...............................................................................42
SECTION 11.04. Withholding...........................................................................43
ARTICLE 12
AMENDMENTS AND MEETINGS
SECTION 12.01. Amendments............................................................................43
SECTION 12.02. Meetings of the Holders of Securities; Action by Written Consent......................44
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ARTICLE 13
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.01. Representations and Warranties of Property Trustee....................................45
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. Notices...............................................................................46
SECTION 14.02. Undertaking for Costs.................................................................48
SECTION 14.03. Governing Law.........................................................................48
SECTION 14.04. Headings..............................................................................48
</TABLE>
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<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OWENS & MINOR TRUST I
May 13, 1998
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of May 13, 1998 by the undersigned trustees (together
with all other Persons from time to time duly appointed and serving as trustees
in accordance with the provisions of this Declaration, the "Trustees"), Owens &
Minor, Inc., a Virginia corporation, as trust sponsor ("O&M" or the "Sponsor"),
and by the holders, from time to time, of undivided beneficial interests in the
assets of the Trust to be issued pursuant to this Declaration.
WHEREAS, the Sponsor and certain of the Trustees entered into
a Declaration of Trust dated as of April 29, 1998 (the "Original Declaration")
in order to establish a statutory business trust (the "Trust") under the
Business Trust Act (as hereinafter defined);
WHEREAS, the Certificate of Trust (the "Certificate of Trust")
of the Trust was filed with the office of the Secretary of State of the State of
Delaware on April 29, 1998;
WHEREAS, the Trustees and the Sponsor desire to continue the
Trust pursuant to the Business Trust Act for the purpose of, as described more
fully in Sections 3.03, 3.04 and 3.05 hereof, (i) issuing and selling Preferred
Securities (as defined herein) representing preferred undivided beneficial
interests in the assets of the Trust for cash and acquiring with the proceeds
thereof Debentures (as hereinafter defined) of O&M issued under the Indenture
(as hereinafter defined) to be held as assets of the Trust and (ii) issuing and
selling Common Securities (as defined herein) representing common undivided
beneficial interests in the assets of the Trust to O&M in exchange for cash and
acquiring with the proceeds thereof additional Debentures issued under the
Indenture to be held as assets of the Trust;
NOW, THEREFORE, it being the intention of the parties hereto
that the Trust constitute a business trust under the Business Trust Act, that
the Original Declaration be amended and restated in its entirety as provided
herein and that this Declaration constitute the governing instrument of such
business trust, the Trustees declare that all assets referred to in clauses (i)
and (ii) of the previous paragraph purchased by the Trust will be held for the
benefit of the Holders (as defined herein) from time to time of the Certificates
(as defined herein) representing undivided beneficial interests in the assets of
the Trust issued hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.
(a) Capitalized terms used in this Declaration but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.01;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Amended and Restated Declaration of Trust (including Exhibits A, B
and C hereto (the "Exhibits")) as modified, supplemented or amended from time to
time;
(d) all references in this Declaration to Articles and
Sections and Exhibits are to Articles and Sections of and Exhibits to this
Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or a nominee thereof,
ownership and transfers of which shall be maintained and made through book
entries by such Clearing Agency as described in Section 9.04.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which banking institutions in the City of New York, in the
State of New York are authorized or required by applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as it may be amended from time to
time.
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
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"Certificate of Trust" has the meaning set forth in the second
Whereas clause above.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization, shall be registered a Global Certificate and which
shall undertake to effect book-entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means the Closing Date as specified in the
Purchase Agreement, which date is also the date of execution and delivery of
this Declaration.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation. A reference to a specific
section ((Sec.)) of the Code refers not only to such specific section but also
to any corresponding provision of any federal tax statute enacted after the date
of this Declaration, as such specific section or corresponding provision is in
effect on the date of application of the provisions of this Declaration
containing such reference.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section
7.01(b).
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Annex I to Exhibit C.
"Common Stock" means the common stock of O&M, par value $2.00
per share.
"Conversion Agent" has the meaning specified in Section 7.02.
"Covered Person" means (i) any officer, director, shareholder,
partner, member, representative, employee or agent of the Trust or its
Affiliates, (ii) any officer, director, shareholder, employee, representative or
agent of O&M or its Affiliates and (iii) the Holders from time to time of the
Securities.
"Debenture Trustee" means The First National Bank of Chicago,
as trustee under the Indenture until a successor is appointed thereunder and
thereafter means such successor trustee.
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"Debentures" means the series of Junior Subordinated
Convertible Debentures issued by O&M under the Indenture to the Property Trustee
and entitled the "5.375% Junior Subordinated Debentures due 2013."
"Debenture Purchase Agreement" means the Debenture Purchase
Agreement dated as of May 13, 1998 between the Trust and O&M pursuant to which
the Trust purchased the Debentures.
"Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.04.
"Delaware Trustee" has the meaning set forth in Section
5.01(a)(iii).
"Depositary Agreement" means the agreement among the Trust,
the Property Trustee and DTC dated as of the Closing Date, as the same may be
amended or supplemented from time to time.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.01.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in respect of the
Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time or any successor legislation.
"Fiscal Year" has the meaning specified in Section
11.01.
"Global Certificate" has the meaning set forth in
Section 9.04.
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means any Trustee, any Affiliate of any
Trustee, any Conversion Agent, any Paying Agent, any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Trustee, Conversion Agent or Paying Agent, or any employees or agents of the
Trust or its Affiliates.
"Indenture" means the Junior Subordinated Indenture dated as
of May 13, 1998 between O&M and the Debenture Trustee as supplemented by the
First Supplemental Indenture thereto dated as of May 13, 1998, pursuant to which
the Debentures are to be issued.
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"Indenture Event of Default" means an event or condition
defined as an "Event of Default" with respect to the Debentures under Section
6.01(a) of the Indenture has occurred and is continuing.
"Initial Purchasers" means the initial purchasers as defined
in the Purchase Agreement.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time or any successor legislation.
"Institutional Accredited Investor" means an institutional
investor that is an "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act.
"Legal Action" has the meaning specified in Section 3.08(g).
"Liquidation Distribution" has the meaning set forth in
Exhibits B and C hereto establishing the terms of the Securities.
"Majority in liquidation amount of the Securities" means,
except as otherwise required by the Trust Indenture Act and except as provided
in the penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities
voting separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined)
represents more than 50% of the liquidation amount of all outstanding Securities
of such class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Exhibits B and C hereto.
"144A Global Securities" has the meaning specified in Section
9.04(b).
"Option Closing Date" means the Option Closing Date as
specified in the Purchase Agreement.
"Original Declaration" has the meaning set forth in the first
WHEREAS clause above.
"Paying Agent" has the meaning specified in Section 3.10(i).
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"Permanent Regulation S Global Security" has the meaning set
forth in Section 9.04(b).
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"PORTAL Market" means the Private Offerings, Resales and
Trading through Automated Linkages Market operated by the National Association
of Securities Dealers, Inc. (or any successor thereto).
"Preferred Guarantee" means the Guarantee Agreement dated as
of May 13, 1998 of O&M in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section
7.01(b).
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a definitive
certificate in fully registered form representing a Preferred Security
substantially in the form of Annex I to Exhibit B.
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.01(c) and having the duties set forth for
the Property Trustee herein.
"Purchase Agreement" means the Purchase Agreement dated as of
May 13, 1998 among the Trust, the Sponsor, J.P. Morgan Securities Inc.,
Donaldson, Lufkin & Jenrette Securities Corporation and Merrill Lynch, Pierce,
Fenner & Smith Incorporated.
"Property Account" has the meaning specified in Section
3.10(c)(i).
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both such Regular Trustees.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of May 13, 1998 among the Sponsor, the Trust, J.P. Morgan
Securities Inc., Donaldson, Lufkin & Jennrette Securities Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
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"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in
Section 9.04(b).
"Regulation S Securities Exchange Date" has the meaning set
forth in Section 9.04(b).
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means any direct or indirect wholly-owned
subsidiary of O&M or any other Person which owns, directly or indirectly, 100%
of the outstanding voting securities of O&M.
"Resignation Request" has the meaning specified in Section
5.02(d).
"Responsible Officer" means, with respect to the Property
Trustee, the chairman of the board of directors, the president, any
vice-president, any assistant vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Restricted Security" has the meaning specified in Section
9.01(d).
"Rule 144" means Rule 144 as promulgated under the Securities
Act.
"Rule 144A" means Rule 144A as promulgated under the
Securities Act.
"Rule 144(k)" means Rule 144(k) as promulgated under the
Securities Act.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act
or any successor rule thereunder.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Special Event" has the meaning set forth in the terms of the
Securities as set forth in Exhibits B and C hereto.
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"Sponsor" or "O&M" means Owens & Minor, Inc., a Virginia
corporation, or any successor entity in a merger, in its capacity as sponsor of
the Trust.
"Subscription Agreement" means the Subscription Agreement
dated as of May 13, 1998 between the Trust and O&M pursuant to which O&M
purchased the Common Securities.
"Successor Delaware Trustee" has the meaning specified in
Section 5.02(b)(ii).
"Successor Property Trustee" means a successor Trustee
possessing the qualifications to act as Property Trustee under Section 5.01(c).
"Temporary Regulation S Global Security" has the meaning set
forth in Section 9.04(b).
"10% in liquidation amount of the Securities" means, except as
otherwise required by the Trust Indenture Act and except as provided in the
penultimate paragraph of paragraph 6 of Exhibit B hereto, Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holder(s) of outstanding Preferred Securities or Common Securities,
voting separately as a class, who are the record owners of a relevant class of
Securities whose liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined)
represents 10% or more of the liquidation amount of all outstanding Securities
of such class.
"Transfer Restriction Termination Date" means the first date
on which the Securities and any Common Stock issued or issuable upon the
conversion or exchange thereof (other than (i) Securities acquired by the Trust
or any Affiliate thereof and (ii) Common Stock issued upon the conversion or
exchange of any Security described in clause (i) above) may be sold pursuant to
Rule 144(k).
"Treasury Regulations" means the income tax regulations
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
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ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application. (a) This
Declaration is subject to the provisions of the Trust Indenture Act that are
required to be part of this Declaration and shall, to the extent applicable, be
governed by such provisions;
(b) if and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by ss.ss. 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control;
(c) the Property Trustee, to the extent permitted by
applicable law and/or the rules and regulations of the Commission, shall be the
only Trustee which is a trustee for the purposes of the Trust Indenture Act; and
(d) the application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.02. Lists of Holders of Preferred Securities. (a)
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide the Property Trustee with such information as is required under ss.
312(a) of the Trust Indenture Act at the times and in the manner provided in ss.
312(a); and
(b) the Property Trustee shall comply with its
obligations under ss.ss. 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Property Trustee. Within 60 days
after May 15 of each year, commencing May 1999, the Property Trustee shall
provide to the Holders of the Securities such reports as are required by ss. 313
of the Trust Indenture Act, if any, in the form, in the manner and at the times
provided by ss. 313 of the Trust Indenture Act. The Property Trustee shall also
comply with the requirements of ss. 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Property Trustee. Each of
the Sponsor and the Regular Trustees on behalf of the Trust shall provide to the
Property Trustee, the Commission and the Holders of the Securities, as
applicable, such documents, reports and information as required by ss.
314(a)(l)-(3) (if any) of the Trust Indenture Act and the compliance
certificates required by ss. 314(a)(4) and (c) of the Trust Indenture Act, any
such certificates to be provided in the form, in the manner and at the times
required by ss. 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to ss. 314(a)(4) of the Trust Indenture Act
shall be provided within 120 days of the end of each Fiscal Year).
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SECTION 2.05. Evidence of Compliance with Conditions
Precedent. Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration which relate to
any of the matters set forth in ss. 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given pursuant to ss. 314(c) shall comply
with ss. 314(e) of the Trust Indenture Act.
SECTION 2.06. Events of Default; Waiver. (a) Subject to
Section 2.06(c), Holders of Preferred Securities may, by vote of at least a
Majority in liquidation amount of the Preferred Securities (A) in accordance
with the terms of the Preferred Securities, direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred upon the Property Trustee, or (B) on
behalf of the Holders of all Preferred Securities, waive any past Event of
Default in respect of the Preferred Securities and its consequences; provided
that if the Event of Default arises out of an Indenture Event of Default:
(i) which is not waivable under the Indenture, the Event of
Default under this Declaration shall also be not waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority
in principal amount of the Debentures, or (2) each holder of
Debentures, the Event of Default under this Declaration may only be
waived by, in the case of clause (1) above, the vote of Holders of
Preferred Securities representing such specified percentage of the
aggregate liquidation amount of the Preferred Securities or, in the
case of clause (2) above, each Holder of Preferred Securities.
Upon such waiver, any such default shall cease to exist, and
any Event of Default with respect to the Preferred Securities arising therefrom
shall be deemed to have been cured for every purpose of this Declaration, but no
such waiver shall extend to any subsequent or other default or Event of Default
with respect to the Preferred Securities or impair any right consequent thereon.
(b) Subject to Section 2.06(c), Holders of Common
Securities may by vote of at least a Majority in liquidation amount of the
Common Securities, (A) in accordance with the terms of the Common Securities,
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or exercising any trust or power conferred
upon the Property Trustee or (B) on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the Event of Default arises
out of an Indenture Event of Default:
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(i) which is not waivable under the Indenture, except where
the Holders of the Common Securities are deemed to have waived such
Event of Default under the Declaration as provided below, the Event of
Default under this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than a majority
in principal amount of the Debentures or (2) each holder of Debentures,
except where the holders of the Common Securities are deemed to have
waived such Event of Default under this Declaration as provided below,
the Event of Default under this Declaration may only be waived by, in
the case of clause (1) above, the vote of Holders of Common Securities
representing such specified percentage of the aggregate liquidation
amount of the Common Securities or, in the case of clause (2) above,
each holder of Common Securities; and
provided, further, that each Holder of Common Securities will be deemed to have
waived any Event of Default with respect to the Common Securities and its
consequences until all Events of Default with respect to the Preferred
Securities have been cured, waived by the Holders of Preferred Securities as
provided in this Declaration or otherwise eliminated and until all Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of this Declaration or the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in this Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under this Declaration without any further act, vote or consent of the Holders
of the Common Securities. Subject to the foregoing provisions of this Section
2.06(b), upon such waiver, any such default shall cease to exist and any Event
of Default with respect to the Common Securities arising therefrom shall be
deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) The right of any Holder of Securities to receive
payment of Distributions on the Securities in accordance with this Declaration
and the terms of the Securities set forth in Exhibits B and C on or after the
respective payment dates therefor, or to institute suit for the enforcement of
any such payment on or after such payment dates, shall not be impaired without
the consent of such Holder.
(d) As provided in the terms of the Securities set forth
in Exhibits B and C hereto, a waiver of an Indenture Event of Default by the
Property Trustee at the written direction of the Holders of the Preferred
Securities constitutes a waiver of the corresponding Event of Default under this
Declaration in respect of the Securities.
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SECTION 2.07. Disclosure of Information. The disclosure of
information as to the names and addresses of the Holders of the Securities in
accordance with ss. 312 of the Trust Indenture Act, regardless of the source
from which such information was derived, shall not be deemed to be a violation
of any existing law, or any law hereafter enacted which does not specifically
refer to ss. 312 of the Trust Indenture Act, nor shall the Property Trustee be
held accountable by reason of mailing any material pursuant to a request made
under ss. 312(b) of the Trust Indenture Act.
ARTICLE 3
ORGANIZATION
SECTION 3.01. Name. The Trust continued by this Declaration is
named "Owens & Minor Trust I" as such name may be modified from time to time by
the Regular Trustees following written notice to the Holders of Securities. The
Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.
SECTION 3.02. Office. The address of the principal office of
the Trust is c/o Owens & Minor, Inc., 4800 Cox Road, Glen Allen, Virginia 23060.
Upon ten days' written notice to the Holders, the Regular Trustees may change
the location of the Trust's principal office.
SECTION 3.03. Issuance of the Trust Securities. On May 8, 1998
the Sponsor, on behalf of the Trust and pursuant to the Original Declaration,
executed and delivered the Purchase Agreement. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall execute and deliver to (i) the
Initial Purchasers named in the Purchase Agreement, the Registration Rights
Agreement, (ii) the Initial Purchasers named in the Purchase Agreement, Global
Certificates registered in the name of the nominee of the initial Clearing
Agency as specified in Section 9.04, and, as the case may be, Definitive
Preferred Security Certificates, in an aggregate amount of 2,400,000 Preferred
Securities having an aggregate liquidation amount of $120,000,000, against
receipt of the aggregate purchase price of such Preferred Securities of
$120,000,000, and (iii) the Sponsor, Common Securities Certificates, registered
in the name of the Sponsor, in an aggregate amount of 74,227 Common Securities
having an aggregate liquidation amount of $3,711,350, against receipt of the
aggregate purchase price of such Common Securities of $3,711,350. In the event
and to the extent the over-allotment option granted by the Trust pursuant to the
Purchase Agreement is exercised by such Initial Purchasers, on the Option
Closing Date the Regular Trustees, on behalf of the Trust, shall execute and
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deliver to (i) such Initial Purchasers Global Certificates registered in the
name of the nominee of the initial Clearing Agency as specified in Section 9.04
and Definitive Preferred Security Certificates, as the case may be, in an
aggregate amount of up to 360,000 Preferred Securities having an aggregate
liquidation amount of up to $18,000,000 against receipt of the aggregate
purchase price of such Preferred Securities of up to $18,000,000, and (ii) the
Sponsor, Common Security Certificates, registered in the name of the Sponsor, in
an aggregate amount of 11,134 Common Securities having an aggregate liquidation
of $556,700, against receipt of the aggregate purchase price of such Common
Securities of up to $556,700.
SECTION 3.04. Purchase of Debentures. On the Closing Date and
contemporaneously with the execution and delivery of this Declaration, the
Regular Trustees, on behalf of the Trust, shall purchase from the Sponsor with
the proceeds received by the Trust from the sale of the Securities on such date
pursuant to Section 3.03, at a purchase price of 100% of the principal amount
thereof, Debentures, registered in the name of the Property Trustee, acting in
such capacity, and having an aggregate principal amount equal to $123,711,350,
and, in satisfaction of the purchase price for such Debentures, the Regular
Trustee, on behalf of the Trust, shall deliver or cause to be delivered to the
Sponsor the sum of $123,711,350. In the event the over-allotment option granted
by the Trust with respect to the Preferred Securities pursuant to the Purchase
Agreement is exercised by the Initial Purchasers named therein, on the Option
Closing Date the Regular Trustees, on behalf of the Trust, shall purchase from
the Sponsor with the proceeds received by the Trust from the sale of the
Preferred Securities on such date pursuant to Section 3.03, at a purchase price
of 100% of the principal amount thereof, additional Debentures, registered in
the name of the Property Trustee, acting in such capacity, and having an
aggregate principal amount of up to $18,556,700, and, in satisfaction of the
purchase price for such Debentures, the Regular Trustees, on behalf of the
Trust, shall deliver or cause to be delivered to the Sponsor an amount equal to
the aggregate principal amount of the Debentures being purchased.
SECTION 3.05. Purpose. The exclusive purposes and functions of
the Trust are: (a)(i) to issue and sell Preferred Securities for cash and use
the proceeds of such sales to acquire from O&M Debentures issued under the
Indenture having an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so issued and sold; (ii) to enter
into such agreements and arrangements as may be necessary in connection with the
sale of Preferred Securities to the Initial Purchasers thereof (including the
Purchase Agreement) and to take all action, and exercise such discretion, as may
be necessary or desirable in connection therewith and to file such registration
statements or make such other filings under the Securities Act, the Exchange Act
or state securities or "Blue Sky" laws as may be necessary or desirable in
connection therewith and the issuance of the Preferred Securities; and (iii) to
issue and sell Common Securities to O&M for cash and use the proceeds of such
sale to purchase as trust assets an equal aggregate principal amount of
Debentures issued under the Indenture; and (b) except as otherwise limited
herein, to engage in only those other activities necessary, convenient or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
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proceeds derived from investments, pledge any of its assets or at any time while
the Securities are outstanding, otherwise undertake (or permit to be undertaken)
any activity that would result in or cause the Trust to be treated as anything
other than a grantor trust for United States federal income tax purposes.
SECTION 3.06. Authority. Subject to the limitations provided
in this Declaration and to the specific duties of the Property Trustee, the
Regular Trustees shall have exclusive and complete authority to carry out the
purposes of the Trust. An action taken by the Regular Trustees in accordance
with their powers shall constitute the act of and serve to bind the Trust and an
action taken by the Property Trustee in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.07. Title to Property of the Trust. Except as
provided in Section 3.10 with respect to the Debentures and the Property Account
or unless otherwise provided in this Declaration, legal title to all assets of
the Trust shall be vested in the Trust. The Holders shall not have legal title
to any part of the assets of the Trust, but shall have an individual undivided
beneficial interest in the assets of the Trust.
SECTION 3.08. Powers and Duties of the Regular Trustees. The
Regular Trustees shall have the exclusive power, authority and duty to cause the
Trust, and shall cause the Trust, to engage in the following activities:
(a) to issue Preferred Securities and Common Securities,
in each case in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided, further, that there shall be no
interests in the Trust other than the Securities and the issuance of Securities
shall be limited to (x) a one-time, simultaneous issuance of both Preferred
Securities and Common Securities on the Closing Date and (y) any subsequent
issuance of Preferred Securities and Common Securities on the Option Closing
Date pursuant to an exercise of the over-allotment option granted to Initial
Purchasers in the Purchase Agreement;
(b) in connection with the issuance of the Preferred
Securities, at the direction of the Sponsor, to effect or cause to be effected
the filings, if necessary, and to execute, deliver and perform on behalf of the
Trust the Depositary Agreement;
(c) to acquire as trust assets Debentures with the
proceeds of the sale of the Preferred Securities and Common Securities;
provided, however, that the Regular Trustees shall cause legal title to all of
the Debentures to be vested in, and the Debentures to be held of record in the
name of, the Property Trustee for the benefit of the Trust and the Holders of
the Preferred Securities and the Common Securities;
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(d) to cause the Trust to enter into the Debenture Purchase
Agreement and the Subscription Agreement;
(e) to cause the Trust to enter into the Purchase
Agreement and such other agreements and arrangements as may be necessary or
desirable in connection with the sale of Preferred Securities to the Initial
Purchasers thereof and the consummation thereof, and to take all action, and
exercise all discretion, as may be necessary or desirable in connection with the
consummation thereof;
(f) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event; provided, that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before taking
or refraining to take any Ministerial Action in relation to a Special Event;
(g) to establish a record date with respect to all
actions to be taken hereunder that require a record date be established,
including for the purposes of Section 316(c) of the Trust Indenture Act and with
respect to Distributions, voting rights, redemptions, and exchanges, and to
issue relevant notices to Holders of the Preferred Securities and Common
Securities as to such actions and applicable record dates;
(h) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action or otherwise adjust claims or demands of or
against the Trust ("Legal Action"), unless pursuant to Section 3.10(e), the
Property Trustee has the exclusive power to bring such Legal Action;
(i) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers, contractors,
advisors and consultants and pay reasonable compensation for such services;
(j) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(k) to give the certificate to the Property Trustee
required by ss. 314(a)(4) of the Trust Indenture Act, which certificate may be
executed by any Regular Trustee;
(l) to incur expenses which are necessary or incidental to
carrying out any of the purposes of the Trust;
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(m) to act as, or appoint another Person to act as,
registrar and transfer agent for the Securities, the Regular Trustees hereby
initially appointing the Property Trustee for such purposes;
(n) to take all actions and perform such duties as may be
required of the Regular Trustee pursuant to the Declaration, including, without
limitation, the terms of the Securities set forth in Exhibits B and C hereto;
(o) to execute all documents or instruments, perform all
duties and powers and do all things for and on behalf of the Trust in all
matters necessary or incidental to the foregoing;
(p) to take all action which may be necessary or
appropriate for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory business trust under
the laws of the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of the
Securities or to enable the Trust to effect the purposes for which the Trust has
been created;
(q) to take all action, not inconsistent with this
Declaration or with applicable law, which the Regular Trustees determine in
their discretion to be reasonable and necessary or desirable in carrying out the
activities of the Trust as set out in this Section 3.08, in order that:
(i) the Trust will not be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation
or a partnership and will be treated as a grantor trust for United
States federal income tax purposes; and
(iii) the Trust will comply with any requirements imposed by
any taxing authority on holders of instruments treated as indebtedness
for United States federal income tax purposes;
provided that such action does not adversely affect the interests of Holders;
(r) to take all action necessary to cause all applicable
information tax statements and other tax information reports that, upon advice
of counsel to the Regular Trustees, are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(s) subject to the requirements of Rule 3a-7 and ss.
317(b) of the Trust Indenture Act, to appoint one or more Paying Agents in
addition to the Property Trustee.
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The Regular Trustees must exercise the powers set forth in
this Section 3.08 in a manner which is consistent with the purposes and
functions of the Trust set out in Section 3.05 and the Regular Trustees shall
not take any action which is inconsistent with the purposes and functions of the
Trust set forth in Section 3.05.
Subject to this Section 3.08, the Regular Trustees shall have
none of the powers nor any of the authority of the Property Trustee set forth in
Section 3.10.
SECTION 3.09. Prohibition of Actions by Trust and Trustees.
The Trust shall not, and the Trustees (including the Property Trustee) shall
cause the Trust not to, engage in any activity other than as required or
authorized by this Declaration. In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall not cause the Trust to:
(a) invest any proceeds received by the Trust from
holding the Debentures but shall promptly distribute from the Property Account
all such proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(b) acquire, dispose of, or substitute for any Trust assets
other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans, other than loans represented by the
Debentures;
(e) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interests in, the Trust other than the Securities;
(g) incur any indebtedness for borrowed money; or
(h)(i) direct the time, method and place of exercising any
trust or power conferred upon the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under the Declaration
or Section 6.06 of the Indenture, (iii) exercise any right to rescind or annul
any declaration that the principal of all of the Debentures shall be due and
payable or (iv) consent to any amendment, modification or termination of the
Indenture or the Debentures, where such consent shall be required, unless in the
case of this clause (h) the Property Trustee shall have received an unqualified
opinion of nationally recognized independent tax counsel recognized as expert in
such matters to the effect that such action will not cause the Trust to be
classified for United States federal income tax purposes as an association
taxable as a corporation or partnership and that the Trust will continue to be
classified as a grantor trust for United States federal income tax purposes.
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SECTION 3.10. Powers and Duties of the Property Trustee. (a)
The legal title to the Debentures shall be owned by and held of record in the
name of the Property Trustee in trust for the benefit of the Trust and the
Holders of the Securities. The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Article 5. Such vesting and
cessation of title shall be effective whether or not transfer documents have
been executed and delivered.
(b) The Property Trustee shall not transfer its right,
title and interest in the Debentures to the Regular Trustees or, if the Property
Trustee does not also act as the Delaware Trustee, the Delaware Trustee.
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
bank account (the "Property Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders of
the Securities and on the receipt of payments of funds made in respect
of the Debentures held by the Property Trustee, deposit such funds into
the Property Account and, without any further acts of the Property
Trustee or the Regular Trustees, promptly make payments to the Holders
of the Preferred Securities and Common Securities from the Property
Account in accordance with Section 6.01. Funds in the Property Account
shall be held uninvested, and without liability for interest thereon,
until disbursed in accordance with this Declaration. The Property
Account shall be an account which is maintained with a banking
institution whose long-term unsecured indebtedness is rated by a
"nationally recognized statistical rating organization", as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act, at
least equal to (but in no event less than "A" or the equivalent) the
rating assigned to the Preferred Securities by a nationally recognized
statistical rating organization;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect promptly the redemption of the
Preferred Securities and the Common Securities to the extent the
Debentures are redeemed or mature;
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Preferred Securities and
the Common Securities, engage in such ministerial activities as shall
be necessary or appropriate to effect promptly the distribution,
pursuant to terms of the Securities, of Debentures to Holders of
Securities upon the occurrence of a Special Event; and
(iv) have the legal power to exercise all of the rights,
powers and privileges of a holder of the Debentures under the Indenture
and, if an Event of Default occurs and is continuing, the Property
Trustee, subject to Section 2.06(b), shall for the benefit of the
Holders of the Securities, enforce its rights as holder of the
Debentures under the Indenture, subject to the rights of the Holders of
the Preferred Securities pursuant to the terms of this Declaration, the
Business Trust Act and the Trust Indenture Act.
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(d) The Property Trustee shall take all actions and
perform such duties as may be specifically required of the Property Trustee
pursuant to the terms of this Declaration, including without limitation, the
Securities set forth in Exhibits B and C hereto.
(e) The Property Trustee shall take any Legal Action
which arises out of or in connection with an Event of Default or the Property
Trustee's duties and obligations under this Declaration, the Business Trust Act
or the Trust Indenture Act; provided, however, that the holders of a Majority in
liquidation amount of the Preferred Securities will have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Property Trustee or to direct the exercise of any trust or power conferred
upon the Property Trustee under the Declaration, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Property Trustee fails to enforce its rights under the
Debentures, a Holder of Preferred Securities, to the extent permitted by law,
after a period of 30 days has elapsed from such Holder's written request to the
Property Trustee to enforce such rights, may institute a legal proceeding
directly against O&M to enforce the Property Trustee's rights under the
Debentures without first instituting any legal proceeding against the Property
Trustee or any other Person; provided, further, that, if an Event of Default has
occurred and is continuing and such event is attributed to the failure of the
Sponsor to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a Holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder (a "Holder Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Holder Direct Action, the rights of the Holders of the
Common Securities will be subrogated to the rights of such Holder of Preferred
Securities to the extent of any payment made by the Sponsor to such Holders of
Preferred Securities in such Holder Direct Action. Except as provided in the
preceding sentences, the Holders of Preferred Securities will not be able to
exercise directly any remedy available to the Holders of the Debentures.
(f) All moneys deposited in the Property Account, and all
Debentures held by the Property Trustee for the benefit of the Holders of the
Securities will not be subject to any right, charge, security interest, lien or
claim of any kind in favor of, or for the benefit of the Property Trustee or its
agents or their creditors.
(g) The Property Trustee shall, within 90 days after the
occurrence of a default with respect to the Securities known to the Property
Trustee, transmit by mail, first class postage prepaid, to the holders of the
Securities, as their names and addresses appear upon the register, notice of all
such defaults with respect to the Securities, unless such defaults shall have
been cured before the giving of such notice (the term "defaults" for the
purposes of this Section 3.10(g) being hereby defined to be an Indenture Event
of Default, not including any periods of grace provided for in the Indenture and
irrespective of the giving of any notice provided therein); provided, that,
except in the case of default in the payment of the principal of (or premium, if
any) or interest on any of the Debentures, the Property Trustee shall be
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protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers, of the Property Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities. The
Property Trustee shall not be deemed to have knowledge of any default, except
(i) a default in the payment of principal, premium or interest on the Debentures
or (ii) any default as to which the Property Trustee shall have received written
notice or a Responsible Officer charged with the administration of this
Declaration shall have obtained written notice.
(h) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds
thereof distributed to the Holders of Securities pursuant to the terms
of the Securities; or
(ii) a Successor Property Trustee has been appointed and
accepted that appointment in accordance with Article 5.
(i) The Property Trustee shall act as paying agent in
respect of the Common Securities and the Preferred Securities and, subject to
Section 3.08(r), may authorize one or more Persons (each, a "Paying Agent") to
pay Distributions, redemption payments or liquidation payments on behalf of the
Trust with respect to the Preferred Securities. Any such Paying Agent shall
comply with ss. 317(b) of the Trust Indenture Act. Any Paying Agent may be
removed by the Property Trustee, after consultation with the Regular Trustees,
at any time and a successor Paying Agent or additional Paying Agents may be
appointed at any time by the Property Trustee, subject to Section 3.08(r).
(j) The Property Trustee shall give prompt written notice
to the Holders of the Securities of any notice received by it from O&M of its
election to defer payments of interest on the Debentures by extending the
interest payment period with respect thereto.
(k) Subject to this Section 3.10, the Property Trustee
shall have none of the powers or the authority of the Regular Trustees set forth
in Section 3.08.
(l) The Property Trustee shall exercise the powers,
duties and rights set forth in this Section 3.10 and Section 3.12 in a manner
which is consistent with the purposes and functions of the Trust set out in
Section 3.05, and the Property Trustee shall not take any action which is
inconsistent with the purposes and functions of the Trust set forth in Section
3.05.
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SECTION 3.11. Delaware Trustee. Notwithstanding any other
provision of this Declaration other than Section 5.01(a)(3), the Delaware
Trustee shall not be entitled to exercise any powers, nor shall the Delaware
Trustee have any of the duties and responsibilities of the Trustees described in
this Declaration (except as required under the Business Trust Act). Except as
set forth in Section 5.01(a)(3), the Delaware Trustee shall be a Trustee for the
sole and limited purpose of fulfilling the requirements of ss. 3807 of the
Business Trust Act. No implied covenants or obligations shall be read into this
Declaration against the Delaware Trustee.
SECTION 3.12. Certain Rights and Duties of the Property
Trustee. (a) The Property Trustee, before the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Declaration, and no implied covenants shall be read into this Declaration
against the Property Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.06), the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) No provision of this Declaration shall be construed
to relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property
Trustee shall be determined solely by the express provisions
of this Declaration, and the Property Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into
this Declaration against the Property Trustee; and
(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee,
the Property Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements
of this Declaration;
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(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders as provided herein
relating to the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee hereunder or under the
Indenture, or exercising any trust or power conferred upon the Property
Trustee under this Declaration; and
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or adequate indemnity against such risk or liability is not
reasonably assured to it.
(c) Subject to the provisions of Section 3.12(a) and (b):
(i) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Property Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part
and, if the Trust is excluded from the definition of Investment Company
solely by means of Rule 3a-7, subject to the requirements of Rule 3a-7,
request and rely upon a certificate, which shall comply with the
provisions of ss. 314(e) of the Trust Indenture Act, signed by any two
of the Regular Trustees or by an authorized officer of the Sponsor, as
the case may be;
(ii) the Property Trustee (A) may consult with counsel (which
may be counsel to the Sponsor or any of its Affiliates and may include
any of its employees) selected by it in good faith and with due care
and the written advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon and in accordance with such advice
and opinion and (B) shall have the right at any time to seek
instructions concerning the administration of this Declaration from any
court of competent jurisdiction;
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(iii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Property Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed by it in good faith and with due care;
(iv) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holders, unless such Holders shall
have offered to the Property Trustee reasonable security and indemnity
against the costs, expenses (including attorneys' fees and expenses)
and liabilities that might be incurred by it in complying with such
request or direction; provided that nothing contained in this clause
(iv) shall relieve the Property Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been cured or waived)
to exercise such of the rights and powers vested in it by this
Declaration, and to use the same degree of care and skill in this
exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs; and
(v) any action taken by the Property Trustee or its agents
hereunder shall bind the Holders of the Securities and the signature of
the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action; and no third party shall be
required to inquire as to the authority of the Property Trustee to so
act, or as to its compliance with any of the terms and provisions of
this Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action.
SECTION 3.13. Filing of Amendments to Certificate of Trust.
The Certificate of Trust as filed with the Secretary of State of the State of
Delaware on April 29, 1998 is attached hereto as Exhibit A. On or after the date
of execution of this Declaration, the Trustees shall cause the filing with the
Secretary of State of the State of Delaware of such amendments to the
Certificate of Trust as the Trustees shall deem necessary or desirable.
SECTION 3.14. Execution of Documents by Regular Trustees.
Unless otherwise determined by the Regular Trustees and except as otherwise
required by the Business Trust Act with respect to the Certificate of Trust or
otherwise, a majority of, or if there are only two, both of, the Regular
Trustees are authorized to execute and deliver on behalf of the Trust any
documents which the Regular Trustees have the power and authority to execute or
deliver pursuant to this Declaration.
SECTION 3.15. Trustees Not Responsible for Recitals or
Issuance of Securities. The recitals contained in this Declaration and the
Securities shall be taken as the statements of the Sponsor, and the Trustees do
not assume any responsibility for their correctness. The Trustees make no
representations as to the value or condition of the property of the Trust or any
part thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration or the Securities.
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SECTION 3.16. Duration of Trust. The Trust, absent termination
pursuant to the provisions of Article 8 hereof, shall have existence until April
30, 2018.
ARTICLE 4
SPONSOR
SECTION 4.01. Purchase of Common Securities by Sponsor. On the
Closing Date the Sponsor will purchase Common Securities issued by the Trust at
the same time as the Preferred Securities to be issued on such date are issued,
such purchase to be in an amount equal to 3% of the total capital of the Trust.
On the Option Closing Date the Sponsor will purchase Common Securities issued by
the Trust at the same time as the Preferred Securities to be issued on such date
are issued, such purchase, together with the amount purchased on the Closing
Date, to be in an amount equal to 3% of the total capital of the Trust.
SECTION 4.02. Expenses. (a) In connection with the purchase of
the Debentures by the Trust, the Sponsor, in its capacity as Sponsor and not as
a Holder, shall be responsible for and shall pay for all debts and obligations
(other than with respect to the Securities) and all costs and expenses of the
Trust (including, but not limited to, costs and expenses relating to the
organization of the Trust, the issuance of the Preferred Securities to the
Initial Purchasers thereof, the fees and expenses (including reasonable counsel
fees and expenses) of the Trustees (including any amounts payable under Article
10), the costs and expenses relating to the operation of the Trust, including
without limitation, costs and expenses of accountants, attorneys, statistical or
bookkeeping services, expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s), transfer agent(s),
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the disposition of Trust assets).
(b) In connection with the purchase of the Debentures by
the Trust, the Sponsor, in its capacity as Sponsor and not as a Holder, will pay
any and all taxes (other than withholding taxes attributable to the Trust or its
assets) and all liabilities, costs and expenses with respect to such taxes of
the Trust.
(c) The Sponsor's obligations under this Section 4.02
shall be for the benefit of, and shall be enforceable by, any Person to whom any
such debts, obligations, costs, expenses and taxes are owed (a "Creditor")
whether or not such Creditor has received notice hereof. Any such Creditor may
enforce the Sponsor's obligations under this Section 4.02 directly against the
Sponsor and the Sponsor irrevocably waives any right or remedy to require that
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any such Creditor take any action against the Trust or any other Person before
proceeding against the Sponsor. The Sponsor agrees to execute such additional
agreements as may be necessary or desirable in order to give full effect to the
provisions of this Section 4.02.
SECTION 4.03. Other Actions. The Sponsor and the Trustees
hereby authorize and direct the Sponsor, as the sponsor of the Trust, (i) to
prepare one or more offering memoranda in preliminary and final form relating to
the offering and sale of Preferred Securities of the Trust in a transaction
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "1933 Act"), and such other forms or filings as may be required by
the 1933 Act, the Securities Exchange Act of 1934, as amended, or the Trust
Indenture Act of l939, as amended, in each case relating to the Preferred
Securities of the Trust; (ii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents that shall be
necessary or desirable to register or establish the exemption from registration
of the Preferred Securities of the Trust under the securities or "Blue Sky" laws
of such jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary
or desirable; (iii) to execute and file an application, and all other
applications, statements, certificates, agreements and other instruments that
shall be necessary or desirable, to the Private Offerings, Resales and Trading
through Automated Linkages ("PORTAL") Market and, if and at such time as
determined by the Sponsor, to the New York Stock Exchange or any other national
stock exchange or the Nasdaq National Market for listing or quotation of the
Preferred Securities of the Trust; (iv) to execute and deliver letters or
documents to, or instruments for filing with, a Depositary relating to the
Preferred Securities of the Trust; and (v) to execute, deliver and perform on
behalf of the Trust one or more purchase agreements, dealer manager agreements,
escrow agreements and other related agreements providing for or relating to the
sale of the Preferred Securities of the Trust; provided, however, that the
Sponsor may not take any action otherwise permitted by this Section 4.03 if such
action would constitute an action prohibited under Section 3.09 hereof.
ARTICLE 5
TRUSTEES
SECTION 5.01. Number of Trustees; Qualifications. (a) The
number of Trustees initially shall be five (5). At any time (i) before the
issuance of the Securities, the Sponsor may, by written instrument, increase or
decrease the number of, and appoint, remove and replace the Trustees, and (ii)
after the issuance of the Securities the number of Trustees may be increased or
decreased solely by, and Trustees may be appointed, removed or replaced solely
by, vote of Holders of Common Securities representing a Majority in liquidation
amount of the Common Securities voting as a class; provided that in any case:
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(i) the number of Trustees shall be at least five (5) unless
the Trustee that acts as the Property Trustee also acts as the Delaware
Trustee, in which cases the number of Trustees shall be at least four
(4);
(ii) at least a majority of the Trustees shall at all times be
officers, directors or employees of O&M;
(iii) if required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be either a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and
otherwise is permitted to act as a Trustee hereunder under the laws of
the State of Delaware, except that if the Property Trustee has its
principal place of business in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the laws of the State of
Delaware, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application; and
(iv) there shall at all times be a Property Trustee hereunder
which shall satisfy the requirements of Section 5.01(c).
Each of the Regular Trustees and the Delaware Trustee shall be either a natural
person at least 21 years of age or a legal entity which shall act through one or
more duly appointed representatives.
(b) The initial Regular Trustees shall be:
G. Gilmer Minor, III
Ann Greer Rector
Richard F. Bozard
c/o OWENS & MINOR, INC.
4800 Cox Road
Glen Allen, Virginia 23060
(c) There shall at all times be one Trustee which shall act as
Property Trustee. In order to act as Property Trustee hereunder, such Trustee
shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation or national banking association
organized and doing business under the laws of the United States of
America or any State or Territory thereof or of the District of
Columbia, or a corporation, national banking association or Person
permitted by the commission to act as an institutional trustee under
the Trustee Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by
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Federal, State, Territorial or District of Columbia authority. If such
corporation or national banking association publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 5.01(c)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published; and
(iii) if the Trust is excluded from the definition of an
Investment Company solely by reason of Rule 3a-7 and to the extent Rule
3a-7 requires a trustee having certain qualifications to hold title to
the "eligible assets" (as defined in Rule 3a-7) of the Trust, the
Property Trustee shall possess those qualifications.
If at any time the Property Trustee shall cease to satisfy the
requirements of clauses (i)-(iii) above, the Property Trustee shall immediately
resign in the manner and with the effect set out in Section 5.02(d). If the
Property Trustee has or shall acquire any "conflicting interest" within the
meaning of ss. 310(b) of the Trust Indenture Act, the Property Trustee and the
Holders of the Common Securities (as if such Holders were the obligor referred
to in ss. 310(b) of the Trust Indenture Act) shall in all respects comply with
the provisions of ss. 310(b) of the Trust Indenture Act. The Preferred Guarantee
shall be deemed to be specifically described in this Declaration for the
purposes of clause (i) of the first proviso contained in ss. 310(b) of the Trust
Indenture Act.
The initial Trustee which shall serve as the Property Trustee
is The First National Bank of Chicago, a national banking association, whose
address is as set forth in Section 14.01(b).
(d) The initial Trustee which shall serve as the Delaware
Trustee is First Chicago Delaware Inc., a Delaware corporation, whose address is
as set forth in Section 14.01(c).
(e) Any action taken by Holders of Common Securities
pursuant to this Article 5 shall be taken at a meeting of Holders of Common
Securities convened for such purpose or by written consent as provided in
Section 12.02.
(f) No amendment may be made to this Section 5.01 which
would change any rights with respect to the number, existence or appointment and
removal of Trustees, except with the consent of each Holder of Common
Securities.
SECTION 5.02. Appointment, Removal and Resignation of
Trustees. (a) Subject to Section 5.02(b), Trustees may be appointed or removed
without cause at any time:
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(i) until the issuance of the Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of the Securities by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class.
(b)(i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.02(a) until a Successor Property
Trustee possessing the qualifications to act as Property Trustee under
Section 5.01(c) has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and
delivered to the Regular Trustees, the Sponsor and the Property Trustee
being removed; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.02(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Section
5.1(a)(3) (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the Regular Trustees, the
Sponsor and the Delaware Trustee being removed.
(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his death, removal or
resignation.
(d) Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective until:
(A) a Successor Property Trustee possessing the
qualifications to act as Property Trustee under Section
5.01(c) has been appointed and has accepted such appointment
by instrument executed by such Successor Property Trustee and
delivered to the Trust, the Sponsor and the resigning Property
Trustee; or
(B) if the Trust is excluded from the definition of
an Investment Company solely by reason of Rule 3a-7, until the
assets of the Trust have been completely liquidated and the
proceeds thereof distributed to the Holders of the Securities;
and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
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executed by such Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(e) If no Successor Property Trustee or Successor
Delaware Trustee shall have been appointed and accepted appointment as provided
in this Section 5.02 within 60 days after delivery to the Sponsor and the Trust
of a Resignation Request, the resigning Property Trustee or Delaware Trustee may
petition any court of competent jurisdiction for appointment of a Successor
Property Trustee or Successor Delaware Trustee. Such court may thereupon after
such notice, if any, as it may deem proper and prescribe, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.
SECTION 5.03. Vacancies among Trustees. If a Trustee ceases to
hold office for any reason and the number of Trustees is not reduced pursuant to
Section 5.01 or if the number of Trustees is increased pursuant to Section 5.01,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
a majority of the Regular Trustees shall be conclusive evidence of the existence
of such vacancy. The vacancy shall be filled with a Trustee appointed in
accordance with the requirements of this Article 5.
SECTION 5.04. Effect of Vacancies. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee, or any one of them, shall not
operate to annul the Trust. Whenever a vacancy in the number of Regular Trustees
shall occur until such vacancy is filled as provided in this Article 5, the
Regular Trustees in office, regardless of their number, shall have all the
powers granted to the Regular Trustees and shall discharge all the duties
imposed upon the Regular Trustees by this Declaration.
SECTION 5.05. Meetings. Meetings of the Regular Trustees shall
be held from time to time upon the call of any Trustee. Regular meetings of the
Regular Trustees may be held at a time and place fixed by resolution of the
Regular Trustees. Notice of any in-person meeting of the Regular Trustees shall
be hand delivered or otherwise delivered in writing (including by facsimile,
with a hard copy by overnight courier) not less than 48 hours before such
meeting. Notice of any telephonic meeting of the Regular Trustees or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 24
hours before such meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in person
or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Regular Trustee attends a meeting for the
express purpose of objecting to the transaction of any activity on the ground
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Regular Trustees may be taken
at a meeting by vote of a majority of the Regular Trustees present (whether in
person or by telephone) and eligible to vote with respect to such matter;
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provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Regular Trustees.
SECTION 5.06. Delegation of Power. (a) Any Regular Trustee
may, by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any registration statement or amendment thereto or other document or schedule
filed with the Commission or making any other governmental filing.
(b) The Regular Trustees shall have power to delegate
from time to time to such of their number or to officers of the Trust the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as the Regular Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
ARTICLE 6
DISTRIBUTIONS
SECTION 6.01. Distributions. Holders shall receive periodic
distributions, redemption payments and liquidation distributions in accordance
with the applicable terms of the relevant Holder's Securities ("Distributions").
Distributions shall be made to the Holders of Preferred Securities and Common
Securities in accordance with the terms of the Securities as set forth in
Exhibits B and C hereto. If and to the extent that O&M makes a payment of
interest (including Compounded Interest (as defined in the Indenture)), premium
or principal on the Debentures held by the Property Trustee (the amount of any
such payment being a "Payment Amount"), the Property Trustee shall and is
directed to promptly make a Distribution of the Payment Amount to Holders in
accordance with the terms of the Securities as set forth in Exhibits B and C
hereto.
ARTICLE 7
ISSUANCE OF SECURITIES
SECTION 7.01. General Provisions Regarding Securities. (a) The
Regular Trustees shall issue on behalf of the Trust securities representing
undivided beneficial interests in the assets of the Trust in accordance with
Section 7.01(b) and for the consideration specified in Section 3.03.
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(b) The Regular Trustees shall issue on behalf of the
Trust one class of preferred securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Exhibit B (the "Preferred Securities") which terms are incorporated by reference
in, and made a part of, this Declaration as if specifically set forth herein,
and one class of common securities representing undivided beneficial interests
in the assets of the Trust having such terms as are set forth in Exhibit C (the
"Common Securities") which terms are incorporated by reference in, and made a
part of, this Declaration as if specifically set forth herein. The Trust shall
have no securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
(c) The Certificates shall be signed on behalf of the
Trust by the Regular Trustees (or if there are more than two Regular Trustees by
any two of the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and other
minor errors or defects in any such reproduction of any such signature shall not
affect the validity of any Certificate. In case any Regular Trustee of the Trust
who shall have signed any of the Certificates shall cease to be such Regular
Trustee before the Certificate so signed shall be delivered by the Trust, such
Certificate nevertheless may be delivered as though the person who signed such
Certificate had not ceased to be such Regular Trustee; and any Certificate may
be signed on behalf of the Trust by such persons as, at the actual date of the
execution of such Certificate, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
Securities may be listed, or to conform to usage. Pending the preparation of
definitive Certificates, the Regular Trustees on behalf of the Trust may execute
temporary Certificates (printed, lithographed or typewritten), in substantially
the form of the definitive Certificates in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Certificates, all as may be determined by the Regular Trustees. Each
temporary Certificate shall be executed by the Regular Trustees on behalf of the
Trust upon the same conditions and in substantially the same manner, and with
like effect, as definitive Certificates. Without unnecessary delay, the Regular
Trustees on behalf of the Trust will execute and furnish definitive Certificates
and thereupon any or all temporary Certificates may be surrendered to the
transfer agent and registrar in exchange therefor (without charge to the
Holders). Each Certificate whether in temporary or definitive form shall be
countersigned by the manual or facsimile signature of an authorized signatory of
the Person acting as registrar and transfer agent for the Securities, which
shall initially be the Property Trustee.
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(d) The consideration received by the Trust for the
issuance of the Securities shall constitute a contribution to the capital of the
Trust and shall not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and nonassessable.
(f) Every Person, by virtue of having become a Holder or
a Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by this Declaration.
(g) Upon issuance of the Securities as provided in this
Declaration, the Regular Trustees on behalf of the Trust shall return to O&M the
$10 constituting initial trust assets as set forth in the Original Declaration.
SECTION 7.02. Conversion Agent. The Trust shall maintain an
office or agency where Preferred Securities may be presented for conversion
("Conversion Agent"). The Trust may appoint the Conversion Agent and may appoint
one or more additional Conversion Agents in such other locations as it may
determine. The term "Conversion Agent" includes any additional Conversion Agent.
The Trust may change any Conversion Agent without prior notice to any Holders.
If the Trust fails to appoint or maintain another entity as Conversion Agent,
the Property Trustee will act as such. The Trust or any of its Affiliates may
act as Conversion Agent. The Trust shall act as Conversion Agent for the Common
Securities. The Conversion Agent shall be entitled to the rights and protections
extended to the Property Trustee when acting in such capacity.
The Property Trustee is hereby initially appointed as
Conversion Agent for the Preferred Securities.
ARTICLE 8
TERMINATION OF TRUST
SECTION 8.01. Termination of Trust. This Declaration and the
Trust shall terminate and be of no further force or effect when:
(a) all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the Holders of Securities in accordance with the terms of the Securities; or
(b) all of the Debentures shall have been distributed to
the Holders of Securities in exchange for all of the Securities in accordance
with the terms of the Securities; or
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(c) upon the expiration of the term of the Trust as set forth
in Section 3.16; or,
(d) upon the distribution of the Sponsor's common stock to all
Securities Holders upon conversion of all outstanding Preferred Securities,
and a certificate of cancellation is filed by the Trustees with the Secretary of
State of the State of Delaware. The Trustees shall so file such a certificate as
soon as practicable after the occurrence of an event referred to in this Section
8.01.
The provisions of Sections 3.12 and 4.02 and Article 10 shall
survive the termination of the Trust.
ARTICLE 9
TRANSFER OF INTERESTS
SECTION 9.01. Transfer of Securities (a) Securities may only
be transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article 9, Preferred Securities shall be
freely transferable.
(c) Subject to this Article 9, O&M and any Related Party
may only transfer Common Securities to O&M (including any successor entity in
connection with a merger or consolidation of O&M into another corporation or any
conveyance, transfer or lease by O&M of its properties and assets, substantially
as an entirety to any Person pursuant to Section 10.01 of the Indenture) or a
Related Party; provided that any such transfer shall be subject to the condition
that the transferor shall have obtained (1) either a ruling from the Internal
Revenue Service or an unqualified written opinion addressed to the Trust and
delivered to the Trustees of nationally recognized independent tax counsel
experienced in such matters to the effect that such transfer will not (i) cause
the Trust to be treated as issuing a class of interests in the Trust differing
from the class of interests represented by the Common Securities originally
issued to O&M, (ii) result in the Trust acquiring or disposing of, or being
deemed to have acquired or disposed of, an asset, or (iii) result in or cause
the Trust to be treated as anything other than a grantor trust for United States
federal income tax purposes and (2) an unqualified written opinion addressed to
the Trust and delivered to the Trustees of a nationally recognized independent
counsel experienced in such matters that such transfer will not cause the Trust
to be an Investment Company or controlled by an Investment Company.
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(d) Each Security that bears or is required to bear the
legend set forth in this Section 9.01(d) (a "Restricted Security") shall be
subject to the restrictions on transfer provided in the legend set forth in this
Section 9.01(d), unless such restrictions on transfer shall be waived by the
written consent of the Regular Trustees, and the Holder of each Restricted
Security, by such securityholder's acceptance thereof, agrees to be bound by
such restrictions on transfer. As used in this Section 9.01(d), the term
"transfer" encompasses any sale, pledge, transfer or other disposition of any
Restricted Security.
Prior to the Transfer Restriction Termination Date, the 144A
Global Security, Temporary Regulation S Global Security, each Definitive
Preferred Security and any certificate evidencing Common Stock issued upon
conversion thereof shall bear a legend in substantially the following form,
unless otherwise agreed by the Regular Trustees (with written notice thereof to
the Indenture Trustee):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
(AN "INSTITUTIONAL ACCREDITED INVESTOR"), OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION; (2)
AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO OWENS & MINOR, INC. OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, BEFORE SUCH TRANSFER FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE TRUST THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
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OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY PRIOR TO THE EXPIRATION
DATE OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE SECURITY
EVIDENCED HEREBY UNDER RULE 144(k) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE TRANSFEROR MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE PROPERTY TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE TRANSFEROR
MUST, BEFORE SUCH TRANSFER, FURNISH TO THE ISSUER SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION",
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
Following the Transfer Restriction Termination Date or the
sale of a Security or Common Stock for which a Security has been exchanged
pursuant to an effective registration statement or Rule 144, any Security or
security issued in exchange or substitution therefor (other than (i) Securities
acquired by the Sponsor or any Affiliate and (ii) Common Stock issued upon the
conversion or exchange of any Security described in clause (i) above) may upon
surrender of such Security for exchange to any Regular Trustee on behalf of the
Trust in accordance with the provisions of this Section 9.01(d), be exchanged
for a new Security or Securities, of like tenor and aggregate liquidation
amount, which shall not bear the restrictive legend required by this Section
9.01(d).
SECTION 9.02. Transfer of Certificates. The Regular Trustees
shall provide for the registration of Certificates and of transfers of
Certificates, which will be effected without charge but only upon payment (with
such indemnity as the Regular Trustees may require) in respect of any tax or
other government charges which may be imposed in relation to it. Upon surrender
for registration of transfer of any Certificate, the Regular Trustees shall
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cause one or more new Certificates to be issued in the name of the designated
transferee or transferees. Every Certificate surrendered for registration of
transfer shall be accompanied by a written instrument of transfer in form
satisfactory to the Regular Trustees duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each Certificate surrendered for
registration of transfer shall be canceled by the Regular Trustees. A transferee
of a Certificate shall be entitled to the rights and subject to the obligations
of a Holder hereunder upon the receipt by such transferee of a Certificate. By
acceptance of a Certificate, each transferee shall be deemed to have agreed to
be bound by this Declaration.
SECTION 9.03. Deemed Security Holders. The Trustees may treat
the Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trustees shall have actual or other notice
thereof.
SECTION 9.04. Book-Entry Interests. (a) Except as provided in
Section 9.07 and unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance
(including Preferred Securities, if any, issued on the Option Closing Date
pursuant to the exercise of the over-allotment option set forth in the Purchase
Agreement), will be issued in the form of one or more, fully registered, global
Preferred Security Certificates (each a "Global Certificate"), to be delivered
to DTC, the initial Clearing Agency, by, or on behalf of, the Trust. Such Global
Certificates shall initially be registered on the books and records of the Trust
in the name of Cede & Co., the nominee of DTC, and no Preferred Security
Beneficial Owner will receive a definitive Preferred Security Certificate
representing such Preferred Security Beneficial Owner's interests in such Global
Certificates, except as provided in Section 9.07.
(b) Preferred Securities that upon initial issuance are
beneficially owned by QIBs may, at the option of the Trust, be represented by
one or more Global Certificates (a "144A Global Security"), and Preferred
Securities that upon initial issuance are beneficially owned by Non-U.S. Persons
may, at the option of the Trust, be represented by one or more Global
Certificates (a "Temporary Regulation S Global Security"). The Temporary
Regulation S Global Security will be deposited with the Property Trustee as
custodian for DTC and registered in the name of a nominee of DTC for the
accounts of Euroclear and Cedel. At any time on or after May 13, 1999 (the
"Regulation S Securities Exchange Date"), one or more permanent Global
Certificates without the legend set forth in Section 9.01(d) (the "Permanent
Regulation S Global Security", and together with the Temporary Regulation S
Global Security, the "Regulation S Global Securities") shall be deposited with
the Clearing Agency, and the Property Trustee shall make endorsements reflecting
a decrease in the principal amount of the Temporary Regulation S Global Security
in an amount equal to the principal amount of the beneficial interest in the
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Temporary Regulation S Global Security transferred. Prior to the Regulation S
Securities Exchange Date, beneficial interests in the Temporary Regulation S
Global TECONS may only be held through Euroclear or Cedel, and any resale or
other transfer of such interests to U.S. persons shall not be permitted during
such period unless such resale or transfer is made pursuant to Rule 144A or
Regulation S and in accordance with the certification requirements described
herein. Transfers of interests in the Preferred Securities between any 144A
Global Security and any Regulation S Global Security will be made in accordance
with the standing instructions and procedures of the Clearing Agency and its
participants. The Property Trustee shall make appropriate endorsements to
reflect increases or decreases in the amount of such Preferred Securities in
global form to reflect any such transfers.
Except as provided below, beneficial owners of a Preferred
Security in global form shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holders of such
Preferred Security in global form.
Any transfer of a beneficial interest in a Preferred Security
in global form which cannot be effected through book-entry settlement must be
effected by the delivery to the transferee (or its nominee) of a Definitive
Preferred Security Certificate or Definitive Preferred Security Certificates
registered in the name of the transferee (or its nominee) on the books
maintained by the Property Trustee. With respect to any such transfer, the
Property Trustee will cause, in accordance with the standing instructions and
procedures of the Clearing Agency, the aggregate principal amount at maturity of
the Preferred Security in global form to be reduced and, following such
reduction, the Sponsor will execute and the Property Trustee will authenticate
and make available for delivery to the transferee (or such transferee's nominee,
as the case may be), a Preferred Security or Securities in the appropriate
aggregate principal amount at maturity in the name of such transferee (or its
nominee) and bearing such restrictive legends as may be required by this
Declaration of Trust.
(c) So long as the Preferred Securities are eligible for
book-entry settlement and to the extent Preferred Securities held by QIBs or
Non-U.S. Persons, as the case may be, are held in a global form, or unless
otherwise required by law, upon any transfer of a Definitive Preferred Security
to a QIB in accordance with Rule 144A or to a Non-U.S. Person in accordance with
Regulation S, unless otherwise requested by the transferor, and upon receipt of
the Definitive Preferred Security Certificate being so transferred, together
with a certification from the transferor that the transfer is being made in
compliance with Rule 144A or Regulation S, as the case may be (or other evidence
satisfactory to the Property Trustee on behalf of the Trust), the Property
Trustee on behalf of the Trust shall make an endorsement on any 144A Global
Security or any Regulation S Global Security, as the case may be, to reflect an
increase in the number of Preferred Securities represented by such Global
Certificate, and the Property Trustee on behalf of the Trust shall cancel such
Definitive Preferred Security in accordance with the standing instructions and
procedures of the Clearing Agency, the number of Preferred Securities
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represented by such Preferred Security in global form to be increased
accordingly; provided that no Definitive Preferred Security, or portion thereof,
in respect of which the Trust or an Affiliate of the Trust held any beneficial
interest shall be included in such Preferred Security in global form until such
Definitive Preferred Security is freely tradable in accordance with Rule 144(k);
provided, further, that the Trust shall issue Preferred Securities in definitive
form upon any transfer of a beneficial interest in the Preferred Security in
global form to the Sponsor or any Affiliate of the Sponsor.
(d) Any Global Certificate may be endorsed with or have
incorporated in the text thereof such legends or recitals or changes not
inconsistent with the provisions of this Declaration as may be required by the
Clearing Agency, by any national securities exchange or by the National
Association of Securities Dealers, Inc. in order for the Preferred Securities to
be tradeable on the PORTAL Market or as may be required for the Preferred
Securities to be tradeable on any other market developed for trading of
securities pursuant to Rule 144A or required to comply with any applicable law
or any regulation thereunder or with the rules and regulations of any securities
exchange upon which the Preferred Securities may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Preferred Securities are
subject. Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.07:
(i) the provisions of this Section 9.04 shall be in full force
and effect;
(ii) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and, except
as set forth herein or in Rule 3a-7 with respect to the Property
Trustee, shall have no obligation to the Preferred Security Beneficial
Owners; provided, that solely for the purposes of determining whether
the Holders of the requisite amount of Preferred Securities have voted
on any matter provided for in this Declaration, so long as definitive
Preferred Security Certificates have not been issued (pursuant to
Section 9.07 hereof), the Trustees may conclusively rely on, and shall
be protected in relying on, any written instrument (including a proxy)
delivered to the Trustees by the Clearing Agency setting forth the
Preferred Security Beneficial Owners' votes or assigning the right to
vote on any matter to any other Persons either in whole or in part;
(iii) to the extent that the provisions of this Section 9.04
conflict with any other provisions of this Declaration, the provisions
of this Section 9.04 shall control; and
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(iv) the rights of the Preferred Security Beneficial Owners
shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants. DTC will make book-entry transfers among
the Clearing Agency Participants and receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants.
SECTION 9.05. Notices to Holders of Certificates. Whenever a
notice or other communication to the Holders is required to be given under this
Declaration, unless and until Definitive Preferred Security Certificates shall
have been issued pursuant to Section 9.07, the relevant Trustees shall give all
such notices and communications, specified herein to be given to Preferred
Securities Holders, to the Clearing Agency and, with respect to any Preferred
Security Certificate registered in the name of a Clearing Agency or the nominee
of a Clearing Agency, the Trustees shall, except as set forth herein or in Rule
3a-7 with respect to the Property Trustee, have no notice obligations to the
Preferred Security Beneficial Owners.
SECTION 9.06. Appointment of Successor Clearing Agency. If any
Clearing Agency elects to discontinue its services as securities depository with
respect to the Preferred Securities, the Regular Trustees may, in their sole
discretion, appoint a successor Clearing Agency with respect to the Preferred
Securities.
SECTION 9.07. Definitive Preferred Securities Certificates.
(a) If (i) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 9.06 or (ii) the Regular Trustees elect after consultation with the
Sponsor to terminate the book-entry system through the Clearing Agency with
respect to the Preferred Securities, then (x) Definitive Preferred Security
Certificates shall be prepared by the Regular Trustees on behalf of the Trust
with respect to such Preferred Securities and (y) upon surrender of the Global
Certificates by the Clearing Agency, accompanied by registration instructions,
the Regular Trustees shall cause definitive Preferred Security Certificates to
be delivered to Preferred Security Beneficial Owners in accordance with the
instructions of the Clearing Agency. Neither the Trustees nor the Trust shall be
liable for any delay in delivery of such instructions and each of them may
conclusively rely on and shall be protected in relying on, such instructions.
(b) Restricted Securities that upon initial issuance are
beneficially owned by, or are subsequently transferred to, Institutional
Accredited Investors that are neither QIBs nor Non-U.S. Persons will be issued
as Definitive Preferred Security Certificates and may not be represented by a
Global Certificate. Preferred Securities that upon initial issuance are
beneficially owned by Persons that are Non-U.S. Persons may, at the option of
the Trust, be issued as Definitive Preferred Security Certificates. Definitive
Preferred Security Certificates issued in exchange for all or a part of a
Preferred Security in global form shall be registered in such names and in such
authorized denominations as the Clearing Agency, pursuant to instructions from
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its direct or indirect participants or otherwise, shall instruct the Property
Trustee. Upon execution and authentication, the Property Trustee shall make
available for delivery such Definitive Preferred Security Certificates to the
person in whose name such Definitive Preferred Security Certificates are so
registered. In the case of transfers to Institutional Accredited Investors, the
Property Trustee shall make appropriate endorsements to reflect decreases in the
amount of the applicable Global Certificate.
SECTION 9.08. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificates should be surrendered to the
Regular Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and (b) there
shall be delivered to the Regular Trustees such security or indemnity as may be
required by them to keep each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a bona fide purchaser, any two
Regular Trustees on behalf of the Trust shall execute and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of like denomination. In connection with the issuance of any new
Certificate under this Section 9.08, the Regular Trustees may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE 10
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.01. Exculpation. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (but, in the case of the Property Trustee, subject to the Trust
Indenture Act) or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Trust and upon such information,
opinions, reports or statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
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reasonable care by or on behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses or any other facts pertinent to the existence and amount of
assets from which Distributions to Holders of Securities might properly be paid.
(c) Pursuant to ss. 3803(a) of the Business Trust Act,
the Holders of Securities, in their capacities as Holders, shall be entitled to
the same limitation of liability that is extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
SECTION 10.02. Indemnification.. (a) To the fullest extent
permitted by applicable law, the Sponsor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of gross
negligence (but, in the case of the Property Trustee, subject to the Trust
Indenture Act) or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Sponsor prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Sponsor of an undertaking by or
on behalf of the Indemnified Person to repay such amount with interest if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 10.02(a).
(c) The provisions of this Section 10.02 shall survive
the termination of this Declaration or the resignation or removal of any
Trustee.
SECTION 10.03. Outside Business. The Sponsor and any Trustee
may engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. Neither the Sponsor nor any Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and the Sponsor or any Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Trustee may engage or be
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interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE 11
ACCOUNTING
SECTION 11.01. Fiscal Year. The fiscal year ("Fiscal Year") of
the Trust shall be the calendar year, or such other year as is required by the
Code.
SECTION 11.02. Certain Accounting Matters. (a) At all times
during the existence of the Trust, the Regular Trustees shall keep, or cause to
be kept, full books of account, records and supporting documents, which shall
reflect in reasonable detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting, in accordance
with generally accepted accounting principles, consistently applied. The books
and records of the Trust, together with a copy of this Declaration and a
certified copy of the Certificate of Trust, or any amendment thereto, shall at
all times be maintained at the principal office of the Trust and shall be open
for inspection for any examination by any Holder or its duly authorized
representative for any purpose reasonably related to its interest in the Trust
during normal business hours.
(b) The Regular Trustees shall cause to be prepared and
mailed to each Holder of Securities, an annual United States federal income tax
information statement, on such form as is required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 31 days after the end of each
Fiscal Year of the Trust.
(c) The Regular Trustees shall cause to be prepared and
filed with the appropriate taxing authority, any annual income tax returns that
counsel to the Regular Trustees has advised are required to be filed by the
Regular Trustees on behalf of the Trust with any federal, state or local taxing
authority, such returns to be filed as soon as practicable after the end of each
Fiscal Year of the Trust and on such forms required by the appropriate taxing
authority.
SECTION 11.03. Banking. The Trust shall maintain one or more
bank accounts in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by the
Property Trustee shall be made directly to the Property Account and no other
funds from the Trust shall be deposited in the Property Account. The sole
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signatories for such accounts shall be designated by the Regular Trustees;
provided, however, that the Property Trustee shall designate the sole
signatories for the Property Account.
SECTION 11.04. Withholding. The Trust and the Trustees shall
comply with all withholding requirements under United States federal, state and
local law. The Trust shall request, and the Holders shall provide to the Trust,
such forms or certificates as are necessary to establish an exemption from
withholding with respect to each Holder, and any representations and forms as
shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Trust shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld shall
be deemed to be a distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount to be withheld was not
withheld from a Distribution, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE 12
AMENDMENTS AND MEETINGS
SECTION 12.01. Amendments. (a) Except as otherwise provided in
this Declaration or by any applicable terms of the Securities, this Declaration
may be amended by, and only by, a written instrument executed by a majority of
the Regular Trustees; provided, however, that (i) no amendment or modification
to this Declaration shall be made unless the Regular Trustees shall have
obtained (A) either a ruling from the Internal Revenue Service or a written
unqualified opinion of nationally recognized independent tax counsel experienced
in such matters to the effect that such amendment will not cause the Trust to be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership and to the effect that the Trust will
continue to be treated as a grantor trust for purposes of United States federal
income taxation and (B) a written unqualified opinion of nationally recognized
independent counsel experienced in such matters to the effect that such
amendment will not cause the Trust to be an Investment Company which is required
to be registered under the Investment Company Act, (ii) at such time after the
Trust has issued any Securities which remain outstanding, any amendment which
would adversely affect the rights, privileges or preferences of any Holder of
Securities may be effected only with such additional requirements as may be set
forth in the terms of such Securities, (iii) Section 4.02, Section 9.01(c) and
this Section 12.01 shall not be amended without the consent of all of the
Holders of the Securities, (iv) no amendment which adversely affects the rights,
powers and privileges of the Property Trustee shall be made without the consent
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of the Property Trustee, (v) Article 4 shall not be amended without the consent
of the Sponsor, and (vi) the rights of Holders of Common Securities under
Article 5 to increase or decrease the number of, and to appoint, replace or
remove, Trustees shall not be amended without the consent of each Holder of
Common Securities.
(b) Notwithstanding Section 12.02(a)(ii), this
Declaration may be amended without the consent of the Holders of the Securities
to (i) cure any ambiguity, (ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other provision of
this Declaration, (iii) to add to the covenants, restrictions or obligations of
the Sponsor, and (iv) to conform to any changes in Rule 3a-7 or any change in
interpretation or application of Rule 3a-7 by the Commission, which amendment
does not adversely affect the rights, preferences or privileges of the Holders.
SECTION 12.02. Meetings of the Holders of Securities; Action
by Written Consent. (a) Meetings of the Holders of Preferred Securities and/or
Common Securities may be called at any time by the Regular Trustees (or as
provided in the terms of the Securities) to consider and act on any matter on
which Holders of such class of Securities are entitled to act under the terms of
this Declaration, the terms of the Securities or the rules of any stock exchange
on which the Preferred Securities are listed or admitted for trading. The
Regular Trustees shall call a meeting of Holders of Preferred Securities or
Common Securities, if directed to do so by Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Certificates held
by the Holders of Securities exercising the right to call a meeting and only
those specified Certificates shall be counted for purposes of determining
whether the required percentage set forth in the second sentence of this
paragraph has been met.
(b) Except to the extent otherwise provided in the terms
of the Securities, the following provision shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given by mail to all
the Holders of Securities having a right to vote thereat not less than
7 days nor more than 60 days prior to the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration or the rules of any stock
exchange on which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be taken at a meeting of
the Holders of Securities may be taken without a meeting if a consent
in writing setting forth the action so taken is signed by Holders of
Securities owning not less than the minimum aggregate liquidation
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amount of Securities that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking of
action without a meeting shall be given to the Holders of Securities
entitled to vote who have not consented in writing. The Regular
Trustees may specify that any written ballot submitted to the Holders
of Securities for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees.
(ii) Each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of a Security is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of the Security executing it. Except as otherwise provided
herein or in the terms of the Securities, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation.
(iii) Each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate.
(iv) Unless otherwise provided in the Business Trust Act, this
Declaration or the rules of any stock exchange on which the Preferred
Securities are then listed or admitted for trading, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any matter
is to be voted on by any Holders of Securities, waiver of any such
notice, action by consent without a meeting, the establishment of a
record date, quorum requirements, voting in person or by proxy or any
other matter with respect to the exercise of any such right to vote.
ARTICLE 13
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.01. Representations and Warranties of Property
Trustee. (a) The Trustee which acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
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(i) the Property Trustee is a national banking association or
a banking corporation with trust powers, duly organized, validly
existing and in good standing under the laws of the United States or
the laws of the state of its incorporation, with trust power and
authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration.
(ii) the execution, delivery and performance by the Property
Trustee of this Declaration has been duly authorized by all necessary
corporate action on the part of the Property Trustee. The Declaration
has been duly executed and delivered by the Property Trustee, and
constitutes a legal, valid and binding obligation of the Property
Trustee, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding
in equity or at law).
(iii) the execution, delivery and performance of this
Declaration by the Property Trustee does not conflict with or
constitute a breach of the Charter or By-laws of the Property Trustee.
(iv) no consent, approval or authorization of, or registration
with or notice to, any banking authority which supervises or regulates
the Property Trustee is required for the execution, delivery or
performance by the Property Trustee, of this Declaration.
(v) the Property Trustee satisfies the qualifications set
forth in Section 5.01(c).
(b) The Trustee which acts as initial Delaware Trustee
represents and warrants to the Trust and the Sponsor at the date of this
Declaration, and each Successor Delaware Trustee represents and warrants to the
Trust and the Sponsor at the time of the Successor Delaware Trustee's acceptance
of its appointment as Delaware Trustee, that it satisfies the qualifications set
forth in Section 5.01(a)(iii).
ARTICLE 14
MISCELLANEOUS
SECTION 14.01. Notices. All notices provided for in this
Declaration shall be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by first class mail, as follows:
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(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below (or such other address
as the Regular Trustees on behalf of the Trust may give notice of to the Holders
of the Securities):
Owens & Minor Trust I
c/o Owens & Minor, Inc.
4800 Cox Road
Glen Allen, Virginia 23060
Attention: General Counsel
Facsimile No: (804) 965-1907
(b) if given to the Property Trustee, at the mailing
address of the Property Trustee set forth below (or such other address as the
Property Trustee may give notice of to the Holders of the Securities):
The First National Bank of Chicago
153 West 51st Street, Suite 4015
5th Floor
New York, New York 10019
Attention: Corporate Trust Administration
Telecopy: (212) 373-1383
(c) if given to the Delaware Trustee, at the mailing
address of the Delaware Trustee set forth below (or such other address as the
Delaware Trustee may give notice of to the Holders of the Securities):
First Chicago Delaware Inc.
300 King Street
Wilmington, Delaware 19801
Telecopy: (312) 407-1708
(d) if given to the Holder of the Common Securities, at
the mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
Owens & Minor, Inc.
4800 Cox Road
Glen Allen, Virginia 23060
Attention: General Counsel
Facsimile No: (804) 965-1907
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
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A copy of any notice to the Property Trustee or the Delaware
Trustee shall also be sent to the Trust. All notices shall be deemed to have
been given, when received in person, telecopied with receipt confirmed, or
mailed by first class mail, postage prepaid except that if a notice or other
document is refused delivery or cannot be delivered because of a changed address
of which no notice was given, such notice or other document shall be deemed to
have been delivered on the date of such refusal or inability to deliver.
SECTION 14.02. Undertaking for Costs. All parties to this
Declaration agree, and each Holder of any Securities by his or her acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Declaration, or in any suit against the Property Trustee for any action taken or
omitted by it as Property Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 14.02 shall not apply to any suit instituted by the
Property Trustee, to any suit instituted by any Holder of Preferred Securities,
or group of Holders of Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities, or to any suit
instituted by any Holder of Preferred Securities for the enforcement of the
payment of the principal of (or premium, if any) or interest on the Debentures,
on or after the respective due dates expressed in such Debentures.
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SECTION 14.03. Governing Law. This Declaration and the rights
of the parties hereunder shall be governed by and interpreted in accordance with
the laws of the State of Delaware and all rights and remedies shall be governed
by such laws without regard to principles of conflict of laws.
SECTION 14.04. Headings. Headings contained in this
Declaration are inserted for convenience of reference only and do not affect the
interpretation of this Declaration or any provision hereof.
IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
OWENS & MINOR, INC.
as Sponsor
By: /s/ G. Gilmer Minor, III
--------------------------------------------
Name: G. Gilmer Minor, III
Title: Chairman, President and Chief
Executive Officer
/s/ G. Gilmer Minor, III
-----------------------------------------------
G. Gilmer Minor, III
as Regular Trustee
/s/ Ann Greer Rector
-----------------------------------------------
Ann Greer Rector
as Regular Trustee
/s/ Richard F. Bozard
-----------------------------------------------
Richard F. Bozard
as Regular Trustee
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By: /s/ Michael Pinzon
--------------------------------------------
Name: Michael Pinzon
Title: Authorized Officer
FIRST CHICAGO DELAWARE INC.
as Delaware Trustee
By: /s/ Melissa G. Weisman
--------------------------------------------
Name: Melissa G. Weisman
Title: Authorized Officer
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EXHIBIT A
CERTIFICATE OF TRUST
OF
OWENS & MINOR TRUST I
THIS Certificate of Trust of Owens & Minor Trust I (the
"Trust") is being duly executed and filed by First Chicago Delaware Inc., a
Delaware corporation, and Ann Rector, as trustees, to form a business trust
under the Delaware Business Trust Act (12 Del. C. ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is Owens
& Minor Trust I.
2. Delaware Trustee. The name and business address of the
trustee of the Trust in the State of Delaware is First Chicago Delaware Inc.,
300 King Street, Wilmington, DE 19801.
3. Effective Date. This Certificate of Trust shall be
effective upon filing.
IN WITNESS WHEREOF, the undersigned, being all of the trustees
of the Trust, have executed this Certificate.
FIRST CHICAGO DELAWARE INC.
By:
--------------------------------------
Name:
Title:
-----------------------------------------
Name: Ann Rector
<PAGE>
EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.01 of the Amended and Restated
Declaration of Trust of Owens & Minor Trust I dated as of May 13, 1998 (as
amended from time to time, the "Declaration"), the designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Preferred Securities are set forth below (each capitalized term used but not
defined herein having the meaning set forth in the Declaration):
1. Designation and Number. Preferred Securities of the Trust
with an aggregate liquidation amount in the assets of the Trust of One Hundred
Twenty Million Dollars ($120,000,000) (plus up to an additional Eighteen Million
Dollars ($18,000,000) issuable upon exercise of the over-allotment option set
forth in the Purchase Agreement) and a liquidation amount in the assets of the
Trust of $50 per Preferred Security, are hereby designated as "$2.6875 Term
Convertible Securities, Series A." The Preferred Security Certificates
evidencing the Preferred Securities shall be substantially in the form attached
hereto as Annex I, with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or practice or to conform
to the rules of any stock exchange on which the Preferred Securities are listed.
In connection with the issuance and sale of the Preferred Securities and the
Common Securities, the Trust will purchase as trust assets Debentures of O&M
having an aggregate principal amount equal to the aggregate liquidation amount
of the Preferred Securities and Common Securities so issued and bearing interest
at an annual rate equal to the annual Distribution rate on the Preferred
Securities and Common Securities and having payment and redemption provisions
which correspond to the payment and redemption provisions of the Preferred
Securities and Common Securities.
2. Distributions. (a) Distributions payable on each Preferred
Security will be fixed at a rate per annum of $2.6875 (the "Coupon Rate")
subject to increase in certain limited circumstances pursuant to the
Registration Rights Agreement per Preferred Security. Distributions in arrears
for more than one calendar quarter will accumulate at the rate per annum of
5.375% thereof (to the extent permitted by law), compounded quarterly. The term
"Distributions" as used herein means such periodic cash distributions and any
such amounts payable unless otherwise stated. A Distribution will be made by the
Property Trustee only to the extent that interest payments are made in respect
of the Debentures held by the Property Trustee. The amount of Distributions
payable for any period will be computed for any quarterly Distribution period on
the basis of a 360-day year of twelve 30-day months.
(b) Distributions on the Preferred Securities will be
cumulative, will accumulate from May 13, 1998 and will be payable quarterly in
arrears, on each January 31, April 30, July 31 and October 31, commencing on
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July 31, 1998, except as otherwise described below, but only if and to the
extent that interest payments are made in respect of the Debentures held by the
Property Trustee.
So long as O&M shall not be in default in the payment of
interest on the Debentures, O&M has the right under the Indenture for the
Debentures to defer payments of interest by extending the interest payment
period from time to time on the Debentures for a period not exceeding 20
consecutive quarterly interest periods (each, an "Extension Period") and, as a
consequence, quarterly Distributions will continue to accumulate (to the extent
permitted by applicable law) at the rate of 5.375% per annum, compounded
quarterly during any such Extension Period. Prior to the termination of any such
Extension Period, O&M may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly interest periods; and provided
that no Extension Period shall last beyond the date of maturity or any
redemption date of the Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, O&M may commence a new Extension
Period, subject to the above requirements. Payments of accumulated Distributions
will be payable to Holders of Preferred Securities as they appear on the books
and records of the Trust on the first record date after the end of the Extension
Period.
(c) Distributions on the Preferred Securities will be payable
promptly by the Property Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the books
and records of the Trust on the relevant record dates. While the Preferred
Securities remain in book-entry only form, the relevant record dates shall be
one Business Day prior to the relevant Distribution date, and if the Preferred
Securities are no longer in book-entry only form, the Regular Trustees shall
have the right to select relevant record dates which shall be more than one
Business Day prior to the relevant payment dates. Distributions payable on any
Preferred Securities that are not punctually paid on any Distribution payment
date as a result of O&M having failed to make the corresponding interest payment
on the Debentures will forthwith cease to be payable to the person in whose name
such Preferred Security is registered on the relevant record date, and such
defaulted Distribution will instead be payable to the person in whose name such
Preferred Security is registered on the special record date established by the
Regular Trustees, which record date shall correspond to the special record date
or other specified date determined in accordance with the Indenture; provided,
however, that Distributions shall not be considered payable on any Distribution
payment date falling within an Extension Period unless O&M has elected to make a
full or partial payment of interest accrued on the Debentures on such
Distribution payment date. Subject to any applicable laws and regulations and
the provisions of the Declaration, each payment in respect of the Preferred
Securities will be made as described in paragraph 10 hereof. If any date on
which Distributions are payable on the Preferred Securities is not a Business
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Day, then payment of the Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without any amounts or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(d) All Distributions paid with respect to the Preferred
Securities and the Common Securities will be paid Pro Rata to the Holders
thereof entitled thereto. If an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to Distributions.
(e) In the event of an election by the Holder to convert its
Securities through the Conversion Agent into Common Stock pursuant to the terms
of the Securities as set forth in this Exhibit B to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that if a Security is surrendered for conversion after the close of business on
any regular record date for payment of a Distribution and before the opening of
business on the corresponding Distribution date, then, notwithstanding such
conversion, the Distribution payable on such Distribution date will be paid in
cash to the person in whose name the Security is registered at the close of
business on such record date, and (other than a Security or a portion of a
Security called for redemption on a redemption date occurring after such record
date and on or prior to such Distribution date) when so surrendered for
conversion, the Security must be accompanied by payment of an amount equal to
the Distribution payable on such Distribution date.
(f) In the event that there is any money or other property
held by or for the Trust that is not accounted for under the Declaration, such
money or property shall be distributed Pro Rata among the Holders of the
Preferred Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In the event of
any voluntary or involuntary dissolution, liquidation, winding-up or termination
of the Trust, the Holders of the Preferred Securities and Common Securities at
the date of the dissolution, liquidation, winding-up or termination, as the case
may be, will be entitled to receive Pro Rata solely out of the assets of the
Trust available for distribution to Holders of Preferred Securities and Common
Securities after satisfaction of liabilities to creditors, an amount equal to
the aggregate of the stated liquidation amount of $50 per Preferred Security and
Common Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, liquidation, winding-up or termination, and
after satisfaction of liabilities to creditors, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Preferred Securities and Common Securities and bearing accrued and unpaid
interest in an amount equal to the accumulated and unpaid Distributions on, such
Preferred Securities and Common Securities, shall be distributed Pro Rata to the
Holders of the Preferred Securities and Common Securities in exchange for such
Securities.
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If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and Common Securities shall be
paid, subject to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive
Liquidation Distributions upon any such dissolution Pro Rata with Holders of
Preferred Securities, except that if an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures. The Preferred
Securities and Common Securities may only be redeemed if Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities are repaid, redeemed or distributed
as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity, upon redemption at any time or from time to time on or
after May 2, 2001, or at any time in certain circumstances upon the occurrence
of a Tax Event, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 30 nor more than 60 days' notice, at a
redemption price per Preferred and Common Security equal to the redemption price
of the Debentures, together with accumulated and unpaid Distributions thereon
through the date of redemption, payable in cash (the "Redemption Price"). The
date of any such repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the repayment or redemption
date of the Debentures.
(b) If fewer than all the outstanding Preferred Securities and
Common Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Preferred Securities to be redeemed
will be redeemed as described in paragraph 4(f)(ii) below. If a partial
redemption would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, O&M pursuant to the Indenture will only redeem
Debentures in whole and, as a result, the Trust may only redeem the Preferred
Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as hereinafter defined, and each a "Special Event") shall occur and
be continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of and bearing accrued and unpaid interest equal to accumulated and unpaid
Distributions on, and having the same record date for payment as the Preferred
Securities and Common Securities, to be distributed to the Holders of the
Preferred Securities and Common Securities on a Pro Rata basis in liquidation of
such Holders' interests in the Trust, within 90 days following the occurrence of
such Special Event (the "90 Day Period"), provided, however, that in the case of
the occurrence of a Tax Event, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion of a
nationally recognized independent tax counsel experienced in such matters (a "No
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Recognition Opinion"), which opinion may rely on any then applicable published
revenue ruling of the Internal Revenue Service, to the effect that the Holders
of the Preferred Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of the dissolution of the Trust
and distribution of Debentures; and provided, further, that, if and as long as
at the time there is available to the Trust the opportunity to eliminate, within
the 90 Day Period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, O&M or the Holders of the
Preferred Securities ("Ministerial Action"), the Trust will pursue such measure
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the
Regular Trustees have received an opinion (a "Redemption Tax Opinion") of
nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that O&M
would be precluded from deducting the interest on the Debentures for United
States federal income tax purposes even if the Debentures were distributed to
the Holders of Preferred Securities and Common Securities in liquidation of such
Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, O&M shall have the right
at any time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash at the Redemption Price within 90 days
following the occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
basis; provided, however, that, if at the time there is available to O&M or the
Regular Trustees on behalf of the Trust the opportunity to eliminate, within
such 90 day period, the Tax Event by taking some Ministerial Action, O&M or the
Regular Trustees on behalf of the Trust will pursue such measure in lieu of
redemption and; provided, further, that O&M shall have no right to redeem the
Debentures while the Regular Trustees on behalf of the Trust are pursuing such
Ministerial Action. The Common Securities will be redeemed Pro Rata with the
Preferred Securities, except that if an Event of Default under the Indenture has
occurred and is continuing, the Preferred Securities will have a priority over
the Common Securities with respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "Dissolution Tax Opinion") to the effect that on or after May
8, 1998 as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
any amendment to, or change in, an interpretation or application of any such
laws or regulations by any legislative body, court, governmental agency or
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regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after May 8, 1998 (including, without
limitation, any of the foregoing arising with respect to, or resulting from, any
proposal, proceeding or other action commencing on or before May 8, 1998), there
is more than an insubstantial risk that (i) the Trust is, or will be within 90
days of the date thereof, subject to United States federal income tax with
respect to income accrued or received on the Debentures, (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of other taxes, duties or other governmental charges or (iii) interest
payable by O&M to the Trust on the Debentures is not, or within 90 days of the
date thereof will not be, deductible by O&M for United States federal income tax
purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of nationally recognized independent counsel
experienced in practice under the Investment Company Act that, as a result of
the occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an Investment
Company which is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after May 8, 1998.
On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding and (ii) certificates representing Preferred Securities will
be deemed to represent beneficial interests in the Debentures having an
aggregate principal amount equal to the stated liquidation amount of, and
bearing accrued and unpaid interest equal to accumulated and unpaid
Distributions on, such Preferred Securities until such certificates are
presented to O&M or its agent for transfer or reissuance.
(d) The Trust may not redeem any outstanding Preferred
Securities unless all accumulated and unpaid Distributions have been paid on all
Preferred Securities for all quarterly Distribution periods terminating on or
prior to the date of redemption.
(e) If Debentures are distributed to Holders of the Preferred
Securities, O&M, pursuant to the terms of the Indenture, will use its best
efforts to have the Debentures listed on the New York Stock Exchange (if the
Preferred Securities are listed thereon at such time) or on such other exchange
as the Preferred Securities were listed immediately prior to the distribution of
the Debentures.
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(f) (i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (f)(i), a Redemption/Distribution Notice
shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities and Common
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Preferred Securities are to be redeemed, the Preferred Securities to be redeemed
will be redeemed Pro Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities registered in the name of
and held of record by DTC (or successor Clearing Agency) or any other nominee,
the Preferred Securities will be redeemed from, and the distribution of the
proceeds of such redemption will be made to, each Clearing Agency Participant
(or person on whose behalf such nominee holds such securities) in accordance
with the procedures applied by such agency or nominee.
(iii) Subject to paragraph 10 hereof, if the Trust gives a
Redemption/ Distribution Notice in respect of a redemption of Preferred
Securities as provided in this paragraph 4 (which notice will be irrevocable)
then (A) while the Preferred Securities are in book-entry only form, with
respect to the Preferred Securities, by 12:00 noon, New York City time, on the
redemption date; provided that O&M has paid the Property Trustee, in immediately
available funds, a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Property Trustee will deposit
irrevocably with DTC (or successor Clearing Agency) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and will
give DTC (or successor Clearing Agency) irrevocable instructions and authority
to pay the Redemption Price to the Holders of the Preferred Securities and (B)
if the Preferred Securities are issued in definitive form, with respect to the
Preferred Securities; and provided that O&M has paid the Property Trustee, in
immediately available funds, a sufficient amount of cash in connection with the
related redemption or maturity of the Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such Preferred Securities by
check mailed to the address of the relevant Holder appearing on the books and
records of the Trust on the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if applicable, then
immediately prior to the close of business on the date of such deposit,
Distributions will cease to accumulate on the Preferred Securities called for
redemption, such Preferred Securities will no longer be deemed to be outstanding
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and all rights of Holders of such Preferred Securities so called for redemption
will cease, except the right of the Holders of such Preferred Securities to
receive the Redemption Price, but without interest on such Redemption Price.
Neither the Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Preferred Securities which have been so called
for redemption. If any date fixed for redemption of Preferred Securities is not
a Business Day, then payment of the Redemption Price payable on such date will
be made on the next succeeding day that is a Business Day (and without any
amount or other payment in respect of any such delay) except that, if such
Business Day falls in the next calendar year, such payment will be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date fixed for redemption. If O&M fails to repay Debentures
on maturity or on the date fixed for redemption or if payment of the Redemption
Price in respect of Preferred Securities is improperly withheld or refused and
not paid either by the Property Trustee or by O&M pursuant to the Preferred
Securities Guarantee, Distributions on such Preferred Securities will continue
to accumulate (in accordance with the continued accrual of interest on the
Debentures), from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to DTC or its nominee (or any successor
Clearing Agency or its nominee) if the Global Certificates have been issued or,
if Definitive Preferred Security Certificates have been issued, to the Holders
of the Preferred Securities.
(v) Upon the date of dissolution of the Trust and distribution
of Debentures as a result of the occurrence of a Special Event, Preferred
Security Certificates shall be deemed to represent beneficial interests in the
Debentures so distributed, and the Preferred Securities will no longer be deemed
outstanding and may be canceled by the Regular Trustees. The Debentures so
distributed shall have an aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so distributed.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), O&M or any of its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
5. Conversion Rights. The Holders of Securities shall have the
right at any time prior to the close of business on April 30, 2013 (or, in the
case of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
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The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of Common Stock
pursuant to the Holder's direction to the Conversion Agent to exchange such
Securities for a portion of the Debentures theretofore held by the Trust on the
basis of one Security per $50 principal amount of Debentures, and immediately
convert such amount of Debentures into fully paid and nonassessable shares of
Common Stock at an initial rate of 2.4242 shares of Common Stock per $50
principal amount of Debentures (which is equivalent to a conversion price of
$20.625 per share of Common Stock, subject to certain adjustments set forth in
Sections 5.03 and 5.04 of the Supplemental Indenture (as so adjusted, the
"Conversion Price")).
(a) In order to convert Securities into Common Stock the
Holder shall submit to the Conversion Agent at the office referred to above an
irrevocable request to convert Securities on behalf of such Holder (the
"Conversion Request"), together, if the Securities are in certificated form,
with such certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall, upon the request of Holders of Securities, make
available to such Holders copies of the form of Conversion Request. The
Conversion Agent shall notify the Property Trustee of the Holder's election to
exchange Securities for a portion of the Debentures held by the Trust and the
Property Trustee shall, upon receipt of such notice, deliver to the Conversion
Agent the appropriate principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon notify the Property
Trustee of the Holder's election to convert such Debentures into shares of
Common Stock. If a Security is surrendered for conversion after the close of
business on any regular record date for payment of a Distribution and before the
opening of business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such Distribution
payment date will be paid in cash to the person in whose name the Security is
registered at the close of business on such record date, and (other than a
Security or a portion of a Security called for redemption on a redemption date
occurring after such record date and on or prior to such Distribution payment
date) when so surrendered for conversion, the Security must be accompanied by
payment of an amount equal to the Distribution payable on such Distribution
payment date. Except as provided above, neither the Trust nor the Sponsor will
make, or be required to make, any payment, allowance or adjustment upon any
conversion on account of any accumulated and unpaid Distributions accumulated on
the Securities surrendered for conversion, or on account of any accumulated and
unpaid dividends on the shares of Common Stock issued upon such conversion.
Securities shall be deemed to have been converted immediately prior to the close
of business on the day on which the Conversion Request relating to such
Securities is received by the Trust in accordance with the foregoing provision
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(the "Conversion Date"). The Person or Persons entitled to receive Common Stock
issuable upon conversion of the Debentures shall be treated for all purposes as
the record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the Conversion Date, the Sponsor shall issue and deliver
at the office of the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same, unless otherwise directed by the
Holder in the Conversion Request and the Conversion Agent shall distribute such
certificate or certificates, together with the applicable cash payment, if any,
to such Person or Persons.
(b) Each Holder of a Security by his acceptance thereof
appoints The First National Bank of Chicago "Conversion Agent" for the purpose
of effecting the conversion of Securities in accordance with this Section. In
effecting the conversion and transactions described in this Section, the
Conversion Agent shall be acting as agent of the Holders of Securities directing
it to effect such conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Securities from time to time for Debentures held by
the Trust in connection with the conversion of such Securities in accordance
with this section and (ii) to convert all or a portion of the Debentures into
Common Stock and thereupon to deliver such shares of Common Stock in accordance
with the provisions of this section and to deliver to the Trust a new Debenture
or Debentures for any resulting unconverted principal amount.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will be paid
in cash by the Sponsor to the Conversion Agent, which in turn will make such
payment to the Holder or Holders of Securities so converted.
(d) The Sponsor shall at all times reserve and keep available,
out of its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, the Sponsor shall be entitled to deliver upon conversion of
Debentures, shares of Common Stock reacquired and held in the treasury of the
Sponsor (in lieu of the issuance of authorized and unissued shares of Common
Stock), so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any shares of Common Stock issued
upon conversion of the Debentures shall be duly authorized, validly issued and
fully paid and nonassessable. The Trust shall deliver the shares of Common Stock
received upon conversion of the Debentures to the converting Holder free and
clear of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. Each of the Sponsor and the Trust shall prepare
and shall use its best efforts to obtain and keep in force such governmental or
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regulatory permits or other authorizations as may be required by law, and shall
comply with all applicable requirements as to registration or qualification of
Common Stock (and all requirements to list Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable the Sponsor
to lawfully issue Common Stock to the Trust upon conversion of the Debentures
and the Trust to lawfully deliver Common Stock to each Holder upon conversion of
the Securities.
(e) The Sponsor will pay any and all taxes that may be payable
in respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Trust the
amount of any such tax, or has established to the satisfaction of the Trust that
such tax has been paid.
(f) Nothing in the preceding paragraph (e) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the
Securities as set forth in this Exhibit B to the Declaration or to the
Declaration itself or otherwise require the Property Trustee or the Trust to pay
any amounts on account of such withholdings.
6. Voting Rights. (a) Except as provided under paragraph 6(b)
below and as otherwise required by law and the Declaration, the Holders of the
Preferred Securities will have no voting rights.
(b) If any proposed amendment to the Declaration provides for,
or the Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Preferred
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing a Majority in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
11
<PAGE>
amount of such class of Securities and (B) amendments to the Declaration shall
be subject to such further requirements as are set forth in Sections 12.01 and
12.02 of the Declaration.
In the event the consent of the Property Trustee, as the
holder of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Property Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination. The
Property Trustee shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of the Securities
voting together as a single class; provided that where such amendment,
modification or termination of the Indenture requires the consent or vote of (1)
holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only vote with respect to that amendment, modification
or termination as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that, other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or Debenture Trustee as set forth above, the
Property Trustee shall be under no obligation to take any action in accordance
with the directions of the Holders of Securities unless the Property Trustee
shall have received, at the expense of the Sponsor, an opinion of nationally
recognized independent tax counsel recognized as expert in such matters to the
effect that the Trust will not be classified for United States federal income
tax purposes as an association taxable as a corporation or a partnership on
account of such action and will be treated as a grantor trust for United States
federal income tax purposes following such action.
Subject to Section 2.06 of the Declaration, and the provisions
of this and the next succeeding paragraph, the Holders of a Majority in
liquidation amount of the Preferred Securities, voting separately as a class
shall have the right to (A) on behalf of all Holders of Preferred Securities,
waive any past default that is waivable under the Declaration (subject to, and
in accordance with the Declaration) and (B) direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as the holder
of the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, or (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; provided that
where the taking of any action under the Indenture requires the consent or vote
of (1) holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only take such action if directed by, in the case of
clause (1) above, the vote of Holders of Preferred Securities representing such
specified percentage of the aggregate liquidation amount of the Preferred
Securities, or, in the case of clause (2) above, each Holder of Preferred
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any proceeding for any remedy available to the Property Trustee or the Debenture
Trustee as set forth above, the Property Trustee shall be under no obligation to
take any of the foregoing actions at the direction of the Holders of Preferred
Securities unless the Property Trustee shall have received, at the expense of
the Sponsor, an opinion of nationally recognized independent tax counsel
recognized as expert in such matters to the effect that the Trust will not be
classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership on account of such action and will be
12
<PAGE>
treated as a grantor trust for United States federal income tax purposes
following such action. If the Property Trustee fails to enforce its rights under
the Declaration (including, without limitation, its rights, powers and
privileges as a holder of the Debentures under the Indenture), any Holder of
Preferred Securities may, to the extent permitted by law, after a period of 30
days has elapsed from such Holder's written request to the Property Trustee to
enforce such rights, institute a legal proceeding directly against O&M to
enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Sponsor to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then the registered holder of the Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder (a "Holder Direct
Action") on or after the respective due date specified in the Debentures. In
connection with such Holder Direct Action, the Sponsor will be subrogated to the
rights of such Holder of Preferred Securities under the Declaration to the
extent of any payment made by the Sponsor to such Holder of Preferred Securities
in such Holder Direct Action. Except as provided in the preceding sentences, the
holders of Preferred Securities will not be able to exercise any other remedy
available to the holders of the Debentures.
A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Preferred Securities will
constitute a waiver of the corresponding Event of Default under the Declaration
in respect of the Securities.
Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders of Preferred Securities
convened for such purpose, at a meeting of all of the Holders of Securities of
the Trust or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which Holders of Preferred Securities are entitled to
13
<PAGE>
vote, or of any matter upon which action by written consent of such Holders is
to be taken, to be mailed to each Holder of record of Preferred Securities. Each
such notice will include a statement setting forth (i) the date of such meeting
or the date by which such action is to be taken, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote or of such matter upon which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or
distribute Debentures in accordance with the Declaration.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities at such time that are owned by O&M or by any entity
directly or indirectly controlling or controlled by or under direct or indirect
common control with O&M shall not be entitled to vote or consent and shall, for
purposes of such vote or consent, be treated as if they were not outstanding.
Except as provided in this paragraph 6, Holders of the
Preferred Securities will have no rights to increase or decrease the number of
Trustees or to appoint, remove or replace a Trustee, which voting rights are
vested solely in the Holders of the Common Securities.
7. Pro Rata Treatment. A reference in these terms of the
Preferred Securities to any payment, distribution or treatment as being "Pro
Rata" shall mean pro rata to each Holder of Securities according to the
aggregate liquidation amount of the Securities held by the relevant Holder in
relation to the aggregate liquidation amount of all Securities outstanding
unless, in relation to a payment, an Event of Default has occurred and is
continuing, in which case any funds available to make such payment shall be paid
first to each Holder of the Preferred Securities pro rata according to the
aggregate liquidation amount of Preferred Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed to the Holders of
the Preferred Securities, to each Holder of Common Securities pro rata according
to the aggregate liquidation amount of Common Securities held by the relevant
Holder relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. Ranking. The Preferred Securities rank pari passu and
payment thereon will be made Pro Rata with the Common Securities except that
where an Event of Default occurs and is continuing, the rights of Holders of
Preferred Securities to payment in respect of Distributions and payments upon
liquidation, redemption or otherwise rank in priority to the rights of Holders
of the Common Securities.
14
<PAGE>
9. Mergers, Consolidations or Amalgamations. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other entity.
10. Transfer, Exchange, Method of Payments. Payment of
Distributions and payments on redemption of the Preferred Securities will be
payable, the transfer of the Preferred Securities will be registrable, and
Preferred Securities will be exchangeable for Preferred Securities of other
denominations of a like aggregate liquidation amount, at the corporate trust
office of the Property Trustee in The City of New York; provided that payment of
Distributions may be made at the option of the Regular Trustees on behalf of the
Trust by check mailed to the address of the persons entitled thereto and that
the payment on redemption of any Preferred Security will be made only upon
surrender of such Preferred Security to the Property Trustee.
11. Acceptance of Indenture and Preferred Guarantee. Each
Holder of Preferred Securities, by the acceptance thereof, agrees to the
provisions of (i) the Preferred Guarantee, including the subordination
provisions therein and (ii) the Indenture and the Debentures, including the
subordination provisions of the Indenture.
12. No Preemptive Rights. The Holders of Preferred Securities
shall have no preemptive rights to subscribe to any additional Preferred
Securities or Common Securities.
13. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
15
<PAGE>
Annex I
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE
INSERT - This Preferred Security is a Global Certificate within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company ("DTC") or a nominee of DTC. This Preferred Security is
exchangeable for Preferred Securities registered in the name of a person other
than DTC or its nominee only in the limited circumstances described in the
Declaration and no transfer of this Preferred Security (other than a transfer of
this Preferred Security as a whole by DTC to a nominee of DTC or by a nominee of
DTC to DTC or another nominee of DTC) may be registered except in limited
circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
[IF THE PREFERRED SECURITY IS TO BE A DEFINITIVE CERTIFICATE
ISSUED TO AN INSTITUTIONAL ACCREDITED INVESTOR, ATTACH "ACCREDITED INVESTOR
LETTER" IN THE FORM ATTACHED HERETO]
Number Preferred Securities
- --------------- ------------------
CUSIP NO. _______________
Certificate Evidencing Preferred Securities
of
Owens & Minor Trust I
$2.6875 Term Convertible Securities, Series A
(liquidation amount $50 per security)
[If prior to the Transfer Restriction Termination Date or sale
pursuant to an effective registration statement or Rule 144, add legend from
Section 9.01(d) of the Declaration.]
<PAGE>
Owens & Minor Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
__________________ (the "Holder") is the registered owner of ___________________
(________) preferred securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the $2.6875 Term Convertible
Securities, Series A (liquidation amount $50 per security) (the "Preferred
Securities"). The Preferred Securities are transferable on the books and records
of the Trust, in person or by a duly authorized attorney, upon surrender of this
certificate duly endorsed and in proper form for transfer. The designations,
rights, privileges, restrictions, preferences and other terms and provisions of
the Preferred Securities are set forth in, and this certificate and the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and Restated Declaration of
Trust of the Trust dated as of May 13, 1998, as the same may be amended from
time to time (the "Declaration") including the designation of the terms of
Preferred Securities as set forth in Exhibit B thereto. The Preferred Securities
and the Common Securities issued by the Trust pursuant to the Declaration
represent undivided beneficial interests in the assets of the Trust, including
the Debentures (as defined in the Declaration) issued by Owens & Minor, Inc., a
Virginia corporation ("O&M"), to the Trust pursuant to the Indenture referred to
in the Declaration. The Holder is entitled to the benefits of the Guarantee
Agreement of O&M dated as of May 13, 1998 (the "Guarantee") to the extent
provided therein. The Trust will furnish a copy of the Declaration, the
Guarantee and the Indenture to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
The Holder of this Certificate, by accepting this Certificate,
is deemed to have (i) agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior and Subordinated Debt (as defined in the Indenture) as and to the
extent provided in the Indenture and (ii) agreed to the terms of the Guarantee,
including that the Guarantee is subordinate and junior in right of payment to
all other liabilities of O&M, including the Debentures, and ranks pari passu in
right payment with the most senior preferred stock issued, from time to time, by
O&M.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
Unless the Property Trustee's Certificate of Authentication
hereon has been properly executed, these Trust Preferred Securities shall not be
entitled to any benefit under the Declaration or be valid or obligatory for any
purpose.
2
<PAGE>
IN WITNESS WHEREOF, the Trustees of the Trust have executed
this certificate this [ ] day of [ ], [ ].
OWENS & MINOR TRUST I
By: , as Trustee
-------------------------
Name:
Title: Regular Trustee
By: , as Trustee
-------------------------
Name:
Title: Regular Trustee
3
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]]
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
Dated: ,
THE FIRST NATIONAL BANK
OF CHICAGO,
as Property Trustee or as Authenticating Agent
By: By:
------------------------------- ------------------------------
Authorized Signatory Authorized Signatory
4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed
at a rate per annum of $2.6875 per Preferred Security, such rate being the rate
of interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarter will accumulate at the rate
per annum of 5.375% thereof (to the extent permitted by law) compounded
quarterly. The term "Distributions" as used herein means such cash distributions
and any such other amounts payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accumulate from May 13, 1998 and
will be payable quarterly in arrears, on each January 31, April 30, July 31 and
October 31, commencing on July 31, 1998, but only if and to the extent that
interest payments are made in respect of the Debentures held by the Property
Trustee. So long as O&M shall not be in default in the payment of interest on
the Debentures, O&M has the right under the Indenture for the Debentures to
defer payments of interest by extending the interest payment period from time to
time on the Debentures for a period not exceeding 20 consecutive quarters (each
an "Extension Period") and, as a consequence, quarterly Distributions will
continue to accumulate (to the extent permitted by applicable law) at the rate
of 5.375% per annum, compounded quarterly during such Extension period; provided
that no Extension Period shall last beyond the date of maturity or any
redemption date of the Debentures. Prior to the termination of any such
Extension Period, O&M may commence a new Extension Period; provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarterly interest periods. Payments of
accumulated Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, O&M may commence a new Extension Period, subject to the above
requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
The Preferred Securities shall be convertible into shares of
Common Stock, through (i) the exchange of Preferred Securities for a portion of
the Debentures and (ii) the immediate conversion of such Debentures into Common
Stock, in the manner and according to the terms set forth in the Declaration.
5
<PAGE>
CONVERSION REQUEST
To: The First National Bank of Chicago as Property Trustee of
Owens & Minor Trust I
The undersigned owner of these Preferred Securities hereby
irrevocably exercises the option to convert these Preferred Securities, or the
portion below designated, into common stock of Owens & Minor, Inc. (the "Common
Stock") in accordance with the terms of the Amended and Restated Declaration of
Trust, dated as of May 13, 1998 (as amended from time to time, the
"Declaration"), by G. Gilmer Minor, III, Ann Greer Rector and Richard F. Bozard,
as Regular Trustees, First Chicago Delaware Inc., as Delaware Trustee, The First
National Bank of Chicago, as Property Trustee, Owens & Minor, Inc., as Sponsor,
and by the Holders, from time to time, of undivided beneficial interests in the
assets of the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned exercise of the option to convert these Preferred Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Preferred Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Preferred Securities set
forth as Exhibit B to the Declaration) and (ii) immediately convert such
Debentures on behalf of the undersigned, into Common Stock (at the conversion
rate specified in the terms of the Trust Preferred Securities set forth as
Exhibit B to the Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
6
<PAGE>
Date: _____________, ____
in whole ______ in part ______
Number of Preferred Securities to
be converted:
------------------------
If a name or names other than the
undersigned, please indicate in
the spaces below the name or names
in which the shares of Common
Stock are to be issued, along with
the address or addresses of such
person or persons
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
----------------------------------
----------------------------------
----------------------------------
Signature Guarantee:a
------------
- ------------------------
a (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Conversion Agent, which
requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Conversion Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
----------------------------
Signature:
-----------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
8
<PAGE>
[FORM OF ASSIGNMENT FOR PREFERRED SECURITY]
For value received _____________________________ hereby sell(s), assign(s)
and transfer(s) unto ________________________________________________
(Please insert social security or
other taxpayer identification number
of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
security is being transferred:
[ ] To Owens & Minor, Inc. or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such security
is not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
[ ] The transferee is an Affiliate of the Company.
Dated:
------------------------
9
<PAGE>
Number of Securities to
be Assigned:
-----------------------
----------------------------------
----------------------------------
Signature(s)
Signature(s) must be guaranteed by
a commercial bank or trust company
or a member firm of a major stock
exchange.
-----------------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
10
<PAGE>
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH (I) TRANSFERS OF INTERESTS IN THE
TEMPORARY REGULATION S GLOBAL SECURITY AND
(II) TRANSFERS OF INTEREST TO NON-U.S. PERSONS
The First National Bank of Chicago
153 West 51st Street
Suite 4015, 5th Floor
New York, New York 10019
Attention: Corporate Trust Administration
Re: Owens & Minor Trust I (the "Trust")
Preferred Securities
Dear Sirs or Mesdames:
In connection with our proposed sale of the number of
Preferred Securities designated below, the undersigned owner confirms that such
sale has been effected pursuant to and in accordance with Regulation S under the
Securities Act of 1933, as amended, and, accordingly, represents that:
(1) the offer of the Trust Preferred Securities was not made
to a person in the United States;
(2) at the time the buy order was originated, the transferee
was outside the United States or we and any person acting on our behalf
reasonably believed that the transferee was outside the United States;
(3) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the U.S. Securities Act of 1933.
11
<PAGE>
You and the Trust are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Date: ___________, ____
Very truly yours,
[Name of Transferor]
By:
-------------------------------
Authorized Signature
Number of Trust Preferred
Securities to be sold:
----------------------------------
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number:
----------------------------------
----------------------------------
----------------------------------
12
<PAGE>
Accredited Investor Letter
,
The First National Bank of Chicago
153 West 51st Street
Suite 4015, 5th Floor
New York, New York 10019
Attention: Corporate Trust Administration
Dear Sirs or Mesdames:
In connection with our proposed purchase of the Preferred
Securities described below (the "Preferred Securities") of Owens & Minor Trust I
(the "Company"), we confirm that:
1. We agree to be bound by, and not to resell, pledge or
otherwise transfer the Preferred Securities except in
compliance with, such restrictions and conditions and
the Securities Act of 1933, as amended (the
"Securities Act").
2. We understand that any subsequent transfer of the
Preferred Securities is subject to certain
restrictions and conditions set forth in the Amended
and Restated Declaration of Trust dated as of May 13,
1998 (the "Declaration") relating to the Preferred
Securities and the undersigned agrees to be bound by,
and not to resell, pledge or otherwise transfer the
Preferred Securities except in compliance with, such
restrictions and conditions and the Securities Act of
1933, as amended (the "Securities Act").
3. We understand that the offer and the sale of the
Preferred Securities has not been registered under
the Securities Act, and that the Preferred Securities
may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and
on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any
Preferred Securities or, if applicable, the Junior
Subordinated Debentures or Common Stock (together,
the "Securities") within two years after the original
issuance of the Preferred Securities, we will do so
only (A) to Owens & Minor, Inc. (the "Company") or
any subsidiary thereof, (B) inside the United States
in accordance with Rule 144A under the Securities Act
to a "qualified institutional buyer" (as defined
therein), (C) inside the United States to an
institutional "accredited investor" (as defined
below) that, prior to such transfer, furnishes to the
Trustee a signed letter containing certain
representations and agreements relating to the
13
<PAGE>
restrictions on transfer of the Preferred Securities
(the form of which letter can be obtained from the
Trustee) and, if such transfer is in respect of
Preferred Securities with an aggregate liquidation
preference of less than $250,000, an opinion of
counsel acceptable to the Company that such transfer
is in compliance with the Securities Act, (D) outside
the United States in accordance with the Rule 904
under the Securities Act (E) pursuant to the
exemption from registration provided by Rule 144
under the Securities Act (if available) or (F)
pursuant to an effective registration statement under
the Securities Act, and we further agree to provide
to any person purchasing any of the Preferred
Securities from us a notice advising such purchaser
that resales of the Preferred Securities are
restricted as stated herein.
4. We understand that, on any proposed resale of any
Securities, we will be required to furnish to the
Issuer and the Trustee such certifications, legal
opinions and other information as the Issuer and the
Trustee may reasonably require to confirm that the
proposed sale complies with the foregoing
restrictions. We further understand that the
Securities purchased by us will bear a legend to the
foregoing effect.
5. We are a institutional "accredited investor" (as
defined in rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) and have such
knowledge and experience in financial and business
matters as to be capable of evaluating the merits and
risks of our investment in the Preferred Securities,
and we and any accounts for which we are acting are
each able to bear the economic risks of our or their
investment.
6. We are acquiring the Preferred Securities purchased
by us for our own account for one or more accounts
(each of which is an institutional "accredited
investor") as to each of which we exercise sole
investment discretion.
14
<PAGE>
You, the Issuer and the Trustee are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
Very truly yours,
By:
---------------------------------------
Name:
Title:
15
<PAGE>
EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.01 of the Amended and Restated
Declaration of Trust of Owens & Minor Trust I dated as of May 13, 1998 (as
amended from time to time, the "Declaration"), the designations, rights,
privileges, restrictions, preferences and other terms and provisions of the
Common Securities are set forth below (each capitalized term used but not
defined herein having the meaning set forth in the Declaration):
1. Designation and Number. Common Securities of the Trust with
an aggregate liquidation amount in the assets of the Trust of Three Million
Seven Hundred Eleven Thousand Three Hundred Fifty Dollars ($3,711,350) (plus up
to an additional Five Hundred Fifty-Six Thousand Seven Hundred Dollars
($556,700) issuable upon exercise of the overallotment option set forth in the
Purchase Agreement) and a liquidation amount in the assets of the Trust of $50
per Common Security, are hereby designated as "$2.6875 Common Trust Securities."
The Common Security Certificates evidencing the Common Securities shall be
substantially in the form attached hereto as Annex I, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice. The Common Securities are to be issued and sold to Owens &
Minor, Inc. ("O&M") in consideration of an amount in cash equal to their
aggregate liquidation amount. In connection with the issuance and sale of the
Preferred Securities and the Common Securities, the Trust will purchase as trust
assets Debentures of O&M having an aggregate principal amount equal to the
aggregate liquidation amount of the Preferred Securities and Common Securities
so issued, and bearing interest at an annual rate equal to the annual
Distribution rate on the Preferred Securities and Common Securities and having
payment and redemption provisions which correspond to the payment and redemption
provisions of the Preferred Securities and Common Securities.
2. Distributions. (a) Distributions payable on each Common
Security will be fixed at a rate per annum of $2.6875 (the "Coupon Rate") per
Common Security. Distributions in arrears for more than one calendar quarter
will accumulate at the rate per annum of 5.375% thereof (to the extent permitted
by applicable law), compounded quarterly. The term "Distributions" as used in
these terms means such periodic cash distributions and any such other amounts
payable unless otherwise stated. A Distribution will be made by the Property
Trustee only to the extent that interest payments are made in respect of the
Debentures held by the Property Trustee. The amount of Distributions payable for
any period will be computed for any quarterly Distribution period on the basis
of a 360-day year of twelve 30 day months.
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(b) Distributions on the Common Securities will be cumulative,
will accumulate from May 13, 1998 and will be payable quarterly in arrears, on
each January 31, April 30, July 31 and October 31, commencing on July 31, 1998,
except as otherwise described below, but only if and to the extent that interest
payments are made in respect of the Debentures held by the Property Trustee.
So long as O&M shall not be in default in the payment of
interest on the Debentures, O&M has the right under the Indenture for the
Debentures to defer payments of interest by extending the interest payment
period from time to time on the Debentures for a period not exceeding 20
consecutive quarterly interest periods (each, an "Extension Period") and, as a
consequence, quarterly Distributions will continue to accumulate (to the extent
permitted by applicable law) at the rate of 5.375% per annum, compounded
quarterly during any such Extension Period; provided that no Extension Period
shall last beyond the date of maturity or any redemption date of the Debentures.
Prior to the termination of any such Extension Period, O&M may further extend
such Extension Period; provided that such Extension Period together with all
such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, O&M may commence a new Extension Period,
subject to the above requirements. Payments of accumulated Distributions will be
payable to Holders of Common Securities as they appear on the books and records
of the Trust on the first record date after the end of the Extension Period.
(c) Distributions on the Common Securities will be payable
promptly by the Property Trustee (or other Paying Agent) upon receipt of
immediately available funds to the Holders thereof as they appear on the books
and records of the Trust on the relevant record dates which will be one Business
Day prior to the relevant Distribution date unless the Preferred Securities are
no longer in book-entry only form in which event the Regular Trustees shall have
the right to select relevant record dates which shall be more than one Business
Day prior to the relevant payment dates. Distributions payable on any Common
Securities that are not punctually paid on any Distribution date as a result of
O&M having failed to make the corresponding interest payment on the Debentures
will forthwith cease to be payable to the person in whose name such Common
Security is registered on the relevant record date, and such defaulted
Distribution will instead be payable to the person in whose name such Common
Security is registered on the special record date established by the Regular
Trustees, which record date shall correspond to the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that Distributions shall not be considered payable on any Distribution payment
date falling within an Extension Period unless O&M has elected to make a full or
partial payment of interest accrued on the Debentures on such Distribution
payment date. Subject to any applicable laws and regulations and the provisions
of the Declaration, each payment in respect of the Common Securities will be
made as described in paragraph 10 hereof. If any date on which Distributions are
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payable on the Common Securities is not a Business Day, then payment of the
Distribution payable on such date will be made on the next succeeding day that
is a Business Day (and without any amount or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date.
(d) All Distributions paid with respect to the Common
Securities and the Preferred Securities will be paid Pro Rata to the Holders
thereof entitled thereto. If an Event of Default has occurred and is continuing,
the Preferred Securities shall have a priority over the Common Securities with
respect to Distributions.
(e) In the event of an election by the Holder to convert its
Securities through the Conversion Agent into Common Stock pursuant to the terms
of the Securities as set forth in this Exhibit C to the Declaration, no payment,
allowance or adjustment shall be made with respect to accumulated and unpaid
Distributions on such Securities, or be required to be made; provided, however,
that if a Security is surrendered for conversion after the close of business on
any regular record date for payment of a Distribution date will be paid in cash
to the person in whose name the Security is registered at the close of business
on such record date, and (other than a Security or a portion of a Security
called for redemption on a redemption date occurring after such record date and
on or prior to such Distribution date) when so surrendered for conversion, the
Security must be accompanied by payment of an amount equal to the Distribution
payable on such Distribution date.
(f) In the event that there is any money or other property
held by or for the Trust that is not accounted for under the Declaration, such
money or property shall be distributed Pro Rata among the Holders of the
Preferred Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In the event of
any voluntary or involuntary dissolution, liquidation, winding-up or termination
of the Trust, the Holders of the Preferred Securities and Common Securities at
the date of the dissolution, liquidation, winding-up or termination, as the case
may be, will be entitled to receive Pro Rata solely out of the assets of the
Trust available for distribution to Holders of Preferred Securities and Common
Securities, after satisfaction of liabilities to creditors, an amount equal to
the aggregate of the stated liquidation amount of $50 per Preferred Security and
Common Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, liquidation, winding-up or termination, and
after satisfaction of liabilities to creditors, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Preferred Securities and Common Securities bearing accrued and unpaid interest
in an amount equal to the accumulated and unpaid Distributions on, such
Preferred Securities and Common Securities, shall be distributed Pro Rata to the
Holders of the Preferred Securities and Common Securities in exchange for such
Securities.
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If, upon any such dissolution, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Preferred Securities and Common Securities shall be
paid, subject to the next paragraph, on a Pro Rata basis.
Holders of Common Securities will be entitled to receive
Liquidation Distributions upon any such dissolution Pro Rata with Holders of
Preferred Securities, except that if an Event of Default has occurred and is
continuing, the Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures. The Preferred
Securities and Common Securities may only be redeemed if Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Securities and Common Securities are repaid, redeemed or distributed
as set forth below:
(a) Upon the repayment of the Debentures, in whole or in part,
whether at maturity, upon redemption at any time or from time to time on or
after May 2, 2001, or at any time in certain circumstances upon the occurrence
of a Tax Event, the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities having an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
repaid or redeemed, upon not less than 30 nor more than 60 days' notice, at a
redemption price per Preferred and Common Security equal to the redemption price
of the Debentures, together with accumulated and unpaid Distributions thereon
through the date of redemption, payable in cash (the "Redemption Price"). The
date of any such repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the repayment or redemption
date of the Debentures.
(b) If fewer than a the outstanding Preferred Securities and
Common Securities are to be so redeemed, the Preferred Securities and the Common
Securities will be redeemed Pro Rata and the Common Securities to be redeemed
will be redeemed as described in paragraph 4(e)(ii) below. If a partial
redemption would result in the delisting of the Preferred Securities by any
national securities exchange or other organization on which the Preferred
Securities are then listed, O&M pursuant to the Indenture will only redeem
Debentures in whole and, as a result, the Trust may only redeem the Common
Securities in whole.
(c) If, at any time, a Tax Event or an Investment Company
Event (each as hereinafter defined, and each a "Special Event") shall occur and
be continuing, the Regular Trustees shall, unless the Debentures are redeemed in
the limited circumstances described below, dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Property Trustee having
an aggregate principal amount equal to the aggregate stated liquidation amount
of and bearing accrued and unpaid interest equal to accumulated and unpaid
Distributions on, and having the same record date for payment as the Preferred
Securities and Common Securities, to be distributed to the Holders of the
Preferred Securities and Common Securities on a Pro Rata basis in liquidation of
such Holders' interests in the Trust, within 90 days following the occurrence of
such Special Event (the "90 Day Period"); provided, however, that in the case of
the occurrence of a Tax Event, as a condition of such dissolution and
distribution, the Regular Trustees shall have received an opinion of a
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nationally recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on any then applicable published
revenue rulings of the Internal Revenue Service, to the effect that the Holders
of the Preferred Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of the dissolution of the Trust
and distribution of Debentures; and provided, further, that, if and as long as
at the time there is available to the Trust the opportunity to eliminate, within
such 90 Day Period, the Special Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, O&M or the Holders of the
Preferred Securities ("Ministerial Action") the Trust will pursue such measure
in lieu of dissolution.
If in the case of the occurrence of a Tax Event, (i) the
Regular Trustees have received an opinion (a "Redemption Tax Opinion") of
nationally recognized independent tax counsel experienced in such matters that,
as a result of a Tax Event, there is more than an insubstantial risk that O&M
would be precluded from deducting the interest on the Debentures for United
States federal income tax purposes even if the Debentures were distributed to
the Holders of Preferred Securities and Common Securities in liquidation of such
Holder's interest in the Trust as described in this paragraph 4(c) or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion cannot be delivered to the Trust, O&M shall have the right
at any time, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part for cash at the Redemption Price within 90 days
following the occurrence of such Tax Event, and promptly following such
redemption Preferred Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
basis; provided, however, that, if at the time there is available to O&M or the
Regular Trustees on behalf of the Trust the opportunity to eliminate, within
such 90 day period, the Tax Event by taking some Ministerial Action, O&M or the
Holders of the Preferred Securities, O&M or the Regular Trustees on behalf of
the Trust will pursue such measure in lieu of redemption; and provided, further,
that O&M shall have no right to redeem the Debentures while the Regular Trustees
on behalf of the Trust are pursuing such Ministerial Action. The Common
Securities will be redeemed Pro Rata with the Preferred Securities, except that
if an Event of Default under the Indenture has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price.
"Tax Event" means that the Regular Trustees shall have
obtained an opinion of nationally recognized independent tax counsel experienced
in such matters (a "Dissolution Tax Opinion") to the effect that on or after May
8, 1998 as a result of (a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein, (b)
any amendment to, or change in, an interpretation or application of any such
laws or regulations by any legislative body, court, governmental agency or
regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
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interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore generally accepted
position or (d) any action taken by any governmental agency or regulatory
authority, which amendment or change is enacted, promulgated, issued or
announced or which interpretation or pronouncement is issued or announced or
which action is taken, in each case on or after May 8, 1998 (including, without
limitation, any of the foregoing arising with respect to, or resulting from, any
proposal, proceeding or other action commencing on or before May 8, 1998), there
is more than an insubstantial risk that (i) the Trust is, or will be, within 90
days of the date thereof, subject to United States federal income tax with
respect to income accrued or received on the Debentures, (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of taxes, duties or other governmental charges or (iii) interest payable
by O&M to the Trust on the Debentures is not, or within 90 days of the date
thereof will not be, deductible by O&M for United States federal income tax
purposes.
"Investment Company Event" means that the Regular Trustees
shall have received an opinion of nationally recognized independent counsel
experienced in practice under the Investment Company Act that, as a result of
the occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an Investment
Company which is required to be registered under the Investment Company Act,
which Change in 1940 Act Law becomes effective on or after May 8, 1998.
On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Common Securities will no longer be deemed to
be outstanding and (ii) any certificates representing Common Securities will be
deemed to represent beneficial interests in the Debentures having an aggregate
principal amount equal to the stated liquidation amount of, and bearing accrued
and unpaid interest equal to accumulated and unpaid Distributions on, such
Common Securities until such certificates are presented to O&M or its agent for
transfer or reissuance.
(d) The Trust may not redeem any outstanding Common Securities
unless all accumulated and unpaid Distributions have been paid on all Common
Securities for all quarterly Distribution periods terminating on or prior to the
date of redemption.
(e)(i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for, the Preferred Securities and Common Securities (a
"Redemption/ Distribution Notice") will be given by the Regular Trustees on
behalf of the Trust by mail to each Holder of Preferred Securities and Common
Securities to be redeemed or exchanged not less than 30 nor more than 60 days
prior to the date fixed for redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the dates on which notices
are given pursuant to this paragraph (e)(i), a Redemption/Distribution Notice
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shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of Preferred Securities and Common
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Common
Securities are to be redeemed, the Common Securities to be redeemed will be
redeemed Pro Rata from each Holder of Common Securities (subject to adjustment
to eliminate fractional Common Securities).
(iii) If the Trust gives a Redemption/Distribution Notice in
respect of a redemption of Common Securities as provided in this paragraph 4
(which notice will be irrevocable) then immediately prior to the close of
business on the redemption date, provided that O&M has paid to the Property
Trustee in immediately available funds a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, Distributions will
cease to accumulate on the Common Securities called for redemption, such Common
Securities will no longer be deemed to be outstanding and all rights of Holders
of such Common Securities so called for redemption will cease, except the right
of the Holders of such Common Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Trustees nor the Trust
shall be required to register or cause to be registered the transfer of any
Common Securities which have been so called for redemption. If any date fixed
for redemption of Common Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any amounts or other payment in respect of
any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price in respect of Common Securities
is improperly withheld or refused and not paid by the Property Trustee,
Distributions on such Common Securities will continue to accumulate (in
accordance with the continued accrual of interest on the Debentures), from the
original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
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(iv) Redemption/Distribution Notices shall be sent by the
Regular Trustees on behalf of the Trust to the Holders of the Common Securities.
(v) Upon the date of dissolution of the Trust and distribution
of Debentures as a result of the occurrence of a Special Event, Common Security
Certificates shall be deemed to represent beneficial interests in the Debentures
so distributed, and the Common Securities will no longer be deemed outstanding
and may be canceled by the Regular Trustees. The Debentures so distributed shall
have an aggregate principal amount equal to the aggregate liquidation amount of
the Common Securities so distributed.
5. Conversion Rights. The Holders of Securities shall have the
right at any time prior to the close of business on April 30, 2013 (or, in the
case of Securities called for redemption, prior to the close of business on the
Business Day prior to the redemption date), at their option, to cause the
Conversion Agent to convert Securities, on behalf of the converting Holders,
into shares of Common Stock in the manner described herein on and subject to the
following terms and conditions:
The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable shares of Common Stock
pursuant to the Holder's direction to the Conversion Agent to exchange such
Securities for a portion of the Debentures theretofore held by the Trust on the
basis of one Security per $50 principal amount of Debentures, and immediately
convert such amount of Debentures into fully paid and nonassessable shares of
Common Stock at an initial rate of 2.4242 shares of Common Stock per $50
principal amount of Debentures (which is equivalent to a conversion price of
$20.625 per share of Common Stock, subject to certain adjustments set forth in
Sections 5.03 and 5.04 of the Supplemental Indenture (as so adjusted,
"Conversion Price")).
(a) In order to convert Securities into Common Stock the
Holder shall submit to the Conversion Agent at the office referred to above an
irrevocable request to convert Securities on behalf of such Holder (the
"Conversion Request"), together, if the Securities are in certificated form,
with such certificates. The Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if other than the Holder, in
which the shares of Common Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of the Debentures held by
the Trust (at the rate of exchange specified in the preceding paragraph) and (b)
to immediately convert such Debentures on behalf of such Holder, into Common
Stock (at the conversion rate specified in the preceding paragraph). The
Conversion Agent shall, upon the request of Holders of Securities, make
available to such Holders copies of the form of Conversion Request. The
Conversion Agent shall notify the Property Trustee of the Holder's election to
exchange Securities for a portion of the Debentures held by the Trust and the
Property Trustee shall, upon receipt of such notice, deliver to the Conversion
Agent the appropriate principal amount of Debentures for exchange in accordance
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with this Section. The Conversion Agent shall thereupon notify the Property
Trustee of the Holder's election to convert such Debentures into shares of
Common Stock. If a Security is surrendered for conversion after the close of
business on any regular record date for payment of a Distribution and before the
opening of business on the corresponding Distribution payment date, then,
notwithstanding such conversion, the Distribution payable on such Distribution
payment date will be paid in cash to the person in whose name the Security is
registered at the close of business on such record date, and (other than a
Security or a portion of a Security called for redemption on a redemption date
occurring after such record date and on or prior to such Distribution payment
date) when so surrendered for conversion, the Security must be accompanied by
payment of an amount equal to the Distribution payable on such Distribution
payment date. Except as provided above, neither the Trust nor the Sponsor will
make, or be required to make, any payment, allowance or adjustment upon any
conversion on account of any accumulated and unpaid Distributions accumulated on
the Securities surrendered for conversion, or on account of any accumulated and
unpaid dividends on the shares of Common Stock issued upon such conversion.
Securities shall be deemed to have been converted immediately prior to the close
of business on the day on which a Conversion Request relating to such Securities
is received by the Trust in accordance with the foregoing provision (the
"Conversion Date"). The Person or Persons entitled to receive Common Stock
issuable upon conversion of the Debentures shall be treated for all purposes as
the record holder or holders of such Common Stock at such time. As promptly as
practicable on or after the Conversion Date, the Sponsor shall issue and deliver
at the office of the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same, unless otherwise directed by the
Holder in the Conversion Request and the Conversion Agent shall distribute such
certificate or certificates, together with the applicable cash payment, if any,
to such Person or Persons.
(b) Each Holder of a Security by his acceptance thereof
appoints The First National Bank of Chicago "Conversion Agent" for the purpose
of effecting the conversion of Securities in accordance with this Section. In
effecting the conversion and transactions described in this Section, the
Conversion Agent shall be acting as agent of the Holders of Securities directing
it to effect such conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Securities from time to time for Debentures held by
the Trust in connection with the conversion of such Securities in accordance
with this section and (ii) to convert all or a portion of the Debentures into
Common Stock and thereupon to deliver such shares of Common Stock in accordance
with the provisions of this section and to deliver to the Trust a new Debenture
or Debentures for any resulting unconverted principal amount.
(c) No fractional shares of Common Stock will be issued as a
result of conversion, but in lieu thereof, such fractional interest will be paid
in cash by the Company to the Conversion Agent, which in turn will make such
payment to the Holder or Holders of Securities so converted.
(d) The Sponsor shall at all times reserve and keep available
out of its authorized and unissued Common Stock, solely for issuance upon the
conversion of the Debentures, free from any preemptive or other similar rights,
such number of shares of Common Stock as shall from time to time be issuable
upon the conversion of all the Debentures then outstanding. Notwithstanding the
foregoing, shall be entitled to deliver upon conversion of Debentures, shares of
Common Stock reacquired and held in the treasury of the Sponsor (in lieu of the
issuance of authorized and unissued shares of Common Stock), so long as any such
treasury shares are free and clear of all liens, charges, security interests or
encumbrances. Any shares of Common Stock issued upon conversion of the
Debentures shall be duly authorized, validly issued and fully paid and
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nonassessable. The Trust shall deliver the shares of Common Stock received upon
conversion of the Debentures to the converting Holder free and clear of all
liens, charges, security interests and encumbrances, except for United States
withholding taxes. Each of the Sponsor and the Trust shall prepare and shall use
its best efforts to obtain and keep in force such governmental or regulatory
permits or other authorizations as may be required by law, and shall comply with
all applicable requirements as to registration or qualification of Common Stock
(and all requirements to list Common Stock issuable upon conversion of
Debentures that are at the time applicable), in order to enable the company to
lawfully issue Common Stock to the Trust upon conversion of the Debentures and
the Trust to lawfully deliver Common Stock to each Holder upon conversion of the
Securities.
(e) The Sponsor will pay any and all taxes that may be payable
in respect of the issue or delivery of shares of Common Stock on conversion of
Debentures and the delivery of the shares of Common Stock by the Trust upon
conversion of the Securities. The Sponsor shall not, however, be required to pay
any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock in a name other than that in which the
Securities so converted were registered, and no such issue or delivery shall be
made unless and until the person requesting such issue has paid to the Trust the
amount of any such tax, or has established to the satisfaction of the Trust that
such tax has been paid.
(f) Nothing in the preceding paragraph (e) shall limit the
requirement of the Trust to withhold taxes pursuant to the terms of the
Securities or set forth in this Exhibit C to the Declaration or to the
Declaration itself or otherwise require the Property Trustee or the Trust to pay
any amounts on account of such withholdings.
6. Voting Rights. (a) Except as provided under paragraph 5(b)
below and as otherwise required by law and the Declaration, the Holders of the
Common Securities will have no voting rights.
(b) Holders of Common Securities have the sole right under the
Declaration to increase or decrease the number of Trustees, and to appoint,
remove or replace a Trustee, any such increase, decrease, appointment, removal
or replacement to be approved by Holders of Common Securities representing a
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Majority in liquidation amount of the Common Securities.
If any proposed amendment to the Declaration provides for, or
the Regular Trustees otherwise propose to effect (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than in connection
with the distribution of Debentures held by the Property Trustee, upon the
occurrence of a Special Event or in connection with the redemption of Common
Securities as a consequence of a redemption of Debentures, then the Holders of
outstanding Securities will be entitled to vote on such amendment or proposal as
a class and such amendment or proposal shall not be effective except with the
approval of the Holders of Securities representing a Majority in liquidation
amount of such Securities; provided, however, that (A) if any amendment or
proposal referred to in clause (i) above would adversely affect only the
Preferred Securities or the Common Securities, then only the affected class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of a Majority in liquidation
amount of such class of Securities, (B) the rights of Holders of Common
Securities under Article 4.02 of the Declaration to increase or decrease the
number of, and to appoint, replace or remove, Trustees shall not be amended
without the consent of each Holder of Common Securities, and (C) amendments to
the Declaration shall be subject to such further requirements as are set forth
in Sections 12.01 and 12.02 of the Declaration.
In the event the consent of the Property Trustee as the holder
of the Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Property Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination. The
Property Trustee shall vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation amount of the Securities
voting together as a single class; provided that where such amendment,
modification or termination of the Indenture requires the consent or vote of (1)
holders of Debentures representing a specified percentage greater than a
majority in principal amount of the Debentures or (2) each holder of Debentures,
the Property Trustee may only vote with respect to that amendment, modification
or termination as directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage of the aggregate
liquidation amount of the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that, other than with respect to
directing the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or Debenture Trustee as set forth above, the
Property Trustee shall be under no obligation to take any action in accordance
with the directions of the Holders of the Securities unless the Property Trustee
shall have received, at the expense of the Sponsor, an opinion of nationally
recognized independent tax counsel recognized as an expert in such matters to
the effect that the Trust will not be classified for United States federal
11
<PAGE>
income tax purposes as an association taxable as a corporation or a partnership
on account of such action and will be treated as a grantor trust for United
States federal income tax purposes following such action.
Subject to Section 2.06 of the Declaration, and the provisions
of this and the next succeeding paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class shall
have the right to (A) on behalf of a Holders of Common Securities, waive any
past default that is waivable under the Declaration (subject to, and in
accordance with the Declaration) and (B) direct the time, method, and place of
conducting any proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred upon the Property Trustee under the
Declaration, including the right to direct the Property Trustee, as holder of
the Debentures, to (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default and its consequences that is waivable
under Section 6.06 of the Indenture, or (iii) exercise any right to rescind or
annul a declaration that the principal of all the Debentures shall be due and
payable; provided that where the taking of any action under the Indenture
requires the consent or vote of (1) holders of Debentures representing a
specified percentage greater than a majority in principal amount of the
Debentures or (e) each holder of Debentures, the Property Trustee may only take
such action if directed by, in the case of clause (1) above, the vote of Holders
of Common Securities representing such specified percentage of the aggregate
liquidation amount of the Common Securities, or, in the case of clause (2)
above, each Holder of Common Securities. Pursuant to this paragraph, the
Property Trustee shall not revoke, or take any action inconsistent with, any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities, and shall not take any action in accordance with the
direction of the Holders of the Common Securities under this paragraph if the
action is prejudicial to the Holders of Preferred Securities. Other than with
respect to directing the time, method and place of conducting any proceeding for
any remedy available to the Property Trustee or the Debenture Trustee as set
forth above, the Property Trustee shall be under no obligation to take any of
the foregoing actions at the direction of the Holders of Common Securities
unless the Properties Trustee shall have received, at the expense of the
Sponsor, an opinion of nationally recognized independent tax counsel recognized
as expert in such matters to the effect that the Trust will not be classified
for United States federal income tax purposes as an association taxable as a
corporation or a partnership on account of such action and will be treated as a
grantor trust for United States income tax purposes following such action.
Notwithstanding any other provision of these terms, each
Holder of Common Securities will be deemed to have waived any Event of Default
with respect to the Common Securities and its consequences until all Events of
Default with respect to the Preferred Securities have been cured, waived by the
Holders of Preferred Securities as provided in the Declaration or otherwise
eliminated, and until all Events of Default with respect to the Preferred
Securities have been so cured, waived by the Holders of Preferred Securities or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the Holders of Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Declaration or of the Securities. In the event
that any Event of Default with respect to the Preferred Securities is waived by
the Holders of Preferred Securities as provided in the Declaration, the Holders
of Common Securities agree that such waiver shall also constitute the waiver of
such Event of Default with respect to the Common Securities for all purposes
under the Declaration without any further act, vote or consent of the Holders of
the Common Securities.
12
<PAGE>
A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Preferred Securities will
constitute a waiver of the corresponding Event of Default under the Declaration
in respect of the Securities.
Any required approval of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities of the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of Common Securities will be
required for the Trust to redeem and cancel Common Securities in accordance with
the Declaration.
7. Pro Rata Treatment. A reference in these terms of the
Common Securities to any payment, distribution or treatment as being "Pro Rata"
shall mean pro rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant Holder in relation to
the aggregate liquidation amount of all Securities outstanding unless, in
relation to a payment, an Event of Default has occurred and is continuing, in
which case any funds available to make such payment shall be paid first to each
Holder of the Preferred Securities pro rata according to the aggregate
liquidation amount of Preferred Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the Holders of the Preferred
Securities, to each Holder of Common Securities pro rata according to the
aggregate liquidation amount of Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all Common Securities
outstanding.
8. Ranking. The Common Securities rank pari passu and payment
thereon will be made Pro Rata with the Preferred Securities except that where an
13
<PAGE>
Event of Default occurs and is continuing, the rights of Holders of Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise are subordinate to the rights of Holders of the
Preferred Securities.
9. Mergers, Consolidations or Amalgamations. The Trust may not
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets to, any corporation or other body.
10. Transfers, Exchanges, Method of Payments. Payment of
Distributions and payments on redemption of the Common Securities will be
payable, the transfer of the Common Securities will be registrable, and Common
Securities will be exchangeable for Common Securities of other denominations of
a like aggregate liquidation amount, at the corporate trust office of the
Property Trustee in The City of New York; provided that payment of Distributions
may be made at the option of the Regular Trustees on behalf of the Trust by
check mailed to the address of the persons entitled thereto and that the payment
on redemption of any Common Security will be made only upon surrender of such
Common Security to the Property Trustee. Notwithstanding the foregoing,
transfers of Common Securities are subject to conditions set forth in Section
9.01(c) of the Declaration.
11. Acceptance of Indenture. Each Holder of Common Securities,
by the acceptance thereof, agrees to the provisions of the Indenture and the
Debentures, including the subordination provisions thereof.
12. No Preemptive Rights. The Holders of Common Securities
shall have no preemptive rights to subscribe to any additional Common Securities
or Preferred Securities.
13. Miscellaneous. These terms shall constitute a part of the
Declaration. The Trust will provide a copy of the Declaration and the Indenture
to a Holder without charge on written request to the Trust at its principal
place of business.
14
<PAGE>
Annex I
FORM OF COMMON SECURITY CERTIFICATE
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
- ---------------- --------------------
Certificate Evidencing Common Securities
of
Owens & Minor Trust I
$2.6875 Common Trust Securities
(liquidation amount $50 per Common Security)
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS SUCH OFFER AND SALE ARE
REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT. THE TRANSFER OF THE SECURITY EVIDENCED HEREBY IS ALSO SUBJECT TO
THE RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW.
Owens & Minor Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that Owens &
Minor, Inc. (the "Holder") is the registered owner of ____________________
(____________) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the "$2.6875 Common Trust
Securities" (liquidation amount $50 per security) (the "Common Securities"). The
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer and satisfaction of the other
conditions set forth in the Declaration (as defined below) including, without
<PAGE>
limitation Section 9.01(c) thereof. The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities are set forth in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be subject to the terms
and provisions of, the Amended and Restated Declaration of Trust of the Trust
dated as of May 13, 1998, as the same may be amended from time to time (the
"Declaration") including the designation of the terms of Common Securities as
set forth in Exhibit C thereto. The Common Securities and the Preferred
Securities issued by the Trust pursuant to the Declaration represent undivided
beneficial interests in the assets of the Trust, including the Debentures (as
defined in the Declaration) issued by Owens & Minor, Inc., a Virginia
corporation, to the Trust pursuant to the Indenture referred to in the
Declaration. The Trust will furnish a copy of the Declaration and the Indenture
to the Holder without charge upon written request to the Trust at its principal
place of business or registered office.
The Holder of this Certificate, by accepting this Certificate,
is deemed to have agreed to the terms of the Indenture and the Debentures,
including that the Debentures are subordinate and junior in right of payment to
all Senior and Subordinated Debt (as defined in the Indenture) as and to the
extent provided in the Indenture.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
2
<PAGE>
IN WITNESS WHEREOF, the Trustees of the Trust have executed
this certificate this [ ] day of [ ], [ ].
OWENS & MINOR TRUST I
By: , as Trustee
----------------------
Name:
Title: Regular Trustee
By: , as Trustee
----------------------
Name:
Title: Regular Trustee
Dated:
Countersigned and Registered:
Transfer Agent and Registrar
By:
--------------------------------
Authorized Signature
3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at
a rate per annum of $2.6875 per Common Security, such rate being the rate of
interest payable on the Debentures to be held by the Property Trustee.
Distributions in arrears for more than one quarter will accumulate at the rate
per annum of 5.375% thereof (to the extent permitted by law) compounded
quarterly. The term "Distributions" as used herein means such cash distributions
and any such other amounts payable unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months.
Except as otherwise described below, distributions on the
Common Securities will be cumulative, will accumulate from May 13, 1998 and will
be payable quarterly in arrears, on each January 31, April 30, July 31 and
October 31, commencing on July 31, 1998, but only if and to the extent that
interest payments are made in respect of the Debentures held by the Property
Trustee. So long as O&M shall not be in default in the payment of interest on
the Debentures, O&M has the right under the Indenture for the Debentures to
defer payments of interest by extending the interest payment period from time to
time on the Debentures for a period not exceeding 20 consecutive quarters (each
an "Extension Period") and, as a consequence, quarterly Distributions will
continue to accumulate (to the extent permitted by applicable law) at the rate
of 5.375% per annum, compounded quarterly during such Extension period; provided
that no Extension Period shall last beyond the date of maturity or any
redemption date of the Debentures. Prior to the termination of any such
Extension Period, O&M may commence a new Extension Period; provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarterly interest periods. Payments of
accumulated Distributions will be payable to Holders as they appear on the books
and records of the Trust on the first record date after the end of the Extension
Period. Upon the termination of any Extension Period and the payment of all
amounts then due, O&M may commence a new Extension Period, subject to the above
requirements.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of
Common Stock, through (i) the exchange of Common Securities for a portion of the
Debentures and (ii) the immediate conversion of such Debentures into Common
Stock, in the manner and according to the terms set forth in the Declaration.
4
<PAGE>
CONVERSION REQUEST
To: The First National Bank of Chicago
as Property Trustee of Owens & Minor Trust I
The undersigned owner of these Common Securities hereby
irrevocably exercises the option to convert these Common Securities, or the
portion below designated, into Common Stock of Owens & Minor, Inc. (the "Common
Stock") in accordance with the terms of the Amended and Restated Declaration of
Trust dated as of May 13, 1998 (as amended from time to time, the
"Declaration"), by G. Gilmer Minor, III, Ann Greer Rector and Richard F. Bozard,
as Regular Trustees, First Chicago Delaware Inc., as Delaware Trustee, The First
National Bank of Chicago, as Property Trustee, Owens & Minor, Inc., as Sponsor,
and by the Holders, from time to time, of undivided beneficial interests in the
assets of the Trust to be issued pursuant to the Declaration. Pursuant to the
aforementioned exercise of the option to convert these Common Securities, the
undersigned hereby directs the Conversion Agent (as that term is defined in the
Declaration) to (i) exchange such Common Securities for a portion of the
Debentures (as that term is defined in the Declaration) held by the Trust (at
the rate of exchange specified in the terms of the Common Securities set forth
as Exhibit C to the Declaration) and (ii) immediately convert such Debentures on
behalf of the undersigned, into Common Stock (at the conversion rate specified
in the terms of the Common Securities set forth as Exhibit C to the
Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the assignment
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.
5
<PAGE>
Date: ___________, ____
in whole ________ in part ________
Number of Common Securities to be
converted:
-----------------------
If a name or names other than the
undersigned, please indicate in
the spaces below the name or names
in which the shares of Common
Stock are to be issued, along with
the address or addresses of such
person or persons
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
- ---------------------------------
- ---------------------------------
- ---------------------------------
Signature Guarantee:b
-------------
- --------------------
b (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Conversion Agent, which
requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Conversion Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
--------------------------
Signature:
---------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee:a
----------------------------------------------------------
- -------------------------
a (Signature must be guaranteed by an "eligible guarantor institution"
that is, a bank, stockbroker, savings and loan association or credit
union meeting the requirements of the Conversion Agent, which
requirements include membership or participation in the Securities
Transfer Agents Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Conversion Agent in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
7
<PAGE>
[FORM OF ASSIGNMENT FOR SECURITY OR
COMMON STOCK ISSUABLE UPON CONVERSION THEREOF]
For value received ________________________________ hereby sell(s), assign(s)
and transfer(s) unto __________________________________________________
(Please insert social security or
other taxpayer identification
number of assignee.)
the within security and hereby irrevocably constitutes and appoints
______________ attorney to transfer the said security on the books of the
Company, with full power of substitution in the premises.
In connection with any transfer of the within security occurring prior to the
Transfer Restriction Termination Date, the undersigned confirms that such
Security is being transferred:
[ ] To Owens & Minor, Inc. or a subsidiary thereof; or
[ ] Pursuant to and in compliance with Rule 144A under the
Securities Act of 1933, as amended; or
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Regulation S under the
Securities Act of 1933, as amended; or
[ ] Pursuant to and in compliance with Rule 144 under the
Securities Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms
that such security is not being transferred to an "affiliate"
of the Company as defined in Rule 144 under the Securities Act
of 1933, as amended (an "Affiliate"):
8
<PAGE>
[ ] The transferee is an Affiliate of the Company.
Dated:
------------------------
Signature(s)
Signature(s) must be guaranteed by
a commercial bank or trust company
or a member firm of a major stock
exchange.
-----------------------------
Signature Guarantee
NOTICE: The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of this Security in every particular without
alteration or enlargement or any change whatever.
9
================================================================================
OWENS & MINOR, INC.
GUARANTEE AGREEMENT
--------------------
Dated as of May 13, 1998
--------------------
================================================================================
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.................................................................................3
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act: Application............................................................6
SECTION 2.02. Lists of Holders of Preferred Securities....................................................6
SECTION 2.03. Reports by the Guarantee Trustee............................................................6
SECTION 2.04. Periodic Reports to Guarantee Trustee.......................................................6
SECTION 2.05. Evidence of Compliance with Conditions Precedent............................................7
SECTION 2.06. Events of Default: Waiver...................................................................7
SECTION 2.07. Disclosure of Information...................................................................7
SECTION 2.08. Conflicting Interest........................................................................7
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee..................................................8
SECTION 3.02. Certain Rights and Duties of the Guarantee Trustee..........................................9
SECTION 3.03. Not Responsible for Recitals or Issuance of Guarantee......................................11
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.01. Qualifications.............................................................................11
SECTION 4.02. Appointment, Removal and Resignation of Guarantee Trustee..................................12
ARTICLE 5
GUARANTEE
SECTION 5.01. Guarantee..................................................................................13
SECTION 5.02. Waiver of Notice...........................................................................13
-i-
<PAGE>
SECTION 5.03. Obligations Not Affected...................................................................13
SECTION 5.04. Enforcement of Guarantee...................................................................14
SECTION 5.05. Guarantee of Payment.......................................................................14
SECTION 5.06. Subrogation................................................................................15
SECTION 5.07. Independent Obligations....................................................................15
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. Limitation of Transactions.................................................................15
SECTION 6.02. Subordination..............................................................................16
ARTICLE 7
TERMINATION
SECTION 7.01. Termination................................................................................16
ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01. Exculpation................................................................................17
SECTION 8.02. Indemnification............................................................................17
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Successors and Assigns.....................................................................18
SECTION 9.02. Amendments.................................................................................18
SECTION 9.03. Notices....................................................................................18
SECTION 9.04. Genders....................................................................................19
SECTION 9.05. Benefit....................................................................................19
SECTION 9.06. Governing Law..............................................................................19
SECTION 9.07. Counterparts...............................................................................19
SECTION 9.08. Exercise of Over-allotment Option..........................................................19
</TABLE>
-ii-
<PAGE>
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 (a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
(AN "INSTITUTIONAL ACCREDITED INVESTOR"), OR (C) IT IS NOT A U.S.
PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION; (2)
AGREES THAT IT WILL NOT PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(k)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), RESELL OR
OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO OWENS & MINOR, INC. OR
ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, BEFORE SUCH TRANSFER FURNISHES THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO
THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH LETTER
CAN BE OBTAINED FROM THE TRUSTEE) AND IF SUCH TRANSFER IS IN RESPECT OF
AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN
OPINION OF COUNSEL ACCEPTABLE TO THE TRUST THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN
<PAGE>
-2-
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
TRANSFEROR MUST, BEFORE SUCH TRANSFER, FURNISH TO THE ISSUER SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT
TO AN EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE
TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE
THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of May 13, 1998, is
executed and delivered by Owens & Minor, Inc., a Virginia corporation (the
"Guarantor"), and The First National Bank of Chicago, a national banking
association, as the initial Guarantee Trustee (as defined herein) for the
benefit of the Holders (as defined herein) from time to time of the Preferred
Securities (as defined herein) of Owens & Minor Trust I, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of
Trust (the "Declaration"), dated as of May 13, 1998 among the trustees of the
Issuer named therein, Owens & Minor, Inc., as Sponsor, and the Holders from time
to time of undivided beneficial interests in the assets of the Issuer, the
Issuer may issue up to $138,000,000 aggregate liquidation amount of its $2.6875
Term Convertible Securities, Series A (the "Preferred Securities") representing
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in Exhibit B to the Declaration, of which $120,000,000 liquidation
amount of Preferred Securities are being issued as of the date hereof. Up to the
remaining $18,000,000 liquidation amount of Preferred Securities may be issued
by the Issuer if and to the extent that the over-allotment option granted by the
Guarantor and the Issuer pursuant to the Purchase Agreement (as defined in the
Declaration) is exercised by the Initial Purchasers named in the Purchase
Agreement.
WHEREAS, as incentive for the Holders to purchase Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders of the Preferred Securities
the Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
<PAGE>
-3-
NOW, THEREFORE, in consideration of the purchase by the
initial purchasers thereof of Preferred Securities, which purchase the Guarantor
hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers
this Guarantee Agreement for the benefit of the Holders from time to time of the
Preferred Securities.
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) Capitalized terms used in this
Guarantee Agreement but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing
undivided beneficial interests in the assets of the Issuer, having the terms set
forth in Exhibit C to the Declaration.
"Common Stock" means the common stock of the Guarantor, par
value $2.00 per share.
<PAGE>
-4-
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of Junior Subordinated
Debentures issued by the Guarantor under the Indenture to the Property Trustee
and entitled the "5.375% Junior Subordinated Convertible Debentures due 2013".
"Distributions" means the periodic distributions and other
payments payable to Holders of Preferred Securities in accordance with the terms
of the Preferred Securities set forth in Exhibit B to the Declaration.
"Event of Default" means a default by the Guarantor on any of
its payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions and the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price"), with respect
to the Preferred Securities called for redemption by the Issuer but only if and
to the extent that in each case the Guarantor has made a payment to the Property
Trustee of interest or principal on the Debentures and (ii) upon a voluntary or
involuntary dissolution, winding up or termination of the Issuer (other than in
connection with the distribution of Debentures to Holders or the redemption of
all the Preferred Securities upon the maturity or redemption of the Debentures
as provided in the Declaration or upon conversion of all Preferred Securities
into Common Stock), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid Distributions on the Preferred Securities to the date
of payment, to the extent the Issuer has funds available therefor, or (b) the
amount of assets of the Issuer remaining available for distribution to Holders
in liquidation of the Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The First National Bank of Chicago,
a national banking association, until a Successor Guarantee Trustee has been
appointed and accepted such appointment pursuant to the terms of this Guarantee
Agreement and thereafter means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any entity directly or indirectly controlling
or controlled by or under direct or indirect common control with the Guarantor.
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"Indemnified Person" means the Guarantee Trustee, any
Affiliate of the Guarantee Trustee, and any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Guarantee
Trustee.
"Indenture" means the Junior Subordinated Indenture dated as
of May 13, 1998 between the Guarantor and The First National Bank of Chicago, as
trustee, as supplemented by the First Supplemental Indenture thereto dated as of
May 13, 1998, pursuant to which the Debentures are to be issued.
"Majority in liquidation amount of the Preferred Securities"
means, except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class the aggregate
liquidation amount of which (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) represents more than
50% of the liquidation amount of all outstanding Preferred Securities.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" has the meaning set forth in the first
WHEREAS clause above.
"Property Trustee" means the Person acting as Property Trustee
under the Declaration.
"Redemption Price" has the meaning set forth in the definition
of "Guarantee Payments."
"Responsible Officer" means, with respect to the Guarantee
Trustee, the chairman of the board of directors, the president, any vice
president, any assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the Guarantee Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as a Guarantee Trustee under
Section 4.01(a).
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"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act: Application. (a) This
Guarantee Agreement is subject to the provisions of the Trust Indenture Act that
are required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by ss.ss. 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control; and
(c) the application of the Trust Indenture Act to this
Guarantee Agreement shall not affect the nature of the Preferred Securities as
equity securities representing undivided beneficial interests in the assets of
the Issuer.
SECTION 2.02. Lists of Holders of Preferred Securities. (a)
The Guarantor shall provide the Guarantee Trustee with such information as is
required under ss. 312(a) of the Trust Indenture Act at the times and in the
manner provided in ss. 312(a); and
(b) the Guarantee Trustee shall comply with its obligations
underss.ss. 310(b), 311 and 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Guarantee Trustee. Within 60 days
after May 15 of each year, commencing May 1999 the Guarantee Trustee shall
provide to the Holders of the Preferred Securities such reports as are required
by ss. 313 of the Trust Indenture Act, if any, in the form, in the manner and at
the times provided by ss. 313 of the Trust Indenture Act. The Guarantee Trustee
shall also comply with the requirements of ss. 313(d) of the Trust Indenture
Act.
SECTION 2.04. Periodic Reports to Guarantee Trustee. The
Guarantor shall provide to the Guarantee Trustee, the Commission and the Holders
of the Preferred Securities, as applicable, such documents, reports and
information as required by ss. 314(a)(1)-(3) (if any) of the Trust Indenture Act
and the compliance certificates required by ss. 314(a)(4) and (c) of the Trust
Indenture Act, any such certificates to be provided in the form, in the manner
and at the times required by ss. 314(a)(4) and (c) of the Trust Indenture Act
(provided that any certificate to be provided pursuant to ss. 314(a)(4) of the
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Trust Indenture Act shall be provided within 120 days of the end of each fiscal
year of the Issuer).
SECTION 2.05. Evidence of Compliance with Conditions
Precedent. The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee
Agreement which relate to any of the matters set forth in ss. 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given pursuant to
ss. 314(c) shall comply with ss. 314(e) of the Trust Indenture Act.
SECTION 2.06. Events of Default: Waiver. (a) Subject to
Section 2.06(b), Holders of Preferred Securities may by vote of at least a
Majority in liquidation amount of the Preferred Securities, (A) direct the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred upon by the
Guarantee Trustee or (B) on behalf of the Holders of all Preferred Securities
waive any past Event of Default and its consequences. Upon such waiver, any such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereof.
(b) The right of any Holder of Preferred Securities to receive
payment of the Guarantee Payments in accordance with this Guarantee Agreement,
or to institute suit for the enforcement of any such payment, shall not be
impaired without the consent of each such Holder.
SECTION 2.07. Disclosure of Information. The disclosure of
information as to the names and addresses of the Holders of the Preferred
Securities in accordance with ss. 312 of the Trust Indenture Act, regardless of
the source from which such information was derived, shall not be deemed to be a
violation of any existing law, or any law hereafter enacted which does not
specifically refer to ss. 312 of the Trust Indenture Act, nor shall the
Guarantee Trustee be held accountable by reason of mailing any material pursuant
to a request made under ss. 312(b) of the Trust Indenture Act.
SECTION 2.08. Conflicting Interest. The Declaration shall be
deemed to be specifically described in this Guarantee Agreement for the purposes
of clause (i) of the first proviso contained in ss. 310(b) of the Trust
Indenture Act.
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ARTICLE 3
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Guarantee Trustee. (a)
This Guarantee Agreement shall be held by the Guarantee Trustee in trust for the
benefit of the Holders of the Preferred Securities. The Guarantee Trustee shall
not transfer its right, title and interest in the Guarantee Agreement to any
Person except a Successor Guarantee Trustee on acceptance by such Successor
Guarantee Trustee of its appointment to act as Guarantee Trustee or to a Holder
of Preferred Securities exercising his or her rights pursuant to Section 5.04.
The right, title and interest of the Guarantee Trustee to the Guarantee
Agreement shall vest automatically in each Person who may hereafter be appointed
as Guarantee Trustee in accordance with Article 4. Such vesting and cessation of
title shall be effective whether or not transfer documents have been executed
and delivered.
(b) If an Event of Default occurs and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Preferred Securities.
(c) This Guarantee Agreement and all moneys received by the
Property Trustee hereunder in respect of the Guarantee Payments will not be
subject to any right, charge, security interest, lien or claim of any kind in
favor of, or for the benefit of the Guarantee Trustee or its agents or their
creditors.
(d) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default known to the Guarantee Trustee, transmit by
mail, first class postage prepaid, to the holders of the Preferred Securities,
as their names and addresses appear upon the register, notice of all such Events
of Default, unless such defaults shall have been cured before the giving of such
notice; provided that the Guarantee Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive committee,
or a trust committee of directors and/or Responsible Officers, of the Guarantee
Trustee in good faith determine that the withholding of such notice is in the
interests of the Holders of the Preferred Securities. The Guarantee Trustee
shall not be deemed to have knowledge of any default except any default as to
which the Guarantee Trustee shall have received written notice or a Responsible
Officer charged with the administration of this Guarantee Agreement shall have
obtained written notice.
(e) The Guarantee Trustee shall continue to serve as a Trustee
unless a Successor Guarantee Trustee has been appointed and accepted that
appointment in accordance with Article 4.
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SECTION 3.02. Certain Rights and Duties of the Guarantee
Trustee. (a) The Guarantee Trustee, before the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee Agreement, and no implied covenants shall be read into this Guarantee
Agreement against the Guarantee Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06(a)), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(b) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee Agreement, and the Guarantee Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Guarantee
Agreement, and no implied covenants or obligations shall be
read into this Guarantee Agreement against the Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming to
the requirements of this Guarantee Agreement; but in the case
of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the
Guarantee Trustee, the Guarantee Trustee shall be under a duty
to examine the same to determine whether or not they conform
to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that the Guarantee Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Preferred Securities as
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provided herein relating to the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable ground for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or
liability is not reasonably assured to it.
(c) Subject to the provisions of Section 3.02(a) and (b):
(i) whenever in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established prior to taking, suffering or omitting any
action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and rely upon a certificate, which shall comply with the
provisions of ss. 314(e) of the Trust Indenture Act, signed by any
authorized officer of the Guarantor;
(ii) the Guarantee Trustee (A) may consult with counsel
(which may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees) selected by it in good faith and with due
care and the written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon and in accordance with such advice
and opinion and (B) shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(iii) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed by it in good faith and with due care;
(iv) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holders of Preferred
Securities, unless such Holders shall have offered to the Guarantee
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Trustee reasonable security and indemnity against the costs, expenses
(including its attorneys' fees and expenses) and liabilities that might
be incurred by it in complying with such request or direction; provided
that nothing contained in this clause (iv) shall relieve the Guarantee
Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured or waived) to exercise such of the rights and
powers vested in it by this Guarantee Agreement, and to use the same
degree of care and skill in this exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her
own affairs; and
(v) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the
signature of the Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action; and no third party
shall be required to inquire as to the authority of the Guarantee
Trustee to so act, or as to its compliance with any of the terms and
provisions of this Guarantee Agreement, both of which shall be
conclusively evidenced by the Guarantee Trustee's or its agent's taking
such action.
SECTION 3.03. Not Responsible for Recitals or Issuance of
Guarantee. The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.01. Qualifications. (a) There shall at all times be
a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a national banking association or corporation
organized and doing business under the laws of the United States of
America or any State or Territory thereof or of the District of
Columbia, or a corporation or Person permitted by the Commission to act
as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $50,000,000, and subject to supervision
or examination by Federal, State, Territorial or District of Columbia
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authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
section 4.01 (a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
If at any time the Guarantee Trustee shall cease to satisfy
the requirements of clauses (i)-(ii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.02. If
the Guarantee Trustee has or shall acquire any "conflicting interest" within the
meaning of ss. 310(b) of the Trust Indenture Act, the Guarantee Trustee and the
Guarantor shall in all respects comply with the provisions of ss. 310(b) of the
Trust Indenture Act.
SECTION 4.02. Appointment, Removal and Resignation of
Guarantee Trustee. (a) Subject to Section 4.02(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except following
the occurrence and during the continuation of an Event of Default.
(b) The Guarantee Trustee shall not be removed in accordance
with Section 4.02(a) until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01(a) has been
appointed and has accepted such appointment by written instrument executed by
such Successor Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold
office until his successor shall have been appointed or until its removal or
resignation.
(d) The Guarantee Trustee may resign from office (without need
for prior or subsequent accounting) by an instrument (a "Resignation Request")
in writing signed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that no such resignation of the Guarantee
Trustee shall be effective until a Successor Guarantee Trustee possessing the
qualifications to act as Guarantee Trustee under Section 4.01 (a) has been
appointed and has accepted such appointment by instrument executed by such
Successor Guarantee Trustee and delivered to Guarantor and the resigning
Guarantee Trustee.
(e) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.02 delivery to
the Guarantor of a Resignation Request, the resigning Guarantee Trustee may
petition any court of competent jurisdiction for appointment of a Successor
Guarantee Trustee. Such court may thereupon after such notice, if any, as it may
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deem proper and prescribe, appoint a Successor Guarantee Trustee.
ARTICLE 5
GUARANTEE
SECTION 5.01. Guarantee. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer) regardless of
any defense, right of set-off or counterclaim which the Issuer may have or
assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 5.02. Waiver of Notice. The Guarantor hereby waives
notice of acceptance of this Guarantee Agreement and of any liability to which
it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Issuer or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice
of redemption and all other notices and demands.
SECTION 5.03. Obligations Not Affected. The obligations,
covenants, agreements and duties of the Guarantor under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all
or any portion of the Distributions (other than an extension of time
for payment of Distributions that results from the extension of any
interest payment period on the Debentures), Redemption Price,
Liquidation Distribution (as defined in the Declaration) or any other
sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
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terms of the Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. Enforcement of Guarantee. The Guarantor and the
Guarantee Trustee expressly acknowledge that (i) this Guarantee Agreement will
be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) Holders representing not less than a
Majority in liquidation amount of the Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available in respect of this Guarantee Agreement including the giving of
directions to the Guarantee Trustee, or exercising any trust or other power
conferred upon the Guarantee Trustee under this Guarantee Agreement, and (iv)
notwithstanding the foregoing, if the Guarantor has failed to make any Guarantee
Payment hereunder, any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding against the
Issuer, the Guarantee Trustee, or any other Person.
SECTION 5.05. Guarantee of Payment. This Guarantee Agreement
creates a guarantee of payment and not merely of collection. This Guarantee
Agreement will not be discharged except by payment of the Guarantee Payments in
full (without duplication of amounts theretofore paid by the Issuer) or upon
termination in accordance with Section 7.01 hereof.
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SECTION 5.06. Subrogation. The Guarantor shall be subrogated
to all (if any) rights of the Holders against the Issuer in respect of any
amounts paid to the Holders by the Guarantor under this Guarantee Agreement;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any rights
which it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Guarantee
Agreement, if, at the time of any such payment, any amounts are due and unpaid
under this Guarantee Agreement. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. Independent Obligations. The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Preferred Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence
of any event referred to in subsections (a) through (g), inclusive, of Section
5.03 hereof.
ARTICLE 6
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01. Limitation of Transactions. So long as any
Preferred Securities remain outstanding, the Guarantor will not declare or pay
dividends on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its common stock or preferred stock or make any
guarantee payment with respect thereto or make any payment of interest, premium
(if any) or principal on any debt securities issued by the Guarantor which rank
pari passu with or junior to the Debentures, if at such time (i) the Guarantor
shall be in default with respect to its Guarantee Payments or other payment
obligations hereunder, (ii) there shall have occurred any event of default under
the Declaration or (iii) the Guarantor shall have given notice of its selection
of an Extension Period (as defined in the Indenture) and such period, or any
extension thereof, is continuing; provided that the foregoing will not apply to
any stock dividends or other stock distributions paid by the Guarantor. The
provisions of the immediately preceding sentence will not restrict the ability
of the Guarantor to redeem rights issued pursuant to the Amended and Restated
Rights Agreement, dated as of May 10, 1994 between the Guarantor and Wachovia
Bank of North Carolina, N.A., as Rights Agent, as it may be amended from time to
time, in an amount per right issued thereunder not to exceed that in effect on
the date hereof. In addition, so long as any Preferred Securities remain
outstanding, the Guarantor (i) will remain the sole direct or indirect owner of
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all of the outstanding Common Securities and shall not cause or permit the
Common Securities to be transferred except to the extent such transfer is
permitted under Section 9.01 of the Declaration; provided that any permitted
successor of the Guarantor under the Indenture may succeed to the Guarantor's
ownership of the Common Securities and (ii) will use reasonable efforts to cause
the Issuer to continue to be treated as a grantor trust for United States
federal income tax purposes except in connection with a distribution of
Debentures as provided in the Declaration.
SECTION 6.02. Subordination. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all other liabilities of the
Guarantor, including the Debentures, except those made pari passu herewith or
subordinate hereto by their terms, and (ii) pari passu in right of payment with
the most senior preferred stock issued, from time to time, if any, by the
Guarantor and with respect to obligations under other guarantee agreements which
the Guarantor may enter into from time to time to the extent that such
agreements shall be entered into in substantially the form hereof and provide
for comparable guarantees by the Guarantor of payment on preferred securities
issued by other trusts affiliated with the Guarantor.
ARTICLE 7
TERMINATION
SECTION 7.01. Termination. This Guarantee Agreement shall
terminate and be of no further force and effect upon full payment of the
Redemption Price of all Preferred Securities, or upon the distribution of
Debentures to Holders of Preferred Securities and Common Securities in exchange
for all of the Preferred Securities and Common Securities, or upon full payment
of the amounts payable in accordance with the Declaration upon liquidation of
the Issuer, or upon conversion of all Preferred Securities into Common Stock.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
must restore payment of any sums paid with respect to the Preferred Securities
or this Guarantee Agreement.
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ARTICLE 8
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.01. Exculpation. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Guarantor or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith and in
a manner such Indemnified Person reasonably believed to be within the scope of
the authority conferred on such Indemnified Person by this Guarantee Agreement
or by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying
in good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders of Preferred Securities
might properly be paid.
SECTION 8.02. Indemnification. (a) To the fullest extent
permitted by applicable law, the Guarantor shall indemnify and hold harmless
each Indemnified Person from and against any loss, damage or claim incurred by
such Indemnified Person by reason of any act or omission performed or omitted by
such Indemnified Person in good faith and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law,
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Guarantor of an undertaking by or
on behalf of the Indemnified Person to repay such amount with interest if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.02(a).
<PAGE>
-18-
(c) The provisions of this Article shall survive the
termination of this Guarantee Agreement or the resignation or removal of the
Guarantee Trustee.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Successors and Assigns. All guarantees and
agreements contained in this Guarantee Agreement shall bind the successors,
assignees, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding. Except in connection with a consolidation, merger or sale involving
the Guarantor that is permitted under Article Ten of the Indenture, the
Guarantor shall not assign its obligations hereunder.
SECTION 9.02. Amendments. Except with respect to any changes
which do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of not less than a Majority in liquidation amount
of the Preferred Securities. The provisions of Section 12.02 of the Declaration
concerning meetings of Holders shall apply to the giving of such approval.
SECTION 9.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be in writing,
duly signed by the party giving such notice, and delivered, telecopied or mailed
by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below
or such other address as the Guarantor may give notice of to the
Holders:
Owens & Minor, Inc.
4800 Cox Road
Glen Allen, Virginia 23060
Facsimile No.: (804) 965-1907
Attention: General Counsel
(b) if given to the Guarantee Trustee, to the address set
forth below or such other address as the Guarantee Trustee may give
notice to the Holders:
The First National Bank of Chicago
153 W. 51st Street, 5th Floor
Suite 4015
<PAGE>
-19-
New York, New York 10019
Attention: Corporate Trust Administration
Telecopy: (212) 373-1383
(c) if given to any Holder of Preferred Securities, at the
address set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.04. Genders. The masculine, feminine and neuter
genders used herein shall include the masculine, feminine and neuter genders.
SECTION 9.05. Benefit. This Guarantee Agreement is solely for
the benefit of the Holders and subject to Section 3.01(a) is not separately
transferable from the Preferred Securities.
SECTION 9.06. Governing Law. THIS GUARANTEE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS).
SECTION 9.07. Counterparts. This Guarantee Agreement may be
executed in counterparts, each of which shall be an original; but such
counterparts shall together constitute one and the same instrument.
SECTION 9.08. Exercise of Over-allotment Option. If and to the
extent that Preferred Securities are issued by the Issuer upon exercise of the
over-allotment option referred to the second WHEREAS clause, the Guarantor
agrees to give prompt notice thereof to the Guarantee Trustee but the failure to
give such notice shall not relieve the Guarantor of any of its obligations
hereunder.
<PAGE>
-20-
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
Owens & Minor, Inc.
By: /s/ Ann Greer Rector
----------------------------------------
Name: Ann Greer Rector
Title: Senior Vice President and Chief
Financial Officer
The First National Bank of Chicago,
as Guarantee Trustee
By: /s/ Michael Pinzon
----------------------------------------
Name: Michael Pinzon
Title: Trust Officer
EXHIBIT 12.1
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND
REQUIREMENTS
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three
Months
Year Ended December 31, Ended
-------------------------------------------------------------------------- March 31,
-------------
1993 1994 1995 1996 1997 1998
----------- --------- ----------- ------------- ----------- -------------
<S> <C>
Income (loss) from continuing
operations before income $ 30,417 $ 13,997 $ (16,408) $ 23,113 $ 41,931 $ 11,455
tax provision (benefit)
Add:
Interest expense, net 1,521 9,996 24,448 18,476 14,882 3,408
Discount on accounts
receivable securitization - - 641 6,521 6,584 1,609
Amortization of debt
issuance costs 9 159 1,090 478 821 205
Portion of rents
representative of the
interest factor 4,286 7,088 8,997 8,521 8,781 2,200
----------- --------- ----------- ------------- ----------- -------------
Income as adjusted $ 36,233 $ 31,240 $ 18,768 $ 57,109 $ 72,999 $ 18,877
----------- --------- ----------- ------------- ----------- -------------
Fixed charges:
Interest expense, net $ 1,521 $ 9,996 $ 24,448 $ 18,476 $ 14,882 $ 3,408
Discount on accounts
receivable securitization - - 641 6,521 6,584 1,609
Amortization of debt issuance
costs 9 159 1,090 478 821 205
Portion of rents
representative of the
interest factor 4,286 7,088 8,997 8,521 8,781 2,200
Pretax preferred stock
dividend requirements - 5,846 3,947 9,225 8,922 2,193
----------- --------- ----------- ------------- ----------- -------------
Fixed charges (including
pretax preferred stock
dividend requirements) $ 5,816 $ 23,089 $ 39,123 $ 43,221 $ 39,990 $ 9,615
----------- --------- ----------- ------------- ----------- -------------
Ratio of earnings to combined
fixed charges and preferred
stock dividend requirements 6.23 1.35 0.48(1) 1.32 1.83 1.96
=========== ========= =========== ============= =========== =============
</TABLE>
(1) Earnings are inadequate by $20,355 to cover combined fixed charges and
preferred stock dividend requirements.
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Owens & Minor, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Owens & Minor, Inc. of our reports dated February 4, 1998, relating
to the consolidated balance sheets of Owens & Minor, Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, changes in shareholders' equity and cash flows, and the related
financial statement schedule, for each of the years in the three-year period
ended December 31, 1997, which reports are included in the Form 10-K of Owens &
Minor, Inc. for the year ended December 31, 1997, incorporated by reference into
the registration statement. We also consent to the reference to our firm under
the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
-------------------------
Richmond, Virginia
July 6, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
Owens & Minor, Inc.
(Exact name of obligor as specified in its charter)
Virginia 54-1701843
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4800 Cox Road
Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Junior Subordinated Debt Trust Securities
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of the Currency, Washington, D.C.; Federal Deposit
Insurance Corporation, Washington, D.C.; and The Board of
Governors of the Federal Reserve System, Washington D.C..
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a part
of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
2
<PAGE>
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 1st day of July,
1998.
The First National Bank of Chicago,
Trustee
By /s/ Sandra L. Caruba
--------------------------------
Sandra L. Caruba
Vice President
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of
SunAmerica Inc., filed with the Securities and Exchange Commission on October 2,
1996 (Registration No.
333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
July 1, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
In connection with the qualification of the indenture between Owens & Minor,
Inc. and The First National Bank of Chicago, as Trustee, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ Sandra L. Caruba
------------------------
Sandra L. Caruba
Vice President
4
<PAGE>
EXHIBIT 7
Legal Title of Bank The First National Bank of Chicago Call Date:
03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS C400
------
<S> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A): RCFD
a. Noninterest-bearing balances and currency and coin(1)......... 0081 4,141,168 1.a
b. Interest-bearing balances(2).................................. 0071 5,142,787 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)..... 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).. 1773 7,819,811 2.b
3. Federal funds sold and securities purchased under agreements to
resell 1350 5,619,157 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RCFD
RC-C)............................................................ 2122 26,140,376 4.a
b. LESS: Allowance for loan and lease losses..................... 3123 417,371 4.b
c. LESS: Allocated transfer risk reserve......................... 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and RCFD
reserve (item 4.a minus 4.b and 4.c).......................... 2125 25,723,005 4.d
5. Trading assets (from Schedule RD-D).............................. 3545 5,795,159 5.
6. Premises and fixed assets (including capitalized leases)......... 2145 757,033 6.
7. Other real estate owned (from Schedule RC-M)..................... 2150 6,547 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)................................... 2130 135,327 8.
9. Customers' liability to this bank on acceptances outstanding..... 2155 512,763 9.
10. Intangible assets (from Schedule RC-M)........................... 2143 261,456 10.
11. Other assets (from Schedule RC-F)................................ 2160 2,223,495 11.
12. Total assets (sum of items 1 through 11)......................... 2170 58,137,708 12.
</TABLE>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call
Date: 03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN
THOUSANDS
------------------
LIABILITIES
<S> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
from Schedule RC-E, part 1)..................................... 2200 21,551,932 13.a
(1) Noninterest-bearing(1)...................................... 6631 9,361,049 13.a1
(2) Interest-bearing............................................ 6636 12,190,883 13.a2
b. In foreign offices, Edge and Agreement subsidiaries, and RCFN
IBFs (from Schedule RC-E, part II).............................. 2200 14,511,110 13.b
(1) Noninterest bearing......................................... 6631 604,859 13.b1
(2) Interest-bearing............................................ 6636 13,906,251 13.b2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3.887,022 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,092 15.a
b. Trading Liabilities(from Sechedule RC-D)........................ RCFD 3548 5,918,194 15.b
16. Other borrowed money: RCFD
a. With original maturity of one year or less...................... 2332 3,134,696 16.a
b. With original maturity of more than one year................... A547 381,681 16.b
c. With original maturity of more than three years................. A548 326,551 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding............ 2920 512,763 18.
19. Subordinated notes and debentures.................................. 3200 2,000,000 19.
20. Other liabilities (from Schedule RC-G)............................. 2930 1,163,747 20.
21. Total liabilities (sum of items 13 through 20)..................... 2948 53,450,788 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus...................... 3838 0 23.
24. Common stock....................................................... 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock) 3839 3,107,585 25.
26. a. Undivided profits and capital reserves.......................... 3632 1,359,598 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities...................................................... 8434 18,975 26.b
27. Cumulative foreign currency translation adjustments 3284 (96) 27.
28. Total equity capital (sum of items 23 through 27).................. 3210 4,686,920 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28).............................. 3300 58,137,708 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external [2 ] Number
as of any date during 1996...................................................................RCFD 6724 M.1.
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
Owens & Minor Trust I
(Exact name of obligor as specified in its charter)
Delaware 54-1896890
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4800 Cox Road
Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Preferred Securities
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of the Currency, Washington, D.C.; Federal Deposit
Insurance Corporation, Washington, D.C.; and The Board of
Governors of the Federal Reserve System, Washington D.C..
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a part
of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
2
<PAGE>
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 1st day of July,
1998.
The First National Bank of Chicago,
Trustee
By /s/ Sandra L. Caruba
--------------------------------
Sandra L. Caruba
Vice President
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of
SunAmerica Inc., filed with the Securities and Exchange Commission on October 2,
1996 (Registration No.
333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
July 1, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
In connection with the qualification of the indenture between Owens & Minor
Trust I and The First National Bank of Chicago, as Trustee, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ Sandra L. Caruba
------------------------
Sandra L. Caruba
Vice President
4
<PAGE>
EXHIBIT 7
Legal Title of Bank The First National Bank of Chicago Call Date:
03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS C400
------
<S> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A): RCFD
a. Noninterest-bearing balances and currency and coin(1)......... 0081 4,141,168 1.a
b. Interest-bearing balances(2).................................. 0071 5,142,787 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)..... 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).. 1773 7,819,811 2.b
3. Federal funds sold and securities purchased under agreements to
resell 1350 5,619,157 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RCFD
RC-C)............................................................ 2122 26,140,376 4.a
b. LESS: Allowance for loan and lease losses..................... 3123 417,371 4.b
c. LESS: Allocated transfer risk reserve......................... 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and RCFD
reserve (item 4.a minus 4.b and 4.c).......................... 2125 25,723,005 4.d
5. Trading assets (from Schedule RD-D).............................. 3545 5,795,159 5.
6. Premises and fixed assets (including capitalized leases)......... 2145 757,033 6.
7. Other real estate owned (from Schedule RC-M)..................... 2150 6,547 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)................................... 2130 135,327 8.
9. Customers' liability to this bank on acceptances outstanding..... 2155 512,763 9.
10. Intangible assets (from Schedule RC-M)........................... 2143 261,456 10.
11. Other assets (from Schedule RC-F)................................ 2160 2,223,495 11.
12. Total assets (sum of items 1 through 11)......................... 2170 58,137,708 12.
</TABLE>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call
Date: 03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN
THOUSANDS
------------------
LIABILITIES
<S> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
from Schedule RC-E, part 1)..................................... 2200 21,551,932 13.a
(1) Noninterest-bearing(1)...................................... 6631 9,361,049 13.a1
(2) Interest-bearing............................................ 6636 12,190,883 13.a2
b. In foreign offices, Edge and Agreement subsidiaries, and RCFN
IBFs (from Schedule RC-E, part II).............................. 2200 14,511,110 13.b
(1) Noninterest bearing......................................... 6631 604,859 13.b1
(2) Interest-bearing............................................ 6636 13,906,251 13.b2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3.887,022 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,092 15.a
b. Trading Liabilities(from Sechedule RC-D)........................ RCFD 3548 5,918,194 15.b
16. Other borrowed money: RCFD
a. With original maturity of one year or less...................... 2332 3,134,696 16.a
b. With original maturity of more than one year................... A547 381,681 16.b
c. With original maturity of more than three years................. A548 326,551 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding............ 2920 512,763 18.
19. Subordinated notes and debentures.................................. 3200 2,000,000 19.
20. Other liabilities (from Schedule RC-G)............................. 2930 1,163,747 20.
21. Total liabilities (sum of items 13 through 20)..................... 2948 53,450,788 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus...................... 3838 0 23.
24. Common stock....................................................... 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock) 3839 3,107,585 25.
26. a. Undivided profits and capital reserves.......................... 3632 1,359,598 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities...................................................... 8434 18,975 26.b
27. Cumulative foreign currency translation adjustments 3284 (96) 27.
28. Total equity capital (sum of items 23 through 27).................. 3210 4,686,920 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28).............................. 3300 58,137,708 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external [2 ] Number
as of any date during 1996...................................................................RCFD 6724 M.1.
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Goldstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
Owens & Minor, Inc.
(Exact name of obligor as specified in its charter)
Virginia 54-1701843
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4800 Cox Road
Glen Allen, Virginia 23060
(Address of principal executive offices) (Zip Code)
Preferred Securities Guarantee
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following
information as to the trustee:
(a) Name and address of each examining or
supervising authority to which it is subject.
Comptroller of the Currency, Washington, D.C.; Federal Deposit
Insurance Corporation, Washington, D.C.; and The Board of
Governors of the Federal Reserve System, Washington D.C..
(b) Whether it is authorized to exercise
corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations With the Obligor. If the obligor
is an affiliate of the trustee, describe each
such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a part
of this Statement of Eligibility.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
2
<PAGE>
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the United
States of America, has duly caused this Statement of Eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all
in the City of Chicago and State of Illinois, on the 1st day of July,
1998.
The First National Bank of Chicago,
Trustee
By /s/ Sandra L. Caruba
--------------------------------
Sandra L. Caruba
Vice President
* Exhibit 1, 2, 3 and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 16 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 25.1 to the Registration Statement on Form S-3 of
SunAmerica Inc., filed with the Securities and Exchange Commission on October 2,
1996 (Registration No. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
July 1, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Ladies and Gentlemen:
In connection with the qualification of the indenture between Owens & Minor,
Inc. and The First National Bank of Chicago, as Trustee, the undersigned, in
accordance with Section 321(b) of the Trust Indenture Act of 1939, as amended,
hereby consents that the reports of examinations of the undersigned, made by
Federal or State authorities authorized to make such examinations, may be
furnished by such authorities to the Securities and Exchange Commission upon its
request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ Sandra L. Caruba
------------------------
Sandra L. Caruba
Vice President
4
<PAGE>
EXHIBIT 7
Legal Title of Bank The First National Bank of Chicago Call Date:
03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-1
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR MARCH 31, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN THOUSANDS C400
------
<S> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RC-A): RCFD
a. Noninterest-bearing balances and currency and coin(1)......... 0081 4,141,168 1.a
b. Interest-bearing balances(2).................................. 0071 5,142,787 1.b
2. Securities
a. Held-to-maturity securities(from Schedule RC-B, column A)..... 1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D).. 1773 7,819,811 2.b
3. Federal funds sold and securities purchased under agreements to
resell 1350 5,619,157 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RCFD
RC-C)............................................................ 2122 26,140,376 4.a
b. LESS: Allowance for loan and lease losses..................... 3123 417,371 4.b
c. LESS: Allocated transfer risk reserve......................... 3128 0 4.c
d. Loans and leases, net of unearned income, allowance, and RCFD
reserve (item 4.a minus 4.b and 4.c).......................... 2125 25,723,005 4.d
5. Trading assets (from Schedule RD-D).............................. 3545 5,795,159 5.
6. Premises and fixed assets (including capitalized leases)......... 2145 757,033 6.
7. Other real estate owned (from Schedule RC-M)..................... 2150 6,547 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)................................... 2130 135,327 8.
9. Customers' liability to this bank on acceptances outstanding..... 2155 512,763 9.
10. Intangible assets (from Schedule RC-M)........................... 2143 261,456 10.
11. Other assets (from Schedule RC-F)................................ 2160 2,223,495 11.
12. Total assets (sum of items 1 through 11)......................... 2170 58,137,708 12.
</TABLE>
- -----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call
Date: 03/31/98 ST-BK: 17-1630 FFIEC 031
Address: One First National Plaza, Ste 0460 Page RC-2
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
<TABLE>
<CAPTION>
DOLLAR AMOUNTS IN
THOUSANDS
------------------
LIABILITIES
<S> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C RCON
from Schedule RC-E, part 1)..................................... 2200 21,551,932 13.a
(1) Noninterest-bearing(1)...................................... 6631 9,361,049 13.a1
(2) Interest-bearing............................................ 6636 12,190,883 13.a2
b. In foreign offices, Edge and Agreement subsidiaries, and RCFN
IBFs (from Schedule RC-E, part II).............................. 2200 14,511,110 13.b
(1) Noninterest bearing......................................... 6631 604,859 13.b1
(2) Interest-bearing............................................ 6636 13,906,251 13.b2
14. Federal funds purchased and securities sold under agreements
to repurchase: RCFD 2800 3.887,022 14
15. a. Demand notes issued to the U.S. Treasury RCON 2840 63,092 15.a
b. Trading Liabilities(from Sechedule RC-D)........................ RCFD 3548 5,918,194 15.b
16. Other borrowed money: RCFD
a. With original maturity of one year or less...................... 2332 3,134,696 16.a
b. With original maturity of more than one year................... A547 381,681 16.b
c. With original maturity of more than three years................. A548 326,551 16.c
17. Not applicable
18. Bank's liability on acceptance executed and outstanding............ 2920 512,763 18.
19. Subordinated notes and debentures.................................. 3200 2,000,000 19.
20. Other liabilities (from Schedule RC-G)............................. 2930 1,163,747 20.
21. Total liabilities (sum of items 13 through 20)..................... 2948 53,450,788 21.
22. Not applicable
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus...................... 3838 0 23.
24. Common stock....................................................... 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock) 3839 3,107,585 25.
26. a. Undivided profits and capital reserves.......................... 3632 1,359,598 26.a
b. Net unrealized holding gains (losses) on available-for-sale
securities...................................................... 8434 18,975 26.b
27. Cumulative foreign currency translation adjustments 3284 (96) 27.
28. Total equity capital (sum of items 23 through 27).................. 3210 4,686,920 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28).............................. 3300 58,137,708 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external [2 ] Number
as of any date during 1996...................................................................RCFD 6724 M.1.
1 = Independent audit of the bank conducted in accordance 4. = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
